Document:

Exhibit 10(B)

 

Exhibit 10(b)

Direct: (216) 694-5400

Fax: (216) 241-6842

jsbrinzo a@cleveland-cliffs.com

CLEVELAND-CLIFFS INC

	 	 	 
	JOHN S. BRINZO
	 	 
	CHAIRMAN
	 	 
	AND
	 	 
	CHIEF EXECUTIVE OFFICER
	 	 

April 18, 2005

CONFIDENTIAL

Mr. Joe Carrabba

5018 49th Street

Yellow Knife, Northwest Territories, X1A3R6 Canada

Dear Joe:

       This letter confirms my verbal offer to you for the position of President and Chief Operating
Officer with Cleveland-Cliffs Inc. In this role, you will report directly to me.

The following are the details of this offer:

BASE SALARY

Your starting salary will be $450,000 per year, payable semi-monthly. Individual
performance and salaries of elected officers are periodically reviewed by the Compensation
and Organization Committee of the Board of Directors based on recommendations of the Chief
Executive Officer.

MANAGEMENT PERFORMANCE INCENTIVE PLAN

Effective with your starting date, you will participate in the Management Performance
Incentive Plan, which provides an annual target cash bonus of $225,000 (50 percent of your
salary). The actual bonus awards can be 0 to 200 percent of target based upon Board
Compensation Committee judgment of individual, unit and corporate performance as
recommended by the CEO. Your 2005 award will not be prorated (based on confirmation that
you will not receive a year 2005 bonus from your current employer) and will be at least
100% of your target bonus.

LONG-TERM EQUITY INCENTIVE PLAN

You will participate in the Long Term Equity Incentive Plan and be eligible to receive
annual Performance Share awards (including Retention Units) based on the Plan formula.
Normally, the grant size will be determined based upon a market review and analysis and
your then current job position. While you remain in the position of President and Chief
Operating Officer, the grant size will normally, subject to market reviews and analysis, be
approximately 100% of your then base salary. However, for 2005, your 2005 equity incentive
award will be a combination of Performance Shares and restricted stock.

 

 

For 2005 your performance share award will be 3,800 Performance Shares of Cleveland-Cliffs Inc
stock. The Performance Shares vest into actual shares on a three-year moving cycle based on
achieving corporate objectives of return on investment and stock price performance against a peer
group. Fifteen percent of your award, or 570 shares, represents “retention units” and will vest
after three years based on your continuing employment to that date. The 2005 award, to the extent
earned, would be converted to an actual number of shares in early 2008 based on total 2005-2007
corporate performance and your continued employment to that date. The shares earned and issued can
range from 0 to 175 percent of the Performance Share award. Your participation in the Performance
Share award will be computed as though you had been an employee of the Company beginning on January
1, 2005 and shall not be prorated because of your being hired during 2005.

In addition, for 2005, you will receive an award of restricted stock under the Long Term Equity
Incentive Plan of 3,800 Shares of restricted stock as of your first day of employment with Cliffs
(your “Date of Employment”). One third of such shares of restricted stock will vest and the
restrictions will lapse on each of the first three anniversaries of your Date of Employment. The
restricted stock shall also vest and the restrictions shall lapse if your employment is
involuntarily terminated by the Company or your employment responsibilities and duties are
substantially diminished within three years after a corporate change-of-control. You understand
that the Company will withhold any and all withholding taxes applicable to the restricted stock
from your other compensation payments at the times and in the amounts specified by law and
regulations.

SIGNING BONUS

You will receive a $250,000 signing bonus payable as soon as practical after your Date of
Employment with Cliffs.

RELOCATION ALLOWANCE

You will be reimbursed for reasonable expenses for transfer of household personal property,
relocation travel for you and your spouse, and residence-finding visits by you and your spouse to
the Cleveland area. Reimbursement will be made for temporary Cleveland housing rental expense until
you establish a permanent residence in the Cleveland area, subject to a time limit which we can
work out.

