EXHIBIT 10.53
SEVERANCE AGREEMENT
BEFORE SIGNING THIS SEVERANCE AGREEMENT (THE “AGREEMENT”), YOU ARE ADVISED TO
CONSULT WITH AN ATTORNEY. YOUR SIGNATURE MUST BE NOTARIZED.
This Agreement is entered into knowingly and voluntarily by and between Donald
J. Gallagher (“Employee”), and Cliffs Natural Resources Inc. and its affiliates
identified in Section III.A below (collectively, the “Company”). Employee and
the Company are referred to each individually as a “Party” and collectively as
the “Parties.”
RECITALS
A.Employee’s employment with the Company will terminate on December 31, 2013 or
on such earlier date (the “Retirement Date”) upon a request by the Company’s
Board of Directors (the “Board”). On the Retirement Date, Employee will cease to
serve as Executive Vice President and President, Global Commercial of the
Company, and shall resign from any other position that he then holds with the
Company.
B.Employee and the Company desire to establish the terms for an amicable
separation of Employee’s employment on the Retirement Date and to settle fully
and finally any and all differences between them which have arisen, or may
arise, out of the employment relationship and/or the termination of that
relationship.
C.The Company desires to obtain certain covenants from Employee that limit
Employee’s future ability to compete with the Company and/or solicit its
customers and employees to terminate their relationships with the Company.
D.The Company desires to offer Employee the payments and benefits described
herein in connection with Employee’s termination of employment and his entrance
into the restrictive covenants contained herein.
E.Receipt of the payments and benefits described herein requires (i) execution
and notarization, (ii) delivery to the Company, and (iii) non-revocation, of the
Release (as defined below), all within the time frames specified in the Release.
AGREEMENT
I.    TERMINATION, SEVERANCE PAYMENTS AND BENEFITS
A.On the Retirement Date, Employee’s employment with the Company shall cease, he
shall cease to be the Executive Vice President and President, Global Commercial
of the Company, and he shall resign from any other positions that he then holds
with the Company as of the Retirement Date. As of the Retirement Date, Employee
shall be released from his duties with the Company and cease to have any
authority to conduct business on behalf of the Company. Employee will continue
to receive his base salary and employee benefits, in the ordinary course of
business consistent with past practice, through the Retirement Date.
B.Subject to Section I.C., Employee shall receive the following payments
(collectively, the “Payments”) and benefits (collectively, the “Benefits”) if
Employee (i) executes this Agreement, (ii) signs, notarizes and delivers the
release of claims in the form attached hereto as Exhibit A (the “Release”) no
earlier than the calendar day following the Retirement Date and no later than
the later of five calendar days following the Retirement Date or the day after
the end of the time period described in Section V.A. of the Release; and (iii)
does not revoke the Release prior to the “Effective Date” (as defined in Section
V.D. of the Release):

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1.
A cash payment equal to Two Million Seventy Thousand and no/100 Dollars
($2,070,000), which is equal to twenty-four (24) months Base Pay ($575,000 * 2 =
$1,150,000.00) plus two times an additional amount that represents an annual
incentive bonus payable at target ($575,000 * 80% * 2 = $920,000), paid, less
appropriate withholdings and deductions, in a lump sum that shall be paid within
thirty (30) days after the Effective Date (the “Payment Date”).

2.
Employee shall continue to participate in the Company’s Executive Management
Performance Incentive Plan (the “EMPI Plan”) for 2013, with the bonus payout to
be determined based on actual performance during the applicable performance
period and paid, less appropriate withholdings and deductions, in a lump sum
when (but not prior to the Effective Date), and at the rate, the EMPI Plan
bonuses are paid to active employees of the Company. For the avoidance of doubt,
(i) Employee’s EMPI Plan bonus for 2013 shall not be prorated, even if the
Retirement Date occurs prior to December 31, 2013, and (ii) Employee shall not
participate in the EMPI Plan for 2014 and subsequent years.

3.
If the Retirement Date occurs prior to December 31, 2013, a cash payment equal
to the base salary Employee would have earned for the period from the Retirement
Date through December 31, 2013 had he continued to work through December 31,
2013, less appropriate withholdings and deductions, in a lump sum that shall be
paid on the Payment Date.

