Amended and Restated Executive Employment Agreement
Exhibit 10.28
Amended
and Restated
This
Amended and Restated Executive Employment Agreement (“Agreement”) between
Freeport-McMoRan Copper & Gold Inc., a Delaware corporation (the “Company”),
and Xxxxx X. Xxxxxxx (the “Executive”) is dated effective as of December 2, 2008
(the “Agreement Date”).
W
I T N E S S E T H:
WHEREAS,
the Executive and the Company are parties to an Executive Employment Agreement
dated April 30, 2001, which was previously amended on December 10, 2003 (the
“Original Agreement”), pursuant to which the Executive currently serves as an
officer of the Company;
WHEREAS,
pursuant to the terms of this Agreement, the Company desires to retain the
services of the Executive and the Executive desires to continue to provide
services to the Company;
WHEREAS,
the Company and the Executive wish to amend the Original Agreement to (i) comply
with the final regulations under Section 409A of the Internal Revenue Code, as
amended, (ii) clarify certain provisions in the Original Agreement, including
the method of calculating the “pro-rata” bonus and the meaning of “bonus” in the
calculation of the lump sum payment due upon certain terminations of employment,
(iii) eliminate the additional cash payment of $1.8 million provided to the
Executive in connection with a termination of employment due to death,
disability or retirement, (iv) revise the method of calculating the cash payment
due in the event of a termination of employment due to reasons other than death,
disability, cause or good reason, to be equal to three times the sum of the
executive’s base salary in effect on the termination date and the average
(instead of the highest) of the bonuses paid to the executive for the
immediately preceding three fiscal years, and (v) add a customary
nondisparagement covenant;
WHEREAS,
during the course of providing services to the Company, the Executive has or
will have received extensive and unique knowledge of, experience in and access
to resources involving, the Mining Business (as defined below) at a substantial
cost to the Company, which Executive acknowledges has enhanced or substantially
will enhance Executive’s skills and knowledge in such business;
WHEREAS,
during the course of providing services to the Company, Executive has had and
will continue to have access to valuable oral and written information, knowledge
and data relating to the business and operations of the Company and its
subsidiaries that is non-public, confidential or proprietary in nature and is
particularly useful in the Mining Business; and
WHEREAS,
in view of the opportunities provided by the Company to Executive, the cost
thereof to the Company, and the need for the Company to be protected against
disclosures by Executive of the Company’s and its subsidiaries’ trade secrets
and other non-public, confidential or proprietary information, the Company and
Executive desire, among other things, to prohibit
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Executive
from disclosing or utilizing, outside the scope of his employment with the
Company, any non-public, confidential or proprietary information, knowledge and
data relating to the business and operations of the Company or its subsidiaries
received by Executive during the course of his employment, and to restrict the
ability of Executive to compete with the Company or its subsidiaries for a
limited period of time.
NOW,
THEREFORE, for and in consideration of the continued employment of Executive by
the Company and the payment of salary, benefits and other compensation to
Executive by the Company, the parties hereto agree to amend and restate the
Original Agreement to read as follows:
Article
I
Employment
Capacity
1. Capacity and Duties of
Executive. The Executive is employed by the Company to render
services on behalf of the Company as Chairman of the Board functioning in an
executive capacity. The Executive will perform such duties as are
assigned to the individual holding the title or titles held by him from time to
time in the Company’s By-laws and such other duties as may be prescribed from
time to time by the Company’s Board of Directors (the “Board”), which duties
shall be consistent with the position of Chairman of the Board.
2. Term. The term of
this Agreement will commence on the Agreement Date and will continue through
December 31, 2008; provided, however, that commencing on December 31, 2008, and
each December 31 thereafter, the term of this Agreement will automatically be
extended for one additional year unless not later than August 1 of the current year, the
Corporate Personnel Committee of the Board (the “Committee”) has given written
notice to the Executive that it does not wish to extend this
Agreement.
3. Devotion to
Responsibilities. The Executive will devote significant
business time to the business of the Company, will use his best efforts to
perform faithfully and efficiently his duties under this Agreement, and will not
engage in or be employed by any other business; provided, however, that nothing
herein will prohibit the Executive from (a) serving as an officer and
director of McMoRan Exploration Co. (“McMoRan”), FM Services Company or any of
their affiliates or successors, (b) serving as a member of the board of
directors, board of trustees or the like of any for-profit or non-profit entity
that does not compete with the Company, or performing services of any type for
any civic or community entity, whether or not the Executive receives
compensation therefor, (c) investing his assets in such form or manner as
will require no more than nominal services on the part of the Executive in the
operation of the business of the entity in which such investment is made, or (d)
serving in various capacities with, and attending meetings of, industry or trade
groups and associations, as long as the Executive’s activities permitted by
clauses (a), (b), (c) and (d) above do not materially and unreasonably interfere
with the ability of the Executive to perform the services and discharge the
responsibilities required of him under this
Agreement. Notwithstanding clause (c) above, the Executive may not,
without the approval of the Committee, beneficially own 5% or more of the equity
interests of a business organization required to file periodic reports with the
Securities and Exchange Commission under the Securities Exchange Act of 1934
(the “Exchange Act”) other than the Company or McMoRan, and the Executive may
not beneficially own more than 2% of the equity interests of any
business
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organization
that competes with the Company. For purposes of this paragraph,
“beneficially own” has the meaning ascribed to that term in Rule 13d-3 under the
Exchange Act.