In addition, the Company will reimburse your realtor’s fees (up to a maximum of 6%) and the
normal closing costs you incur with the sale of your home in Yellow Knife and the purchase of a
home in the Cleveland, Ohio area. You will also be eligible for interim living expenses and will be
reimbursed for your reasonable travel expenses to Yellow Knife as frequently as every other
weekend, as you may elect for a reasonable period to be determined.

SEVERANCE PROTECTION

Separately, the Company will enter into a change-of-control severance agreement with you. This
agreement will provide, among other things, three years’ compensation (base salary plus target
bonus) in the event your position is eliminated or substantially diminished following a corporate
change-of-control.

 

 

EMPLOYEE BENEFIT PLANS

Subject to the eligibility rules of the various plans, you will be entitled to participate
in the pension, 401(k), life insurance, hospitalization and medical plans or insurance
coverage, disability, other employee benefit plans, programs and arrangements, and executive
perquisites that are generally made available by the Company to employees in your position
from time to time including certain non-qualified deferred compensation and supplemental
retirement plans. Attached is a brief summary of these benefits. Of course, the terms of the
benefit plans themselves will be determinative of the plan’s features subject to the
following:

Supplemental Employee Retirement Plan

In addition to your normal accruals under the Supplemental Employee Retirement Plan, you
will be given an initial credit to your cash balance account of $1,000,000 as of your Date
of Employment. Such credit, along with all other credits that you subsequently earn, will
vest and be payable in accordance with the terms of the Supplemental Employee Retirement
Plan.

Vacation Benefits

You will be eligible for four (4) weeks of vacation during 2005 and during each calendar
year thereafter.

Retiree Medical Coverage

Subsidized retiree medical coverage is not a part of the Company’s retirement benefit
program for employees hired or rehired after January 1, 1993.

Periodic Review of Benefit Plans

The Company periodically reviews all employee benefit plans and programs to ensure that
employees are offered competitive and affordable benefits. Accordingly, from time to time,
changes may be made to meet the future needs of employees, or to conform with industry
trends and practices or Company conditions. The Company reserves the right to amend or
terminate any such employee benefit plan, program or perquisite at any time and for any
reason without the consent of any employee or participant.

TERMS OF EMPLOYMENT

     This offer is contingent upon your successful completion of a Company pre-employment
physical and drug/alcohol screen, which will be administered and evaluated consistent with the
Americans with Disabilities Act of 1990.

     By accepting this offer as President and COO, you agree to act honestly, in good faith, and in
the Company’s best interests, and to exercise the degree of skill and diligence that a person
having your expertise and knowledge of the Company’s affairs would reasonably be expected to
exercise in comparable circumstances. Further, you agree to devote yourself exclusively and
full-time to the Company’s business and not to be employed or engaged in other businesses without
the Company’s prior written approval. You agree to observe and abide by all the Company’s policies,
rules and procedures, as

 

 

may be in effect from time to time, including the Company’s Code of Business Conduct and Ethics
policy. A copy of that policy is enclosed.

     In accordance with corporate policy, this letter and your response are not meant to constitute
a contract of employment for any specific period of time and you will remain, at all times, an
employee at-will, which means that you will not be obligated to remain employed by the Company for
any specific period of time. Likewise, the Company is not obligated to employ you for any specific
period of time. Absolutely no one except the Board of Directors of the Company may change the
at-will nature of our relationship, and then only in writing. Any reliance on any representations,
oral or otherwise, contrary to “employment-at-will” is unreasonable.

     Joe, I look forward to you joining the Cliffs’ team and working with you. We believe that you
will find the challenges to be significant, the rewards to be competitive, and the satisfaction to
be substantial in working for a highly professional organization with a proud history in a vital
industry.

     Please confirm in writing your acceptance of this offer and return the signed copy of the
enclosed Employee Invention and Secrecy Agreement with your confirmation.