4.
Employee will be credited with five (5) additional years of age and treated as a
“Grandfathered Retiree” for purposes of determining retiree contributions for
coverage under the Insurance Benefits Program For Retirees & Surviving Spouses
of Cliffs Natural Resources Inc. and its Associated Employers (the “Retiree
Health Plan”).

5.
The Company shall pay the premiums for coverage on the Health Savings Account
Plan under the Retiree Health Plan for Employee and Employee’s qualified
beneficiaries for a maximum of 24 months, subject to shortening of this period
if Employee becomes reemployed and eligible for alternative health insurance
coverage, except that if the Company’s payment of premiums for any such month
would cause adverse tax consequences to the Employee or subject the Company to a
penalty, the Company shall not be required to pay such premiums for such month
to the extent necessary to eliminate such adverse tax consequences or penalty,
and the Employee shall instead be permitted to continue to receive the coverage
described in this paragraph by paying such premiums himself.

6.
Provided that the Employee properly and timely completes and submits all of the
necessary documentation relating to the receipt of COBRA coverage for dental and
vision benefits, the Company shall pay the premiums for dental and vision COBRA
continuation coverage for Employee and Employee’s COBRA qualified beneficiaries
for a maximum of 24 months, subject to shortening of this period if Employee or
Employee’s COBRA qualified beneficiaries become ineligible for COBRA
continuation coverage, except that if the Company’s payment of premiums for any
such month would cause adverse tax consequences to the Employee or subject the
Company to a penalty, the Company shall not be required to pay such premiums for
such month to the extent necessary to eliminate such adverse tax consequences or
penalty, and the Employee shall instead be permitted to continue to receive the
coverage described in this paragraph by paying such premiums himself. The
Company’s extension of the normal eighteen (18) month COBRA continuation period
shall not extend any other COBRA election or coverage periods. For example, the
payment of COBRA premiums

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shall not affect the eleven (11) month disability extension or the eighteen (18)
month second qualifying event extension of the normal eighteen (18) month COBRA
period.
7.
Employee shall be entitled to vest in the performance share awards held by him
on the date hereof based on actual performance through the entire applicable
performance period of each such award, with the number of shares so earned to be
paid out in the manner and at the time (but not prior to the Effective Date)
specified by the terms of each such award.

8.
Employee shall be entitled to fully vest in the restricted share unit awards
held by him on the date hereof, with the number of shares so earned to be paid
out in the manner and at the time (but not prior to the Effective Date)
specified by the terms of each such award.

9.
Employee shall continue to be covered by any provision for indemnification by
the Company in effect on the date of the execution of this Agreement for so long
as it provides such indemnification for its active senior executives. In
addition, the Company shall continue to maintain D&O coverage that covers past
executives to the same extent that it covers present executives. Finally, in the
event of a change in control in which the Company is not the survivor, the
Company shall use its reasonable best efforts to require as part of such
transaction that the surviving company provide indemnification and D&O coverage
that covers the past executives of the Company.

C.Should Employee breach any of the covenants contained in Sections V (relating
to the covenant of confidentiality, but excluding for purposes of this Section
I.C. any immaterial breach with respect to immaterial confidential information),
VII (relating to the covenant not to compete), and IX (relating to the covenant
not to solicit) of this Agreement, Employee shall be required to return the
Payments and the value of the Benefits already received under this Agreement in
excess of one (1) month’s Base Pay within seven (7) days of demand by the
Company, and shall receive no further Payments or Benefits under this Agreement.
D.Subject to Section I.C., should Employee die prior to receipt of the Payments
set forth in Section I.B., then the Payments will be payable to Employee’s
estate or otherwise inure to the benefit of his/her heirs.
E.The term “Base Pay” shall mean Employee’s rate of annual base salary in effect
as of the Retirement Date. Base Pay does not include pension contributions made
by the Company, welfare or other fringe benefits paid for by the Company,
expense reimbursements, overtime pay, bonuses, commissions, incentive pay, or
any other special compensation.
II.    REPRESENTATIONS AND WARRANTIES
Employee understands, acknowledges and agrees that:
•
Employee has the sole right and exclusive authority to execute this Agreement.

