Document:

EX-10.2

 

Exhibit 10.2

PERFORMANCE SHARE AGREEMENT (EMPLOYEE)

Pursuant to the JLG Industries, Inc.

Long Term Incentive Plan

     THIS AGREEMENT made as of this ___day of ___, 20___, by and between JLG
Industries, Inc., a Pennsylvania corporation (the “Company”) and ___(“Grantee”).

     WITNESSETH, that:

     WHEREAS, the Company has duly adopted the JLG Industries, Inc. Long Term Incentive Plan, a
copy of which as presently in effect is on file with the Company (the “Plan”); and

     WHEREAS, the Committee, pursuant to authority vested in it by the Board of Directors and by
the Plan, has approved the granting to the Grantee of an award of Performance Shares (the “Award”),
upon the terms and subject to the conditions hereinafter set forth, and the Company desires by this
instrument to grant said Award and to specify the terms and conditions thereof.

     NOW, THEREFORE, it is hereby covenanted and agreed by and between the Company and the Grantee
as follows (capitalized terms used but not defined herein shall have the same meanings as set forth
in the Plan):

     Section 1. Grant of Award. Pursuant to the Plan, the Company hereby awards to the Grantee a
maximum number of [insert maximum units payable] Performance Share units (“PSUs”). The number of
PSUs payable under this Award shall be determined based on the criteria set forth in Section 3 and
4 below. Payment of PSUs earned, if any, under this Award shall be paid in accordance with
Section 5 below.

     Section 2. Transfer Restrictions. The right to receive payment of PSUs under this Award shall
not be sold, assigned, conveyed, transferred, pledged, hypothecated or otherwise disposed of,
voluntarily or involuntarily, by the Grantee other than pursuant to the terms of this Agreement.

     Section 3. PSUs Payable.

     (a) The number of PSUs payable under this Award shall be based on the attainment of the
performance goals set forth in this Section 3 and on Schedule I attached hereto. The performance
period over which the performance goals shall be measured is [insert performance period, e.g., the
three consecutive fiscal years of the Company ending on ___] (the “Performance Period”)

     (b) The performance goals shall be based on achievement of the performance metrics over the
Performance Period as set forth on Schedule I attached hereto.

 

 

     Section 4. Vesting of Award; Change in Control. [Delete subsection (b) and/or (c) and lead-in
language to subsection (a) if early vesting will not be provided for death, disability and
retirement and/or change in control]

     (a) Except as provided in subsection (b) or (c), the PSUs payable under Section 3 shall be
forfeited and shall not be paid unless the Grantee remains continuously employed with the Company
throughout the Performance Period.

     (b) Notwithstanding subsection (a), if, during the Performance Period, the Grantee first
terminates employment with the Company because of the Grantee’s death, Disability, or retirement
(but only if the Grantee provides the Company with at least 60 days written notice of such
retirement), then the Grantee shall, at the end of the Performance Period, be paid an amount of
PSUs equal to the amount the Grantee would have received if the Grantee had remained continuously
employed through the end of the Performance Period, multiplied by a fraction, the numerator of
which is the full number of months during the Performance Period that the Grantee was actively
employed by the Company, and denominator of which is [insert number of months in Performance
Period]. For this purpose, the Grantee shall be deemed to have retired if the Grantee terminates
employment with the Company after becoming eligible for normal or early retirement under the JLG
Industries, Inc. Employees’ Retirement Savings Plan.

     (c) Notwithstanding subsection (a) and the performance criteria set forth on Schedule I, if a
Change in Control occurs during the Performance Period, the performance goals set forth on Schedule
I shall be deemed to have been satisfied at the maximum level, and the Grantee shall receive the
maximum number of PSUs payable as set forth on Schedule I.

     Section 5. Payment of PSUs.

     (a) Payment of PSUs payable under Section 3 shall be made by issuance and delivery to the
Grantee of one Share for each PSU payable.

     (b) Except as provided in subsection (c), Shares to be delivered to the Grantee shall be
delivered as soon as practical after the Committee has certified in writing that the PSUs are
payable; provided, however, that to the extent necessary to ensure compliance with Code Section
409A, the date of payment shall be a specified date after the end of Performance Period set forth
in the Plan or in an amendment to this Award.

     (c) If payment is trigged under Section 4(c) because of a Change in Control, then the Shares
will be delivered to the Grantee as soon as practical after such Change in Control; provided,
however, that if the Grantee is an “officer” of the Company (as such term is defined in Rule
16a-1(f) promulgated by the U.S. Securities and Exchange Commission) as of or within six months
prior to such Change in Control, and such Change in Control shall occur prior to the expiration of
six months after the date of this Agreement, payment of the Shares shall be postponed until
expiration of such six-month period.

     Section 6. Government Regulations. Notwithstanding anything contained herein to the contrary,
the Company’s obligation to issue or deliver Shares or deliver certificates

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evidencing the Shares shall be subject to the Company’s determination that such issuance or
delivery will be in compliance with all applicable laws, rules and regulations and the Company
shall have obtained all necessary approvals required by any governmental agencies, the New York
Stock Exchange or other national securities exchanges to effect the registration or listing of the
Shares.

     Section 7. Withholding Taxes. The Company shall have the right to require the Grantee to
remit to the Company, or to withhold from other amounts payable to the Grantee, as compensation or
otherwise, an amount sufficient to satisfy all federal, state and local withholding tax
requirements.

     Section 8. Captions. The description of headings of the sections of this Agreement are for
convenience only and shall not control or affect the meaning or construction of any provision of
this Agreement.

     Section 9. Rights as Shareholder.

     (a) The Grantee shall have no rights of a shareholder with respect to any Shares covered by
the PSUs until the date of issuance of Shares.

[use the following section (b) if no adjustment will be made for dividends]

     (b) No adjustment shall be made for dividends or distributions or other rights for which the
record date is prior to the date of issuance, except as provided in Section 10 below.

[use the following section (b) if adjustment will be made for dividends]

     (b) If a dividend is paid on Shares prior to the issuance of Shares pursuant to this Award,
the number of PSUs listed on Schedule I shall be adjusted upward to reflect such dividend, using
the Fair Market Value of Company Shares on the date such dividends are paid to Company
stockholders; provided however, that the PSUs, as adjusted, shall continue to be subject to the
requirements for payment set forth in Sections 3 and 4(c) and shall not be paid until the time
specified by Section 5.

     Section 10. Effect of Certain Transactions. The effects on the terms of any Share evidenced
hereby and on the rights and obligations of the Grantee and Company hereunder of a merger,
consolidation, reorganization, recapitalization or otherwise, or any dividend on the Shares,
payable in Shares, or stock split or combination of Shares, shall be determined in the manner
provided in Sections 22 and 23 of the Plan.

     Section 11. No Effect on Employment. Nothing contained in this Agreement shall confer upon the
Grantee any right to remain an employee of the Company. Nothing contained in this Agreement shall
be deemed by implication or otherwise to impose any limitation on any right of the Company or any
Subsidiary to terminate the Grantee’s employment at any time.

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     Section 12. Notices. Any notice to be given hereunder by the Grantee shall be either hand
delivered to the office of the General Counsel of the Company, sent by facsimile transmission to
the attention of the General Counsel of the Company at (240) 313-1807, or sent by mail or overnight
delivery service addressed to the Company for the attention of the General Counsel of the Company,
and any notice by the Company to the Grantee shall be hand delivered to the Grantee or sent by mail
or overnight delivery service addressed to the Grantee at the address shown on the signature page
hereof. Either party may, by notice given to the other in accordance with the provisions of this
Section, change the address to which subsequent notices shall be sent.

