Severance Agreement - Cleveland-Cliffs Inc. and Donald J. Gallagher
SEVERANCE AGREEMENT
THIS SEVERANCE AGREEMENT (this "Agreement"), dated as of March 9,
2004 is made and entered by and between Cleveland-Cliffs Inc, an Ohio
corporation (the "Company"), and Donald J. Gallagher (the "Executive").
WITNESSETH:
WHEREAS, the Executive is a senior executive of the Company or one
or more of its Subsidiaries and is expected to make major contributions to the
short- and long-term profitability, growth and financial strength of the
Company;
WHEREAS, the Company recognizes that, as is the case for most
publicly held companies, the possibility of a Change in Control (as defined
below) exists;
WHEREAS, the Company desires to assure itself of both present and
future continuity of management and desires to establish certain minimum
severance benefits for certain of its senior executives, including the
Executive, applicable in the event of a Change in Control;
WHEREAS, the Company wishes to ensure that its senior executives are
not practically disabled from discharging their duties in respect of a proposed
or actual transaction involving a Change in Control; and
WHEREAS, the Company desires to provide additional inducement for
the Executive to continue to remain in the employ of the Company.
NOW, THEREFORE, the Company and the Executive agree as follows:
1. Certain Defined Terms. In addition to terms defined elsewhere
herein, the following terms have the following meanings when used in this
Agreement with initial capital letters:
(a) "Base Pay" means the Executive's annual base salary rate as in
effect from time to time.
(b) "Board" means the Board of Directors of the Company.
(c) "Cause" means that, prior to any termination pursuant to
Section 3(b), the Executive shall have committed:
(i) and been convicted of a criminal violation involving
fraud, embezzlement or theft in connection with his duties or
in the course of his employment with the Company or any
Subsidiary;
(ii) intentional wrongful damage to property of the Company
or any Subsidiary;
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(iii) intentional wrongful disclosure of secret processes or
confidential information of the Company or any Subsidiary; or
(iv) intentional wrongful engagement in any Competitive
Activity;
and any such act shall have been demonstrably and materially harmful to
the Company. For purposes of this Agreement, no act or failure to act on
the part of the Executive shall be deemed "intentional" if it was due
primarily to an error in judgment or negligence, but shall be deemed
"intentional" only if done or omitted to be done by the Executive not in
good faith and without reasonable belief that the Executive's action or
omission was in the best interest of the Company. Notwithstanding the
foregoing, the Executive shall not be deemed to have been terminated for
"Cause" hereunder unless and until there shall have been delivered to the
Executive a copy of a resolution duly adopted by the affirmative vote of
not less than three quarters of the Board then in office at a meeting of
the Board called and held for such purpose, after reasonable notice to the
Executive and an opportunity for the Executive, together with the
Executive's counsel (if the Executive chooses to have counsel present at
such meeting), to be heard before the Board, finding that, in the good
faith opinion of the Board, the Executive had committed an act
constituting "Cause" as herein defined and specifying the particulars
thereof in detail. Nothing herein will limit the right of the Executive or
his beneficiaries to contest the validity or propriety of any such
determination.
(d) "Change in Control" means the occurrence during the Term of
any of the following events:
(i) The acquisition by any individual, entity or group
(within the meaning of Section 13(d)(3) or 14(d)(2) of the
Exchange Act) (a "Person") of beneficial ownership (within the
meaning of Rule 13d-3 promulgated under the Exchange Act) of
30% or more of the combined voting power of the then
outstanding Voting Stock of the Company; provided, however,
that for purposes of this Section 1(d)(i), the following
acquisitions shall not constitute a Change in Control: (A) any
issuance of Voting Stock of the Company directly from the
Company that is approved by the Incumbent Board (as defined in
Section 1(d)(ii), below), (B) any acquisition by the Company
of Voting Stock of the Company, (C) any acquisition of Voting
Stock of the Company by any employee benefit plan (or related
trust) sponsored or maintained by the Company or any
Subsidiary, or (D) any acquisition of Voting Stock of the
Company by any Person pursuant to a Business Combination that
complies with clauses (A), (B) and (C) of Section 1(d)(iii),
below; or
(ii) individuals who, as of the date hereof, constitute the
Board (the "Incumbent Board") cease for any reason to
constitute at least a majority of the Board; provided,
however, that any individual becoming a Director subsequent to
the date hereof whose election, or nomination for election by
the Company's shareholders, was approved by a vote of at least
a majority of the Directors then comprising the Incumbent
Board (either by
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a specific vote or by approval of the proxy statement of the
Company in which such person is named as a nominee for
director, without objection to such nomination) shall be
deemed to have been a member of the Incumbent Board, but
excluding, for this purpose, any such individual whose initial
assumption of office occurs as a result of an actual or
threatened election contest (within the meaning of Rule 14a-11
of the Exchange Act) with respect to the election or removal
of Directors or other actual or threatened solicitation of
proxies or consents by or on behalf of a Person other than the
Board; or
(iii) consummation of a reorganization, merger or
consolidation involving the Company, a sale or other
disposition of all or substantially all of the assets of the
Company, or any other transaction involving the Company (each,
a "Business Combination"), unless, in each case, immediately
following such Business Combination, (A) all or substantially
all of the individuals and entities who were the beneficial
owners of Voting Stock of the Company immediately prior to
such Business Combination beneficially own, directly or
indirectly, more than 55% of the combined voting power of the
then outstanding shares of Voting Stock of the entity
resulting from such Business Combination (including, without
limitation, an entity which as a result of such transaction
owns the Company or all or substantially all of the Company's
assets either directly or through one or more subsidiaries) in
substantially the same proportions relative to each other as
their ownership, immediately prior to such Business
Combination, of the Voting Stock of the Company, (B) no Person
(other than the Company, such entity resulting from such
Business Combination, or any employee benefit plan (or related
trust) sponsored or maintained by the Company, any Subsidiary
or such entity resulting from such Business Combination)
beneficially owns, directly or indirectly, 30% or more of the
combined voting power of the then outstanding shares of Voting
Stock of the entity resulting from such Business Combination,
and (C) at least a majority of the members of the Board of
Directors of the entity resulting from such Business
Combination were members of the Incumbent Board at the time of
the execution of the initial agreement or of the action of the
Board providing for such Business Combination; or
(iv) approval by the shareholders of the Company of a
complete liquidation or dissolution of the Company, except
pursuant to a Business Combination that complies with clauses
(A), (B) and (C) of Section 1(d)(iii).
