<PAGE>   1
                                                                EXHIBIT 10(r)

                                                                              #4
                                TRUST AGREEMENT

        This Trust Agreement ("Trust Agreement") made this 28th day of August,
1987 by and between Cleveland-Cliffs Inc, an Ohio corporation
("Cleveland-Cliffs"), and AmeriTrust Company National Association, a national
banking association, as trustee (the "Trustee");

                                 WITNESSETH:
        WHEREAS, certain benefits are or may become payable under the
provisions of the Plan for Deferred Payment of Directors' Fees of The
Cleveland-Cliffs Iron Company, adopted June 4, 1981 and assumed by
Cleveland-Cliffs Inc, effective July 1, 1985, as the same has been or may
hereafter be supplemented, amended or restated, or any successor thereto (the
"Plan"), a current copy of which is attached hereto as Exhibit B and
incorporated herein by reference, to the persons (who may be directors
("Directors") or beneficiaries of Directors) listed (from time to time as
provided in Section 9(b) hereof) on Exhibit A hereto or to the beneficiaries of
such persons (Directors and Directors' beneficiaries are referred to herein as
"Trust Beneficiaries"), as the case may be;


<PAGE>   2
                                                                               2


        WHEREAS, the Plan provides for any Director who is separately
compensated for his services on the Board of Directors to elect to defer
payment of all or a portion of his compensation as a Director and
Cleveland-Cliffs wishes specifically to assure the payment to the Trust
Beneficiaries of amounts due thereunder (the amounts so payable being
collectively referred to herein as the "Benefits") in the event of a "Change of
Control" (as defined herein);
        WHEREAS, subject to Section 9 hereof, the amounts and timing of
Benefits to which each Trust Beneficiary is presently or may become entitled
are as provided in the Plan;
        WHEREAS, Cleveland-Cliffs wishes to establish a trust (the "Trust") and
to transfer to the Trust assets which shall be held therein subject to the
claims of the creditors of Cleveland-Cliffs to the extent set forth in Section
3 hereof until paid in full to all Trust Beneficiaries as Benefits in such
manner and at such times as specified herein unless Cleveland-Cliffs is
Insolvent (as defined herein) at the time that such Benefits become payable;
and

        WHEREAS, Cleveland-Cliffs shall be considered "Insolvent" for purposes
of this Trust Agreement at such time as Cleveland-Cliffs (i) is subject to a
pending voluntary or involuntary proceeding as a debtor under the United States
Bankruptcy Code, as heretofore or hereafter amended, or (ii) is unable to pay
its debts as they mature.


<PAGE>   3
                                                                               3


        NOW, THEREFORE, the parties do hereby establish the Trust and agree
that the Trust shall be comprised, held and disposed of as follows:
        1.    TRUST FUND: (a) Subject to the claims of its creditors to the
extent set forth in Section 3 hereof.  Cleveland-Cliffs hereby deposits with
the Trustee in trust Ten Dollars ($10.00) which shall become the principal of
this Trust, to be held, administered and disposed of by the Trustee as herein
provided, but no payments of all or any portion of the principal of the Trust
or earnings thereon shall be made to Cleveland-Cliffs or any other person or
entity on behalf of Cleveland-Cliffs except as herein expressly provided.
        (b) The Trust hereby established shall be revocable by Cleveland-Cliffs
at any time prior to the date on which occurs a "Change of Control," as that
term is defined in this Section 1(b); on or after such date ("Irrevocability
Date"), this Trust shall be irrevocable.  Cleveland-Cliffs shall notify the
Trustee promptly in the event that a Change of Control has occurred.  The term
"Change of Control" shall mean the occurrence of any of the following events:
        (i) a tender offer shall be made and consummated for the ownership of
30% or more of the outstanding voting securities of Cleveland-Cliffs;
        (ii) Cleveland-Cliffs shall be merged or consolidated with another
corporation and as a result of