     Section 13. Plan Controls. The right to receive PSUs evidenced hereby has been awarded
pursuant to the Plan, and the Grantee hereby acknowledges receipt of a copy of the Plan and agrees
to be bound by all the terms and provisions thereof. The rights evidenced hereby are subject to all
other terms and provisions of the Plan, which are hereby incorporated into this Agreement by
reference. Subject to certain limitations set forth in Section 24 of the Plan, the Board of
Directors may at any time terminate, suspend, or modify the Plan, which such actions shall be
binding upon the Grantee. In the event of any conflict between the Plan and this Agreement, the
terms of the Plan shall be determinative. This Award and the Plan are intended to, and shall
comply with the requirements of, and shall be operated, administered, and interpreted in accordance
with, a good faith interpretation of Code Section 409A and Section 885 of the American Jobs
Creation Act of 2004 (the “AJCA”) to the extent applicable. If any provision of this Award is
inconsistent with the restrictions imposed by Code Section 409A or the AJCA, that provision shall
be deemed to be amended to the extent necessary to bring it into compliance with Code Section 409A
and the AJCA.

     Section 14. Governing Law. This Agreement shall be governed by the laws of Pennsylvania
without regard to conflicts of laws, except to the extent that such laws may be superseded by any
federal law.

     Section 15. Counterparts. This Agreement may be executed in one or more counterparts, all of
which together shall constitute one and the same instrument.

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     IN WITNESS WHEREOF, JLG Industries, Inc. has caused this Agreement to be executed in its
corporate name and the Grantee has executed the same in evidence of the Grantee’s acceptance hereof
upon the terms and conditions herein set forth, as of the day and year first above written.

	 	 	 	 	 	 
	 	 	JLG INDUSTRIES,
INC.

	 

	 	By:	 	 
	 

	 	 	 	 
	 

	 	 	 	Authorized Officer

	 	 	 	 
	 

	 	GRANTEE:

	 

	 	

Grantee

	 

	 	Address of Grantee:

	 

	 	

	 
	 

	 	

	 
	 

	 	

	 

	 	(tel): 

	 

	 	(fax): 

	 

	 	 

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SCHEDULE I

	   	[Set forth target(s) and criteria based on Performance Period set
forth in Section 3(a). If target(s) will provide for partial
payment of PSUs for partial achievement of target(s), set forth
here. Plan’s allowed performance criteria: (i) increase in net
sales; (ii) pretax income before allocation of corporate overhead
and/or bonus; (iii) budget; (iv) earnings per share; (v) net income;
(vi) attainment of division, group or corporate financial goals;
(vii) return on stockholders’ equity; (viii) return on assets; (ix)
attainment of strategic and operational initiatives; (x)
appreciation in or maintenance of the price of the common stock or
any other publicly-traded securities of the Company; (xi) increase
in market share; (xii) gross profits; (xiii) earnings before
interest and taxes; (xiv) earnings before interest, taxes,
depreciation and amortization; (xv) economic value-added models;
(xvi) comparisons with various stock market indices; (xvii)
comparisons with performance metrics of peer companies; or (xviii)
reductions in costs.]

6Exhibit 10(A)

 

Exhibit
10(a)

SEVERANCE AGREEMENT

          THIS SEVERANCE AGREEMENT (this “Agreement”), dated as of May 23, 2005 is made and entered by
and between Cleveland-Cliffs Inc, an Ohio corporation (the “Company”), and Joseph A. Carrabba (the
“Executive”).

WITNESSETH:

          WHEREAS, the Executive is a senior executive of the Company or one or more of its Subsidiaries
and is expected to make major contributions to the short- and long-term profitability, growth and
financial strength of the Company;

          WHEREAS, the Company recognizes that, as is the case for most publicly held companies, the
possibility of a Change in Control (as defined below) exists;

          WHEREAS, the Company desires to assure itself of both present and future continuity of
management and desires to establish certain minimum severance benefits for certain of its senior
executives, including the Executive, applicable in the event of a Change in Control;

          WHEREAS, the Company wishes to ensure that its senior executives are not practically disabled
from discharging their duties in respect of a proposed or actual transaction involving a Change in
Control; and

          WHEREAS, the Company desires to provide additional inducement for the Executive to continue to
remain in the employ of the Company.

          NOW, THEREFORE, the Company and the Executive agree as follows:

	1.	 	     Certain Defined Terms. In addition to terms defined elsewhere herein, the following
terms have the following meanings when used in this Agreement with initial capital letters:

	 	(a)	 	“Base Pay” means the Executive’s annual base salary rate as in effect from time
to time.
	 
	 	(b)	 	“Board” means the Board of Directors of the Company.
	 
	 	(c)	 	“Cause” means that, prior to any termination pursuant to Section 3(b), the
Executive shall have committed:

	 	(i)	 	     and been convicted of a criminal violation involving fraud,
embezzlement or theft in connection with his duties or in the course of his
employment with the Company or any Subsidiary;
	 
	 	(ii)	 	     intentional wrongful damage to property of the Company or any
Subsidiary;

 

 

	 	(iii)	 	     intentional wrongful disclosure of secret processes or
confidential information of the Company or any Subsidiary; or
	 
	 	(iv)	 	     intentional wrongful engagement in any Competitive Activity;

	 	 	and any such act shall have been demonstrably and materially harmful to the Company. For
purposes of this Agreement, no act or failure to act on the part of the Executive shall be
deemed “intentional” if it was due primarily to an error in judgment or negligence, but
shall be deemed “intentional” only if done or omitted to be done by the Executive not in
good faith and without reasonable belief that the Executive’s action or omission was in the
best interest of the Company. Notwithstanding the foregoing, the Executive shall not be
deemed to have been terminated for “Cause” hereunder unless and until there shall have been
delivered to the Executive a copy of a resolution duly adopted by the affirmative vote of
not less than three quarters of the Board then in office at a meeting of the Board called
and held for such purpose, after reasonable notice to the Executive and an opportunity for
the Executive, together with the Executive’s counsel (if the Executive chooses to have
counsel present at such meeting), to be heard before the Board, finding that, in the good
faith opinion of the Board, the Executive had committed an act constituting “Cause” as
herein defined and specifying the particulars thereof in detail. Nothing herein will limit
the right of the Executive or his beneficiaries to contest the validity or propriety of any
such determination.

	 	(d)	 	“Change in Control” means the occurrence during the Term of any of the
following events:

	 	(i)	 	     The acquisition by any individual, entity or group (within the
meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act) (a “Person”) of
beneficial ownership (within the meaning of Rule 13d-3 promulgated under the
Exchange Act) of 30% or more of the combined voting power of the then
outstanding Voting Stock of the Company; provided, however, that for purposes
of this Section 1(d)(i), the following acquisitions shall not constitute a
Change in Control: (A) any issuance of Voting Stock of the Company directly
from the Company that is approved by the Incumbent Board (as defined in Section
1(d)(ii), below), (B) any acquisition by the Company of Voting Stock of the
Company, (C) any acquisition of Voting Stock of the Company by any employee
benefit plan (or related trust) sponsored or maintained by the Company or any
Subsidiary, or (D) any acquisition of Voting Stock of the Company by any Person
pursuant to a Business Combination that complies with clauses (A), (B) and (C)
of Section 1(d)(iii), below; or
	 
	 	(ii)	 	     individuals who, as of the date hereof, constitute the Board
(the “Incumbent Board”) cease for any reason to constitute at least a majority
of the Board; provided, however, that any individual becoming a Director
subsequent to the date hereof whose election, or nomination for election by the
Company’s shareholders, was approved by a vote of at least a majority of the
Directors then comprising the Incumbent Board (either by

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	 	 	 	a specific vote or by approval of the proxy statement of the Company in
which such person is named as a nominee for director, without objection to
such nomination) shall be deemed to have been a member of the Incumbent
Board, but excluding, for this purpose, any such individual whose initial
assumption of office occurs as a result of an actual or threatened election
contest (within the meaning of Rule 14a-11 of the Exchange Act) with respect
to the election or removal of Directors or other actual or threatened
solicitation of proxies or consents by or on behalf of a Person other than
the Board; or
	 