(e) "Competitive Activity" means the Executive's participation,
without the written consent of an officer of the Company, in the
management of any business enterprise if such enterprise engages in
substantial and direct competition with the Company and such
enterprise's sales of any product or service competitive with any
product or service of the Company amounted to 10% of such
enterprise's net
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sales for its most recently completed fiscal year and if the
Company's net sales of said product or service amounted to 10% of
the Company's net sales for its most recently completed fiscal year.
"Competitive Activity" will not include (i) the mere ownership of
securities in any such enterprise and the exercise of rights
appurtenant thereto or (ii) participation in the management of any
such enterprise other than in connection with the competitive
operations of such enterprise.
(f) "Employee Benefits" means the perquisites, benefits and
service credit for benefits as provided under any and all employee
retirement income and welfare benefit policies, plans, programs or
arrangements in which Executive is entitled to participate,
including without limitation any stock option, performance share,
performance unit, stock purchase, stock appreciation, savings,
pension, supplemental executive retirement, or other retirement
income or welfare benefit, deferred compensation, incentive
compensation, group or other life, health, medical/hospital or other
insurance (whether funded by actual insurance or self-insured by the
Company or a Subsidiary), disability, salary continuation, expense
reimbursement and other employee benefit policies, plans, programs
or arrangements that may now exist or any equivalent successor
policies, plans, programs or arrangements that may be adopted
hereafter by the Company or a Subsidiary, providing perquisites,
benefits and service credit for benefits at least as great in value
in the aggregate as are payable thereunder prior to a Change in
Control.
(g) "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
(h) "Incentive Pay" means an annual bonus, incentive or other
payment of compensation, in addition to Base Pay, made or to be made
in regard to services rendered in any year or other period pursuant
to any bonus, incentive, profit-sharing, performance, discretionary
pay or similar agreement, policy, plan, program or arrangement
(whether or not funded) of the Company or a Subsidiary, or any
successor thereto.
(i) "Industry Service" means professionally related service, prior
to his employment by the Company or a Subsidiary, by the Executive
as an employee within the iron, steel and mining industries or
service within an industry to which such Executive's position with
the Company relates. The Executive shall be given credit for one
year of Industry Service for every two years of service with the
Company, as designated in writing by, or in minutes of the actions
of, the Compensation and Organization Committee of the Board, and
such years of credited Industry Service shall be defined as
"Credited Years of Industry Service."
(j) "Retirement Plans" means the retirement income, supplemental
executive retirement, excess benefits and retiree medical, life and
similar benefit plans providing retirement perquisites, benefits and
service credit for benefits at least as great in value in the
aggregate as are payable thereunder prior to a Change in Control.
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(k) "Severance Period" means the period of time commencing on the
date of the first occurrence of a Change in Control and continuing
until the earlier of (i) the second anniversary of the occurrence of
the Change in Control, or (ii) the Executive's death.
(l) "Subsidiary" means an entity in which the Company directly or
indirectly beneficially owns 50% or more of the outstanding capital
or profits interests or Voting Stock.
(m) "Supplemental Retirement Plan" or "SRP" means the
Cleveland-Cliffs Inc Supplemental Retirement Benefit Plan (as
Amended and Restated as of January 1, 2001), as it may be amended
prior to a Change in Control, and modified as provided in Annex A,
Paragraph (3).
(n) "Term" means the period commencing as of the date hereof and
expiring as of the later of (i) the close of business on December
31, 2004, or (ii) the expiration of the Severance Period; provided,
however, that (A) commencing on January 1, 2005 and each January 1
thereafter, the term of this Agreement will automatically be
extended for an additional year unless, not later than September 30
of the immediately preceding year, the Company or the Executive
shall have given notice that it or the Executive, as the case may
be, does not wish to have the Term extended and (B) subject to the
last sentence of Section 9, if, prior to a Change in Control, the
Executive ceases for any reason to be an officer of the Company and
any Subsidiary, thereupon without further action the Term shall be
deemed to have expired and this Agreement will immediately terminate
and be of no further effect. For purposes of this Section 1(n), the
Executive shall not be deemed to have ceased to be an employee of
the Company and any Subsidiary by reason of the transfer of
Executive's employment between the Company and any Subsidiary, or
among any Subsidiaries.
(o) "Termination Date" means the date on which the Executive's
employment is terminated pursuant to Section 3 (the effective date
of which shall be the date of termination, or such other date that
may be specified by the Executive if the termination is pursuant to
Section 3(b)).
(p) "Voting Stock" means securities entitled to vote generally in
the election of directors.
2. Operation of Agreement. This Agreement will be effective and
binding immediately upon its execution, but, anything in this Agreement to
the contrary notwithstanding, this Agreement will not be operative unless
and until a Change in Control occurs. Upon the occurrence of a Change in
Control at any time during the Term, without further action, this
Agreement shall become immediately operative, including without
limitation, the last sentence of Section 9 notwithstanding that the Term
may have theretofore expired.
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3. Termination Following a Change in Control.(a) In the event
of the occurrence of a Change in Control, the Executive's employment may
be terminated by the Company or a Subsidiary during the Severance Period
and the Executive shall be entitled to the benefits provided by Section 4
unless such termination is the result of the occurrence of one or more of
the following events:
(i) The Executive's death;
(ii) If the Executive becomes permanently disabled within the
meaning of, and begins actually to receive disability benefits
pursuant to, the long-term disability plan in effect for, or
applicable to, the Executive immediately prior to the Change
in Control; or
(iii) Cause.
If, during the Severance Period, the Executive's employment is terminated by the
Company or any Subsidiary other than pursuant to Section 3(a)(i), 3(a)(ii) or
3(a)(iii), the Executive will be entitled to the benefits provided by Section 4
hereof.