     If you have any questions regarding the terms of the offer or the responsibility of the
position, please do not hesitate to contact me or Randy Kummer.

	 	 	 
	 

	 	Very truly yours,
	 

	 	/s/ John S. Brinzo
	 

	 	     John S. Brinzo

     Acceptance of Offer:

     I have read and understand and accept all the terms of the offer of employment as set forth in
the foregoing letter. I have not relied on any agreements or representations, express or implied,
that are not set forth expressly in the foregoing letter.

April 29, 2005

Date  

/s/ Joe Carrabba

  Joe Carrabba

JSB/drm

Enclosure

cc:    Randy L. Kummer

         Personnel FileExhibit 10(C)

 

Exhibit 10(c)

CLEVELAND-CLIFFS INC

Restricted Shares Agreement

          WHEREAS, Joseph A. Carrabba (the “Grantee”) is an employee of Cleveland-Cliffs Inc (the
“Company”) or a Subsidiary; and

          WHEREAS, the execution of a restricted shares agreement (“Agreement”) in the form hereof has
been authorized by a resolution of the Compensation and Organization Committee (the “Committee”) of
the Board of Directors (individually a “Director” and collectively the “Board”) of the Company that
was duly adopted on April 13, 2005;

          NOW, THEREFORE, pursuant to the Company’s 1992 Incentive Equity Plan (as Amended and Restated
as of May 13, 1997), as amended (the “Plan”), the Company hereby grants to the Grantee 3,800 shares
of the Company’s common stock, par value $.50 per share (the “Common Shares”), effective May 23,
2005 (the “Date of Grant”) subject to the terms and conditions of the Plan and the following terms,
conditions, limitations and restrictions:

	1.	 	     Issuance of Common Shares. The Common Shares covered by this Agreement shall be fully
paid and nonassessable and shall be represented by a certificate(s) registered in the name of
the Grantee and bearing a legend referring to the restrictions hereinafter set forth.

	2.	 	     Restrictions on Transfer of Common Shares. The Common Shares subject to this
Agreement may not be transferred, sold, pledged, exchanged, assigned or otherwise
encumbered or disposed of by the Grantee, except to the Company, until they have become
nonforfeitable in accordance with Section 3 hereof; provided, however, that
the Grantee’s interest in the Common Shares covered by this Agreement may be transferred at
any time by will or the laws of descent and distribution. Any purported transfer, encumbrance
or other disposition of the Common Shares covered by this Agreement that is in violation of
this Section 2 shall be null and void, and the other party to any such purported transaction
shall not obtain any rights to or interest in the Common Shares covered by this Agreement.
When and as permitted by the Plan, the Company may waive the restrictions set forth in this
Section 2 with respect to all or any portion of the Common Shares covered by this Agreement.

	3.	 	     Vesting of Common Shares. (a) The Common Shares covered by this Agreement shall
become one hundred percent (100%) nonforfeitable in accordance with the following schedule,
provided the Grantee remains in the continuous employ of the Company or a Subsidiary until
each date provided below:

	 	 	 	 	 
	Date of Vesting	 	Number of Shares Vesting	 
	May 23, 2006
	 	 	1,267	 
	 
	 	 	 	 
	May 23, 2007
	 	 	1,267	 
	 
	 	 	 	 
	May 23, 2008
	 	 	1,266	 

For the purposes of this Agreement: “Subsidiary” shall mean a corporation, partnership, joint
venture, unincorporated association or other entity in which the Company has a

 

 

direct or indirect ownership or other equity interest; the continuous employment of the
Grantee with the Company or a subsidiary shall not be deemed to have been interrupted, and the
Grantee shall not be deemed to have ceased to be an employee of the Company or a Subsidiary, by
reason of (i) the transfer of his employment among the Company and its Subsidiaries or (ii) a
leave of absence approved by the Committee for illness, military or governmental service or
other reasons.