	 	(iii)	 	     consummation of a reorganization, merger or consolidation
involving the Company, a sale or other disposition of all or substantially all
of the assets of the Company, or any other transaction involving the Company
(each, a “Business Combination”), unless, in each case, immediately following
such Business Combination, (A) all or substantially all of the individuals and
entities who were the beneficial owners of Voting Stock of the Company
immediately prior to such Business Combination beneficially own, directly or
indirectly, more than 55% of the combined voting power of the then
outstanding
shares of Voting Stock of the entity resulting from such Business Combination
(including, without limitation, an entity which as a result of such transaction
owns the Company or all or substantially all of the Company’s assets either
directly or through one or more subsidiaries) in substantially the same
proportions relative to each other as their ownership, immediately prior to
such Business Combination, of the Voting Stock of the Company, (B) no Person
(other than the Company, such entity resulting from such Business Combination,
or any employee benefit plan (or related trust) sponsored or maintained by the
Company, any Subsidiary or such entity resulting from such Business
Combination) beneficially owns, directly or indirectly, 30% or more of the
combined voting power of the then outstanding shares of Voting Stock of the
entity resulting from such Business Combination, and (C) at least a majority of
the members of the Board of Directors of the entity resulting from such
Business Combination were members of the Incumbent Board at the time of the
execution of the initial agreement or of the action of the Board providing for
such Business Combination; or
	 
	 	(iv)	 	     approval by the shareholders of the Company of a complete
liquidation or dissolution of the Company, except pursuant to a Business
Combination that complies with clauses (A), (B) and (C) of Section 1(d)(iii).

	 	(e)	 	“Competitive Activity” means the Executive’s participation, without the written
consent of the Chief Executive Officer, in the management of any business enterprise if
such enterprise engages in substantial and direct competition with the Company and such
enterprise’s sales of any product or service competitive with any product or service of
the Company amounted to 10% of such enterprise’s net

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	 	 	 	sales for its most recently completed fiscal year and if the Company’s net sales of
said product or service amounted to 10% of the Company’s net sales for its most
recently completed fiscal year. “Competitive Activity” will not include (i) the
mere ownership of securities in any such enterprise and the exercise of rights
appurtenant thereto or (ii) participation in the management of any such enterprise
other than in connection with the competitive operations of such enterprise.
	 
	 	(f)	 	“Employee Benefits” means the perquisites, benefits and service credit for
benefits as provided under any and all employee retirement income and welfare benefit
policies, plans, programs or arrangements in which Executive is entitled to
participate, including without limitation any stock option, performance share,
performance unit, stock purchase, stock appreciation, savings, pension, supplemental
executive retirement, or other retirement income or welfare benefit, deferred
compensation, incentive compensation, group or other life, health, medical/hospital or
other insurance (whether funded by actual insurance or self-insured by the Company or a
Subsidiary), disability, salary continuation, expense reimbursement and other employee
benefit policies, plans, programs or arrangements that may now exist or any equivalent
successor policies, plans, programs or arrangements that may be adopted hereafter by
the Company or a Subsidiary, providing perquisites, benefits and service credit for
benefits at least as great in value in the aggregate as are payable thereunder prior to
a Change in Control.
	 
	 	(g)	 	“Exchange Act” means the Securities Exchange Act of 1934, as amended.
	 
	 	(h)	 	“Incentive Pay” means an annual bonus, incentive or other payment of
compensation, in addition to Base Pay, made or to be made in regard to services
rendered in any year or other period pursuant to any bonus, incentive, profit-sharing,
performance, discretionary pay or similar agreement, policy, plan, program or
arrangement (whether or not funded) of the Company or a Subsidiary, or any successor
thereto.
	 
	 	(i)	 	“Industry Service” means professionally related service, prior to his
employment by the Company or a Subsidiary, by the Executive as an employee within the
iron, steel and mining industries or service within an industry to which such
Executive’s position with the Company relates. The Executive shall be given credit for
one year of Industry Service for every two years of service with the Company, as
designated in writing by, or in minutes of the actions of, the Compensation and
Organization Committee of the Board, and such years of credited Industry Service shall
be defined as “Credited Years of Industry Service.”
	 
	 	(j)	 	“Retirement Plans” means the retirement income, supplemental executive
retirement, excess benefits and retiree medical, life and similar benefit plans
providing retirement perquisites, benefits and service credit for benefits at least as
great in value in the aggregate as are payable thereunder prior to a Change in Control.

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	 	(k)	 	“Severance Period” means the period of time commencing on the date of the first
occurrence of a Change in Control and continuing until the earlier of (i) the second
anniversary of the occurrence of the Change in Control, or (ii) the Executive’s death.
	 
	 	(l)	 	“Subsidiary” means an entity in which the Company directly or indirectly
beneficially owns 50% or more of the outstanding capital or profits interests or Voting
Stock.
	 
	 	(m)	 	“Supplemental Retirement Plan” or “SRP” means the Cleveland-Cliffs Inc
Supplemental Retirement Benefit Plan (as Amended and Restated as of January 1, 2001),
as it may be amended prior to a Change in Control, and modified as provided in Annex A,
Paragraph (3).
	 
	 	(n)	 	“Term” means the period commencing as of the date hereof and expiring as of the
later of (i) the close of business on December 31, 2005, or (ii) the expiration of the
Severance Period; provided, however, that (A) commencing on January 1,
2006 and each January 1 thereafter, the term of this Agreement will automatically be
extended for an additional year unless, not later than September 30 of the immediately
preceding year, the Company or the Executive shall have given notice that it or the
Executive, as the case may be, does not wish to have the Term extended and (B) subject
to the last sentence of Section 9, if, prior to a Change in Control, the Executive
ceases for any reason to be an officer of the Company and any Subsidiary, thereupon
without further action the Term shall be deemed to have expired and this Agreement will
immediately terminate and be of no further effect. For purposes of this Section 1(n),
the Executive shall not be deemed to have ceased to be an employee of the Company and
any Subsidiary by reason of the transfer of Executive’s employment between the Company
and any Subsidiary, or among any Subsidiaries.
	 
	 	(o)	 	“Termination Date” means the date on which the Executive’s employment is
terminated pursuant to Section 3 (the effective date of which shall be the date of
termination, or such other date that may be specified by the Executive if the
termination is pursuant to Section 3(b)).
	 
	 	(p)	 	“Voting Stock” means securities entitled to vote generally in the election of
directors.

	2.	 	     Operation of Agreement. This Agreement will be effective and binding immediately
upon its execution, but, anything in this Agreement to the contrary notwithstanding, this
Agreement will not be operative unless and until a Change in Control occurs. Upon the
occurrence of a Change in Control at any time during the Term, without further action, this
Agreement shall become immediately operative, including without limitation, the last sentence
of Section 9 notwithstanding that the Term may have theretofore expired.

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	3.	 	     Termination Following a Change in Control. (a) In the event of the occurrence of
a Change in Control, the Executive’s employment may be terminated by the Company or a
Subsidiary during the Severance Period and the Executive shall be entitled to the benefits
provided by Section 4 unless such termination is the result of the occurrence of one or more
of the following events:

	 	(i)	 	     The Executive’s death;
	 
	 	(ii)	 	     If the Executive becomes permanently disabled within the
meaning of, and begins actually to receive disability benefits pursuant to, the
long-term disability plan in effect for, or applicable to, the Executive
immediately prior to the Change in Control; or
	 
	 	(iii)	 	     Cause.

If, during the Severance Period, the Executive’s employment is terminated by the Company or any
Subsidiary other than pursuant to Section 3(a)(i), 3(a)(ii) or 3(a)(iii), the Executive will be
entitled to the benefits provided by Section 4 hereof.