•
The Company is not obligated to pay, and will not pay, to Employee any Payment
or Benefits until this Agreement and the Release have become effective.

•
Employee executes this Agreement knowingly and voluntarily, in order to induce
Company to provide the Payments and Benefits.

•
Employee has not sold, assigned, transferred, conveyed or otherwise disposed of
any of the claims, demands, obligations or causes of action referred to in this
Agreement.

•
No other person or entity has an interest in the claims, demands, obligations or
causes of action referred to in this Agreement.

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•
The Payments and Benefits that Employee will receive in exchange for executing
this Agreement and the Release are in addition to anything of value to which
Employee is already entitled.

•
The Payments and Benefits provided for in this Agreement are the only
consideration that Employee ever will receive from the Company or any Released
Parties (as defined below) for any and all claims, demands, obligations or
causes of action released by this Agreement and the Release.

•
The Payments and Benefits provided for in this Agreement are not intended to be
provided in addition to any payments or benefits that now may be due or in the
future become due or payable to Employee under the Worker Adjustment and
Retraining Notification (“WARN”) Act (if applicable). Therefore, if WARN Act
payments are or become due to Employee, any Payment and Benefits made under this
Agreement in excess of one month’s Base Pay, up to the full amount necessary to
satisfy such obligation, shall be treated as having been paid in satisfaction of
any such obligation, and the rest of the Payments and Benefits shall be treated
as having been given in exchange for the other covenants, agreements and
obligations of this Agreement and the Release.

•
This Agreement and its terms shall not be construed as an admission of any
liability whatsoever on the part of the Company or any other Released Parties
described in this Agreement, by which/whom any liability is and always has been
expressly denied.

•
With the payments contemplated by this Agreement, the Company will have paid
Employee for all vacation and any other paid time off accrued through the
Retirement Date with the exception of whatever Employee is entitled to receive
as a retiree of the Company.

•
As of the date of execution of this Agreement, Employee has not filed any
administrative charges or lawsuits arising out of or relating to Employee’s
employment with the Company or the separation of that employment. If Employee
cannot represent that the statement in this paragraph is true, initial here:
_____.

•
As of the date of execution of this Agreement, Employee has no work-related
injury and is medically stationary with no impairment of earning capacity. If
Employee cannot represent that the statement in this paragraph is true, initial
here: _____.

III.    RELEASE
A.    Employee, for himself, and his marital community (if any), agents, heirs,
executors, administrators, and assigns, hereby knowingly and voluntarily fully
releases and forever discharges from any and all agreements, debts, claims,
demands, actions, judgments, causes of action, and liabilities of every kind or
nature, known or unknown, that Employee, individually or as a member of a class,
ever had or now has, the following (referred to collectively as the “Released
Parties”):
•
Cliffs Natural Resources Inc.;

•
Cliffs North American Coal LLC;

•
Pinnacle Mining Company, LLC;

•
Oak Grove Resources, LLC;

•
Cliffs Logan County Coal LLC;

•
Cliffs Quebec Iron Mining Limited;

•
The Bloom Lake Iron Ore Mine Limited Partnership;

•
Cliffs Canadian Shared Services Inc.;

•
Northshore Mining Company;

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•
Silver Bay Power Company;

•
Tilden Mining Company LC;

•
Empire Iron Mining Partnership;

•
Cliffs Mining Company;

•
Hibbing Taconite Company Joint Venture;

•
United Taconite LLC;

•
The Cleveland-Cliffs Iron Company;

•
Cliffs Mining Services Company;

•
Lake Superior & Ishpeming Railroad Company;

•
Wabush Iron Co. Ltd.;

•
Wabush Mines Joint Venture;

•
Cliffs International Management Company LLC;

•
Cliffs Sales Company;

•
Cliffs Natural Resources Exploration Ltda.;

•
Cliffs Natural Resources Pty Ltd;

•
Cliffs Chromite Ontario Inc.;

•
All affiliates of Cliffs Natural Resources Inc. not already listed above,
including any corporation or other entity which is controlled by or under common
control with Cliffs Natural Resources Inc., or which is in the same affiliated
service group or otherwise required to be aggregated with Cliffs Natural
Resources Inc. under Sections 414 or 1563 of the Internal Revenue Code;

•
All current or former owners, officers, directors, shareholders, members,
employees, managers, agents, attorneys, partners and insurers of the above
entities; and

•
The predecessors, successors, and assigns of the above entities and individuals
and the spouses, children, and family members of the individuals.