(b) In the event of the occurrence of a Change in Control, the
Executive may terminate employment with the Company and any
Subsidiary during the Severance Period with the right to severance
compensation as provided in Section 4 upon the occurrence of one or
more of the following events (regardless of whether any other
reason, other than Cause as hereinabove provided, for such
termination exists or has occurred, including without limitation
other employment):
(i) Failure to elect or reelect or otherwise to maintain the
Executive in the office or the position, or a substantially
equivalent office or position, of or with the Company and/or a
Subsidiary (or any successor thereto by operation of law or
otherwise), as the case may be, which the Executive held
immediately prior to a Change in Control, or the removal of
the Executive as a Director of the Company and/or a Subsidiary
(or any successor thereto) if the Executive shall have been a
Director of the Company and/or a Subsidiary immediately prior
to the Change in Control;
(ii) (A) A significant adverse change in the nature or scope
of the authorities, powers, functions, responsibilities or
duties attached to the position with the Company and any
Subsidiary which the Executive held immediately prior to the
Change in Control, (B) a reduction in the Executive's Base
Pay, (C) a reduction in the Executive's opportunity to receive
Incentive Pay from the Company and any Subsidiary, or (D) the
termination or denial of the Executive's rights to Employee
Benefits or a reduction in the scope or value thereof, any of
which is not remedied by the Company within 10 calendar days
after receipt by the Company of written notice from the
Executive of such change, reduction or termination, as the
case may be;
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(iii) A determination by the Executive (which determination
will be conclusive and binding upon the parties hereto
provided it has been made in good faith and in all events will
be presumed to have been made in good faith unless otherwise
shown by the Company by clear and convincing evidence) that a
change in circumstances has occurred following a Change in
Control, including, without limitation, a change in the scope
of the business or other activities for which the Executive
was responsible immediately prior to the Change in Control,
which has rendered the Executive substantially unable to carry
out, has substantially hindered Executive's performance of, or
has caused Executive to suffer a substantial reduction in, any
of the authorities, powers, functions, responsibilities or
duties attached to the position held by the Executive
immediately prior to the Change in Control, which situation is
not remedied within 10 calendar days after written notice to
the Company from the Executive of such determination;
(iv) The liquidation, dissolution, merger, consolidation or
reorganization of the Company or transfer of all or
substantially all of its business and/or assets, unless the
successor or successors (by liquidation, merger,
consolidation, reorganization, transfer or otherwise) to which
all or substantially all of its business and/or assets have
been transferred (by operation of law or otherwise) assumed
all duties and obligations of the Company under this Agreement
pursuant to Section 11(a);
(v) The Company relocates its principal executive offices
(if such offices are the principal location of Executive's
work), or requires the Executive to have his principal
location of work changed, to any location that, in either
case, is in excess of 25 miles from the location thereof
immediately prior to the Change in Control, without his prior
written consent; or
(vi) Without limiting the generality or effect of the
foregoing, any material breach of this Agreement by the
Company or any successor thereto which is not remedied by the
Company within 10 calendar days after receipt by the Company
of written notice from the Executive of such breach.
(c) A termination by the Company pursuant to Section 3(a) or by
the Executive pursuant to Section 3(b) will not affect any rights
that the Executive may have pursuant to any agreement, policy, plan,
program or arrangement of the Company or Subsidiary providing
Employee Benefits, which rights shall be governed by the terms
thereof, except for any rights to severance compensation to which
the Executive may be entitled upon termination of employment under
any severance pay policy, plan, program or arrangement of the
Company, which rights shall, during the Severance Period, be
superseded by this Agreement.
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4. Severance Compensation.(a) If, following the occurrence of
a Change in Control, the Company or Subsidiary terminates the
Executive's employment during the Severance Period other than
pursuant to Section 3(a)(i), 3(a)(ii) or 3(a)(iii), or if the
Executive terminates his employment pursuant to Section 3(b), the
Company will pay to the Executive the amounts described in Annex A
within ten business days after the Termination Date, or, if later,
upon the expiration of the revocation period provided for in Exhibit
A, and will continue to provide to the Executive the benefits
described on Annex A for the periods described therein.
(b) Without limiting the rights of the Executive at law or in
equity, if the Company fails to make any payment or provide any
benefit required to be made or provided hereunder on a timely basis,
the Company will pay interest on the amount or value thereof at an
annualized rate of interest equal to the so-called composite "prime
rate" as quoted from time to time during the relevant period in the
Midwest Edition of The Wall Street Journal, plus 2%. Such interest
will be payable as it accrues on demand. Any change in such prime
rate will be effective on and as of the date of such change.
(c) Notwithstanding any provision of this Agreement to the
contrary, the parties' respective rights and obligations under this
Section 4 and under Sections 5, 7, 8 and the last sentence of
Section 9 and Paragraph (3) of Annex A will survive any termination
or expiration of this Agreement or the termination of the
Executive's employment following a Change in Control for any reason
whatsoever.
(d) Unless otherwise expressly provided by the applicable policy,
plan, program or agreement, after the occurrence of a Change in
Control, the Company shall pay in cash to the Executive a lump sum
amount equal to the value of any annual bonus or long-term incentive
pay (including, without limitation, incentive-based annual cash
bonuses and performance units, but not including any equity-based
compensation or compensation provided under a qualified plan) earned
or granted with respect to the Executive's service during the
performance period or periods that includes the date on which the
Change in Control occurred, disregarding any applicable vesting
requirements; provided that such amount shall be calculated at the
plan target rate, but prorated on the portion of the Executive's
service that had elapsed during the applicable performance period.
Such payment shall take into account service rendered through the
payment date and shall be made at the earlier of (i) the date
prescribed for payment pursuant to the applicable plan, program or
agreement, and (ii) within five business days after the Termination
Date.
(e) Notwithstanding any provision to the contrary in any
applicable policy, plan, program or agreement, upon the occurrence
of a Change in Control, all equity incentive grants and awards held
by the Executive shall become fully vested and all stock options
held by the Executive shall become fully exercisable.
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5. Certain Additional Payments by the Company.(a) Anything in
this Agreement to the contrary notwithstanding, in the event that
this Agreement shall become operative and it shall be determined (as
hereafter provided) that any payment (other than the Gross-Up
payments provided for in this Section 5) or distribution by the
Company or any of its affiliates to or for the benefit of the
Executive, whether paid or payable or distributed or distributable
pursuant to the terms of this Agreement or otherwise pursuant to or
by reason of any other agreement, policy, plan, program or
arrangement, including without limitation any stock option,
performance share, performance unit, stock appreciation right or
similar right, or the lapse or termination of any restriction on or
the vesting or exercisability of any of the foregoing (a "Payment"),
would be subject to the excise tax imposed by Section 4999 of the
Internal Revenue Code of 1986, as amended (the "Code") (or any
successor provision thereto) by reason of being considered
"contingent on a change in ownership or control" of the Company,
within the meaning of Section 280G of the Code (or any successor
provision thereto) or to any similar tax imposed by state or local
law, or any interest or penalties with respect to such tax (such tax
or taxes, together with any such interest and penalties, being
hereafter collectively referred to as the "Excise Tax"), then the
Executive shall be entitled to receive an additional payment or
payments (collectively, a "Gross-Up Payment"); provided, however,
that no Gross-up Payment shall be made with respect to the Excise
Tax, if any, attributable to (i) any incentive stock option, as
defined by Section 422 of the Code ("ISO") granted prior to the
execution of this Agreement, or (ii) any stock appreciation or
similar right, whether or not limited, granted in tandem with any
ISO described in clause (i). The Gross-Up Payment shall be in an
amount such that, after payment by the Executive of all taxes
(including any interest or penalties imposed with respect to such
taxes), including any Excise Tax imposed upon the Gross-Up Payment,
the Executive retains an amount of the Gross-Up Payment equal to the
Excise Tax imposed upon the Payment.