	 	(b)	 	In the event of the occurrence of a Change in Control, the Executive may
terminate employment with the Company and any Subsidiary during the Severance Period
with the right to severance compensation as provided in Section 4 upon the occurrence
of one or more of the following events (regardless of whether any other reason, other
than Cause as hereinabove provided, for such termination exists or has occurred,
including without limitation other employment):

	 	(i)	 	     Failure to elect or reelect or otherwise to maintain the
Executive in the office or the position, or a substantially equivalent office
or position, of or with the Company and/or a Subsidiary (or any successor
thereto by operation of law or otherwise), as the case may be, which the
Executive held immediately prior to a Change in Control, or the removal of the
Executive as a Director of the Company and/or a Subsidiary (or any successor
thereto) if the Executive shall have been a Director of the Company and/or a
Subsidiary immediately prior to the Change in Control;
	 
	 	(ii)	 	     (A) A significant adverse change in the nature or scope of the
authorities, powers, functions, responsibilities or duties attached to the
position with the Company and any Subsidiary which the Executive held
immediately prior to the Change in Control, (B) a reduction in the Executive’s
Base Pay, (C) a reduction in the Executive’s opportunity to receive Incentive
Pay from the Company and any Subsidiary, or (D) the termination or denial of
the Executive’s rights to Employee Benefits or a reduction in the scope or
value thereof, any of which is not remedied by the Company within 10 calendar
days after receipt by the Company of written notice from the Executive of such
change, reduction or termination, as the case may be;

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	 	(iii)	 	     A determination by the Executive (which determination will be
conclusive and binding upon the parties hereto provided it has been made in
good faith and in all events will be presumed to have been made in good faith
unless otherwise shown by the Company by clear and convincing evidence) that a
change in circumstances has occurred following a Change in Control, including,
without limitation, a change in the scope of the business or other activities
for which the Executive was responsible immediately prior to the Change in
Control, which has rendered the Executive substantially unable to carry out,
has substantially hindered Executive’s performance of, or has caused Executive
to suffer a substantial reduction in, any of the authorities, powers,
functions, responsibilities or duties attached to the position held by the
Executive immediately prior to the Change in Control, which situation is not
remedied within 10 calendar days after written notice to the Company from the
Executive of such determination;
	 
	 	(iv)	 	     The liquidation, dissolution, merger, consolidation or
reorganization of the Company or transfer of all or substantially all of its
business and/or assets, unless the successor or successors (by liquidation,
merger, consolidation, reorganization, transfer or otherwise) to which all or
substantially all of its business and/or assets have been transferred (by
operation of law or otherwise) assumed all duties and obligations of the
Company under this Agreement pursuant to Section 11(a);
	 
	 	(v)	 	     The Company relocates its principal executive offices (if such
offices are the principal location of Executive’s work), or requires the
Executive to have his principal location of work changed, to any location that,
in either case, is in excess of 25 miles from the location thereof immediately
prior to the Change in Control, without his prior written consent; or
	 
	 	(vi)	 	     Without limiting the generality or effect of the foregoing, any
material breach of this Agreement by the Company or any successor thereto which
is not remedied by the Company within 10 calendar days after receipt by the
Company of written notice from the Executive of such breach.

	 	(c)	 	A termination by the Company pursuant to Section 3(a) or by the Executive
pursuant to Section 3(b) will not affect any rights that the Executive may have
pursuant to any agreement, policy, plan, program or arrangement of the Company or
Subsidiary providing Employee Benefits, which rights shall be governed by the terms
thereof, except for any rights to severance compensation to which the Executive may be
entitled upon termination of employment under any severance pay policy, plan, program
or arrangement of the Company, which rights shall, during the Severance Period, be
superseded by this Agreement.

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	4.	 	     Severance Compensation. (a) If, following the occurrence of a Change in Control,
the Company or Subsidiary terminates the Executive’s employment during the Severance Period
other than pursuant to Section 3(a)(i), 3(a)(ii) or 3(a)(iii), or if the Executive terminates
his employment pursuant to Section 3(b), the Company will pay to the Executive the amounts
described in Annex A within ten business days after the Termination Date, or, if later, upon
the expiration of the revocation period provided for in Exhibit A, and will continue to
provide to the Executive the benefits described on Annex A for the periods described therein.

	 	(b)	 	     Without limiting the rights of the Executive at law or in equity, if the
Company fails to make any payment or provide any benefit required to be made or
provided hereunder on a timely basis, the Company will pay interest on the amount or
value thereof at an annualized rate of interest equal to the so-called composite “prime
rate” as quoted from time to time during the relevant period in the Midwest Edition of
The Wall Street Journal, plus 2%. Such interest will be payable as it accrues
on demand. Any change in such prime rate will be effective on and as of the date of
such change.
	 
	 	(c)	 	     Notwithstanding any provision of this Agreement to the contrary, the parties’
respective rights and obligations under this Section 4 and under Sections 5, 7, 8 and
the last sentence of Section 9 and Paragraph (3) of Annex A will survive any
termination or expiration of this Agreement or the termination of the Executive’s
employment following a Change in Control for any reason whatsoever.
	 
	 	(d)	 	     Unless otherwise expressly provided by the applicable policy, plan, program or
agreement, after the occurrence of a Change in Control, the Company shall pay in cash
to the Executive a lump sum amount equal to the value of any annual bonus or long-term
incentive pay (including, without limitation, incentive-based annual cash bonuses and
performance units, but not including any equity-based compensation or compensation
provided under a qualified plan) earned or granted with respect to the Executive’s
service during the performance period or periods that includes the date on which the
Change in Control occurred, disregarding any applicable vesting requirements; provided
that such amount shall be calculated at the plan target rate, but prorated on the
portion of the Executive’s service that had elapsed during the applicable performance
period. Such payment shall take into account service rendered through the payment date
and shall be made at the earlier of (i) the date prescribed for payment pursuant to the
applicable plan, program or agreement, and (ii) within five business days after the
Termination Date.
	 
	 	(e)	 	     Notwithstanding any provision to the contrary in any applicable policy, plan,
program or agreement, upon the occurrence of a Change in Control, all

8

 

	 	 	 	equity incentive grants and awards held by the Executive shall become fully vested
and all stock options held by the Executive shall become fully exercisable.

	5.	 	     Certain Additional Payments by the Company. (a) Anything in this Agreement to the
contrary notwithstanding, in the event that this Agreement shall become operative and it shall
be determined (as hereafter provided) that any payment (other than the Gross-Up payments
provided for in this Section 5) or distribution by the Company or any of its affiliates to or
for the benefit of the Executive, whether paid or payable or distributed or distributable
pursuant to the terms of this Agreement or otherwise pursuant to or by reason of any other
agreement, policy, plan, program or arrangement, including without limitation any stock
option, performance share, performance unit, stock appreciation right or similar right, or the
lapse or termination of any restriction on or the vesting or exercisability of any of the
foregoing (a “Payment”), would be subject to the excise tax imposed by Section 4999 of the
Internal Revenue Code of 1986, as amended (the “Code”) (or any successor provision thereto) by
reason of being considered “contingent on a change in ownership or control” of the Company,
within the meaning of Section 280G of the Code (or any successor provision thereto) or to any
similar tax imposed by state or local law, or any interest or penalties with respect to such
tax (such tax or taxes, together with any such interest and penalties, being hereafter
collectively referred to as the “Excise Tax”), then the Executive shall be entitled to receive
an additional payment or payments (collectively, a “Gross-Up
Payment”); provided, however,
that no Gross-up Payment shall be made with respect to the Excise Tax, if any, attributable to
(i) any incentive stock option, as defined by Section 422 of the Code (“ISO”) granted prior to
the execution of this Agreement, or (ii) any stock appreciation or similar right, whether or
not limited, granted in tandem with any ISO described in clause (i). The Gross-Up Payment
shall be in an amount such that, after payment by the Executive of all taxes (including any
interest or penalties imposed with respect to such taxes), including any Excise Tax imposed
upon the Gross-Up Payment, the Executive retains an amount of the Gross-Up Payment equal to
the Excise Tax imposed upon the Payment.

