CONFORMED COPY
DISTRIBUTION AGREEMENT
dated as of
July 5, 1995
between
FREEPORT-McMoRan INC.
and
FREEPORT-McMoRan COPPER & GOLD INC.
TABLE OF CONTENTS*
ARTICLE I
DEFINITIONS
Section 1.01. Definitions . . . . . . . . . . . . . . . . 2
ARTICLE II
THE DISTRIBUTION
Section 2.01. Cooperation Prior to the Distribution . . . 4
Section 2.02. FTX Board Action; Conditions Precedent
to the Distribution . . . . . . . . . . . . . . . . . . . . . 4
Section 2.03. The Distribution . . . . . . . . . . . . . 5
Section 2.04. Sale of Fractional Shares . . . . . . . . . 5
ARTICLE III
TRANSITION
Section 3.01. Transition . . . . . . . . . . . . . . . . 5
Section 3.02. Office Lease . . . . . . . . . . . . . . . 6
Section 3.03. Further Assurances and Consents . . . . . . 6
Section 3.04. Intercompany Accounts . . . . . . . . . . . 6
Section 3.05. Certain Intellectual Property Matters . . . 7
ARTICLE IV
INFORMATION
Section 4.01. Access to Information . . . . . . . . . . . 8
Section 4.02. Litigation Cooperation . . . . . . . . . . 8
Section 4.03. Tax Cooperation . . . . . . . . . . . . . . 8
Section 4.04. Reimbursement . . . . . . . . . . . . . . . 9
Section 4.05. Retention of Records . . . . . . . . . . . 9
Section 4.06. Confidentiality . . . . . . . . . . . . . . 9
ARTICLE V
REPRESENTATIONS AND COVENANTS
Section 5.01. Certain Prohibited Actions . . . . . . . . 10
Section 5.02. Representations and Covenants
Set Forth in the Ruling . . . . . . . . . . . . . . . . . . . . . 13
Section 5.03. State and Local Taxes . . . . . . . . . . . 13
Section 5.04. Applicability of Management Services
*The Table of Contents is not a part of this Agreement.
i
Agreement . . . . . . . . . . . . . . . . . . . . . 13
Section 5.05. Employee Matters . . . . . . . . . . . . . 13
ARTICLE VI
MISCELLANEOUS
Section 6.01. Expenses . . . . . . . . . . . . . . . . . 13
Section 6.02. Notices . . . . . . . . . . . . . . . . . . 13
Section 6.03. Amendment and Waiver . . . . . . . . . . . 14
Section 6.04. Arbitration . . . . . . . . . . . . . . . . 14
Section 6.05. Counterparts . . . . . . . . . . . . . . . 15
Section 6.06. Governing Law . . . . . . . . . . . . . . . 15
Section 6.07. Entire Agreement . . . . . . . . . . . . . 15
Section 6.08. Parties in Interest . . . . . . . . . . . . 15
Section 6.09. Specific Enforcement . . . . . . . . . . . 15
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DISTRIBUTION AGREEMENT
DISTRIBUTION AGREEMENT dated as of July 5, 1995 (the
"Agreement") between FREEPORT-McMoRan INC., a Delaware
corporation (together with its successors and permitted
assigns, "FTX"), and FREEPORT-McMoRan COPPER & GOLD INC., a
Delaware corporation (together with its successors and
permitted assigns, "FCX").