<PAGE>   4
                                                                               4


such merger or consolidation less than 70% of the outstanding voting
securities of the surviving or resulting corporation shall be owned in the
aggregate by the former shareholders of Cleveland-Cliffs, other than affiliates
(within the meaning of the Securities Exchange Act of 1934) of any party to
such merger or consolidation, as the same shall have existed immediately prior
to such merger or consolidation;
        (iii)  Cleveland-Cliffs shall sell substantially all of its assets to
another corporation which is not a wholly owned subsidiary;
        (iv)  a person, within the meaning of Section 3(a)(9) or of Section
13(d)(3) (as in effect on the date hereof) of the Securities Exchange Act of
1934, shall acquire 30% or more of the outstanding voting securities of
Cleveland-Cliffs (whether directly, indirectly, beneficially or of record), or
        (v) during any period of two consecutive years, individuals who at the
beginning of any such period constitute the Board of Directors of
Cleveland-Cliffs cease for any reason to constitute at least a majority
thereof, unless the election, or the nomination for election by the
shareholders of Cleveland-Cliffs, of each Director first elected during any
such period was approved by a vote of at least two-thirds of the Directors of
Cleveland-Cliffs then


<PAGE>   5
                                                                               5


         still in office who are Directors of Cleveland-Cliffs on the date at
         the beginning of any such period.
For purposes hereof, ownership of voting securities shall take into account and
shall include ownership as determined by applying the provisions of Rule
13d-3(d)(1)(i) (as in effect on the date hereof) pursuant to the Securities
Exchange Act of 1934.
        (c)  Upon the earlier to occur of (i) a Change of Control or (ii) a
declaration by the Board of Directors of Cleveland-Cliffs that a Change of
Control is imminent, Cleveland-Cliffs shall promptly, and in any event within
five (5) business days, transfer to the Trustee to be added to the principal of
the Trust under this Agreement property or cash equal to the then value of the
separate accounts of the Directors under the provisions of the Plan.  Any
payments by the Trustee pursuant to this Agreement shall, to the extent
thereof, discharge the obligation of Cleveland-Cliffs to pay benefits under the
Plan, it being the intent of Cleveland-Cliffs that assets in the Trust
established hereby be held as security for the obligation of Cleveland-Cliffs
to pay benefits under the Plan.
        (d)  The principal of the Trust and any earnings thereon shall be held
in trust separate and apart from other funds of Cleveland-Cliffs exclusively
for the uses and purposes herein set forth.  No Trust Beneficiary shall have
any preferred claim on, or any beneficial ownership interest in,


<PAGE>   6
                                                                               6


any assets of the Trust prior to the time that such assets are paid to a Trust
Beneficiary as Benefits as provided herein.
        (e)  Any Company may at any time or from time to time make additional
deposits of cash or other property in the Trust to augment the principal to be
held, administered and disposed of by the Trustee as herein provided, but no
payments of all or any portion of the principal of the Trust or earnings
thereon shall be made to Cleveland-Cliffs or any other person or entity on
behalf of Cleveland-Cliffs except as herein expressly provided.
        (f)  The term "Company" as used herein shall mean Cleveland-Cliffs, any
wholly owned subsidiary or any entity that is a successor to Cleveland-Cliffs
in ownership of substantially all its assets.
        (g)  The Trust is intended to be a grantor trust, within the meaning of
section 671 of the internal Revenue Code of 1986, as amended (the "Code"), or
any successor provision thereto, and shall be construed accordingly.
        (h)  This Agreement shall be construed as a part of the Plan, and shall
override the terms of the Plan (including, but not limited to, Section 5
thereof) to the extent inconsistent herewith.
        2.   PAYMENTS TO TRUST BENEFICIARIES.  (a)  Provided that
Cleveland-Cliffs is not Insolvent and commencing with the earliest to occur of
(i) appropriate notice by Cleveland-Cliffs to the Trustee, or (ii) the
Irrevocability Date, the Trustee