	 	(b)	 	     Subject to the provisions of Section 5(f), all determinations required to be
made under this Section 5, including whether an Excise Tax is payable by the Executive
and the amount of such Excise Tax and whether a Gross-Up Payment is required to be paid
by the Company to the Executive and the amount of such Gross-Up Payment, if any, shall
be made by a nationally recognized accounting firm (the “Accounting Firm”) selected by
the Executive in his sole discretion. The Executive shall direct the Accounting Firm
to submit its determination and detailed supporting calculations to both the Company
and the Executive within 30 calendar days after the Termination Date, if applicable,
and any such other time or times as may be requested by the Company or the Executive.
If the Accounting Firm determines that any Excise Tax is payable by the Executive, the
Company shall pay the required Gross-Up Payment to the Executive within five business
days after receipt of such determination and calculations with respect to any Payment
to the Executive. If the Accounting Firm determines that no Excise Tax

9

 

	 	 	 	is payable by the Executive, it shall, at the same time as it makes such
determination, furnish the Company and the Executive an opinion that the Executive
has substantial authority not to report any Excise Tax on his federal, state or
local income or other tax return. As a result of the uncertainty in the application
of Section 4999 of the Code (or any successor provision thereto) and the possibility
of similar uncertainty regarding applicable state or local tax law at the time of
any determination by the Accounting Firm hereunder, it is possible that Gross-Up
Payments which will not have been made by the Company should have been made (an
“Underpayment”), consistent with the calculations required to be made hereunder. In
the event that the Company exhausts or fails to pursue its remedies pursuant to
Section 5(f) and the Executive thereafter is required to make a payment of any
Excise Tax, the Executive shall direct the Accounting Firm to determine the amount
of the Underpayment that has occurred and to submit its determination and detailed
supporting calculations to both the Company and the Executive as promptly as
possible. Any such Underpayment shall be promptly paid by the Company to, or for
the benefit of, the Executive within five business days after receipt of such
determination and calculations.
	 
	 	(c)	 	     The Company and the Executive shall each provide the Accounting Firm access to
and copies of any books, records and documents in the possession of the Company or the
Executive, as the case may be, reasonably requested by the Accounting Firm, and
otherwise cooperate with the Accounting Firm in connection with the preparation and
issuance of the determinations and calculations contemplated by Section 5(b). Any
determination by the Accounting Firm as to the amount of the Gross-Up Payment shall be
binding upon the Company and the Executive.
	 
	 	(d)	 	     The federal, state and local income or other tax returns filed by the Executive
shall be prepared and filed on a consistent basis with the determination of the
Accounting Firm with respect to the Excise Tax payable by the Executive. The Executive
shall make proper payment of the amount of any Excise Payment, and at the request of
the Company, provide to the Company true and correct copies (with any amendments) of
his federal income tax return as filed with the Internal Revenue Service and
corresponding state and local tax returns, if relevant, as filed with the applicable
taxing authority, and such other documents reasonably requested by the Company,
evidencing such payment. If prior to the filing of the Executive’s federal income tax
return, or corresponding state or local tax return, if relevant, the Accounting Firm
determines that the amount of the Gross-Up Payment should be reduced, the Executive
shall within five business days pay to the Company the amount of such reduction.
	 
	 	(e)	 	     The fees and expenses of the Accounting Firm for its services in connection
with the determinations and calculations contemplated by Section 5(b) shall be borne by
the Company. If such fees and expenses are initially paid by the Executive, the
Company shall reimburse the Executive the full amount of such fees and expenses within
five business days after receipt from the Executive of a statement therefor and
reasonable evidence of his payment thereof.

10

 

	 	(f)	 	     The Executive shall notify the Company in writing of any claim by the Internal
Revenue Service or any other taxing authority that, if successful, would require the
payment by the Company of a Gross-Up Payment. Such notification shall be given as
promptly as practicable but no later than 10 business days after the Executive actually
receives notice of such claim and the Executive shall further apprise the Company of
the nature of such claim and the date on which such claim is requested to be paid (in
each case, to the extent known by the Executive). The Executive shall not pay such
claim prior to the earlier of (i) the expiration of the 30-calendar-day period
following the date on which he gives such notice to the Company and (ii) the date that
any payment of amount with respect to such claim is due. If the Company notifies the
Executive in writing prior to the expiration of such period that it desires to contest
such claim, the Executive shall:

	 	(i)	 	     provide the Company with any written records or documents in
his possession relating to such claim reasonably requested by the Company;
	 
	 	(ii)	 	     take such action in connection with contesting such claim as
the Company shall reasonably request in writing from time to time, including
without limitation accepting legal representation with respect to such claim by
an attorney competent in respect of the subject matter and reasonably selected
by the Company;
	 
	 	(iii)	 	     cooperate with the Company in good faith in order effectively
to contest such claim; and
	 
	 	(iv)	 	     permit the Company to participate in any proceedings relating
to such claim;

provided, however, that the Company shall bear and pay directly all costs and
expenses (including interest and penalties) incurred in connection with such contest and shall
indemnify and hold harmless the Executive, on an after-tax basis, for and against any Excise Tax or
income tax, including interest and penalties with respect thereto, imposed as a result of such
representation and payment of costs and expenses. Without limiting the foregoing provisions of
this Section 5(f), the Company shall control all proceedings taken in connection with the contest
of any claim contemplated by this Section 5(f) and, at its sole option, may pursue or forego any
and all administrative appeals, proceedings, hearings and conferences with the taxing authority in
respect of such claim (provided, however, that the Executive may participate therein at his own
cost and expense) and may, at its option, either direct the Executive to pay the tax claimed and
sue for a refund or contest the claim in any permissible manner, and the Executive agrees to
prosecute such contest to a determination before any administrative tribunal, in a court of initial
jurisdiction and in one or more appellate courts, as the Company shall determine; provided,
however, that if the Company directs the Executive to pay the tax claimed and sue for a
refund, the Company shall advance the amount of such payment to the Executive on an interest-free
basis and shall indemnify and hold the Executive harmless, on an after-tax basis, from any Excise
Tax or income or other tax, including interest or penalties with respect thereto, imposed with
respect to such advance; and provided further, however, that any extension
of the statute of

11

 

limitations relating to payment of taxes for the taxable year of the Executive with respect to
which the contested amount is claimed to be due is limited solely to such contested amount.
Furthermore, the Company’s control of any such contested claim shall be limited to issues with
respect to which a Gross-Up Payment would be payable hereunder and the Executive shall be entitled
to settle or contest, as the case may be, any other issue raised by the Internal Revenue Service or
any other taxing authority.

	 	(g)	 	     If, after the receipt by the Executive of an amount advanced by the Company
pursuant to Section 5(f), the Executive receives any refund with respect to such claim,
the Executive shall (subject to the Company’s complying with the requirements of
Section 5(f)) promptly pay to the Company the amount of such refund (together with any
interest paid or credited thereon after any taxes applicable thereto). If, after the
receipt by the Executive of an amount advanced by the Company pursuant to Section 5(f),
a determination is made that the Executive shall not be entitled to any refund with
respect to such claim and the Company does not notify the Executive in writing of its
intent to contest such denial or refund prior to the expiration of 30 calendar days
after such determination, then such advance shall be forgiven and shall not be required
to be repaid and the amount of any such advance shall offset, to the extent thereof,
the amount of Gross-Up Payment required to be paid by the Company to the Executive
pursuant to this Section 5.

	6.	 	     No Mitigation Obligation. The Company hereby acknowledges that it will be difficult
and may be impossible for the Executive to find reasonably comparable employment following the
Termination Date and that the non-competition covenant contained in Section 8 will further
limit the employment opportunities for the Executive. In addition, the Company acknowledges
that its severance pay plans applicable in general to its salaried employees do not provide
for mitigation, offset or reduction of any severance payment received thereunder.
Accordingly, the payment of the severance compensation by the Company to the Executive in
accordance with the terms of this Agreement is hereby acknowledged by the Company to be
reasonable, and the Executive will not be required to mitigate the amount of any payment
provided for in this Agreement by seeking other employment or otherwise, nor will any profits,
income, earnings or other benefits from any source whatsoever create any mitigation, offset,
reduction or any other obligation on the part of the Executive hereunder or otherwise, except
as expressly provided in the last sentence of Paragraph (2) set forth on Annex A.