W I T N E S S E T H
WHEREAS, FTX owns as of the close of business on the
date hereof 117,909,323 shares of Class B Common Stock of
FCX;
WHEREAS, the Board of Directors of FTX has
determined that it is in the best interest of FTX and the
stockholders of FTX to distribute all of the outstanding
shares of FCX's Class B Common Stock which FTX owns at the
time of such distribution to the holders of FTX Common Stock
(the "Distribution");
WHEREAS, the parties have been members of an
affiliated group of companies, including FCX and its
affiliates, and FTX has entered into certain obligations for
the joint benefit of the members of the group which the
parties agree should be allocated among such members on a
fair and equitable basis;
WHEREAS, the parties have determined that it is
necessary and desirable to set forth the principal
transactions required to effect such Distribution and to
enter into other agreements that shall govern certain other
matters following such Distribution; and
WHEREAS, prior to the Distribution, FTX shall enter
into certain other agreements with FCX in addition to this
Agreement, including, but not limited to, the Employee
Benefits Allocation Agreement;
NOW, THEREFORE, in consideration of the mutual
agreements and covenants contained in this Agreement, the
parties hereby agree as follows:
ARTICLE I
DEFINITIONS
Section 1.01. Definitions. As used herein, the
following terms have the following meaning:
"Action" means any claim, suit, arbitration,
inquiry, proceeding or investigation by or before any court,
governmental or other regulatory or administrative agency or
commission or any other tribunal.
"Affiliate" means, with respect to any Person, any
Person that is directly or indirectly controlled by such
Person; provided that for the purposes of this Agreement,
(i) IMC-Agrico Company shall be considered an Affiliate of
FTX, and (ii) FCX and its Affiliates shall not be considered
Affiliates of FTX. As used in this definition, the term
"control" means the possession, directly or indirectly, of
the power to direct or cause the direction of the management
and policies of the Person whether through ownership of
voting securities, by contract or otherwise.
"Class A Common Stock" means the Class A Common
Stock, par value $.10 per share, of FCX.
"Class B Common Stock" means the Class B Common
Stock, par value $.10 per share, of FCX.
"Commission" means the Securities and Exchange
Commission.
"Consent Solicitation Statement" means the Consent
Solicitation Statement of FCX dated February 7, 1995, as
supplemented by the letter of FCX dated March 8, 1995.
"Distribution Agent" means Mellon Securities Trust
Company, as agent of the holders of the FTX Common Stock.
"Distribution Date" means July 17, 1995.
"Employee Benefits Allocation Agreement" means an
employee benefits allocation agreement between FTX and FCX,
as amended from time to time.
"Exchange Act" means the Securities Exchange Act of
1934, as amended.
"FCX Board" means the Board of Directors of FCX.
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"Five-Year Period" means the five-year period
immediately following the Distribution Date.
"Form 8-A" means the registration statement on Form
8-A in respect of the Class B Common Stock filed with the
Commission under the Exchange Act on June 29, 1995, together
with any amendments thereto.
"FRP" means Freeport-McMoRan Resource Partners,
Limited Partnership, a Delaware publicly traded limited
partnership.
"FTX Common Stock" means the common stock, par value
$1.00 per share, of FTX.
"Implementation Agreement" means the Implementation
Agreement dated May 2, 1995 between FCX and RTZ.
"Management Services Agreement" means, individually
and collectively (unless otherwise indicated), (i) the
agreement dated as of May 1, 1988 between FTX, Freeport-
McMoRan Copper Company, Inc. and Freeport Indonesia,
Incorporated, and (ii) any transitional management services
agreement that may be entered into involving FTX, FCX and
PT-FI and that expires no later than one year after the
Distribution Date, pursuant to each of which FTX furnishes
from time to time certain services to FCX and PT-FI.
"NYSE" means the New York Stock Exchange, Inc.
"Person" means an individual, corporation,
association, partnership, organization, business,
governmental authority or regulatory body or any other
entity.
"Preferred Stock" means the 7% Convertible
Exchangeable Preferred Stock, the Step-Up Convertible
Preferred Stock, Series I and II of the Gold-Denominated
Preferred Stock and the Silver-Denominated Preferred Stock
of FCX, collectively.
"PT-FI" means P.T. Freeport Indonesia Company, an
Indonesian limited liability company that is domesticated in
Delaware.
"Record Date" means July 17, 1995.
"RTZ" means The RTZ Corporation PLC, a corporation
organized under the laws of England.
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"Ruling" means the private letter ruling that the
Internal Revenue Service issued to FTX on November 21, 1994
and that addresses the United States federal income tax
consequences of the Distribution.