	 	(b)	 	     Notwithstanding the provisions of Section 3(a) hereof, all of the Common Shares covered
by this Agreement shall become nonforfeitable upon any change in control of the Company
that shall occur while the Grantee is an employee of the Company or a Subsidiary, but only
if the Grantee’s employment is involuntarily terminated by the Company or if his employment
responsibilities and duties are substantially diminished within three (3) years after such
change in control. For the purposes of this Agreement, the term “change in control” shall
mean the occurrence 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 of 1934, as amended, (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
3(b)(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 3(b)(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 (as defined in Section (b) (iii) below) that
complies with clauses (A), (B) and (C) of Section 3(b)(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 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

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	 	(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 3(b)(iii).

	 	(c)	 	     For purposes of Section 3(b), voting stock means securities entitled to vote generally
in the election of directors, and 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.
	 
	 	(d)	 	     Notwithstanding the provisions of Section 3(a), the Common Shares covered by this
Agreement will become nonforfeitable on May 23, 2008 in the event that the employment of
the Grantee with the Company and its Subsidiaries shall be terminated prior to May 23, 2008
by reason of:

	 	(i)	 	his disability, death, or involuntary termination by the Company for a
reason other than “Cause” as defined in Section 3(e) below.

	 	(e)	 	     For purposes of this Section 3, the term “Cause” shall mean that the Grantee
shall have prior to any termination of employment 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

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	 	(ii)	 	intentional wrongful damage to property of the Company
or any Subsidiary; or
	 
	 	(iii)	 	intentional wrongful disclosure of secret processes or
confidential information of the Company or any Subsidiary.

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.

	4.	 	        Forfeiture of Common Shares.

	 	(a)	 	     Any of the Common Shares covered by this Agreement that have not become
nonforfeitable in accordance with Section 3 hereof shall be forfeited if the Grantee ceases
to be employed by the Company or a Subsidiary at any time prior to May 23, 2008 for a
reason other than the reasons set forth in Section 3(d) hereof. In the event of a
forfeiture, the certificates representing all of the Common Shares covered by this
Agreement that have not become nonforfeitable in accordance with Section 3 hereof shall be
cancelled.
	 
	 	(b)	 	     The Grantee shall not render services for any organization or engage directly or
indirectly in any business which is a competitor of the Company or any affiliate of the
Company, or which organization or business is or plans to become prejudicial to or in
conflict with the business interests of the Company or any affiliate of the Company.
	 
	 	(c)	 	     Failure to comply with the provisions of subsection (b) above will cause a Grantee to:
(i) forfeit his/her right to Common Shares covered by this Agreement, and (ii) reimburse
the Company for the value of any Common Shares that vest in the Grantee within the 90-day
period preceding his/her violation of subsection (b) above.
	 
	 	(d)	 	     Failure of the Grantee to repay to the Company the amount to be reimbursed in
subsection (c) above within three days of termination of employment will result in the
offset of said amount from the Grantee’s account balance in the Voluntary Non-Qualified
Deferred Compensation Plan (if applicable) and/or from any accrued salary or vacation pay
owed at the date of termination of employment or from future earnings payable by the
Grantee’s next employer.

	5.	 	        Dividend, Voting and Other Rights. The Grantee shall have all of the rights of a
shareholder with respect to the Common Shares covered by this Agreement, including the right
to vote the Common Shares and receive any dividends that may be paid thereon;
provided, however, that any additional Common shares that the Grantee may
become entitled to receive pursuant to a share dividend or a merger or reorganization in which
the Company is the surviving corporation or any other change in the capital structure of the

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	 	 	Company shall be subject to the same restrictions as the Common Shares covered by this
Agreement.
	 
	6.	 	     Retention of Share Certificate(s) by Company. The certificate(s) representing the
Common Shares covered by this Agreement shall be held in custody by the Company in book entry
form together with a stock power endorsed in blank by the Grantee with respect thereto, until
those shares have become nonforfeitable in accordance with Section 3 hereof.
	 