B.    Without limiting the generality of this Agreement, Employee acknowledges
and agrees that this Agreement is intended to bar every claim, demand, and cause
of action, including without limitation any and all claims arising under the
following laws, as amended from time to time:
•
The federal Civil Rights Acts of 1866, 1871, 1964 and 1991 and all similar state
civil rights statutes;

•The Employee Retirement Income Security Act of 1974;
•The Fair Labor Standards Act;
•The Rehabilitation Act of 1973;
•The Occupational Safety and Health Act;
•The Mine Safety and Health Act;
•The Health Insurance Portability and Accountability Act;
•The Age Discrimination in Employment Act;
•The Older Workers Benefit Protection Act;
•The Americans with Disabilities Act;
•The National Labor Relations Act;
•The Family and Medical Leave Act;
•The Equal Pay Act;
•The Worker Adjustment and Retraining Notification Act;
•The Lilly Ledbetter Fair Pay Act;
•State wage payment statutes;

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•State wage and hour statutes;
•State employment statutes;
•Any statutes regarding the making and enforcing of contracts;
•Any whistleblower statute; and
•All similar provisions under all other federal, state and local laws.
C.    Without limiting the generality of this Agreement, Employee further
acknowledges and agrees that this Agreement is intended to bar all equitable
claims and all common law claims, including without limitation claims of or for:
•Breach of an express or an implied contract;
•Breach of the covenant of good faith and fair dealing;
•
Unpaid wages, salary, commissions, vacation or other employee benefits;

•Unjust enrichment;
•Negligent or intentional interference with contractual relations;
•Negligent or intentional interference with prospective economic relations;
•Estoppel;
•Fraud;
•Negligence;
•Negligent or intentional misrepresentation;
•Personal injury;
•Slander;
•Libel;
•Defamation;
•False light;
•Injurious falsehood;
•Invasion of privacy;
•Wrongful discharge;
•Failure to hire;
•Retaliatory discharge;
•Constructive discharge;
•Negligent or intentional infliction of emotional distress;
•Negligent hiring, supervision or retention;
•Loss of consortium; and
•Any claims that may relate to drug and/or alcohol testing.
D.    Employee further understands, acknowledges and agrees that this Agreement
is a general release, and that Employee further waives and assumes the risk of
any and all claims which exist as of the date this Agreement is executed,
including those of which Employee does not know or suspect to exist, whether
through ignorance, oversight, error, negligence, or otherwise, and which, if
known, would materially affect Employee’s decision to sign this Agreement.
E.    Employee further understands, acknowledges and agrees that this Agreement
waives any right Employee has to recover damages in any lawsuit brought by
Employee as well as in a lawsuit brought by any third party, including without
limitation the Equal Employment Opportunity Commission (the “EEOC”) or any
similar state agency. Employee is not, however, waiving the right to file a
charge with the EEOC or any similar state agency.

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F.    This Agreement shall not be interpreted to release or require the release
of the Company or the Released Parties from any:
•
Claims for Payments or Benefits under this Agreement; or

•
Claims for benefits under any pension plan or welfare plan of the Company; or

•
Claims arising out of acts or practices which occur after the execution of this
Agreement.

The Company agrees to indemnify Employee for actions occurring during his
employment to the same extent provided during his employment. This provision is
not meant to expand Company’s obligations.
IV.    REPRESENTATION OF UNDERSTANDING OF RELEASE
Employee acknowledges that Employee has had the opportunity to consult an
attorney of Employee’s own choosing before entering into this Agreement.
Employee represents and warrants that Employee has read all of the terms of this
Agreement and that Employee fully understands and voluntarily accepts these
terms. Employee further acknowledges and agrees that Employee has been given a
reasonable period of time within which to consider this Agreement.
V.    CONFIDENTIAL INFORMATION AND COVENANTS
Employee represents that, during Employee’s employment with the Company,
Employee has not breached any confidentiality agreement to which Employee is a
party. Employee further represents and warrants that Employee will continue to
abide by the terms of any confidentiality agreement applicable to Employee after
the Retirement Date.