Article
II
Compensation
and Benefits
1. Salary. The
Company will pay the Executive a salary (“Base Salary”) at an annual rate per
fiscal year of the Company (“Fiscal Year”) of $2,500,000, which will be payable
to the Executive in equal semi-monthly installments. Base Salary may
be remitted to the Executive on behalf of the Company by an affiliate of the
Company.
2. Bonus. The
Executive will be eligible to receive an annual incentive bonus (the “Bonus”),
payable, if at all, only with respect to services that the Executive provides to
the Company. Any Bonus will be determined, accrued and paid in
accordance with the terms of the Company’s 2005 Annual Incentive Plan, as
amended, or any incentive or bonus compensation plan that is a successor or
substitute therefor, that covers certain individuals designated by the Committee
(the “Annual Incentive Plan”). The Executive acknowledges and agrees
that this Section 2 imposes no obligation on the Company to award any bonus to
the Executive.
3. Equity Awards and Long-Term
Performance Units. The Executive will continue to be eligible
to participate in all short-term and long-term equity and non-equity incentive
plans in which the Executive currently participates or which may be offered in
the future to the most senior executives of the Company.
4. Vacation. The
Executive will be entitled to paid vacation and holidays as provided to
executives of the Company generally.
5. Indemnification and
Insurance. In accordance with the Company’s Certificate of
Incorporation, the Company will indemnify the Executive, to the fullest extent
permitted by applicable law, for any and all claims brought against him arising
out his services to the Company and its subsidiaries. In addition,
the Company will continue to maintain a directors’ and officers’ insurance
policy covering the Executive substantially in the form of the policy in
existence as of the Agreement Date to the extent such policy remains available
at reasonable commercial terms.
6. Other Benefits. The
Executive will continue to be entitled to all benefits and perquisites presently
provided to him or generally to the most senior executives of the Company and be
eligible to participate in and receive all benefits under welfare benefit plans,
practices, policies and programs (including, without limitation, medical,
prescription, dental, disability, employee life, group life, accidental death
and travel accident insurance plans and programs) available generally to the
most senior executives of the Company.
7. Expenses. The
Executive will be entitled to receive prompt reimbursement for all reasonable
business expenses (including food, transportation, entertainment and lodging)
incurred from time to time on behalf of the Company in the performance of his
duties, upon the presentation of such supporting invoices, documents and forms
as the Company reasonably requests.
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Article
III
Termination
of Employment; Change of Control
1. Death. The
Executive’s status as an officer and employee will terminate immediately and
automatically upon the Executive’s death.
2. Disability. The
Company may terminate Executive’s status as an officer and employee for
“Disability” as follows:
(a) If the
Executive has a disability that entitles him to receive benefits under the
Company’s long-term disability insurance policy in effect at the time either
because he is Totally Disabled or Partially Disabled, as such terms are defined
in the Company’s policy in effect as of the Agreement Date or as similar terms
are defined in any successor policy, then the Company may terminate Executive’s
status as an officer and employee effective on the first day on which the
Executive receives a payment under such policy (or on the first day that he
would be so eligible, if he had applied timely for such payments).
(b) If the
Company has no long-term disability plan in effect, and if (i) because of
physical or mental illness the Executive is rendered incapable of satisfactorily
discharging his duties and responsibilities under this Agreement for a period of
90 consecutive days and (ii) a duly qualified physician chosen by the Company
and reasonably acceptable to the Executive or his legal representatives so
certifies in writing, the Board will have the power to determine that the
Executive has become disabled. If the Board makes such a
determination, the Company will have the continuing right and option, during the
period that such disability continues, and by notice given in the manner
provided in this Agreement, to terminate the status of Executive as an officer
and employee. Any such termination will become effective 30 days
after such notice of termination is given, unless within such 30-day period, the
Executive becomes capable of rendering services of the character contemplated
hereby (and a physician chosen by the Company and reasonably acceptable to the
Executive or his legal representatives so certifies in writing) and the
Executive in fact resumes such services.
(c) The
“Disability Effective Date” will mean the date on which termination of
Executive’s status as an officer and employee becomes effective due to
Disability.
3. Cause. The
Company may terminate the Executive’s status as an officer and employee for
“Cause,” which is defined as follows:
(a) The
Executive’s willful and continued failure to perform substantially the
Executive’s duties with the Company or its affiliates (other than any such
failure resulting from incapacity due to physical or mental illness), after a
written demand for substantial performance is delivered to the Executive by the
Board, which specifically identifies the manner in which the Board believes that
the Executive has not substantially performed the Executive’s
duties;
(b) The
Executive’s material breach of this Agreement after a written demand is
delivered to the Executive by the Board, which specifically identifies the
manner in which the Board believes that the Executive has materially breached
this Agreement;
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(c) The final
conviction of the Executive or an entering of a guilty plea or a plea of no
contest by the Executive to a felony;
(d) Unauthorized
acts or omissions by the Executive that could reasonably be expected to cause
material financial harm to the Company or materially disrupt Company
operations;
(e) The
Executive’s commission of an act of dishonesty (even if not a crime) resulting
in the enrichment of the Executive at the expense of the Company;
or
(f) The
Executive’s knowing falsification or knowing attempted falsification of
financial records of the Company in violation of SEC Rule 13b2-1.