(b) Subject to the provisions of Section 5(f), all determinations
required to be made under this Section 5, including whether an
Excise Tax is payable by the Executive and the amount of such Excise
Tax and whether a Gross-Up Payment is required to be paid by the
Company to the Executive and the amount of such Gross-Up Payment, if
any, shall be made by a nationally recognized accounting firm (the
"Accounting Firm") selected by the Executive in his sole discretion.
The Executive shall direct the Accounting Firm to submit its
determination and detailed supporting calculations to both the
Company and the Executive within 30 calendar days after the
Termination Date, if applicable, and any such other time or times as
may be requested by the Company or the Executive. If the Accounting
Firm determines that any Excise Tax is payable by the Executive, the
Company shall pay the required Gross-Up Payment to the Executive
within five business days after receipt of such determination and
calculations with respect to any Payment to the Executive. If the
Accounting Firm determines that no Excise Tax is payable by the
Executive, it shall, at the same time as it makes such
determination, furnish the Company and the Executive an opinion that
the Executive has substantial authority not to report any Excise Tax
on his federal,
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state or local income or other tax return. As a result of the
uncertainty in the application of Section 4999 of the Code (or any
successor provision thereto) and the possibility of similar
uncertainty regarding applicable state or local tax law at the time
of any determination by the Accounting Firm hereunder, it is
possible that Gross-Up Payments which will not have been made by the
Company should have been made (an "Underpayment"), consistent with
the calculations required to be made hereunder. In the event that
the Company exhausts or fails to pursue its remedies pursuant to
Section 5(f) and the Executive thereafter is required to make a
payment of any Excise Tax, the Executive shall direct the Accounting
Firm to determine the amount of the Underpayment that has occurred
and to submit its determination and detailed supporting calculations
to both the Company and the Executive as promptly as possible. Any
such Underpayment shall be promptly paid by the Company to, or for
the benefit of, the Executive within five business days after
receipt of such determination and calculations.
(c) The Company and the Executive shall each provide the
Accounting Firm access to and copies of any books, records and
documents in the possession of the Company or the Executive, as the
case may be, reasonably requested by the Accounting Firm, and
otherwise cooperate with the Accounting Firm in connection with the
preparation and issuance of the determinations and calculations
contemplated by Section 5(b). Any determination by the Accounting
Firm as to the amount of the Gross-Up Payment shall be binding upon
the Company and the Executive.
(d) The federal, state and local income or other tax returns filed
by the Executive shall be prepared and filed on a consistent basis
with the determination of the Accounting Firm with respect to the
Excise Tax payable by the Executive. The Executive shall make proper
payment of the amount of any Excise Payment, and at the request of
the Company, provide to the Company true and correct copies (with
any amendments) of his federal income tax return as filed with the
Internal Revenue Service and corresponding state and local tax
returns, if relevant, as filed with the applicable taxing authority,
and such other documents reasonably requested by the Company,
evidencing such payment. If prior to the filing of the Executive's
federal income tax return, or corresponding state or local tax
return, if relevant, the Accounting Firm determines that the amount
of the Gross-Up Payment should be reduced, the Executive shall
within five business days pay to the Company the amount of such
reduction.
(e) The fees and expenses of the Accounting Firm for its services
in connection with the determinations and calculations contemplated
by Section 5(b) shall be borne by the Company. If such fees and
expenses are initially paid by the Executive, the Company shall
reimburse the Executive the full amount of such fees and expenses
within five business days after receipt from the Executive of a
statement therefor and reasonable evidence of his payment thereof.
(f) The Executive shall notify the Company in writing of any claim
by the Internal Revenue Service or any other taxing authority that,
if successful, would
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require the payment by the Company of a Gross-Up Payment. Such
notification shall be given as promptly as practicable but no later
than 10 business days after the Executive actually receives notice
of such claim and the Executive shall further apprise the Company of
the nature of such claim and the date on which such claim is
requested to be paid (in each case, to the extent known by the
Executive). The Executive shall not pay such claim prior to the
earlier of (i) the expiration of the 30-calendar-day period
following the date on which he gives such notice to the Company and
(ii) the date that any payment of amount with respect to such claim
is due. If the Company notifies the Executive in writing prior to
the expiration of such period that it desires to contest such claim,
the Executive shall:
(i) provide the Company with any written records or
documents in his possession relating to such claim reasonably
requested by the Company;
(ii) take such action in connection with contesting such
claim as the Company shall reasonably request in writing from
time to time, including without limitation accepting legal
representation with respect to such claim by an attorney
competent in respect of the subject matter and reasonably
selected by the Company;
(iii) cooperate with the Company in good faith in order
effectively to contest such claim; and
(iv) permit the Company to participate in any proceedings
relating to such claim;
provided, however, that the Company shall bear and pay directly all costs and
expenses (including interest and penalties) incurred in connection with such
contest and shall indemnify and hold harmless the Executive, on an after-tax
basis, for and against any Excise Tax or income tax, including interest and
penalties with respect thereto, imposed as a result of such representation and
payment of costs and expenses. Without limiting the foregoing provisions of this
Section 5(f), the Company shall control all proceedings taken in connection with
the contest of any claim contemplated by this Section 5(f) and, at its sole
option, may pursue or forego any and all administrative appeals, proceedings,
hearings and conferences with the taxing authority in respect of such claim
(provided, however, that the Executive may participate therein at his own cost
and expense) and may, at its option, either direct the Executive to pay the tax
claimed and sue for a refund or contest the claim in any permissible manner, and
the Executive agrees to prosecute such contest to a determination before any
administrative tribunal, in a court of initial jurisdiction and in one or more
appellate courts, as the Company shall determine; provided, however, that if the
Company directs the Executive to pay the tax claimed and sue for a refund, the
Company shall advance the amount of such payment to the Executive on an
interest-free basis and shall indemnify and hold the Executive harmless, on an
after-tax basis, from any Excise Tax or income or other tax, including interest
or penalties with respect thereto, imposed with respect to such advance; and
provided further, however, that any extension of the statute of limitations
relating to payment of taxes for the taxable year of the Executive with respect
to which the contested amount is claimed to be due is limited solely to such
contested amount.