<PAGE>   7
                                                                               7


shall make payments of Benefits to each Trust Beneficiary from the assets of
the Trust in accordance with the terms of the Plan and subject to Section 9
hereof.  The Trustee shall make provision for withholding of any federal,
state, or local taxes that may be required to be withheld by the Trustee in
connection with the payment of any Benefits hereunder.
        (b)  If the balance of a Director's separate account maintained
pursuant to Section 7(b) hereof is not sufficient to provide for full payment
of Benefits to which such Director's Trust Beneficiaries are entitled as
provided herein, Cleveland-Cliffs shall make the balance of each such payment
as provided in the Plan.  No payment from the Trust assets to a Trust
Beneficiary shall exceed the balance of such separate account.
        3.   THE TRUSTEE'S RESPONSIBILITY REGARDING PAYMENTS TO A TRUST
BENEFICIARY WHEN CLEVELAND-CLIFFS IS INSOLVENT: (a) At all times during the
continuance of this Trust, the principal and income of the Trust shall be
subject to claims of creditors of Cleveland-Cliffs.  The Board of Directors
("Board") of Cleveland-Cliffs and its Chief Executive Officer ("CEO") shall
have the duty to inform the Trustee if either the Board or the CEO believes
that Cleveland-Cliffs is Insolvent.  If the Trustee receives a notice from the
Board, the CEO, or a creditor of Cleveland-Cliffs alleging that
Cleveland-Cliffs is Insolvent, then unless the Trustee independently determines
that Cleveland-Cliffs is not Insolvent, the Trustee shall



<PAGE>   8
                                                                               8


(i) discontinue payments to any Trust Beneficiary, (ii) hold the Trust assets
for the benefit of the general creditors of Cleveland-Cliffs and (iii) promptly
seek the determination of a court of competent jurisdiction regarding the
Insolvency of Cleveland-Cliffs.  The Trustee shall deliver any undistributed
principal and income in the Trust to the extent necessary to satisfy the claims
of the creditors of Cleveland-Cliffs as a court of competent jurisdiction may
direct.  Such payments of principal and income shall be borne by the separate
accounts of the Trust Beneficiaries in proportion to the balances on the date
of such court order of their respective accounts maintained pursuant to Section
7(b) hereof.  If payments to any Trust Beneficiary have been discontinued
pursuant to this Section 3(a), The Trustee shall resume payments to such Trust
Beneficiary only after receipt of an order of a court of competent
jurisdiction.  The Trustee shall have no duty to inquire as to whether
Cleveland-Cliffs is Insolvent and may rely on information concerning the
Insolvency of Cleveland-Cliffs which has been furnished to the Trustee by any
person.  Nothing in this Trust Agreement shall in any way diminish any rights
of any Trust Beneficiary to pursue his rights as a general creditor of
Cleveland-Cliffs with respect to Benefits or otherwise, and the rights of each
Trust Beneficiary under the Plan shall in no way be affected or diminished by
any provision of this Trust Agreement or action taken pursuant to this Trust
Agreement except that any payment


<PAGE>   9
                                                                               9


actually received by any Trust Beneficiary hereunder shall reduce
dollar-per-dollar amounts otherwise due to such Trust Beneficiary pursuant to
the Plan.

        (b)  If the Trustee discontinues payments of Benefits from the Trust
pursuant to Section 3(a) hereof, the Trustee shall, to the extent it has liquid
assets, place cash equal to the discontinued payments (to the extent not paid
to creditors pursuant to Section 3(a) and not paid to the Trustee pursuant to
Section 10 hereof) in such interest-bearing deposit accounts or certificates of
deposit (including any such accounts or certificates issued or offered by the
Trustee or any successor corporation but excluding obligations of
Cleveland-Cliffs) as determined by the Trustee in its sole discretion.  If the
Trustee subsequently resumes such payments.  The first payment following such
discontinuance shall include the aggregate amount of all payments which would
have been made to the Trust Beneficiaries in accordance with this Trust
Agreement during the period of such discontinuance, less the aggregate amount
of payments made to any Trust Beneficiary by Cleveland-Cliffs pursuant to the
Plan during any such period of discontinuance, together with interest on the
net amount delayed determined at a rate equal to the rate paid on the accounts
or deposits selected by the Trustee; provided, however, that no such payment
shall exceed the balance of the respective Director's account as provided in
Section 7(b) hereof.