For
purposes of this provision, no act or failure to act, on the part of the
Executive, will be considered “willful” unless it is done, or omitted to be
done, by the Executive in bad faith or without a reasonable belief that the act
or omission was in the best interests of the Company or its
affiliates. Any act, or failure to act, based on authority given
pursuant to a resolution duly adopted by the Board or the advice of counsel to
the Company or its affiliates will be conclusively presumed to be done, or
omitted to be done, by the Executive in good faith and in the best interests of
the Company or its affiliates. The termination of employment of the
Executive will not be deemed to be for Cause unless and until there has been
delivered to the Executive a copy of a resolution duly adopted by the
affirmative vote of not less than three-quarters of the entire membership of the
Board at a meeting of the Board called and held for such purpose (after
reasonable notice is provided to the Executive and the Executive is given an
opportunity, together with counsel, to be heard before the Board), finding that,
in the good faith opinion of the Board, the Executive has engaged in any of the
conduct described in subparagraphs (a) through (f) above, and specifying the
particulars of such conduct.
4. Good Reason. The
Executive may terminate his status as an officer and employee for “Good Reason,”
which is defined as follows:
(a) Any
failure by the Company or its affiliates to comply with any of the provisions of
this Agreement (including, but not limited to, the failure to provide the
Executive with the position set forth in Article I, Section 1 and, at a minimum,
the Base Salary set forth in Article II, Section 1), other than an isolated,
insubstantial and inadvertent failure not occurring in bad faith that is
remedied within 10 days after receipt by the Company of written notice thereof
from the Executive; or
(b) The
assignment to the Executive of any duties inconsistent in any material respect
with Executive’s position (including status, offices, titles and reporting
requirements), authority, duties or responsibilities as contemplated by this
Agreement, or any other action that results in a diminution in such position,
authority, duties or responsibilities, excluding for this purpose an isolated,
insubstantial and inadvertent action not taken in bad faith that is remedied
within 10 days after receipt by the Company of written notice thereof from the
Executive.
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5. Termination by the
Company. In addition to termination for death, Disability or
Cause, the Company may at any time terminate the Executive’s status as an
officer and employee for any reason or for no reason at all.
6. Retirement. In
addition to termination for death or Good Reason, the Executive may at any time
retire and terminate his status as an officer and
employee. “Retirement” (and variants thereof) for purposes of this
Agreement is defined as the Executive’s voluntary termination of his status as
an officer and employee at any time after reaching age 54, but shall not include
a termination for Good Reason.
7. Notice of Termination; Termination
Date. (a) Other than as a result
of the death of Executive, any termination of Executive’s status as an officer
and employee shall be communicated to the other party by Notice of Termination
given in accordance with Article VII, Section 2 of this
Agreement. For purposes of this Agreement, a “Notice of Termination”
means a written notice that (i) indicates the specific termination provision in
this Agreement on which the party relies, (ii) to the extent
applicable, sets forth in reasonable detail the facts and circumstances claimed
to provide a basis for termination under the provisions so indicated and (iii)
if the Termination Date (as defined below) is other than the date of receipt of
such notice, specifies the Termination Date. The Company’s failure to
set forth in the Notice of Termination any fact or circumstance that contributes
to a showing of Disability or Cause will not negate the effect of the notice nor
waive any right of the Company or preclude the Company from asserting such fact
or circumstance in enforcing the Company’s rights.
(b) “Termination
Date” means, if Executive’s status as an officer and employee is terminated (i)
by reason of Executive’s death, the date of Executive’s death, (ii) by reason of
Disability, the Disability Effective Date, (iii) by the Company other than
by reason of death or Disability, the date of delivery of the Notice of
Termination or any later date specified in the Notice of Termination, which date
will not be more than 30 days after the giving of the notice, or (iv) by
the Executive other than by reason of death, the date of delivery of the Notice
of Termination or any later date specified in the Notice of Termination, which
date will not be more than 30 days after the giving of the notice.
8. Change of
Control. Upon and following a Change of Control of the
Company, as defined in the Amended and Restated Change of Control Agreement
between the Executive and the Company dated effective December 2, 2008, and any
amendments thereto or any subsequent change of control agreement between the
Executive and the Company (the “Change of Control Agreement”), the rights and
obligations of the Executive and the Company will no longer be governed by this
Agreement, but will be as provided in the Change of Control Agreement (including
any rights or obligations in this Agreement that are specifically incorporated
by reference therein). Upon the occurrence of a Change of Control,
the term of this Agreement will end, and the provisions of this Agreement will
be null and void, and of no further force and effect, except that compensation
and benefit obligations accrued by the Company with respect to the Executive
prior to the Change of Control and during the term of this Agreement will remain
valid and enforceable, and the rights of Executive to indemnification shall
remain in effect.
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Article
IV
Obligations
upon Termination
1. Separation from
Service. No payments or benefits provided herein that are paid
because of a termination of employment under circumstances described herein
shall be paid, unless such termination of employment also constitutes a
“separation from service” within the meaning of Section 409A of the Internal
Revenue Code of 1986, as amended (the “Code”) and the regulations and guidance
issued thereunder (“Section 409A”).