	7.	 	     Compliance with Law. The Company shall make reasonable efforts to comply with all
applicable federal and state securities laws; provided, however,
notwithstanding any other provision of this Agreement, the Company shall not be obligated to
issue any restricted or unrestricted Common Shares pursuant to this Agreement if the issuance
thereof would result in a violation of any such law. To the extent that the Ohio Securities
Act shall be applicable to this Agreement, the Company shall not be obligated to issue any
restricted or unrestricted Common Shares or other securities pursuant to this Agreement,
unless those shares or other securities are (a) exempt from registration thereunder, (b) the
subject of a transaction that is exempt from compliance therewith, (c) registered by
description or qualification thereunder or (d) the subject of a transaction that shall have
been registered by description thereunder.
	 
	8.	 	     Adjustments. The Committee shall make any adjustments in the number or kind of shares
of stock or other securities covered by this Agreement that the Committee may determine to be
equitably required to prevent any dilution or expansion of the Grantee’s rights under this
Agreement that otherwise would result from any (a) stock dividend, stock split, combination of shares, recapitalization or other change in the capital structure of the Company, (b) merger,
consolidation, separation, reorganization or partial or complete liquidation involving the
Company or (c) other transaction or event having an effect similar to any of those referred to
in Section 8(a) and 8(b) hereof. Furthermore, in the event that any transaction or event
described or referred to in the immediately preceding sentence shall occur, the Committee may
provide in substitution of any or all of the Grantee’s rights under this Agreement such
alternative consideration as the Committee may determine in good faith to be equitable under
the circumstances.
	 
	9.	 	     Withholding Taxes. If the Company shall be required to withhold any federal, state,
local or foreign tax in connection with any issuance of restricted or unrestricted Common
Shares or other securities pursuant to this Agreement, the Grantee shall pay the tax or make
provisions that are satisfactory to the Company for the payment thereof.
	 
	10.	 	     Right to Terminate Employment. No provision of this Agreement shall limit in any way
whatsoever any right that the Company or a Subsidiary may otherwise have to terminate the
employment of the Grantee at any time.
	 
	11.	 	     Relation to Other Benefits. Any economic or other benefit to the Grantee under this
Agreement or the Plan shall not be taken into account in determining any benefits to which the
Grantee may be entitled under any profit-sharing, retirement or other benefit or compensation
plan maintained by the Company or a Subsidiary and shall not affect the amount of any life
insurance coverage available to any beneficiary under any life insurance plan covering
employees of the Company or a Subsidiary.

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	12.	 	     Amendments. Any amendment to the Plan shall be deemed to be an amendment to this
Agreement to the extent that the amendment is applicable hereto; provided,
however, that no amendment shall adversely affect the rights of the Grantee with
respect to the Common Shares or other securities covered by this Agreement without the
Grantee’s consent.
	 
	13.	 	     Severability. In the event that one or more of the provisions of this Agreement shall
be invalidated for any reason by a court of competent jurisdiction, any provision so
invalidated shall be deemed to be separable from the other provisions hereof, and the
remaining provisions hereof shall continue to be valid and fully enforceable.
	 
	14.	 	     Governing Law. This Agreement is made under, and shall be construed in accordance
with, the laws of the State of Ohio.

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          This Agreement is executed by the Company on this 21st day of June, 2005.

	 	 	 
	 

	 	CLEVELAND-CLIFFS INC
	 
	 	 
	 

	 	By /s/ Randy L. Kummer
	 

	 	 
	 

	 	     Randy L. Kummer
	 

	 	     Senior Vice President - Human Resources

          The undersigned Grantee hereby acknowledges receipt of an executed original of this Agreement
and accepts the right to receive the Common Shares or other securities covered hereby, subject to
the terms and conditions of the Plan and the terms and conditions hereinabove set forth.

	 	 	 
	 

	 	/s/ Joseph A. Carrabba
	 

	 	 
	 

	 	Grantee
	 

	 	Date: June 21, 2005

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