<PAGE>   10
                                                                              10


        4.   PAYMENTS TO CLEVELAND-CLIFFS: Except to the extent expressly
contemplated by Section 1(b) hereof, Cleveland-Cliffs shall have no right or
power to direct the Trustee to return any of the Trust assets to
Cleveland-Cliffs before all payments of Benefits have been made to all Trust
Beneficiaries as herein provided.
        5.   INVESTMENT OF PRINCIPAL: The Trustee shall invest and reinvest the
principal of the Trust including any income accumulated and added to principal,
as directed by the Compensation Committee of the Board of Directors of
Cleveland- Cliffs (which direction may include investment in Common Shares of
Cleveland-Cliffs).  In the absence of any such direction, the Trustee shall
have sole power to invest the assets of the Trust (including investment in
common shares of Cleveland-Cliffs).  The Trustee shall act at all however, with
the care, skill, prudence, and diligence under the circumstances then
prevailing that a prudent corporate trustee, acting in a like capacity and
familiar with such matters, would use in the conduct of an enterprise of a like
character and with like aims.  The investment objective of the Trustee shall be
to preserve the principal of the Trust while obtaining a reasonable total rate
of return, measurement of which shall include market appreciation or
depreciation plus receipt of interest and dividends.  The Trustee shall not be
required to invest nominal amounts.
        6.   INCOME OF THE TRUST: Except as provided in Section 3 hereof,
during the continuance of this Trust all net


<PAGE>   11
                                                                              11


income of the Trust shall be allocated not less frequently than monthly among
the Trust Beneficiaries' separate accounts in accordance with Section 7(b)
hereof.

        7.   ACCOUNTING BY TRUSTEE: (a) The Trustee shall keep records in
reasonable detail of all investments, receipts, disbursements and all other
transactions required to be done, including such specific records as shall be
agreed upon in writing by Cleveland-Cliffs and the Trustee.  All such accounts,
books and records shall be open to inspection and audit at all reasonable times
by Cleveland-Cliffs, by any Director, or in the event of a Director's death or
adjudged incompetence, by his Trust Beneficiaries (as to his account), or by
any agent or representative of any of the foregoing.   Within 60 calendar days
following the end of each calendar year and within 60 calendar days after the
removal or resignation of the Trustee, the Trustee shall deliver to
Cleveland-Cliffs and to each Director, or in the event of his death or adjudged
incompetence, his Trust Beneficiaries (as to his account) a written account of
its administration of the Trust during such year or during the period from the
end of the last preceding year to the date of such removal or resignation,
setting forth all investments, receipts, disbursements and other transactions
effected by it, including a description of all securities and investments
purchased and sold with the cost or net proceeds of such purchases or sales
(accrued interest paid or receivable being shown separately), and showing all
cash, securities,


<PAGE>   12
                                                                              12


rights and other property held in the Trust at the end of such year or as of
the date of such removal or resignation, as the case may be.  Such written
accounts shall reflect the aggregate of the Trust accounts and status of each
separate account maintained for each Director.
        (b)  The Trustee shall maintain a separate account for each Trust
Beneficiary. The Trustee shall credit or debit each Trust Beneficiary's account
as appropriate to reflect such Trust Beneficiary's allocable portion of the
Trust assets, as such Trust assets may be adjusted from time to time pursuant
to the terms of this Trust Agreement.  Prior to the Irrevocability Date, all
deposits of principal pursuant to Section l(a) hereof shall be allocated as
directed by Cleveland-Cliffs; on or after such date deposits of principal, once
allocated, may not be reallocated by Cleveland-Cliffs.  Income, expense, gain
or loss on assets allocated to the separate accounts of the Trust Beneficiaries
shall be allocated separately to such accounts by the Trustee in proportion to
the balances of the separate accounts of the Directors.
        8.   RESPONSIBILITY OF TRUSTEE: (a) The Trustee shall act with the
care, skill, prudence and diligence under the circumstances then prevailing
that a prudent corporate trustee, acting in a like capacity and familiar with
such matters, would the conduct of an enterprise of a like character and with
like aims; provided, however, that the Trustee shall incur no liability to any
person for any action taken pursuant to a direction, request or approval,
contemplated by and complying