2. Death, Disability or
Retirement. If (A) the Executive’s status as an officer and
employee is terminated by reason of the Executive’s death or Retirement, or (B)
the Company terminates the Executive’s status as an officer and employee by
reason of Executive’s Disability then, subject to the six-month delay set forth
in Article VII, Section 14, if applicable:
(a) The
Company will pay the Executive or his legal representatives the amount of the
Executive’s Base Salary earned through the Termination Date to the extent not
previously paid (the “Accrued Obligations”);
(b) The
Company will pay to the Executive or his legal representatives a pro rata Bonus
(the “Pro Rata Bonus”) for the Fiscal Year in which the Termination Date occurs,
which shall be paid out at such time as annual cash bonuses are paid to other
senior executives in accordance with the terms of the Annual Incentive Plan (as
defined above in Article II, Section 2). The amount of the Pro Rata
Bonus shall be determined by multiplying (i) the bonus the Executive would have
received pursuant to the terms of the Annual Incentive Plan as determined by the
Committee had he remained employed by the Company through the applicable Fiscal
Year, by (ii) the fraction obtained by dividing the number of days in the year
through the Termination Date by 365. To the extent that the Committee
exercises negative discretion in determining bonus awards under the Annual
Incentive Plan for the Fiscal Year in which the Termination Date occurs, such
negative discretion may not be applied in a manner more adverse to the Executive
than to other similarly situated active senior executives of the
Company;
(c) The
Company will pay or deliver, as appropriate, all other benefits due to Executive
pursuant to any employee benefit plans and incentive plans maintained by the
Company or its subsidiaries with respect to services rendered by the Executive
prior to the Termination Date; and
(d) In the
case of Executive’s Retirement, for a period commencing on the Termination Date
and ending on the earlier of (i) the third anniversary of the
Termination Date, or (ii) the date that the Executive accepts new employment
(the “Continuation Period”), the Company will at its expense maintain and
administer for the continued benefit of Executive all insurance and welfare
benefit plans in which Executive was entitled to participate as an employee of
the Company as of the Termination Date, except medical reimbursement benefits
under the Company’s flex plans, provided that Executive’s continued
participation is possible under the general terms and provisions of such plans
and all applicable laws. If the Executive is a “specified employee”
governed by Article VII, Section 14, to the extent that any benefits provided to
the Executive under this Article IV, Section 2(d) are taxable to the Executive,
then, with the exception of nontaxable medical insurance benefits, the value of
the aggregate amount
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of
such taxable benefits provided to the Executive pursuant to this Article IV,
Section 2(d) during the six-month period following the Termination Date shall be
limited to the amount specified by Section 402(g)(1)(B) of Code for the year in
which the Termination Date occurred. The Executive shall pay the cost
of any benefits that exceed the amount specified in the previous sentence during
the six-month period following the Termination Date, and shall be reimbursed in
full by the Company during the seventh month after the Termination
Date. The coverage and benefits (including deductibles and costs)
provided under any such benefit plan in accordance with this paragraph during
the Continuation Period will be no less favorable to the Executive than the most
favorable of such coverages and benefits as of the Termination
Date. If the Executive’s participation in any such benefit plan is
barred or any such benefit plan is terminated, the Company will use commercially
reasonable efforts to provide the Executive with compensation or benefits
substantially similar or comparable in value to those the Executive would
otherwise have been entitled to receive under such plans. At the end
of the Continuation Period, the Executive will have the option to have assigned
to him, at no cost and with no apportionment of prepaid premiums, any assignable
insurance owned by the Company that relates specifically to the
Executive. Subject to the general terms and provisions of the plans
and all applicable laws, the Executive will be eligible for coverage under the
Company’s retiree medical plan or the Consolidated Omnibus Budget Reconciliation
Act at the end of the Continuation Period or earlier cessation of the Company’s
obligation under the foregoing provisions of this paragraph.
3. Cause. If the
Company terminates the Executive’s status as an officer and employee for Cause,
the Company will pay to the Executive the Accrued Obligations. The
Company will have no further obligation to the Executive other than for
obligations imposed by law and obligations for any benefits due the Executive
pursuant to any employee benefit plans and incentive plans maintained by the
Company or its subsidiaries with respect to services rendered by the Executive
prior to the Termination Date.
4. Termination by Executive for Good
Reason or by Company for Reasons other than Death, Disability or
Cause. If the Executive terminates his status as an officer
and employee for Good Reason or the Company terminates the Executive’s status as
an officer and employee other than for death, Disability or Cause, then subject
to the six-month delay set forth in Article VII, Section 14, if
applicable:
(a) The
Company will pay to the Executive the Accrued Obligations and the Pro Rata
Bonus;
(b) Within
twenty (20) business days of the Termination Date, the Company will pay to the
Executive in a lump sum in cash an amount equal to three times the sum of the
(i) Executive’s Base Salary in effect at the Termination Date and (ii) average
of the Bonuses paid to the Executive for the immediately preceding three Fiscal
Years, which Bonus amounts shall not include any premium received in connection
with Executive’s participation in any restricted stock program offered by the
Company, but shall include the grant date value of any equity awards granted to
the Executive in lieu of a portion of the Bonus for a given year;
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(c) All stock
options will become immediately exercisable as of the Termination Date and will
remain exercisable until the expiration date specified in the applicable notice
of grant of nonqualified stock option;
(d) All
restricted stock units granted to the Executive will vest as of the Termination
Date to the extent not previously vested and will convert to common stock of the
Company, provided any applicable performance conditions have been met as of the
Termination Date;
(e) The
Executive’s performance units under the Company’s Long-Term Performance
Incentive Plan will be credited with the annual earnings per share or net loss
per share (as defined in the plan) for the Fiscal Year in which the Termination
Date occurs and all amounts credited to the Executive’s performance unit account
will be fully vested and will be paid out within 60 days of the end of the
Fiscal Year in which the Termination Date occurs;
(f) The
Company will pay or deliver, as appropriate, all other benefits due the
Executive pursuant to any employee benefit plans maintained by the Company or
its subsidiaries with respect to services rendered by the Executive prior to the
Termination Date; and
(g) For the
Continuation Period, the Company shall at its expense maintain and administer
for the continued benefit of Executive the benefits provided for under Article
IV, Section 2(d).
