Employment and Separation Agreement - Cleveland-Cliffs Inc. and Thomas J. O'Neil
EMPLOYMENT AND SEPARATION AGREEMENT
This EMPLOYMENT AND SEPARATION AGREEMENT ("Agreement") is entered into as
of this 8th day of April, 2003, by and between Cleveland-Cliffs Inc (the
"Company") and Thomas J. O'Neil (the "Executive").
WHEREAS, the Company and the Executive have arrived at a satisfactory
agreement regarding the basis upon which the employment of the Executive with
the Company will continue until his retirement; and
WHEREAS, the Company and the Executive desire to set forth in a written
agreement the terms and provisions of the continued employment and retirement of
the Executive and certain benefits to be provided to the Executive under certain
circumstances;
NOW THEREFORE, in consideration of the foregoing, the mutual covenants and
agreements set forth in this Agreement and for other good and valuable
consideration the receipt and sufficiency of which are hereby acknowledged, the
Company and the Executive agree as follows:
SECTION 1. CONTINUED EMPLOYMENT.
1.1 EMPLOYMENT AT WILL. The Company and the Executive agree that the
employment of the Executive has been and will continue to be "at will" such that
the Executive can quit at any time without prior notice to the Company and the
Company can terminate the employment of the Executive at any time without prior
notice to the Executive.
1.2 EMPLOYMENT UNTIL JULY 1, 2003. Subject to the provisions of Section 1.1
hereof, the Company and the Executive agree that it is intended that the
Executive will continue in his current position of President and Chief Operating
Officer of the Company until July 1, 2003 at
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the same level of compensation and benefits which currently apply to the
Executive, except that the Board of Directors may, in its discretion, grant an
increase in base salary to the Executive at any time, and except that all
compensation programs and benefits programs applicable to the Executive can be
amended or terminated by the Company at any time.
1.3 EMPLOYMENT ON AND AFTER JULY 1, 2003. The Company and the Executive
agree that it is intended that the Executive will cease to be the President and
Chief Operating Officer of the Company on July 1, 2003 but will continue to be a
full-time employee of the Company until June 30, 2004. Subject to the provisions
of Section 1.1 hereof, commencing on July 1, 2003 and continuing until June 30,
2004, the Executive shall be employed as President of Cliffs International
Division, which position is not an elected officer position. It is intended that
the Executive will be based in Arizona during this period and will be entitled
to the following salary, bonus, and incentive compensation for such period:
(a) the Executive will be paid his annual base rate of salary of $350,000
for the period July 1, 2003 to June 30, 2004:
(b) the Executive will participate in the Company's annual bonus program,
the Management Performance Incentive Plan, for 2003 on the basis of
his performance through June 30, 2003 on a pro-rata basis;
(c) the Executive will not participate in such Management Performance
Incentive Plan with respect to his service after June 30, 2003 or
during 2004;
(d) the Executive has not received and will not receive any grants of
performance shares under the Company's Performance Share Plan for
calendar year 2003 and 2004; and
(e) if the Executive remains in the employ of Cleveland-Cliffs Inc until
June 30, 2004, all performance shares held by the Executive under the
Company's Performance Share Plan which have not previously vested will
become fully vested on June 30, 2004 and will be valued and paid as
otherwise provided in the Plan.
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Notwithstanding the terms and provisions of the letter to the Executive dated
February 9, 2001 under the Company's Special Executive Retention Program, the
Executive will not receive the second retention payment which would be payable
on or after March 31, 2004 and the Executive hereby waives his right to receive
such second retention payment.
Except as provided above and subject to the provisions of Section 1.1
hereof, the Executive shall continue to participate in all compensation and
employee benefit programs of the Company recognizing however that all such
compensation programs and benefits programs applicable to the Executive can be
amended or terminated by the Company at any time.
SECTION 2. RETIREMENT, TERMINATION OF EMPLOYMENT, OR DEATH.
2.1 RETIREMENT DATE. The Company and the Executive agree that the
Executive's employment with the Company will terminate as of June 30, 2004 (the
"Retirement Date").
2.2 TERMINATION ON THE RETIREMENT DATE. In the event the Executive
terminates employment with the Company on the Retirement Date and executes the
Release of All Claims described in Section 5.2 hereof, the Executive will be
entitled to receive the Special Benefits set forth in Section 3 hereof.