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Furthermore, the Company's control of any such contested claim shall be limited
to issues with respect to which a Gross-Up Payment would be payable hereunder
and the Executive shall be entitled to settle or contest, as the case may be,
any other issue raised by the Internal Revenue Service or any other taxing
authority.
(g) If, after the receipt by the Executive of an amount
advanced by the Company pursuant to Section 5(f), the
Executive receives any refund with respect to such claim, the
Executive shall (subject to the Company's complying with the
requirements of Section 5(f)) promptly pay to the Company the
amount of such refund (together with any interest paid or
credited thereon after any taxes applicable thereto). If,
after the receipt by the Executive of an amount advanced by
the Company pursuant to Section 5(f), a determination is made
that the Executive shall not be entitled to any refund with
respect to such claim and the Company does not notify the
Executive in writing of its intent to contest such denial or
refund prior to the expiration of 30 calendar days after such
determination, then such advance shall be forgiven and shall
not be required to be repaid and the amount of any such
advance shall offset, to the extent thereof, the amount of
Gross-Up Payment required to be paid by the Company to the
Executive pursuant to this Section 5.
6. No Mitigation Obligation. The Company hereby acknowledges that
it will be difficult and may be impossible for the Executive to find
reasonably comparable employment following the Termination Date and
that the non-competition covenant contained in Section 8 will
further limit the employment opportunities for the Executive. In
addition, the Company acknowledges that its severance pay plans
applicable in general to its salaried employees do not provide for
mitigation, offset or reduction of any severance payment received
thereunder. Accordingly, the payment of the severance compensation
by the Company to the Executive in accordance with the terms of this
Agreement is hereby acknowledged by the Company to be reasonable,
and the Executive will not be required to mitigate the amount of any
payment provided for in this Agreement by seeking other employment
or otherwise, nor will any profits, income, earnings or other
benefits from any source whatsoever create any mitigation, offset,
reduction or any other obligation on the part of the Executive
hereunder or otherwise, except as expressly provided in the last
sentence of Paragraph (2) set forth on Annex A.
7. Legal Fees and Expenses.(a) It is the intent of the
Company that the Executive not be required to incur legal fees
and the related expenses associated with the interpretation,
enforcement or defense of Executive's rights under this
Agreement by litigation or otherwise because the cost and
expense thereof would substantially detract from the benefits
intended to be extended to the Executive hereunder.
Accordingly, if it should appear to the Executive that the
Company has failed to comply with any of its obligations under
this Agreement or in the event that the Company or any other
person takes or threatens to take any action to declare this
Agreement void or unenforceable, or institutes any litigation
or other action or proceeding designed to deny, or to recover
from, the Executive the benefits provided or intended to be
provided to the Executive hereunder, the Company irrevocably
authorizes the Executive from time to time to retain counsel
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of Executive's choice, at the expense of the Company as hereafter
provided, to advise and represent the Executive in connection with
any such interpretation, enforcement or defense, including without
limitation the initiation or defense of any litigation or other
legal action, whether by or against the Company or any Director,
officer, stockholder or other person affiliated with the Company, in
any jurisdiction. Notwithstanding any existing or prior
attorney-client relationship between the Company and such counsel,
the Company irrevocably consents to the Executive's entering into an
attorney-client relationship with such counsel, and in that
connection the Company and the Executive agree that a confidential
relationship shall exist between the Executive and such counsel.
Without respect to whether the Executive prevails, in whole or in
part, in connection with any of the foregoing, the Company will pay
and be solely financially responsible for any and all attorneys' and
related fees and expenses incurred by the Executive in connection
with any of the foregoing; provided that, in regard to such matters,
the Executive has not acted in bad faith or with no colorable claim
of success.
(b) To ensure that the provisions of this Agreement can be
enforced by the Executive, certain trust arrangements ("Trusts")
have been established between KeyTrust Company of Ohio, N.A., as
Trustee ("Trustee"), and the Company. Each of Trust Agreement No. 1
(Amended and Restated Effective June 1, 1997, as amended) ("Trust
Agreement No. 1"), Trust Agreement No. 2 (Amended and Restated
Effective October 15, 2002, as amended) ("Trust Agreement No. 2"),
and Trust Agreement No. 7 dated April 9, 1991, as amended ("Trust
Agreement No. 7"), as it may be subsequently amended and/or
restated, between the Trustee and the Company, sets forth the terms
and conditions relating to payment from Trust Agreement No. 1 of
compensation, pension benefits and other benefits pursuant to the
Agreement owed by the Company, payment from Trust Agreement No. 2
for attorneys' fees and related fees and expenses pursuant to
Section 7(a) hereof owed by the Company, and payment from Trust
Agreement No. 7 of pension benefits owed by the Company. Executive
shall make demand on the Company for any payments due Executive
pursuant to Section 7(a) hereof prior to making demand therefor on
the Trustee under Trust Agreement No. 2.
(c) Upon the earlier to occur of (i) a Change in Control or (ii) a
declaration by the Board that a Change Control is imminent, the
Company shall promptly to the extent it has not previously done so,
and in any event within five (5) business days:
(A) transfer to Trustee to be added to the principal of the
Trust under Trust Agreement No. 1 a sum equal to (I) the
present value on the date of the Change in Control (or
on such fifth business day if the Board has declared a
Change in Control to be imminent) of the payments to be
made to Executive under the provisions of Annex A and
Section 5 hereof, such present value to be computed
using the assumptions set forth in Annex A hereof and
the computations provided for in Section 5 hereof less
(II) the balance in the Executive's accounts provided
for in Trust Agreement No. 1 as of
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the most recent completed valuation thereof, as
certified by the Trustee under Trust Agreement No. 1
less (III) the balance in the Executive's accounts
provided for in Trust Agreement No. 7 as of the most
recently completed valuation thereof, as certified by
the Trustee under Trust Agreement No. 7; provided,
however, that if the Trustee under Trust Agreement No. 1
and/or Trust Agreement No. 7 does not so certify by the
end of the fourth (4th) business day after the earlier
of such Change in Control or declaration, then the
balance of such respective account shall be deemed to be
zero. Any payments of compensation, pension or other
benefits by the Trustee pursuant to Trust Agreement No.