5. Resignation from Boards of
Directors. If Executive is a director of the Company and his
employment is terminated for any reason other than death, the Executive will, if
requested by the Company, immediately resign as a director of the Company and
its subsidiaries. If such resignation is not received within 20
business days after the Executive actually receives written notice from the
Company requesting the resignations, the Executive will forfeit any right to
receive any payments pursuant to this Agreement.
Article
V
Nondisclosure,
Noncompetition and Proprietary Rights
1. Certain
Definitions. For purposes of this Agreement, the following
terms will have the following meanings:
(a) “Confidential
Information” means any information, knowledge or data of any nature and in any
form (including information that is electronically transmitted or stored on any
form of magnetic or electronic storage media) relating to the past, current or
prospective business or operations of the Company and its subsidiaries, that at
the time or times concerned is not generally known to persons engaged in
businesses similar to those conducted or contemplated by the Company and its
subsidiaries (other than information known by such persons through a violation
of an obligation of confidentiality to the Company), whether produced by the
Company and its subsidiaries or any of their consultants, agents or independent
contractors or by the Executive, and whether or not marked confidential,
including without limitation information relating to the Company’s or its
subsidiaries’ products and services, business plans, business acquisitions,
processes, product or service research and development ideas, methods or
techniques, training methods and materials, and other operational methods
or
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techniques,
quality assurance procedures or standards, operating procedures, files, plans,
specifications, proposals, drawings, charts, graphs, support data, trade
secrets, supplier lists, supplier information, purchasing methods or practices,
distribution and selling activities, consultants’ reports, marketing and
engineering or other technical studies, maintenance records, employment or
personnel data, marketing data, strategies or techniques, financial reports,
budgets, projections, cost analyses, price lists, formulae and analyses,
employee lists, customer records, customer lists, customer source lists,
proprietary computer software, and internal notes and memoranda relating to any
of the foregoing.
(b) “Mining
Business” means the exploration, mining, production, marketing and sale of
metals and ore containing metals.
2. Nondisclosure of Confidential
Information. The Executive will hold in a fiduciary capacity
for the benefit of the Company all Confidential Information obtained by the
Executive during the Executive’s employment (whether prior to or after the
Agreement Date) and will use such Confidential Information solely within the
scope of his employment with and for the exclusive benefit of the
Company. For a period of five years after the Termination Date, the
Executive agrees (a) not to communicate, divulge or make available to any
person or entity (other than the Company) any such Confidential Information,
except upon the prior written authorization of the Company or as may be required
by law or legal process, and (b) to deliver promptly to the Company any
Confidential Information in his possession, including any duplicates thereof and
any notes or other records the Executive has prepared with respect
thereto. In the event that the provisions of any applicable law or
the order of any court would require the Executive to disclose or otherwise make
available any Confidential Information, the Executive will give the Company
prompt prior written notice of such required disclosure and an opportunity to
contest the requirement of such disclosure or apply for a protective order with
respect to such Confidential Information by appropriate
proceedings.
3. Limited Covenant Not to
Compete. For a period of two years after the Termination Date,
the Executive agrees that, with respect to each State of the United States or
other jurisdiction, or specified portions thereof, in which the Executive
regularly (a) makes contact with customers of the Company or any of its
subsidiaries, (b) conducts the business of the Company or any of its
subsidiaries, or (c) supervises the activities of other employees of the Company
or any of its subsidiaries, and in which the Company or any of its subsidiaries
engages in Mining Business as of the Termination Date, including without
limitation the counties of Yavapai, Gila, Xxxxxxxx, Xxxxxx and Pima, all in the
State of Arizona, Grant, New Mexico, Clear Creek, Colorado, and the countries of
Indonesia, Spain, Peru, Chile and the Democratic Republic of the Congo
(collectively, the “Subject Areas”), the Executive will restrict his activities
within the Subject Areas as follows:
(a) Executive
will not, directly or indirectly, for himself or others, own, manage, operate,
control, be employed in an executive, managerial or supervisory capacity by,
consult with, assist or otherwise engage or participate in or allow his skill,
knowledge, experience or reputation to be used in connection with, the
ownership, management, operation or control of, any company or other business
enterprise engaged in the Mining Business within any of the Subject Areas;
provided, however, that nothing contained herein will prohibit the Executive
from making passive investments as long as the Executive does not beneficially
own
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more than
2% of the equity interests of a business enterprise engaged in the Mining
Business within any of the Subject Areas. For purposes of this
paragraph, “beneficially own” will have the same meaning ascribed to that term
in Rule 13d-3 under the Exchange Act;
(b) The
Executive will not call upon any customer of the Company or its subsidiaries for
the purpose of soliciting, diverting or enticing away the business of such
person or entity, or otherwise disrupting any previously established
relationship existing between such person or entity and the Company or its
subsidiaries;
(c) The
Executive will not solicit, induce, influence or attempt to influence any
supplier, lessor, lessee, licensor, partner, joint venturer, potential acquiree
or any other person who has a business relationship with the Company or its
subsidiaries, or who on the Termination Date is engaged in discussions or
negotiations to enter into a business relationship with the Company or its
subsidiaries, to discontinue or reduce or limit the extent of such relationship
with the Company or its subsidiaries;
(d) Without
the consent of the Company, the Executive will not make contact with any of the
employees of the Company or its subsidiaries with whom he had contact during the
course of his employment with the Company for the purpose of soliciting such
employee for hire, whether as an employee or independent contractor, or
otherwise disrupting such employee’s relationship with the Company or its
subsidiaries; and
(e) Without
the consent of the Company, the Executive further agrees that, for a period of
one year from and after the Termination Date, Executive will not hire any
employee of the Company or its subsidiaries as an employee or independent
contractor, whether or not such engagement is solicited by the
Executive.