2.3 TERMINATION BY THE COMPANY WITHOUT CAUSE PRIOR TO THE RETIREMENT DATE.
In the event the Company terminates the employment of the Executive without
Cause prior to the Retirement Date and the Executive executes the Release of All
Claims described in Section 5.2 hereof, the Executive will be entitled to
receive the compensation and benefits described in Sections 1.2 and 1.3 hereof
and the Special Benefits set forth in Section 3 hereof. For purposes of this
Agreement "Cause" shall mean only (i) Executive's willful failure to perform his
duties under this Agreement within a reasonable period of time after receipt of
written notice from the Company setting forth in reasonable detail the duties
which Executive has failed to perform and
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the corrective actions expected of him; (ii) a breach of Executive's duty of
loyalty to the Company, including but not limited to a breach of Executive's
obligations under Section 6 below; (iii) indictment for, conviction of, or
written confession to a crime against the Company or a crime which otherwise
materially adversely affects Executive's ability to perform his obligations
under this Agreement, any business relationships which the Company maintains or
the general reputation and good will of the Company.
2.4 TERMINATION BY THE COMPANY WITH CAUSE OR BY THE EXECUTIVE FOR ANY
REASON PRIOR TO THE RETIREMENT DATE. In the event the Company terminates the
employment of the Executive with Cause, as defined in Section 2.3 hereof, prior
to the Retirement Date, the Executive will not be entitled to receive the
Special Benefits set forth in Section 3 hereof. In the event the Executive
terminates his employment with the Company for any reason other than death prior
to the Retirement Date, the Executive will also not be entitled to receive the
Special Benefits set forth in Section 3 hereof.
2.5 DEATH PRIOR TO THE RETIREMENT DATE. In the event the Executive does not
otherwise terminate employment and dies prior to the Retirement Date, his
spouse, if she is same spouse as the Executive is married to on the date of this
Agreement, shall be entitled to the Medical Benefit described in Section 4.2
hereof.
2.6 DEATH AFTER THE RETIREMENT DATE. In the event the Executive terminates
employment with the Company on the Retirement Date and dies thereafter, his
spouse, if she is same spouse as the Executive is married to on the date of this
Agreement, shall be entitled to receive the Medical Benefits described in
Section 4.2 hereof.
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SECTION 3. SPECIAL BENEFITS.
3.1 SPECIAL RETIREMENT BENEFITS. If the Executive retires pursuant to
Section 2.2 hereof or is terminated by the Company pursuant to Section 2.3
hereof and the Executive executes the release described in Section 5.2 hereof,
the Company will pay the Executive a supplemental retirement benefit commencing
on the first day of the month next following his date of retirement or
termination of employment a monthly amount equal to the monthly amount of his
unreduced accrued retirement benefit under The Pension Plan For Employees Of
Cleveland-Cliffs Inc And Its Associated Employers ("Qualified Pension Plan").
Such monthly benefit shall be paid until the month before the month in which the
Executive is first eligible to receive an unreduced retirement benefit under the
Qualified Pension Plan at which time the payments under this Agreement shall
cease. At the election of the Company such amount may be paid under the
Cleveland-Cliffs Inc Supplemental Retirement Benefit Plan or may be paid
separately by the Company.
3.2 CONTINUATION OF ARRANGEMENT WITH AYCO. The Company hereby agrees that,
unless this Agreement is terminated pursuant to Section 2.4 hereof, the
Executive will continue to be provided with personal financial planning services
by AYCO until December 31, 2005 and shall be provided with personal tax return
preparation services by AYCO for the Executive's taxable years ending in 2003,
2004, and 2005.
3.3 EXPENSES AS 2003 PRESIDENT OF SOCIETY FOR MINING, METALLURGY AND
EXPLORATION. The Company agrees that, unless this Agreement is terminated
pursuant to Section 2.4 hereof, the Company shall pay all reasonable travel
expenses which the Executive shall incur as the President of the Society for
Mining, Metallurgy and Exploration during his term of office as 2003 President
of the Society.
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SECTION 4. RETIREE MEDICAL BENEFITS
4.1 RETIREE MEDICAL BENEFITS FOR THE EXECUTIVE. The Company will, in
accordance with a letter dated May 20, 1997 from Mr. M. Thomas Moore, Chairman
and Chief Executive Officer of Cleveland-Cliffs Inc to the Executive, provide
retiree medical coverage to the Executive and his spouse and dependents, if any,
on the same terms and conditions as retiree medical benefits are being provided
to retired salaried employees of the Company subject to the right of the Company
to amend or terminate retiree medical benefits at any time and subject to all
conditions specified in such May 20, 1997 letter. In order to be covered by such
retiree medical benefits, the Executive must make such contribution to the cost
of such coverage as is being paid by other retired salaried employees of the
Company. In the event that the Executive shall fail to timely make such required
contributions, the retiree medical coverage under this Agreement shall cease.