	7.	 	     Legal Fees and Expenses. (a) It is the intent of the Company that the Executive
not be required to incur legal fees and the related expenses associated with the
interpretation, enforcement or defense of Executive’s rights under this Agreement by
litigation or otherwise because the cost and expense thereof would substantially detract from
the benefits intended to be extended to the Executive hereunder. Accordingly, if it should
appear to the Executive that the Company has failed to comply with any of its obligations
under this Agreement or in the event that the Company or any other person takes or threatens
to take any action to declare this Agreement void or unenforceable, or institutes any
litigation or other action or proceeding designed to deny, or to recover from, the Executive
the

12

 

	 	 	benefits provided or intended to be provided to the Executive hereunder, the Company
irrevocably authorizes the Executive from time to time to retain counsel of
Executive’s choice, at the expense of the Company as hereafter provided, to advise
and represent the Executive in connection with any such interpretation, enforcement
or defense, including without limitation the initiation or defense of any litigation
or other legal action, whether by or against the Company or any Director, officer,
stockholder or other person affiliated with the Company, in any jurisdiction.
Notwithstanding any existing or prior attorney-client relationship between the
Company and such counsel, the Company irrevocably consents to the Executive’s
entering into an attorney-client relationship with such counsel, and in that
connection the Company and the Executive agree that a confidential relationship
shall exist between the Executive and such counsel. Without respect to whether the
Executive prevails, in whole or in part, in connection with any of the foregoing,
the Company will pay and be solely financially responsible for any and all
attorneys’ and related fees and expenses incurred by the Executive in connection
with any of the foregoing; provided that, in regard to such matters, the Executive
has not acted in bad faith or with no colorable claim of success.

	 	(b)	 	     To ensure that the provisions of this Agreement can be enforced by the
Executive, certain trust arrangements (“Trusts”) have been established between KeyTrust
Company of Ohio, N.A., as Trustee (“Trustee”), and the Company. Each of Trust
Agreement No. 1 (Amended and Restated Effective June 1, 1997, as amended) (“Trust
Agreement No. 1”), Trust Agreement No. 2 (Amended and Restated Effective October 15,
2002, as amended) (“Trust Agreement No. 2”), and Trust Agreement No. 7 dated April 9,
1991, as amended (“Trust Agreement No. 7”), as it may be subsequently amended and/or
restated, between the Trustee and the Company, sets forth the terms and conditions
relating to payment from Trust Agreement No. 1 of compensation, pension benefits and
other benefits pursuant to the Agreement owed by the Company, payment from Trust
Agreement No. 2 for attorneys’ fees and related fees and expenses pursuant to Section
7(a) hereof owed by the Company, and payment from Trust Agreement No. 7 of pension
benefits owed by the Company. Executive shall make demand on the Company for any
payments due Executive pursuant to Section 7(a) hereof prior to making demand therefor
on the Trustee under Trust Agreement No. 2.
	 
	 	(c)	 	     Upon the earlier to occur of (i) a Change in Control or (ii) a declaration by
the Board that a Change Control is imminent, the Company shall promptly to the extent
it has not previously done so, and in any event within five (5) business days:

	 	(A)	 	transfer to Trustee to be added to the
principal of the Trust under Trust Agreement No. 1 a sum equal to (I)
the present value on the date of the Change in Control (or on such
fifth business day if the Board has declared a Change in Control to be
imminent) of the payments to be made to Executive under the provisions
of Annex A and Section 5 hereof, such present value to be computed
using the assumptions set forth in Annex A hereof and the computations

13

 

	 	 	 	provided for in Section 5 hereof less (II) the balance in the
Executive’s accounts provided for in Trust Agreement No. 1 as of the
most recent completed valuation thereof, as certified by the Trustee
under Trust Agreement No. 1 less (III) the balance in the Executive’s
accounts provided for in Trust Agreement No. 7 as of the most
recently completed valuation thereof, as certified by the Trustee
under Trust Agreement No. 7; provided, however, that if the Trustee
under Trust Agreement No. 1 and/or Trust Agreement No. 7 does not so
certify by the end of the fourth (4th) business day after the earlier
of such Change in Control or declaration, then the balance of such
respective account shall be deemed to be zero. Any payments of
compensation, pension or other benefits by the Trustee pursuant to
Trust Agreement No. 1 or Trust Agreement No. 7 shall, to the extent
thereof, discharge the Company’s obligation to pay compensation,
pension and other benefits hereunder, it being the intent of the
Company that assets in such Trusts be held as security for the
Company’s obligation to pay compensation, pension and other benefits
under this Agreement; and
	 
	 	(B)	 	transfer to the Trustee to be added to the
principal of the Trust under Trust Agreement No. 2 the sum of TWO
HUNDRED FIFTY THOUSAND DOLLARS ($250,000) less any principal in such
Trust on such fifth business day. Any payments of the Executive’s
attorneys’ and related fees and expenses by the Trustee pursuant to
Trust Agreement No. 2 shall, to the extent thereof, discharge the
Company’s obligation hereunder, it being the intent of the Company that
assets in such Trust be held as security for the Company’s obligation
under Section 7(a) hereof. Executive understands and acknowledges that
the entire corpus of the Trust under Trust Agreement No. 2 will be
$250,000 and that said amount will be available to discharge not only
the obligations of the Company to Executive under Section 7(a) hereof,
but also similar obligations of the Company to other executives and
employees under similar provisions of other agreements and plans.

	8.	 	     Competitive Activity; Confidentiality; Nonsolicitation. (a) During the Term and
for a period ending two years following the Termination Date, if the Executive shall have
received or shall be receiving benefits under Section 4, and, if applicable, Section 5, the
Executive shall not, without the prior written consent of the Company, which consent shall not
be unreasonably withheld, engage in any Competitive Activity.

	 	(b)	 	     During the Term, the Company agrees that it will disclose to Executive its
confidential or proprietary information (as defined in this Section 8(b)) to the extent
necessary for Executive to carry out his obligations to the Company. The Executive
hereby covenants and agrees that he will not, without the prior written

14

 

	 	 	 	consent of the Company, during the Term or thereafter disclose to any person not
employed by the Company, or use in connection with engaging in competition with the
Company, any confidential or proprietary information of the Company. For purposes
of this Agreement, the term “confidential or proprietary information” will include
all information of any nature and in any form that is owned by the Company and that
is not publicly available (other than by Executive’s breach of this Section 8(b)) or
generally known to persons engaged in businesses similar or related to those of the
Company. Confidential or proprietary information will include, without limitation,
the Company’s financial matters, customers, employees, industry contracts, strategic
business plans, product development (or other proprietary product data), marketing
plans, and all other secrets and all other information of a confidential or
proprietary nature. For purposes of the preceding two sentences, the term “Company”
will also include any Subsidiary (collectively, the “Restricted Group”). The
foregoing obligations imposed by this Section 8(b) will not apply (i) during the
Term, in the course of the business of and for the benefit of the Company, (ii) if
such confidential or proprietary information will have become, through no fault of
the Executive, generally known to the public or (iii) if the Executive is required
by law to make disclosure (after giving the Company notice and an opportunity to
contest such requirement).
	 
	 	(c)	 	     The Executive hereby covenants and agrees that during the Term and for two
years thereafter Executive will not, without the prior written consent of the Company,
which consent shall not unreasonably be withheld, on behalf of Executive or on behalf
of any person, firm or company, directly or indirectly, attempt to influence, persuade
or induce, or assist any other person in so persuading or inducing, any employee of the
Restricted Group to give up, or to not commence, employment or a business relationship
with the Restricted Group.

	9.	 	     Employment Rights. Nothing expressed or implied in this Agreement will create any
right or duty on the part of the Company or the Executive to have the Executive remain in the
employment of the Company or any Subsidiary prior to or following any Change in Control. Any
termination of employment of the Executive or the removal of the Executive from the office or
position in the Company or any Subsidiary that occurs (i) not more than 180 days prior to the
date on which a Change in Control occurs, and (ii) following the commencement of any
discussion with a third person that ultimately results in a Change in Control, shall be deemed
to be a termination or removal of the Executive after a Change in Control for purposes of this
Agreement.
	 