VI.    RETURN OF COMPANY PROPERTY
A.    Employee agrees to return to the Company within five (5) calendar days
following the Retirement Date all originals and copies of the Company’s
property, documents and information in Employee’s possession, regardless of the
form on which such information has been maintained or stored, including without
limitation, computer disks, tapes or other forms of electronic storage, Company
credit cards (including telephone credit cards), tools, equipment, keys,
identification, software, computer access codes, disks and instructional
manuals, and all other property prepared by, or for, or belonging to the
Company. Employee further agrees that, as of the fifth (5th) calendar day
following the Retirement Date, he will not retain any documents or other
property belonging to Company. For the avoidance of doubt, Employee shall not be
required to return to the Company items not material to the business of the
Company or its affiliates that are of nominal or sentimental value.
B.    Employee must comply fully with this Section VI before the Company is
obligated to perform under Section I.
VII.    NON-COMPETITION
Employee agrees that, during his period of employment and the period beginning
on his Retirement Date and ending twelve (12) months following the Retirement
Date, Employee shall not establish, engage in, work for or consult with any
business that competes or intends to compete with the Company’s iron ore or coal
sales businesses in North America or Asia. Employee agrees that the Payments and
Benefits provided by the Company to Employee under this Agreement include
consideration for such twelve-month noncompetition obligation.
VIII.    NON-DISPARAGEMENT

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Employee shall not make any negative statements orally or in writing about
Employee’s employment with the Company, about the Company or its affiliates or
any of its employees or products, to anyone other than to the EEOC or any
similar state agency, Employee’s immediate family, and Employee’s legal
representatives or financial advisors. Nothing herein shall prevent Employee
from testifying truthfully in a legal proceeding or governmental administrative
proceeding. Employee may indicate on employment applications that Employee was
employed by the Company, Employee’s duties, length of employment, and salary.
The Company shall not make any negative statements orally or in writing about
Employee’s employment with the Company to anyone other than to the EEOC or any
similar state agency and the Company’s legal representatives. Nothing herein
shall prevent the Company from testifying truthfully in a legal proceeding or
governmental administrative proceeding.
IX.    NON-SOLICITATION
A.    Employee agrees that, during his period of employment and the period
beginning on his Retirement Date and ending twelve (12) months following the
Retirement Date, Employee shall not directly or indirectly contact, approach or
solicit for the purpose of offering employment to, or directly or indirectly
actually hire, any person employed by the Company or its affiliates (or who was
employed by the Company or its affiliates during the six (6) month period
immediately prior to such solicitation or hire), without the prior written
consent of the Company; provided, however, that this Section IX shall not
preclude Employee from soliciting for employment (but shall, for the avoidance
of doubt, prohibit hiring) any such person who responds to a general
solicitation through a public medium that is not targeted at such person.
B.    Employee agrees that, during his period of employment and the period
beginning on his Retirement Date and ending twelve (12) months following the
Retirement Date, Employee shall not directly or indirectly, for himself or on
behalf of any other person, partnership, company, corporation or other entity,
solicit or attempt to solicit the business or patronage of (i) any person or
entity whose account was serviced by Employee at the Company; or (ii) any person
or entity who is or has been a customer of the Company prior to Employee’s
termination; or (iii) any person or entity the Company has targeted and
contacted prior to Employee’s termination for the purpose of establishing a
customer relationship, without the prior written consent of the Company.
C.    Employee agrees that the Payments and Benefits provided by the Company to
Employee under this Agreement include consideration for the non-solicitation
provisions contained in this Section IX.
X.    SEVERABILITY
In the event that any provision(s) of this Agreement is found to be
unenforceable for any reason whatsoever, the unenforceable provision shall be
considered to be severable, and the remainder of this Agreement shall continue
in full force and effect.
XI.    BINDING EFFECT
This Agreement shall be binding upon and operate to the benefit of Employee, the
Company, the Released Parties, and their successors and assigns.
XII.    WAIVER
No waiver of any of the terms of this Agreement shall constitute a waiver of any
other terms, whether or not similar, nor shall any waiver be a continuing
waiver. No waiver shall be binding unless executed in writing by the Party
making the waiver. The Company or Employee may waive any provision of this
Agreement intended for its/his benefit, but such waiver shall in no way excuse
the other Party from the performance of any of its/his other obligations under
this Agreement.
XIII.    GOVERNING LAW