1 or Trust Agreement No. 7 shall, to the extent thereof,
discharge the Company's obligation to pay compensation,
pension and other benefits hereunder, it being the
intent of the Company that assets in such Trusts be held
as security for the Company's obligation to pay
compensation, pension and other benefits under this
Agreement; and
(B) transfer to the Trustee to be added to the principal of
the Trust under Trust Agreement No. 2 the sum of TWO
HUNDRED FIFTY THOUSAND DOLLARS ($250,000) less any
principal in such Trust on such fifth business day. Any
payments of the Executive's attorneys' and related fees
and expenses by the Trustee pursuant to Trust Agreement
No. 2 shall, to the extent thereof, discharge the
Company's obligation hereunder, it being the intent of
the Company that assets in such Trust be held as
security for the Company's obligation under Section 7(a)
hereof. Executive understands and acknowledges that the
entire corpus of the Trust under Trust Agreement No. 2
will be $250,000 and that said amount will be available
to discharge not only the obligations of the Company to
Executive under Section 7(a) hereof, but also similar
obligations of the Company to other executives and
employees under similar provisions of other agreements
and plans.
8. Competitive Activity; Confidentiality; Nonsolicitation.(a)
During the Term and for a period ending two years following the
Termination Date, if the Executive shall have received or shall be
receiving benefits under Section 4, and, if applicable, Section 5,
the Executive shall not, without the prior written consent of the
Company, which consent shall not be unreasonably withheld, engage in
any Competitive Activity.
(b) During the Term, the Company agrees that it will disclose to
Executive its confidential or proprietary information (as defined in
this Section 8(b)) to the extent necessary for Executive to carry
out his obligations to the Company. The Executive hereby covenants
and agrees that he will not, without the prior written consent of
the Company, during the Term or thereafter disclose to any person
not employed by the Company, or use in connection with engaging in
competition
14
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with the Company, any confidential or proprietary information of the
Company. For purposes of this Agreement, the term "confidential or
proprietary information" will include all information of any nature
and in any form that is owned by the Company and that is not
publicly available (other than by Executive's breach of this Section
8(b)) or generally known to persons engaged in businesses similar or
related to those of the Company. Confidential or proprietary
information will include, without limitation, the Company's
financial matters, customers, employees, industry contracts,
strategic business plans, product development (or other proprietary
product data), marketing plans, and all other secrets and all other
information of a confidential or proprietary nature. For purposes of
the preceding two sentences, the term "Company" will also include
any Subsidiary (collectively, the "Restricted Group"). The foregoing
obligations imposed by this Section 8(b) will not apply (i) during
the Term, in the course of the business of and for the benefit of
the Company, (ii) if such confidential or proprietary information
will have become, through no fault of the Executive, generally known
to the public or (iii) if the Executive is required by law to make
disclosure (after giving the Company notice and an opportunity to
contest such requirement).
(c) The Executive hereby covenants and agrees that during the Term
and for two years thereafter Executive will not, without the prior
written consent of the Company, which consent shall not unreasonably
be withheld, on behalf of Executive or on behalf of any person, firm
or company, directly or indirectly, attempt to influence, persuade
or induce, or assist any other person in so persuading or inducing,
any employee of the Restricted Group to give up, or to not commence,
employment or a business relationship with the Restricted Group.
9. Employment Rights. Nothing expressed or implied in this
Agreement will create any right or duty on the part of the Company or the
Executive to have the Executive remain in the employment of the Company or
any Subsidiary prior to or following any Change in Control. Any
termination of employment of the Executive or the removal of the Executive
from the office or position in the Company or any Subsidiary that occurs
(i) not more than 180 days prior to the date on which a Change in Control
occurs, and (ii) following the commencement of any discussion with a third
person that ultimately results in a Change in Control, shall be deemed to
be a termination or removal of the Executive after a Change in Control for
purposes of this Agreement.
10. Withholding of Taxes. The Company may withhold from any
amounts payable under this Agreement all federal, state, city or other
taxes as the Company is required to withhold pursuant to any applicable
law, regulation or ruling.
11. Successors and Binding Agreement.(a) The Company will
require any successor (whether direct or indirect, by purchase,
merger, consolidation, reorganization or otherwise) to all or
substantially all of the business or assets of the Company, by
agreement in form and substance reasonably satisfactory to the
Executive, expressly to assume and agree to perform this Agreement
in the same manner and to the same extent the Company would be
required to perform if no
15
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such succession had taken place. This Agreement will be binding upon
and inure to the benefit of the Company and any successor to the
Company, including without limitation any persons acquiring directly
or indirectly all or substantially all of the business or assets of
the Company whether by purchase, merger, consolidation,
reorganization or otherwise (and such successor shall thereafter be
deemed the "Company" for the purposes of this Agreement), but will
not otherwise be assignable, transferable or delegable by the
Company.
(b) This Agreement will inure to the benefit of and be enforceable
by the Executive's personal or legal representatives, executors,
administrators, successors, heirs, distributees and legatees.
(c) This Agreement is personal in nature and neither of the
parties hereto shall, without the consent of the other, assign,
transfer or delegate this Agreement or any rights or obligations
hereunder except as expressly provided in Sections 11(a) and 11(b).
Without limiting the generality or effect of the foregoing, the
Executive's right to receive payments hereunder will not be
assignable, transferable or delegable, whether by pledge, creation
of a security interest, or otherwise, other than by a transfer by
Executive's will or by the laws of descent and distribution and, in
the event of any attempted assignment or transfer contrary to this
Section 11(c), the Company shall have no liability to pay any amount
so attempted to be assigned, transferred or delegated.
12. Notices. For all purposes of this Agreement, all
communications, including without limitation notices, consents, requests
or approvals, required or permitted to be given hereunder will be in
writing and will be deemed to have been duly given when hand delivered or
dispatched by electronic facsimile transmission (with receipt thereof
orally confirmed), or five business days after having been mailed by
United States registered or certified mail, return receipt requested,
postage prepaid, or three business days after having been sent by a
nationally recognized overnight courier service such as FedEx, UPS, or
Purolator, addressed to the Company (to the attention of the Secretary of
the Company) at its principal executive office and to the Executive at his
principal residence, or to such other address as any party may have
furnished to the other in writing and in accordance herewith, except that
notices of changes of address shall be effective only upon receipt.