"Tax" means any net income, alternative or add-on
minimum, gross income, gross receipts, sales, use, ad
valorem, franchise, profits, license, withholding, payroll,
employment, excise, transfer, recording, severance, stamp,
occupation, premium, property, environmental or other tax,
governmental fee or other like assessment or charge of any
kind whatsoever, together with any interest, penalty,
addition to tax or additional amount related thereto.
"Two-Year Period" means the two-year period
immediately following the Distribution Date.
ARTICLE II
THE DISTRIBUTION
Section 2.01. Cooperation Prior to the
Distribution. (a) FCX has prepared and filed with the
Commission the Form 8-A, which includes or incorporates by
reference the Consent Solicitation Statement setting forth
appropriate disclosure concerning the capital stock of FCX
and any other appropriate matters required to be stated
therein. FCX shall use reasonable efforts to cause the Form
8-A to become effective under the Exchange Act.
(b) FTX and FCX shall take all such action as may
be necessary or appropriate under the securities or blue sky
laws of states or other political subdivisions of the United
States in connection with the Distribution and the
transactions contemplated by this Agreement.
(c) FCX shall prepare and file applications to list
the Class B Common Stock to be distributed by FTX on the
NYSE and the Australian Stock Exchange.
Section 2.02. FTX Board Action; Conditions
Precedent to the Distribution. FTX's Board of Directors has
on the date hereof established the Record Date and the
Distribution Date and appropriate procedures in connection
with the Distribution and the merger of FM Facilitating
Company, Inc. ("Facilitating") with and into FCX has been
consummated in accordance with the Agreement and Plan of
Merger dated as of February 7, 1995 between Facilitating and
FCX. In no event shall the Distribution occur unless the
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following conditions shall have been satisfied or waived by
FTX:
(i) the Form 8-A shall have become effective under
the Exchange Act and the Commission shall have confirmed
that it has no further comments thereon; and
(ii) the Class B Common Stock shall have been
approved for listing on the NYSE, subject to official
notice of issuance.
Section 2.03. The Distribution. On the
Distribution Date, subject to the conditions set forth in
this Agreement, FTX shall cause the Distribution Agent to
distribute, on a pro rata basis and taking into account
Section 2.04, to the holders of record of FTX Common Stock
on the Record Date, all shares of Class B Common Stock held
by FTX on the Distribution Date. On the Distribution Date,
FTX shall relinquish any and all ownership interest of and
control over such shares of Class B Common Stock. During
the period commencing on the Distribution Date and ending
upon the date(s) on which certificates evidencing such
shares are mailed to holders of record of FTX Common Stock
on the Record Date or on which fractional shares of Class B
Common Stock are sold on behalf of such holders, the
Distribution Agent shall hold the Class B Common Stock on
behalf of such holders. FCX agrees to provide all
certificates evidencing shares of Class B Common Stock that
FTX shall require in order to effect the Distribution.
Section 2.04. Sale of Fractional Shares. FTX shall
appoint the Distribution Agent as agent for each holder of
record of FTX Common Stock who would receive in the
Distribution any fractional share of Class B Common Stock.
The Distribution Agent shall aggregate all such fractional
shares and sell them in an orderly manner after the
Distribution Date in the open market and, after completion
of such sales, distribute a pro rata portion of the gross
proceeds from such sales, based upon the average gross
selling price of all such fractional shares, to each
shareholder of FTX who would otherwise have received a
fractional share. FCX shall reimburse the Distribution
Agent for its reasonable costs, expenses and fees in
connection with the sale of fractional shares of Class B
Common Stock.
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ARTICLE III
TRANSITION
Section 3.01. Transition. The parties agree that
prior to the Distribution FTX entered into certain
commitments and arrangements for the joint benefit of FTX,
FCX and their respective Affiliates. FCX and its Affiliates
have been allocated from time to time a portion of the costs
of such commitments and arrangements. The parties agree
that, to the extent applicable, the benefits of such
commitments and arrangements entered into by FTX prior to
the Distribution shall continue to be made available to FCX
and its Affiliates following the Distribution and that
following the Distribution each of the parties on whose
behalf such commitments and arrangements were made shall be
liable on a fair and equitable basis for its proportionate
share for any costs associated with such commitments and
arrangements.