The Executive may elect to have the payments under Section 3.1 hereof and the
payments under the Qualified Plan reduced by the amount of such contributions.
In the event that the Company shall establish different retiree medical
programs for different groups of retired salaried employees or provide for
different contribution levels for different groups of salaried employees, the
Executive shall be covered by the retiree medical program and the contribution
level which applies to retired salaried employees whose dates of hire and
service most closely resemble the date of hire and service of the Executive.
Executive may, however, be allowed to choose alternative levels of retiree
medical coverage and contribution levels, if such alternative levels are made
available by the Company to others under its salaried retiree medical plan.
4.2 SPOUSAL MEDICAL BENEFITS. In the event that the Executive dies under
the circumstances described in Section 2.5 hereof, the Company shall, in
accordance with a letter
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dated May 20, 1997 from Mr. M. Thomas Moore, Chairman and Chief Executive
Officer of Cleveland-Cliffs Inc to the Executive, provide retiree medical
coverage to the spouse of the Executive at the time of his death, if she is the
same person who was his spouse on the date of execution of this Agreement on the
same terms and conditions as retiree medical benefits are being provided to
surviving spouses of deceased salaried employees of the Company subject to the
right of the Company to amend or terminate retiree medical benefits at any time.
In the event that the Executive dies under the circumstances described in
Section 2.6 hereof at a time when the Executive is covered by retiree medical
benefits for himself and his dependents, the Company shall provide retiree
medical coverage to the spouse of the Executive at the time of his death, if she
is the same person who was his spouse on the date of execution of this Agreement
on the same terms and conditions as retiree medical benefits are being provided
to surviving spouses of deceased retired salaried employees of the Company
subject to the right of the Company to amend or terminate retiree medical
benefits at any time. In order to be covered by such spousal retiree medical
benefits, the spouse must make such contribution to the cost of such coverage as
is being paid by other surviving spouses of deceased retired salaried employees
of the Company. In the event that the spouse of the Executive shall fail to
timely make such required contributions, the spousal retiree medical coverage
under this Agreement shall cease. The surviving spouse of the Executive may
elect to have the payments to her under the Qualified Plan, if any, reduced by
the amount of such contributions.
SECTION 5. RELEASE OF ALL CLAIMS.
5.1 RELEASE AS OF DATE OF THIS AGREEMENT. By executing this Agreement, the
Executive hereby fully releases and forever discharges the Company, its
Affiliates and Successors, and their officers, directors, shareholders, agents,
representatives, and employees,
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from any and all claims, debts, liabilities, demands and obligations, known and
unknown (hereinafter collectively referred to as "claims") of any kind,
character and nature which the Executive has or arguably may have now or in the
future against the Company and any of the entities or persons identified above,
especially, but not limited to, those matters which may arise out of or in any
way relate to the Executive's employment with the Company and which occurred
from the beginning of time until the date of the execution of this Agreement.
This release is intended to be broadly construed to encompass all possible legal
and equitable claims, and is intended to include, but not to be limited to,
claims brought under the Age Discrimination in Employment Act of 1967, which
prohibits age discrimination in employment; Title VII of the Civil Rights Act of
1964 as amended by the Civil Rights Act of 1991, which prohibits discrimination
in employment based on race, color, national origin, religion, sex; the
Americans with Disabilities Act, which prohibits discrimination against
individuals with disabilities; Fair Labor Standards Act of 1938, as amended; the
Family and Medical Leave Act of 1993, the Civil Rights Attorney's Fees Awards
Act of 1976; or any other federal, state or local laws or regulations
prohibiting employment discrimination or restricting an employer's right to
terminate employees. This Release also includes any state or federal claims for
wrongful discharge, breach of contract, breach of promise, breach of public
policy, or any claim of wrongful doing arising out of Executive's employment or
the termination of the Executive's employment. The Executive warrants and
represents that he understands and acknowledges the significance and
consequences of this release and waiver, that the Executive has been advised of
his right to consult with an attorney for information and advice concerning such
release and waiver, and that such release and waiver is freely and voluntarily
given. This Release is intentionally broad but is not intended to release any
claims the Executive may have for vested accrued benefits under any
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compensation program or employee benefit program of the Company provided that
such claims for benefits have not been denied prior to the date of execution of
this Agreement.