<PAGE>   13
                                                                              13


with the terms of this Trust Agreement, given in writing by Cleveland-Cliffs,
by the Compensation Committee or by a Trust Beneficiary applicable to his or
her beneficial interest herein; and provided, further, that the Trustee shall
have no duty to seek additional deposits of principal from Cleveland-Cliffs for
additional amounts accrued under the Plan, and the Trustee shall not be
responsible for the adequacy of this Trust.
        (b)  The Trustee may vote any stock or other securities and exercise
any right appurtenant to any stock, other securities or other property held
hereunder, either in person or by general or limited proxy, power of attorney
or other instrument.
        (c)  The Trustee may hold securities in bearer form and may register
securities and other property held in the trust fund in its own name or in the
name of a nominee, combine certificates representing securities with
certificates of the same issue held by the Trustee in other fiduciary
capacities, and deposit, or arrange for deposit of property with any
depository; provided that the books and records of the Trustee shall at all
times show that all such securities are part of the trust fund.
        (d)  If the Trustee shall undertake or defend any litigation arising in
connection with this Trust Agreement, it shall be indemnified by
Cleveland-Cliffs against its costs, expenses and liabilities (including without
limitation attorneys' fees and expenses) relating thereto.


<PAGE>   14
                                                                              14


        (e)  The Trustee may consult with legal counsel, independent
accountants and actuaries (who may be counsel independent accountants or
actuaries for Cleveland-Cliffs) with respect to any of its duties or
obligations hereunder, and shall be fully protected in acting or refraining
from acting in accordance with the advice of such counsel, independent
accountants and actuaries.
        (f)  The Trustee may rely and shall be protected in acting or
refraining from acting within the authority granted by the terms of this Trust
Agreement upon any written notice, instruction or request furnished to it
hereunder and believed by it to be genuine and to have been signed or presented
by the proper party or parties.
        (g)  The trustee may hire agents, accountants, actuaries, and financial
consultants, who may be agents, accountants, actuaries, or financial
consultants, as the case may be, for Cleveland-Cliffs, and shall not be
answerable for the conduct of same if appointed with due care.
        (h)  The Trustee is empowered to take all actions necessary or
advisable in order to collect any benefits or payments of which the Trustee is
the designated beneficiary.
        (i)  The Trustee shall have, without exclusion, all powers conferred on
trustees by applicable law unless expressly provided otherwise herein.


<PAGE>   15
                                                                              15


        9.   AMENDMENTS, ETC. TO AGREEMENTS AND PLAN; COOPERATION OF
CLEVELAND-CLIFFS:
        (a)  Cleveland-Cliffs has previously furnished the Trustee a complete
and correct copy of the Plan, and Cleveland-Cliffs shall, and any Trust
Beneficiary may, promptly furnish the Trustee true and correct copies of any
amendment, restatement or successor thereto, whereupon such amendment,
restatement or successor shall be incorporated herein by reference, provided
that such amendment, restatement or successor shall not affect the Trustee's
duties and responsibilities hereunder without the consent of the Trustee.
        (b)  Cleveland-Cliffs shall provide the Trustee with all information
requested by the Trustee for purposes of determining payments to the Trust
Beneficiaries or withholding of taxes as provided in Section 2.  Upon the
failure of Cleveland-Cliffs or any Trust Beneficiary to provide any such
information, the trustee shall, to the extent necessary in the sole judgment of
the Trustee, (i) compute the amount payable hereunder to any Trust Beneficiary;
and (ii) notify Cleveland-Cliffs and the Trust Beneficiary in writing of its
computations. Thereafter this Trust Agreement shall be construed as to the
Trustee's duties and obligations hereunder in accordance with such Trustee
determinations without further action; provided, however, that no such
determinations shall in any way diminish the rights of any Trust Beneficiary
hereunder


<PAGE>   16
                                                                              16


or under the Plan; and provided, further, that no such determinations shall be
deemed to modify this Trust Agreement or the Plan.  Nothing in this Trust
Agreement shall restrict Cleveland-Cliffs right to amend, modify or terminate
the Plan.
        (b)  At such times as may in the judgment of Cleveland-Cliffs be
appropriate, Cleveland-Cliffs shall furnish to the Trustee any amendment to
Exhibit A for the purpose of the addition of additional Directors (or the
deletion of Directors who (together with their Trust Beneficiaries) have no
Benefits currently due or payable in the future) to Exhibit A; provided,
however, that no such amendment shall be made after the Irrevocability Date.
        10.  COMPENSATION AND EXPENSES OF TRUSTEE: The Trustee shall be
entitled to receive such reasonable compensation for its services as shall be
agreed upon by Cleveland-Cliffs and the Trustee.  The Trustee shall also be
entitled to reimbursement of its reasonable expenses incurred with respect to
the administration of the Trust including fees and expenses incurred pursuant
to Sections 8(d), 8(e) and 8(g) and liabilities to creditors pursuant to court
direction as provided in Section 3(a) hereof.  Such compensation and expenses
shall in all events be payable either directly by Cleveland-Cliffs or, in the
event that Cleveland-Cliffs shall refuse, from the assets of the Trust and
charged pro rata in proportion to each separate account balance.  The Trust
shall have a claim against Cleveland-Cliffs for any such compensation or
expenses so paid.