4. Nondisparagement. During
and after the term of this Agreement, the Executive agrees to refrain from
making any statements and from taking any actions that disparage or could
reasonably be expected to harm the reputation of the Company and its
subsidiaries or any of their directors, officers or employees, and agrees that
he will not voluntarily assist or otherwise participate in any action or
proceeding undertaken by any other person that disparages or could reasonably be
expected to materially harm the reputation of the Company and its subsidiaries
or any of their directors, officers or employees. Similarly, the
Company agrees that its directors and officers shall refrain from making any
statements and from taking any actions that disparage or could reasonably be
expected to harm the reputation of the Executive and agrees that its directors
and officers will not voluntarily assist or otherwise participate in any action
or proceeding undertaken by any other person that disparages or could reasonably
be expected to materially harm the reputation of the Executive.
5. Injunctive Relief; Other
Remedies. Executive acknowledges that a breach by Executive of
Sections 2, 3 or 4 of this Article V would cause immediate and irreparable harm
to the Company for which an adequate monetary remedy does not exist; hence, the
Executive agrees that, in the event of a breach or threatened breach by the
Executive of the provisions of Sections 2, 3 or 4 of this Article V, the Company
will be entitled to injunctive relief restraining the Executive from such
violation without the necessity of proof of actual damage or the posting of any
bond, except as required by non-waivable, applicable law. Nothing
herein, however, will
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be
construed as prohibiting the Company from pursuing any other remedy at law or in
equity to which the Company may be entitled under applicable law in the event of
a breach or threatened breach of this Agreement by the Executive, including
without limitation the recovery of damages and/or costs and expenses, such as
reasonable attorneys’ fees, incurred by the Company as a result of any such
breach or threatened breach. In addition to the exercise of the
foregoing remedies, the Company will have the right upon the occurrence of any
such breach to offset the damages of such breach as determined by the Company,
against any unpaid salary, bonus, commissions or reimbursements otherwise owed
to Executive. In particular, Executive acknowledges that the payments
provided under Article IV are conditioned upon Executive fulfilling any
noncompetition and nondisclosure agreements contained in this Article
V. If Executive at any time materially breaches any noncompetition or
nondisclosure agreements contained in this Article V, then the Company may
offset the damages of such breach, as determined solely by the Company, against
payments otherwise due to the Executive under Article IV or, at the Company’s
option, suspend payments otherwise due to the Executive under Article IV during
the period of such breach. Executive acknowledges that any such
offset or suspension of payments would be an exercise of the Company’s right to
offset or suspend its performance hereunder upon the Executive’s breach of this
Agreement; such offset or suspension of payments would not constitute, and shall
not be characterized as, the imposition of liquidated damages.
6. Requests for Waiver in Cases of
Undue Hardship. If the Executive should find that any of the
limitations in this Article V impose a severe hardship on his ability to secure
other employment, then the Executive may ask the Company to waive the specified
limitations before accepting employment that otherwise would be a breach of
Executive’s obligations under this Agreement. Such request must be in
writing and set forth the name and address of the organization with which
employment or another prohibited relationship is sought and the position, duties
or other activities that the Executive seeks to perform, and the location of
performance. The Company will consider the request and, in its sole
discretion, decide whether and on what conditions to grant such
waiver.
7. Governing Law of this Article V;
Consent to Jurisdiction. Any dispute regarding the
reasonableness of the covenants and agreements set forth in this Article V or
the territorial scope or duration thereof, or the remedies available to the
Company upon any breach of such covenants and agreements, will be governed by
and interpreted in accordance with the laws of the State of the United States or
other jurisdiction in which the alleged prohibited competing activity or
disclosure occurs, and, with respect to each such dispute, the Company and the
Executive each hereby consent to the jurisdiction of the state and federal
courts sitting in the relevant State (or, in the case of any jurisdiction
outside the United States, the relevant courts of such jurisdiction) for
resolution of such dispute, and agree that service of process may be made upon
him or it in any legal proceeding relating to this Article V by any means
allowed under the laws of such jurisdiction.
8. Executive’s Understanding of this
Article. Executive hereby represents to the Company that he
has read and understands, and agrees to be bound by, the terms of this
Article V. Executive acknowledges that the geographic scope and
duration of the covenants contained in Article V are the result of arm’s-length
bargaining and are fair and reasonable in light of (a) the importance of the
functions performed by the Executive and the length of time it
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would
take the Company to find and train a suitable replacement, (b) the nature and
wide geographic scope of the operations of the Company and its subsidiaries, (c)
the Executive’s level of control over and contact with the business and
operations of the Company and its subsidiaries in various jurisdictions where
same are conducted and (d) the fact that all facets of the Mining Business are
conducted by the Company and its subsidiaries throughout the geographic area
where competition is restricted by this Agreement. It is the desire
and intent of the parties that the provisions of this Agreement be enforced to
the fullest extent permitted under applicable law, whether now or hereafter in
effect and, therefore, to the extent permitted by applicable law, the parties
hereto waive any provision of applicable law that would render any provision of
this Article V invalid or unenforceable.