	10.	 	     Withholding of Taxes. The Company may withhold from any amounts payable under this
Agreement all federal, state, city or other taxes as the Company is required to withhold
pursuant to any applicable law, regulation or ruling.

	11.	 	     Successors and Binding Agreement. (a) The Company will require any successor
(whether direct or indirect, by purchase, merger, consolidation, reorganization or otherwise)
to all or substantially all of the business or assets of the Company, by agreement in form and
substance reasonably satisfactory to the

15

 

	 	 	Executive, expressly to assume and agree to perform this Agreement in the same
manner and to the same extent the Company would be required to perform if no such
succession had taken place. This Agreement will be binding upon and inure to the
benefit of the Company and any successor to the Company, including without
limitation any persons acquiring directly or indirectly all or substantially all of
the business or assets of the Company whether by purchase, merger, consolidation,
reorganization or otherwise (and such successor shall thereafter be deemed the
“Company” for the purposes of this Agreement), but will not otherwise be assignable,
transferable or delegable by the Company.

	 	(b)	 	     This Agreement will inure to the benefit of and be enforceable by the
Executive’s personal or legal representatives, executors, administrators, successors,
heirs, distributees and legatees.

	 	(c)	 	     This Agreement is personal in nature and neither of the parties hereto shall,
without the consent of the other, assign, transfer or delegate this Agreement or any
rights or obligations hereunder except as expressly provided in Sections 11(a) and
11(b). Without limiting the generality or effect of the foregoing, the Executive’s
right to receive payments hereunder will not be assignable, transferable or delegable,
whether by pledge, creation of a security interest, or otherwise, other than by a
transfer by Executive’s will or by the laws of descent and distribution and, in the
event of any attempted assignment or transfer contrary to this Section 11(c), the
Company shall have no liability to pay any amount so attempted to be assigned,
transferred or delegated.

	12.	 	     Notices. For all purposes of this Agreement, all communications, including without
limitation notices, consents, requests or approvals, required or permitted to be given
hereunder will be in writing and will be deemed to have been duly given when hand delivered or
dispatched by electronic facsimile transmission (with receipt thereof orally confirmed), or
five business days after having been mailed by United States registered or certified mail,
return receipt requested, postage prepaid, or three business days after having been sent by a
nationally recognized overnight courier service such as FedEx, UPS, or Purolator, addressed to
the Company (to the attention of the Secretary of the Company) at its principal executive
office and to the Executive at his principal residence, or to such other address as any party
may have furnished to the other in writing and in accordance herewith, except that notices of
changes of address shall be effective only upon receipt.
	 
	13.	 	     Governing Law. The validity, interpretation, construction and performance of this
Agreement will be governed by and construed in accordance with the substantive laws of the
State of Ohio, without giving effect to the principles of conflict of laws of such State.
	 
	14.	 	     Validity. If any provision of this Agreement or the application of any provision
hereof to any person or circumstances is held invalid, unenforceable or otherwise illegal, the
remainder of this Agreement and the application of such provision to any other person or
circumstances will not be affected, and the provision so held to be

16

 

	 	 	invalid, unenforceable or otherwise illegal will be reformed to the extent (and only to the
extent) necessary to make it enforceable, valid or legal.
	 
	15.	 	     Miscellaneous. No provision of this Agreement may be modified, waived or discharged
unless such waiver, modification or discharge is agreed to in writing signed by the Executive
and the Company. No waiver by either party hereto at any time of any breach by the other
party hereto or compliance with any condition or provision of this Agreement to be performed
by such other party will be deemed a waiver of similar or dissimilar provisions or conditions
at the same or at any prior or subsequent time. No agreements or representations, oral or
otherwise, expressed or implied with respect to the subject matter hereof have been made by
either party which are not set forth expressly in this Agreement. References to Sections are
to references to Sections of this Agreement.
	 
	16.	 	     Construction. The masculine gender, when used in this Agreement, shall be deemed to
include the feminine gender and the singular number shall include the plural, unless the
context clearly indicates to the contrary.
	 
	17.	 	     Counterparts. This Agreement may be executed in one or more counterparts, each of
which shall be deemed to be an original but all of which together will constitute one and the
same agreement.

          IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed and delivered
as of the date first above written.

	 	 	 	 	 
	 	 	CLEVELAND-CLIFFS INC
	 
	 	 	 	 
	 

	 	By:
	 	/s/ J. S. Brinzo
	 

	 	 	 	 
	 

	 	 	 	J. S. Brinzo

Chairman and Chief Executive Officer
	 
	 	 	 	 
	 

	 	 	 	/s/ Joseph A. Carrabba
	 

	 	 	 	 

	 

	 	 	 	Joseph A. Carrabba

17

 

Annex A

Severance Compensation

          (1)     A lump sum payment in an amount equal to three (3) times the sum of (A) Base Pay (at the
highest rate in effect for any period prior to the Termination Date), plus (B) Incentive Pay (in an
amount equal to not less than the greater of (i) the target bonus and/or target award opportunity
for the fiscal year immediately preceding the year in which the Change in Control occurred, or (ii)
the target bonus and/or target award opportunity for the fiscal year in which the Termination Date
occurs).

          (2)     For a period of thirty-six (36) months following the Termination Date (the “Continuation
Period”), the Company will arrange to provide the Executive with Employee Benefits that are welfare
benefits (but not stock option, performance share, performance unit, stock purchase, stock
appreciation or similar compensatory benefits) substantially similar to those that the Executive
was receiving or entitled to receive immediately prior to the Termination Date (or, if greater,
immediately prior to the reduction, termination, or denial described in Section 3(b)(ii)). If and
to the extent that any benefit described in this Paragraph 2 is not or cannot be paid or provided
under any policy, plan, program or arrangement of the Company or any Subsidiary, as the case may
be, then the Company will itself pay or provide for the payment to the Executive, his dependents
and beneficiaries, of such Employee Benefits along with, in the case of any benefit described in
this Paragraph 2 which is subject to tax because it is not or cannot be paid or provided under any
such policy, plan, program or arrangement of the Company or any Subsidiary, an additional amount
such that after payment by the Executive, or his dependents or beneficiaries, as the case may be,
of all taxes so imposed, the recipient retains an amount equal to such taxes. Notwithstanding the
foregoing, or any other provision of the Agreement, for purposes of determining the period of
continuation coverage to which the Executive or any of his dependents is entitled pursuant to
Section 4980B of the Code (or any successor provision thereto) under the Company’s medical, dental
and other group health plans, or successor plans, the Executive’s “qualifying event” shall be the
termination of the Continuation Period and the Executive shall be considered to have remained
actively employed on a full-time basis through that date. Without otherwise limiting the purposes
or effect of Section 5, Employee Benefits otherwise receivable by the Executive pursuant to this
Paragraph 2 will be reduced to the extent comparable welfare benefits are actually received by the
Executive from another employer during the Continuation Period following the Executive’s
Termination Date, and any such benefits actually received by the Executive shall be reported by the
Executive to the Company.

          (3)     A lump sum payment (the “SRP Payment”) in an amount equal to the sum of the future pension
benefits (converted to a lump sum of actuarial equivalence) which the Executive would have been
entitled to receive three (3) years following the Termination Date under the SRP, and as modified
by this Paragraph (3) (assuming Base Salary and Incentive Pay as determined in Paragraph (1), if
the Executive had remained in the full-time employment of the Company until three (3) years
following the Termination Date.

A-1

 

The calculation of the SRP Payment and its actuarial equivalence shall be made as of the
Termination Date. The lump sum of actuarial equivalence shall be calculated as of three (3) years
following the Termination Date using the assumptions and factors used in the SRP, and such sum
shall be discounted to the date of payment using a discount rate prescribed for purposes of
valuation computations under Section 280G of the Internal Revenue Code of 1986, as amended (the
“Code”) or any successor provision thereto, or if no rate is so prescribed, a rate equal to the
then “applicable interest rate” under Section 417(e)(3)(A)(ii)(II) of the Code for the month in
which the Termination Date occurs.