<PAGE>   17
                                                                              17

        11.  REPLACEMENT OF THE TRUSTEE: (a) Prior to the Irrevocability Date,
the Trustee may be removed by Cleveland-Cliffs.  On or after the Irrevocability
Date, the Trustee may be removed at any time by agreement of Cleveland-Cliffs
and a majority of the Directors.  The Trustee may resign after providing not
less than 90 days' notice to Cleveland-Cliffs and to the Directors.  In case of
removal or resignation, a new trustee, which shall be independent and not
subject to control of either Cleveland-Cliffs or the Trust Beneficiaries, shall
be appointed as shall be agreed by Cleveland-Cliffs and a majority of the
Directors.  No such removal or resignation shall become effective until the
acceptance of the trust by a successor trustee designated in accordance with
this Section 11.  If the Trustee should resign, and within 45 days of the
notice of such resignation Cleveland-Cliffs and the Directors shall not have
notified the Trustee of an agreement as to a replacement trustee, the Trustee
shall appoint a successor trustee, which shall be a bank or trust company,
wherever located, having a capital and surplus of at least $500,000,000 in the
aggregate.
        (b)  For purposes of the removal or appointment of a Trustee under this
Section 11, (i) if any Director shall be deceased or adjudged incompetent, such
Director's Trust Beneficiaries shall participate in such Director's stead, and
(ii) a Trust Beneficiary shall not participate if all payments of Benefits then
currently due or payable in the future have been made to such Trust
Beneficiary.


<PAGE>   18
                                                                              18


        12.  AMENDMENT OR TERMINATION: (a) This Trust Agreement may be amended
by Cleveland-Cliffs and the Trustee without the consent of any Trust
Beneficiaries provided the amendment does not adversely affect any Trust
Beneficiary.  This Trust Agreement may also be amended at any time and to any
extent by a written instrument executed by the Trustee, Cleveland-Cliffs and
the Trust Beneficiaries, except to alter Section 12(b), and except that
amendments to Exhibit A contemplated by Section 9(b) hereof shall be made as
therein provided.
        (b)  The Trust shall terminate on the date on which the Trust no longer
contains any assets, or, if earlier, the date on which each Trust Beneficiary
is entitled to no further payments hereunder.
        (c)  Upon termination of the Trust as provided in Section 12(b) hereof,
any assets remaining in the Trust shall be returned to Cleveland-Cliffs.
        13.  SPECIAL DISTRIBUTION: (a) It is intended that (i) the creation of,
and transfer of assets to, the Trust will not cause the Plan to be other than
"unfunded" for purposes of title I of the Employee Retirement Income Security
Act of 1974, as amended, or any successor provision thereto ("ERISA"); (ii)
transfers of assets to the Trust will not be transfers of property for purposes
of section 83 of the Code, or any successor provision thereto, nor will such
transfers cause a currently taxable benefit to be realized by a Trust
Beneficiary