The Executive further warrants and acknowledges that he has been given a
reasonable period of time of at least twenty-one (21) days within which to
consider the terms of this Agreement and that the Executive has carefully read,
understood and agreed to each and every provision contained in this Agreement.
5.2 RELEASE ON JUNE 30, 2004. The Company agrees to provide and Executive
agrees to execute and deliver to the Company an additional release in form and
substance similar to Section 5.1 hereof on June 30, 2004.
5.3 RIGHT TO REVOKE RELEASES. The Executive shall have seven (7) days from
the date of his execution of this Agreement within which to revoke the
Agreement. Said revocation shall be in writing and delivered to the Company. If
the Executive revokes the Agreement, all provisions of the Agreement will be
null and void.
The Executive shall have seven days from the date that he delivers the
release described in Section 5.2 hereof to revoke such Release. Failure to
deliver such Release or revocation of such Release will terminate the obligation
of the Company to provide any of the Special Benefits to the Executive described
in Section 3 hereof.
5.4 RELEASE DOES NOT APPLY TO CLAIMS FOR INDEMNIFICATION OR INSURANCE
AGAINST THIRD PARTY CLAIMS AGAINST THE EXECUTIVE. The Release contained in
Section 5.1 hereof and the Release described in Section 5.2 hereof shall not
release claims which the Executive may have against the Company or against any
insurance contract purchased by the Company for indemnification against claims
against the Executive by a third party arising out of his service as an officer
or employee of the Company or his service at the request of the Company as a
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director, trustee, officer, employee or agent of another corporation, domestic
or foreign, nonprofit or for profit, partnership, joint venture, trust or other
enterprise.
SECTION 6. COVENANTS.
6.1 DISCLOSURE OR USE OF INFORMATION. The Executive will at all times
during and after the term of his employment by the Company keep and maintain the
confidentiality of all Confidential Information and will not at any time either
directly or indirectly use such information for his own benefit or otherwise
divulge, disclose or communicate such information, except as required by law, to
any person or entity in any manner whatsoever other than employees or agents of
the Company or its Affiliates who have a need to know such information and then
only to the extent necessary to perform their responsibilities on behalf of the
Company or its Affiliates. As used herein, "Confidential Information" will mean
any and all information (EXCLUDING INFORMATION IN THE PUBLIC DOMAIN) which
relates to the business of the Company and its Affiliates including without
limitation all patents and patent applications, copyrights applied for, issued
to or owned by the Company or any of its Affiliates, inventions, trade secrets,
computer programs, proprietary engineering and technical data, drawings or
designs, proprietary manufacturing techniques, information concerning pricing
and pricing policies, marketing techniques, suppliers, proprietary methods and
manner of operations, and information relating to the identity and/or location
of all past, present and prospective customers of the Company and its
Affiliates.
6.2 CO-OPERATION. During the term of his employment by the Company after
the date this Agreement is executed and for a period of twenty-four (24) months
following the Retirement Date, the Executive will not attempt to induce any
employee of the Company or an Affiliate to terminate his or her employment with
the Company or an Affiliate nor will he take any action
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with respect to any of the suppliers or customers of the Company and its
Affiliates which would have or might be likely to have an adverse effect upon
the business of the Company and its Affiliates. Executive hereby agrees not to
make any statement or take any action, directly or indirectly, except as
required by law, that will disparage or discredit the Company and its
Affiliates, their Officers, Directors of the Company, their employees or any of
their products, or in any way damage their reputation or ability to do business
or conduct their affairs. Executive agrees that subsequent to the Retirement
Date he will, in conjunction with a Company request, reasonably co-operate with
the Company in connection with transition matters, disputes and litigation
matters upon reasonable notice, at reasonable times, and will be paid or
reimbursed for reasonable expenses incurred by the Executive relating to such
matters.
6.3 NON-COMPETITION. The Executive hereby agrees that the Executive will
not, for a period of two (2) years after June 30, 2004, directly or indirectly,
for himself or for others, in any state of the United States or in any foreign
country where the Company or any of its Affiliates (as defined below) is then
conducting business:
(1) engage, as an employee, partner, or sole proprietor, in any
business segment of any person or entity which competes, directly
or indirectly, with the product lines of the Company or its
Affiliates; or
(2) in connection with any product lines of the Company or its
Affiliates, render advice, consultation, or services to or
otherwise assist any other person or entity which competes,
directly or indirectly, with the Company or any of its Affiliates
with respect to such product lines.