The Company hereby waives the discretionary right, at any time subsequent to the date of a Change
in Control, to amend or terminate the SRP as to the Executive as provided in paragraph 7 thereof or
to terminate the rights of the Executive or his beneficiary under the SRP in the event Executive
engages in a competitive business as provided in any plan or arrangement between the Company and
the Executive or applicable to the Executive, including but not limited to, the provisions of
paragraph 4 of the SRP, or any similar provisions of any such plan or arrangement or other plan or
arrangement supplementing or superseding the same. This Paragraph (3) shall constitute a
“Supplemental Agreement” as defined in Paragraph 1.J of the SRP. If the Company shall terminate
the Executive’s employment during the Severance Period, other than for Cause pursuant to Section
3(a)(i), 3(a)(ii) or 3(a)(iii) of the Agreement, or if the Executive shall terminate his employment
pursuant to Section 3(b) of the Agreement, or if, following the end of the Severance Period, the
Executive’s employment is terminated for any reason, for the purposes of computing the Executive’s
period of continuous service and of calculating and paying his benefit under the SRP:

     (A)     At the time of his termination of employment with the Company (by death or
otherwise), the Executive shall be credited with years of continuous service for
benefit accrual and eligibility equal to the greater of (i) the number of his actual
years of continuous service or (ii) the number of years of continuous service he
would have had if he had continued his employment with the Company for three (3)
years after the Termination Date, and had he attained the greater of (iii) his
actual chronological age, (iv) sixty-five, or (v) his chronological age three (3)
years after the Termination Date. In addition, the Executive shall be eligible for
a 30-year pension benefit based upon his years of continuous service as computed
under the preceding sentence. Such Executive shall be eligible to commence a
30-year pension benefit on the earlier of (vi) the date upon which the Executive
would have otherwise reached 30 years of continuous service with the Company but for
his termination of employment after the Change in Control at which time the
Executive shall be deemed to be age 65, or (vii) the date upon which the sum of the
Executive’s years of continuous service (as computed in the first sentence of this
subparagraph (A)) and the Executive’s Credited Years of Industry Service is equal
to 30 years of service, at which time the Executive shall be deemed to be age 65;
and

     (B)     The Executive shall be a “Participant” in the SRP, notwithstanding any
limitations therein. The terms of the Agreement and this Annex A shall take
precedence to the extent they are contrary to provisions contained in the SRP.

A-2

 

Payment of the SRP Payment by the Company shall be deemed to be a satisfaction of all obligations
of the Company to the Executive under the SRP.

          (4)     Base Salary through the Termination Date plus prorata Incentive Pay for the year in which
the Termination Date occurs calculated at the greater of (i) the target bonus and/or target
opportunity or (ii) actual performance, in each case for the fiscal year in which the Termination
Date occurs.

          (5)     In lieu of the Executive’s right to receive deferred compensation under the Voluntary
Non-Qualified Deferred Compensation Plan or any other plan providing for deferral of income or
amounts otherwise payable to the Executive, a lump sum payment in cash in an amount equal to 100%
of the Executive’s cash and stock account balances under such plans.

          (6)     Outplacement services by a firm selected by the Executive, at the expense of the Company
in an amount up to 15% of the Executive’s Base Pay.

          (7)     Post-retirement medical, hospital, surgical and prescription drug coverage for the
lifetime of the Executive, his spouse and any eligible dependents equivalent to that which would
have been furnished on the day prior to the Change in Control to an officer of the Company who
retired on such date with full eligibility for such benefits.

A-3

 

CLEVELAND-CLIFFS INC

SEVERANCE AGREEMENT

EXHIBIT A

Form of Release

          WHEREAS, the Executive’s employment has been terminated in accordance with Section 3 of the
Severance Agreement (the “Agreement”) dated as of May 23, 2005 between the Executive and
Cleveland-Cliffs Inc; and

          WHEREAS, the Executive is required to sign this Release in order to receive the Severance
Compensation (as such term is defined in the Agreement) as described in Annex A of the Agreement
and the other benefits described in the Agreement.

          NOW THEREFORE, in consideration of the promises and agreements contained herein and other good
and valuable consideration, the sufficiency and receipt of which are hereby acknowledged, and
intending to be legally bound, the Executive agrees as follows:

     1.     This Release is effective on the date hereof and will continue in effect as provided herein.

     2.     In consideration of the payments to be made and the benefits to be received by the
Executive pursuant to the Agreement, which the Executive acknowledges are in addition to payments
and benefits which the Executive would be entitled to receive absent the Agreement (other than
severance pay and benefits under any other severance plan, policy, program or arrangement sponsored
by Cleveland-Cliffs Inc), the Executive, for himself and his dependents, successors, assigns,
heirs, executors and administrators (and his and their legal representatives of every kind), hereby
releases, dismisses, remises and forever discharges Cleveland-Cliffs Inc, its predecessors,
parents, subsidiaries, divisions, related or affiliated companies, officers, directors,
stockholders, members, employees, heirs, successors, assigns, representatives, agents and counsel
(the “Company”) from any and all arbitrations, claims, including claims for attorney’s fees,
demands, damages, suits, proceedings, actions and/or causes of action of any kind and every
description, whether known or unknown, which Executive now has or may have had for, upon, or by
reason of any cause whatsoever (“claims”), against the Company, including but not limited to:

     (a)     any and all claims arising out of or relating to Executive’s employment by or
service with the Company and his termination from the Company;

     (b)     any and all claims of discrimination, including but not limited to claims of
discrimination on the basis of sex, race, age, national origin, marital status, religion or
handicap, including, specifically, but without limiting the generality of the foregoing, any
claims under the Age Discrimination in Employment Act, as amended, Title VII of the Civil
Rights Act of 1964, as amended, the Americans with Disabilities Act, Ohio Revised

Exh. A-1

 

Code Section 4101.17 and Ohio Revised Code Chapter 4112, including Sections 4112.02 and
4112.99 thereof; and

     (c)     any and all claims of wrongful or unjust discharge or breach of any contract or
promise, express or implied.

     3.     Executive understands and acknowledges that the Company does not admit any violation of
law, liability or invasion of any of his rights and that any such violation, liability or invasion
is expressly denied. The consideration provided for this Release is made for the purpose of
settling and extinguishing all claims and rights (and every other similar or dissimilar matter)
that Executive ever had or now may have against the Company to the extent provided in this Release.
Executive further agrees and acknowledges that no representations, promises or inducements have
been made by the Company other than as appear in the Agreement.

     4.     Executive further agrees and acknowledges that:

     (a)     The release provided for herein releases claims to and including the date of this
Release;

     (b)     He has been advised by the Company to consult with legal counsel prior to executing
this Release, has had an opportunity to consult with and to be advised by legal counsel of
his choice, fully understands the terms of this Release, and enters into this Release
freely, voluntarily and intending to be bound;

     (c)     He has been given a period of 21 days to review and consider the terms of this
Release, prior to its execution and that he may use as much of the 21 day period as he
desires; and

     (d)     He may, within 7 days after execution, revoke this Release. Revocation shall be
made by delivering a written notice of revocation to the Vice President Human Resources at
the Company. For such revocation to be effective, written notice must be actually received
by the Vice President Human Resources at the Company no later than the close of business on
the 7th day after Executive executes this Release. If Executive does exercise his right to
revoke this Release, all of the terms and conditions of the Release shall be of no force and
effect and the Company shall not have any obligation to make payments or provide benefits to
Executive as set forth in Sections 4, 5, and 7 of the Agreement.

     5.     Executive agrees that he will never file a lawsuit or other complaint asserting any claim
that is released in this Release.

     6.     Executive waives and releases any claim that he has or may have to reemployment after
                    .

Exh. A-2

 

          IN WITNESS WHEREOF, the Executive has executed and delivered this Release on the date set
forth below.

	 	 	 
	Dated:                                        

	 	                                                                                

Executive

Exh. A-3

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