<PAGE>   19
                                                                              19


pursuant to the "economic benefit" doctrine; and (iii) pursuant to section 451
of the Code, or any successor provision thereto, amounts will be includable as
compensation in the gross income of a Trust Beneficiary in the taxable year or
years in which such amounts are actually distributed or made available to such
Trust Beneficiary by the Trustee.
        (b)  Notwithstanding anything to the contrary contained in this Trust
Agreement, in the event it is determined by a final decision of the Internal
Revenue Service, or, if an appeal is taken therefrom, by a court of competent
jurisdiction that (i) by reason of the creation of, and a transfer of assets
to, the Trust, the Trust is considered "funded" for purposes of title I of
ERISA; or (ii) a transfer of assets to the Trust is considered a transfer of
property for purposes of section 83 of the Code or any successor provision
thereto; or (iii) a transfer of assets to the Trust causes a Trust Beneficiary
to realize income pursuant to the "economic benefit" doctrine; or (iv) pursuant
to section 451 of the Code  or any successor provision thereto, amounts are
includable as compensation in the gross income of a Trust Beneficiary in a
taxable year that is prior to the taxable year or years in which such amounts
would, but for this Section 13, otherwise actually be distributed or made
available to such Trust Beneficiary by the Trustee, then (A) the assets held in
Trust shall be allocated in accordance with Section 7(b) hereof, and (B)
subject to the last sentence of Section 2(b) hereof, the


<PAGE>   20
                                                                              20


Trustee shall promptly make a distribution to each affected Trust Beneficiary
which, after taking into account the federal, state and local income tax
consequences of the special distribution itself, is equal to the sum of any
federal, and local income taxes, interest due thereon, and penalties assessed
with respect thereto, which are attributable to amounts that are includable in
the income of such Trust Beneficiary for any of the reasons described in clause
(i), (ii), (iii) or (iv) of this Section 13(b).
        14.  SEVERABILITY, ALIENATION, ETC.: (a) Any provision of this Trust
Agreement prohibited by law shall be ineffective to the extent of any such
prohibition without invalidating the remaining provisions hereof.
        (b)  To the extent permitted by law, benefits to Trust Beneficiaries
under this Trust Agreement may not be, anticipated, assigned (either at law or
in equity), alienated or subject to attachment, garnishment, levy, execution or
other legal or equitable process and no benefit provided for herein and
actually paid to any Trust Beneficiary by the Trustee shall be subject to any
claim for repayment by Cleveland-Cliffs or Trustee.
        (c)  This Trust Agreement shall be governed by and construed in
accordance with the laws of the State of Ohio, without giving effect to the
principles of conflict of laws thereof.


<PAGE>   21
                                                                              21


        (d)  This Trust Agreement may be executed in two or more counterparts,
each of which shall be considered an original agreement.  This Trust Agreement
shall become effective immediately upon the execution by Cleveland-Cliffs of at
least one counterpart, it being understood that all parties need not sign the
same counterpart, but shall not bind any Trustee until such Trustee has
executed at least one counterpart.

        15.  NOTICES; IDENTIFICATION OF CERTAIN TRUST BENEFICIARIES: (a) All
notices, requests, consents and other communication hereunder shall be in
writing and shall be deemed to have been duly given when received:

   If to the Trustee, to:

   AmeriTrust Company National Association
   900 Euclid Avenue
   Cleveland, Ohio 44115

   Attention: Trust Department
      Employee Benefit Administration

   If to Cleveland-Cliffs, to:

   Cleveland-Cliffs Inc
   1100 Superior Avenue
   Cleveland, OH 44114

   Attention: Secretary

   If to the Directors or to any party or any Trust Beneficiaries, to the
addresses listed on Exhibit A hereto

provided, however, that if any party or any Trust Beneficiary or his or its
successors shall have designated a different


<PAGE>   22
                                                                              22


address by written notice to the other parties, then to the
last address so designated.
        (b)  Cleveland-Cliffs shall provide the Trustee with the names of any
beneficiary or beneficiaries designated by Directors or beneficiaries under the
Plan (and who are, therefore, Trust Beneficiaries hereunder).
        IN WITNESS WHEREOF, Cleveland-Cliffs has caused counterparts of this
Trust Agreement to be executed on its behalf at  4:08  p.m. Eastern Standard
Time on October 28, 1987, each of which shall be an original agreement, and the
Trustee has caused counterparts of this Trust Agreement to be executed on its
behalf at 4:09  p.m. Eastern Standard Time on October 28, 1987.


                                CLEVELAND-CLIFFS INC


                                By: Richard F. Novak
                                    ----------------
                                Its: Vice President - Human Resources
                                     --------------------------------


                                AMERITRUST COMPANY NATIONAL ASSOCIATION

                                By: Gary W. Queen
                                    --------------
                                Its: Senior Vice President
                                     ---------------------



5059C