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This Agreement shall be governed by and construed in accordance with the laws of
the State of Ohio, without regard to the principles of conflicts of law, except
to the extent those laws are preempted by federal law.
XIV.    SUBSEQUENT MODIFICATIONS
The terms of this Agreement may be altered or amended, in whole or in part, only
upon the signed written agreement of all Parties to this Agreement. No oral
agreement may modify any term of this Agreement.
XV.    ENTIRE AGREEMENT
This Agreement constitutes the sole and entire agreement of the Parties with
respect to the subject matter hereof, and supersedes any and all prior and
contemporaneous agreements, promises, representations, negotiations, and
understandings of the Parties, whether written or oral. There are no agreements
of any nature whatsoever among the Parties except as expressly stated herein.
XVI.    ATTORNEYS’ FEES AND COSTS
This Section XVI shall not apply to any litigation arising out of a challenge to
the validity of the Release under the ADEA, or any litigation in which the
validity of the Release under the ADEA is an issue. In the event of litigation
arising out of any other alleged breach of this Agreement, the prevailing Party
shall be entitled to an award of its reasonable attorneys’ fees and costs.
XVII.    SECTION 409A
The Parties acknowledge that Employee shall incur a “separation from service,”
within the meaning of Section 409A of the Code (“Section 409A”), no later than
the Retirement Date. Notwithstanding anything in this Agreement to the contrary,
if Employee is considered a “specified employee” (as defined in Section 409A),
any amounts paid or provided under this Agreement shall, to the extent necessary
in order to avoid the imposition of a penalty tax on Employee under
Section 409A, be delayed for six months after Employee’s “separation from
service” within the meaning of Section 409A, and the accumulated amounts shall
be paid in a lump sum within ten (10) calendar days after the end of the six
(6)-month period. If Employee dies during the six-month postponement period
prior to the payment of such accumulated amounts, the payments which are
deferred on account of Section 409A shall be paid to the personal representative
of Employee’s estate within 60 calendar days after the date of Employee’s death.
For purposes of this Agreement, each amount to be paid or benefit to be provided
to Employee pursuant to this Agreement shall be construed as a separate
identified payment for purposes of Section 409A. All reimbursements and in-kind
benefits provided under the Agreement shall be made or provided in accordance
with the requirements of Section 409A to the extent applicable, including, where
applicable, the requirement that (i) any reimbursement is for expenses incurred
during the period of time specified in this Agreement, (ii) the amount of
expenses eligible for reimbursement, or in-kind benefits provided, during a
calendar year may not affect the expenses eligible for reimbursement, or in kind
benefits to be provided, in any other calendar year, (iii) the reimbursement of
an eligible expense will be made no later than the last calendar day of the
calendar year following the year in which the expense is incurred, and (iv) the
right to reimbursement or in kind benefits is not subject to liquidation or
exchange for another benefit.

[Signature Page Follows]

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CLIFFS NATURAL RESOURCES INC.

 
/s/ James R. Michaud
 
James R. Michaud
 
Executive Vice President, Chief Human Resources Officer

Date: 12/30/2013
 
/s/ Donald J. Gallagher
 
 
Donald J. Gallagher
 
 
 
STATE OF OHIO )
 
 
) ss.
 
 
County of CUYAHOGA)
 
 

On this 30th day of December, 2013, before me personally appeared Donald J.
Gallagher, to me known to be the person described in and who executed the
Severance Agreement and acknowledged that he/she executed the same as his/her
free act and deed.

IN TESTIMONY WHEREOF, I have hereunto set my hand and affixed my official seal
in the County and State aforesaid, the day and year first above written.

 
 
/s/ Jody C. Hunter
 
 
Notary Public
 
 
 
My Commission Expires:
 
April 28, 2018

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