13. Governing Law. The validity, interpretation, construction and
performance of this Agreement will be governed by and construed in
accordance with the substantive laws of the State of Ohio, without giving
effect to the principles of conflict of laws of such State.
14. Validity. If any provision of this Agreement or the
application of any provision hereof to any person or circumstances is held
invalid, unenforceable or otherwise illegal, the remainder of this
Agreement and the application of such provision to any other person or
circumstances will not be affected, and the provision so held to be
invalid, unenforceable or otherwise illegal will be reformed to the extent
(and only to the extent) necessary to make it enforceable, valid or legal.
16
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15. Miscellaneous. No provision of this Agreement may be modified,
waived or discharged unless such waiver, modification or discharge is
agreed to in writing signed by the Executive and the Company. No waiver by
either party hereto at any time of any breach by the other party hereto or
compliance with any condition or provision of this Agreement to be
performed by such other party will be deemed a waiver of similar or
dissimilar provisions or conditions at the same or at any prior or
subsequent time. No agreements or representations, oral or otherwise,
expressed or implied with respect to the subject matter hereof have been
made by either party which are not set forth expressly in this Agreement.
References to Sections are to references to Sections of this Agreement.
16. Construction. The masculine gender, when used in this
Agreement, shall be deemed to include the feminine gender and the singular
number shall include the plural, unless the context clearly indicates to
the contrary.
17. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of
which together will constitute one and the same agreement.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
duly executed and delivered as of the date first above written.
CLEVELAND-CLIFFS INC
By: /s/ J. S. Brinzo
--------------------------------
J. S. Brinzo
Chairman and Chief Executive Officer
/s/ Donald J. Gallagher
--------------------------------
Donald J. Gallagher
17
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Annex A
Severance Compensation
(1) A lump sum payment in an amount equal to three (3) times the sum
of (A) Base Pay (at the highest rate in effect for any period prior to the
Termination Date), plus (B) Incentive Pay (in an amount equal to not less than
the greater of (i) the target bonus and/or target award opportunity for the
fiscal year immediately preceding the year in which the Change in Control
occurred, or (ii) the target bonus and/or target award opportunity for the
fiscal year in which the Termination Date occurs).
(2) For a period of thirty-six (36) months following the Termination
Date (the "Continuation Period"), the Company will arrange to provide the
Executive with Employee Benefits that are welfare benefits (but not stock
option, performance share, performance unit, stock purchase, stock appreciation
or similar compensatory benefits) substantially similar to those that the
Executive was receiving or entitled to receive immediately prior to the
Termination Date (or, if greater, immediately prior to the reduction,
termination, or denial described in Section 3(b)(ii)). If and to the extent that
any benefit described in this Paragraph 2 is not or cannot be paid or provided
under any policy, plan, program or arrangement of the Company or any Subsidiary,
as the case may be, then the Company will itself pay or provide for the payment
to the Executive, his dependents and beneficiaries, of such Employee Benefits
along with, in the case of any benefit described in this Paragraph 2 which is
subject to tax because it is not or cannot be paid or provided under any such
policy, plan, program or arrangement of the Company or any Subsidiary, an
additional amount such that after payment by the Executive, or his dependents or
beneficiaries, as the case may be, of all taxes so imposed, the recipient
retains an amount equal to such taxes. Notwithstanding the foregoing, or any
other provision of the Agreement, for purposes of determining the period of
continuation coverage to which the Executive or any of his dependents is
entitled pursuant to Section 4980B of the Code (or any successor provision
thereto) under the Company's medical, dental and other group health plans, or
successor plans, the Executive's "qualifying event" shall be the termination of
the Continuation Period and the Executive shall be considered to have remained
actively employed on a full-time basis through that date. Without otherwise
limiting the purposes or effect of Section 5, Employee Benefits otherwise
receivable by the Executive pursuant to this Paragraph 2 will be reduced to the
extent comparable welfare benefits are actually received by the Executive from
another employer during the Continuation Period following the Executive's
Termination Date, and any such benefits actually received by the Executive shall
be reported by the Executive to the Company.
(3) A lump sum payment (the "SRP Payment") in an amount equal to the
sum of the future pension benefits (converted to a lump sum of actuarial
equivalence) which the Executive would have been entitled to receive three (3)
years following the Termination Date under the SRP, and as modified by this
Paragraph (3) (assuming Base Salary and Incentive Pay as determined in Paragraph
(1), if the Executive had remained in the full-time employment of the Company
until three (3) years following the Termination Date.
A-1
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The calculation of the SRP Payment and its actuarial equivalence shall be made
as of the Termination Date. The lump sum of actuarial equivalence shall be
calculated as of three (3) years following the Termination Date using the
assumptions and factors used in the SRP, and such sum shall be discounted to the
date of payment using a discount rate prescribed for purposes of valuation
computations under Section 280G of the Internal Revenue Code of 1986, as amended
(the "Code") or any successor provision thereto, or if no rate is so prescribed,
a rate equal to the then "applicable interest rate" under Section
417(e)(3)(A)(ii)(II) of the Code for the month in which the Termination Date
occurs.
The Company hereby waives the discretionary right, at any time subsequent to the
date of a Change in Control, to amend or terminate the SRP as to the Executive
as provided in paragraph 7 thereof or to terminate the rights of the Executive
or his beneficiary under the SRP in the event Executive engages in a competitive
business as provided in any plan or arrangement between the Company and the
Executive or applicable to the Executive, including but not limited to, the
provisions of paragraph 4 of the SRP, or any similar provisions of any such plan
or arrangement or other plan or arrangement supplementing or superseding the
same. This Paragraph (3) shall constitute a "Supplemental Agreement" as defined
in Paragraph 1.J of the SRP. If the Company shall terminate the Executive's
employment during the Severance Period, other than for Cause pursuant to Section
3(a)(i), 3(a)(ii) or 3(a)(iii) of the Agreement, or if the Executive shall
terminate his employment pursuant to Section 3(b) of the Agreement, or if,
following the end of the Severance Period, the Executive's employment is
terminated for any reason, for the purposes of computing the Executive's period
of continuous service and of calculating and paying his benefit under the SRP:
(A) At the time of his termination of employment with the
Company (by death or otherwise), the Executive shall be credited
with years of continuous service for benefit accrual and eligibility
equal to the greater of (i) the number of his actual years of
continuous service or (ii) the number of years of continuous service
he would have had if he had continued his employment with the
Company for three (3) years after the Termination Date, and had he
attained the greater of (iii) his actual chronological age, (iv)
sixty-five, or (v) his chronological age three (3) years after the
Termination Date. In addition, the Executive shall be eligible for a
30-year pension benefit based upon his years of continuous service
as computed under the preceding sentence. Such Executive shall be
eligible to commence a 30-year pension benefit on the earlier of
(vi) the date upon which the Executive would have otherwise reached
30 years of continuous service with the Company but for his
termination of employment after the Change in Control at which time
the Executive shall be deemed to be age 65, or (vii) the date upon
which the sum of the Executive's years of continuous service (as
computed in the first sentence of this subparagraph (A)) and the
Executive's Credited Years of Industry Service is equal to 30 years
of service, at which time the Executive shall be deemed to be age
65; and
(B) The Executive shall be a "Participant" in the SRP,
notwithstanding any limitations therein. The terms of the Agreement
and this Annex A shall take precedence to the extent they are
contrary to provisions contained in the SRP.