Article
VI
Binding
Arbitration
1. Binding Agreement to
Arbitrate. Any claim or controversy arising out of any
provision of this Agreement (other than Article V hereof), or the breach or
alleged breach of any such provision, will be settled by binding arbitration
administered by the American Arbitration Association (the “AAA”) under its
National Rules for the Resolution of Employment Disputes as in effect at the
time of the claim or controversy (the “Rules”), and judgment on the award
rendered by the arbitrator(s) may be entered in any court having jurisdiction
thereof.
2. Selection and Qualifications of
Arbitrators. If no party to the arbitration makes a claim in
excess of $1.0 million, exclusive of interest and attorneys’ fees, the
proceedings will be conducted before a single neutral arbitrator selected in
accordance with the Rules. If any party makes a claim that exceeds
$1.0 million, the proceedings will be conducted before a panel of three neutral
arbitrators selected in accordance with the Rules.
3. Location of
Proceedings. The place of arbitration will be in Phoenix,
Arizona.
4. Remedies. Any award
in an arbitration initiated under this Article VI will be limited to actual
monetary damages, including if determined appropriate by the arbitrator(s) an
award of costs and fees to the prevailing party. “Costs and fees”
mean all reasonable pre-award expenses of the arbitration, including
arbitrator’s fees, administrative fees, travel expenses, out-of-pocket expenses
such as copying, telephone, witness fees and attorneys’ fees. The
arbitrator(s) will have no authority to award consequential, punitive or other
damages not measured by the prevailing party’s actual damages, except as may be
required by statute.
5. Opinion. The award
of the arbitrators will be in writing, will be signed by a majority of the
arbitrators, and will include findings of fact and a statement of the reasons
for the disposition of any claim.
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Article
VII
Miscellaneous
1. Binding
Effect.
(a) This
Agreement will be binding upon and inure to the benefit of the Company and any
of its successors or assigns.
(b) This
Agreement is personal to the Executive and will not be assignable by the
Executive without the consent of the Company (there being no obligation to give
such consent) other than such rights or benefits as are transferred by will or
the laws of descent and distribution.
(c) Other
than in connection with a Change of Control (in which case this Agreement will
be superseded by the Change of Control Agreement), the Company will require any
successor to or assignee of (whether direct or indirect, by purchase, merger,
consolidation or otherwise) all or substantially all of the assets of the
Company (i) to assume unconditionally and expressly this Agreement and (ii) to
agree to perform all of the obligations under this Agreement in the same manner
and to the same extent as would have been required of the Company had no
assignment or succession occurred, such assumption to be set forth in a writing
reasonably satisfactory to the Executive. In the event of any such
assignment or succession, the term “Company” as used in this Agreement will
refer also to such successor or assign.
2. Notices. All
notices hereunder must be in writing and unless otherwise specifically provided
herein, will be deemed to have been given upon receipt of delivery
by: (a) hand (against a receipt therefor), (b) certified or
registered mail, postage prepaid, return receipt requested, (c) a nationally
recognized overnight courier service (against a receipt therefor) or (d)
telecopy transmission with confirmation of receipt. All such notices
must be addressed as follows:
If to the
Company, to:
Freeport-McMoRan
Copper & Gold Inc.
Xxx Xxxxx
Xxxxxxx Xxxxxx
Xxxxxxx,
Xxxxxxx 00000
Attention: Chairman
of the Corporate Personnel Committee
If to the
Executive, to:
Xxxxx X.
Xxxxxxx
Xxx Xxxxx
Xxxxxxx Xxxxxx
Xxxxxxx,
Xxxxxxx 00000
or such
other address as to which any party hereto may have notified the other in
writing.
3. Governing Law. This
Agreement will be construed and enforced in accordance with and governed by the
internal laws of the State of Delaware without regard to principles
of
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conflict
of laws, except as expressly provided in Article V above with respect to the
resolution of disputes arising under, or the Company’s enforcement of, Article V
of this Agreement.
4. Withholding. The
Executive agrees that the Company has the right to withhold, from the amounts
payable pursuant to this Agreement, all amounts required to be withheld under
applicable income and/or employment tax laws, or as otherwise stated in
documents granting rights that are affected by this Agreement.
5. Severability. If
any term or provision of this Agreement or the application thereof to any person
or circumstance, will at any time or to any extent be invalid, illegal or
unenforceable in any respect as written, Executive and the Company intend for
any court construing this Agreement to modify or limit such provision
temporally, spatially or otherwise so as to render it valid and enforceable to
the fullest extent allowed by law. Any such provision that is not
susceptible of such reformation will be ignored so as to not affect any other
term or provision hereof, and the remainder of this Agreement, or the
application of such term or provision to persons or circumstances other than
those as to which it is held invalid, illegal or unenforceable, will not be
affected thereby and each term and provision of this Agreement will be valid and
enforced to the fullest extent permitted by law.
6. Waiver of
Breach. The waiver by either party of a breach of any
provision of this Agreement will not operate or be construed as a waiver of any
subsequent breach thereof.
7. Remedies Not
Exclusive. Except as provided in Article VI hereof, no remedy
specified herein will be deemed to be such party’s exclusive remedy, and
accordingly, in addition to all of the rights and remedies provided for in this
Agreement, the parties will have all other rights and remedies provided to them
by applicable law, rule or regulation.