The Executive understands that the foregoing restrictions may limit his
ability to engage in certain business pursuits during the period provided for
above, but acknowledges that he will receive sufficiently higher Special
Benefits from the Company than he would otherwise receive to justify such
restriction. The Executive acknowledges that he understands the effect of
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the provisions of this Agreement, that he has had reasonable time to consider
the effect of these provisions, and that he was encouraged to and had an
opportunity to consult an attorney with respect to these provisions. The Company
and the Executive consider the restrictions contained in this Agreement to be
reasonable and necessary. Nevertheless, if any aspect of these restrictions is
found to be unreasonable or otherwise unenforceable by a Court of competent
jurisdiction, the parties intend for such restrictions to be modified by such
Court so as to be reasonable and enforceable and, as so modified by the Court,
to be fully enforced.
6.4 INJUNCTIVE RELIEF. In the event of a breach of any of the provisions of
this Section 6 by the Executive, the Company will be entitled to preliminary and
permanent injunctive relief, without bond or security, sufficient to enforce the
provisions thereof and the Company will be entitled to pursue such other
remedies at law or in equity as it deems appropriate.
SECTION 7. MISCELLANEOUS.
7.1 DEFINITIONS.
a. The term "Affiliate" shall mean any entity controlling,
controlled by or under common control with the Company,
including, but not limited to, divisions and subsidiaries of the
Company.
b. The term "Successor" will include any person, firm, corporation
or business entity which acquires all or substantially all of the
assets or succeeds to the business of the Company.
7.2 TAX WITHHOLDING. The Company may withhold from any benefits payable
under this Agreement all federal, state, city, or other taxes as may be required
pursuant to any law or governmental regulation or ruling.
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7.3 GOVERNING LAW. To the extent not preempted by federal law, the
provisions of this Agreement will be construed and enforced in accordance with
the laws of the State of Ohio.
7.4 SUCCESSORS. This Agreement is personal to the Executive and will not be
assignable by him without the prior written consent of the Company except that
he can assign any payments under this Agreement (but not any of his obligations
under this Agreement) to his spouse or to his estate. This Agreement may be
assigned or transferred to and will be binding upon and inure to the benefit of
any Successor of the Company.
7.5 ENTIRE AGREEMENT. As of the execution date of this Agreement, the
Company and the Executive agree that this Agreement shall become effective as of
July 1, 2003 and shall replace the Management Agreement dated August 17, 1998
between the Company and the Executive as of the Retirement Date if and only if
the Executive terminates employment with the Company on the Retirement Date. If
and when this Agreement has become effective, it shall supersede any other prior
agreements or understandings, oral or written, between the Executive and the
Company with respect to the subject matter hereof and shall constitute the
entire agreement of the parties with respect thereto.
7.6 MODIFICATION. This Agreement will not be varied, altered, modified,
canceled, changed, or in any way amended except by mutual agreement in a written
instrument executed by the Company and the Executive or their legal
representatives.
7.7 EXECUTION OF AGREEMENT. In executing this Agreement, the parties
acknowledge that they do so freely and voluntarily after having had ample time
to fully consider and reflect upon their decision to enter into this Agreement,
and not as a result of any duress, fraud or undue influence exerted by either
party upon the other. In addition, the Executive acknowledges that he has read
this Agreement carefully, that he has been advised by the Company to consult an
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attorney or other independent advisor of his own choosing, and that he has
determined that it is in his best interest to enter into this Agreement.
7.8 PERIODS FOR CONSIDERATION AND REVOCATION. The Executive acknowledges
that he has been given the right to a period of at least twenty-one (21) days,
if he so desires, within which to consider entering into this Agreement and that
he further has seven (7) days following execution of this Agreement to revoke
it. This Agreement shall not become effective or enforceable until the date the
revocation period has expired.
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IN WITNESS WHEREOF, the Executive and the Company have executed this
Agreement as of the day and year first above written.
CLEVELAND-CLIFFS INC
By: /s/John S. Brinzo
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And:___________________________________
/s/ Thomas J. O'Neil
__________________________
THOMAS J. O'NEIL