A-2
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Payment of the SRP Payment by the Company shall be deemed to be a satisfaction
of all obligations of the Company to the Executive under the SRP.
(4) Base Salary through the Termination Date plus prorata Incentive
Pay for the year in which the Termination Date occurs calculated at the greater
of (i) the target bonus and/or target opportunity or (ii) actual performance, in
each case for the fiscal year in which the Termination Date occurs.
(5) In lieu of the Executive's right to receive deferred
compensation under the Voluntary Non-Qualified Deferred Compensation Plan or any
other plan providing for deferral of income or amounts otherwise payable to the
Executive, a lump sum payment in cash in an amount equal to 100% of the
Executive's cash and stock account balances under such plans.
(6) Outplacement services by a firm selected by the Executive, at
the expense of the Company in an amount up to 15% of the Executive's Base Pay.
(7) Post-retirement medical, hospital, surgical and prescription
drug coverage for the lifetime of the Executive, his spouse and any eligible
dependents equivalent to that which would have been furnished on the day prior
to the Change in Control to an officer of the Company who retired on such date
with full eligibility for such benefits.
A-3
<PAGE>
CLEVELAND-CLIFFS INC
SEVERANCE AGREEMENT
EXHIBIT A
Form of Release
WHEREAS, the Executive's employment has been terminated in
accordance with Section 3 of the Severance Agreement (the "Agreement") dated as
of March 9, 2004 between the Executive and Cleveland-Cliffs Inc; and
WHEREAS, the Executive is required to sign this Release in order to
receive the Severance Compensation (as such term is defined in the Agreement) as
described in Annex A of the Agreement and the other benefits described in the
Agreement.
NOW THEREFORE, in consideration of the promises and agreements
contained herein and other good and valuable consideration, the sufficiency and
receipt of which are hereby acknowledged, and intending to be legally bound, the
Executive agrees as follows:
1. This Release is effective on the date hereof and will continue in
effect as provided herein.
2. In consideration of the payments to be made and the benefits to be
received by the Executive pursuant to the Agreement, which the Executive
acknowledges are in addition to payments and benefits which the Executive would
be entitled to receive absent the Agreement (other than severance pay and
benefits under any other severance plan, policy, program or arrangement
sponsored by Cleveland-Cliffs Inc), the Executive, for himself and his
dependents, successors, assigns, heirs, executors and administrators (and his
and their legal representatives of every kind), hereby releases, dismisses,
remises and forever discharges Cleveland-Cliffs Inc, its predecessors, parents,
subsidiaries, divisions, related or affiliated companies, officers, directors,
stockholders, members, employees, heirs, successors, assigns, representatives,
agents and counsel (the "Company") from any and all arbitrations, claims,
including claims for attorney's fees, demands, damages, suits, proceedings,
actions and/or causes of action of any kind and every description, whether known
or unknown, which Executive now has or may have had for, upon, or by reason of
any cause whatsoever ("claims"), against the Company, including but not limited
to:
(a) any and all claims arising out of or relating to Executive's
employment by or service with the Company and his termination from the
Company;
(b) any and all claims of discrimination, including but not limited
to claims of discrimination on the basis of sex, race, age, national
origin, marital status, religion or handicap, including, specifically, but
without limiting the generality of the foregoing, any claims under the Age
Discrimination in Employment Act, as amended, Title VII of the Civil
Rights Act of 1964, as amended, the Americans with Disabilities Act, Ohio
Revised
Exh. A-1
<PAGE>
Code Section 4101.17 and Ohio Revised Code Chapter 4112, including
Sections 4112.02 and 4112.99 thereof; and
(c) any and all claims of wrongful or unjust discharge or breach of
any contract or promise, express or implied.
3. Executive understands and acknowledges that the Company does not admit
any violation of law, liability or invasion of any of his rights and that any
such violation, liability or invasion is expressly denied. The consideration
provided for this Release is made for the purpose of settling and extinguishing
all claims and rights (and every other similar or dissimilar matter) that
Executive ever had or now may have against the Company to the extent provided in
this Release. Executive further agrees and acknowledges that no representations,
promises or inducements have been made by the Company other than as appear in
the Agreement.
4. Executive further agrees and acknowledges that:
(a) The release provided for herein releases claims to and including
the date of this Release;
(b) He has been advised by the Company to consult with legal counsel
prior to executing this Release, has had an opportunity to consult with
and to be advised by legal counsel of his choice, fully understands the
terms of this Release, and enters into this Release freely, voluntarily
and intending to be bound;
(c) He has been given a period of 21 days to review and consider the
terms of this Release, prior to its execution and that he may use as much
of the 21 day period as he desires; and
(d) He may, within 7 days after execution, revoke this Release.
Revocation shall be made by delivering a written notice of revocation to
the Vice President Human Resources at the Company. For such revocation to
be effective, written notice must be actually received by the Vice
President Human Resources at the Company no later than the close of
business on the 7th day after Executive executes this Release. If
Executive does exercise his right to revoke this Release, all of the terms
and conditions of the Release shall be of no force and effect and the
Company shall not have any obligation to make payments or provide benefits
to Executive as set forth in Sections 4, 5, and 7 of the Agreement.
5. Executive agrees that he will never file a lawsuit or other complaint
asserting any claim that is released in this Release.
6. Executive waives and releases any claim that he has or may have to
reemployment after __________________.
Exh. A-2
<PAGE>
IN WITNESS WHEREOF, the Executive has executed and delivered this
Release on the date set forth below.
Dated:____________________________________ _______________________________
Executive
Exh. A-3