8. Legal Fees.
(a) Except as
otherwise provided herein, the Company agrees to pay all legal fees and expenses
that the Executive may reasonably incur as a result of any contest by the
Company, the Executive or others with respect to the validity or enforceability
of, or liability under, any provision of this Agreement (including as a result
of any contest by the Executive about the amount or timing of any payment
pursuant to this Agreement), provided that the Executive prevails on any
material claim.
(b) The
payment of or reimbursement for legal fees under this Article VII, Section 8,
shall comply with the requirement that non-qualified deferred compensation be
paid on a specified date or pursuant to a fixed schedule, which requires that
(1) the amount of benefits or reimbursements provided during one calendar year
shall not affect the amount of benefits or reimbursements to be provided in any
other calendar year, (2) the reimbursement of any eligible expense shall be made
no later than the last day of the calendar year following the year in which the
expense was incurred, and (3) the right to reimbursement or benefits hereunder
is not subject to liquidation or exchange for another benefit.
9. Company’s Reservation of
Rights. The Executive acknowledges and understands that he
serves at the pleasure of the Board and that the Company has the right at
any
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time
to terminate or change the Executive’s status as an officer and employee of the
Company, subject to the rights of the Executive to claim the benefits conferred
by this Agreement.
10. JURY TRIAL
WAIVER. THE PARTIES HEREBY WAIVE TRIAL BY JURY IN ANY JUDICIAL
PROCEEDING TO WHICH THEY ARE PARTIES INVOLVING, DIRECTLY OR INDIRECTLY, ANY
MATTER IN ANY WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH THIS
AGREEMENT.
11. Survival. The
rights and obligations of the Company and Executive contained in Article V of
this Agreement will survive the termination of the
Agreement. Following the Termination Date, each party will have the
right to enforce all rights, and will be bound by all obligations, of such party
that are continuing rights and obligations under this Agreement.
12. Prior Employment
Agreement. Effective as of the Agreement Date, this Agreement
supersedes any prior employment agreement between the Executive and the
Company. This Agreement may not be amended orally, but only by an
agreement in writing by the parties hereto.
13. Counterparts. This
Agreement may be executed in one or more counterparts, each of which will be
deemed to be an original but all of which together will constitute one and the
same instrument.
14. Section 409A of the Internal Revenue
Code.
(a) It is the
intention of the parties that payments or benefits payable under this Agreement
not be subject to the additional tax imposed pursuant to Section 409A, and the
provisions of this Agreement shall be construed and administered in accordance
with such intent. To the extent any potential payments or benefits
could become subject to Section 409A, the parties shall cooperate to amend this
Agreement with the goal of giving the Executive the economic benefits described
herein in a manner that does not result in such tax being imposed. If
the parties are unable to agree on a mutually acceptable amendment, the Company
may, without the Executive’s consent and in such manner as it deems appropriate,
amend or modify this Agreement or delay the payment of any amounts hereunder to
the minimum extent necessary to meet the requirements of Section
409A.
(b) If
Executive is a “specified employee,” any payments payable as a result of
Executive’s termination of employment (other than as a result of death) shall
not be payable before the earlier of (i) the first business day that is more
than six months after Executive’s Termination Date, (ii) the date of Executive’s
death, or (iii) the date that otherwise complies with the requirements of
Section 409A. “Specified employee” shall mean the Executive if the
Executive is a key employee under Treasury Regulations Section 1.409A-1(i)
because of final and binding action taken by the Board or the Committee, or by
operation of law or such regulation.
(c) No
acceleration of payments and benefits provided for in this Agreement shall be
permitted, except that the Company may accelerate payment, if permitted by
Section 409A, as necessary to allow the Executive to pay FICA taxes on amounts
payable hereunder and additional taxes resulting from the payment of such FICA
amount, or as necessary to pay taxes
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and
penalties arising as a result of the payments provided for in this Agreement
failing to meet the requirements of Section 409A. In no event shall the
Executive, directly or indirectly, designate the calendar year of
payment.
(d) To the
extent that the amounts payable under Article IV are reimbursements and other
separation payments described under Treasury Regulations Section
1.409A-1(b)(9)(v), such payments do not provide for the deferral of
compensation. If they do constitute deferral of compensation governed
by Section 409A, they shall be deemed to be reimbursements or in-kind benefits
governed by Treasury Regulations Section 1.409A-3(i)(1)(iv). If the
previous sentence applies, (i) the amount of expenses eligible for reimbursement
or in-kind benefits provided during the Executive’s taxable year shall not
affect the expenses eligible for reimbursement or in-kind benefits in any other
taxable year, (ii) the reimbursement of an eligible expense must be made on or
before the last day of the Executive’s taxable year following the taxable year
in which the expense was incurred and (iii) the right to reimbursement or
in-kind benefits shall not be subject to liquidation or exchange for another
benefit.
[remainder
of page intentionally left blank]
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IN WITNESS WHEREOF, the Company and the
Executive have caused this Agreement to be executed as of December 31,
2008.
Freeport-McMoRan
Copper & Gold Inc.
By: /s/ H. Xxxxx Xxxxxx,
Xx.
H. Xxxxx
Xxxxxx, Xx.
Director
and Chairman of the
Corporate
Personnel Committee of the
Board of
Directors
Executive
/s/ Xxxxx X.
Xxxxxxx
Xxxxx X.
Xxxxxxx
Signature
Page of Executive Employment Agreement
between
Freeport-McMoRan Copper & Gold Inc.
and
Xxxxx X. Xxxxxxx
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