Section 3.02. Office Lease. FTX has entered into
an office lease and ancillary agreements (the "Lease") in
respect of a portion of the building located at 0000 Xxxxxxx
Xxxxxx, Xxx Xxxxxxx, Xxxxxxxxx, which houses the offices of
both FTX and FCX and includes the location of personnel who
have provided services to both parties. FCX and its
Affiliates have been allocated from time to time a portion
of the costs of the Lease and pursuant to the Management
Services Agreement FCX and its Affiliates shall continue to
pay a portion of the costs of the Lease. The parties agree
that, no later than one year after the Distribution Date,
they shall negotiate a fair and equitable agreement in
respect of the Lease pursuant to which the costs thereunder
and the use of the space covered thereby shall be allocated
on a fair and equitable basis for the balance of the term of
the Lease.
Section 3.03. Further Assurances and Consents. (a)
Each of the parties hereto shall execute and deliver such
further instruments of conveyance and assignment and shall
take such other actions as any other party may reasonably
request in order to effectuate the purposes of this
Agreement and to carry out the terms hereof.
(b) In addition to the actions specifically
provided for elsewhere in this Agreement, each of the
parties hereto shall use its reasonable efforts to take, or
cause to be taken, all actions, and to do, or cause to be
done, all things, reasonably necessary, proper or advisable
under applicable laws, regulations and agreements or
otherwise to consummate and make effective the transactions
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contemplated by this Agreement, including, without
limitation, using its reasonable efforts to obtain any
approvals, consents and assignments and to make any filings
and applications necessary or desirable in order to
consummate the transactions contemplated by this Agreement;
provided that no party hereto shall be obligated to pay any
consideration therefor (except for filing fees and other
similar charges) to any third party from whom such
approvals, consents and assignments are requested or to take
any action or omit to take any action if the taking of or
the omission to take such action would be unreasonably
burdensome to the party or its business.
Section 3.04. Intercompany Accounts. On the
Distribution Date, all intercompany loans, receivables and
payables in existence as of the Distribution Date between
FTX and FCX shall be settled for cash, except with respect
to any receivables and payables arising (i) under the
Management Services Agreement dated May 1, 1988 which have
not been billed as of the Distribution Date or (ii) in
connection with transferred employees, including
arrangements in respect of employee benefits. The excepted
receivables and payables shall be settled in ordinary
course.
Section 3.05. Certain Intellectual Property
Matters. The following provisions shall apply, from and
after the Distribution Date, except as shall otherwise be
agreed by FTX and FCX, to the use of the terms "Freeport-
McMoRan", "Freeport" and "McMoRan":
(i) except as provided below, neither FTX nor FCX
nor any of their subsidiaries, divisions or Affiliates
shall use the word "McMoRan" as part of the name of such
subsidiary, division or Affiliate;
(ii) FTX, FRP and FCX and their successors shall
be entitled to continue to use the term "Freeport-
McMoRan" in their corporate or partnership name, as the
case may be, but (A) such entities shall not permit the
use of such term in its name by any subsidiary, division
or Affiliate which does not, as of the Distribution Date,
use such term in its name and (B) with respect to each
subsidiary, division and Affiliate currently using the
term "Freeport-McMoRan" in its corporate, division or
Affiliate title, FTX, FRP and FCX will as soon as
practicable after the Distribution Date cause such
subsidiary, division or Affiliate to change its name to
one which does not include the term "Freeport-McMoRan"
or, except as provided below, "Freeport";
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(iii) FCX shall be entitled to use the separate
word "Freeport" as part of the name of any of its
subsidiaries, divisions and Affiliates associated with
its Indonesian operations;
(iv) FTX and FRP shall be entitled to use the
separate word "Freeport" as part of the name of any of
their subsidiaries, divisions and Affiliates engaged in
the business of mining, extracting, processing or
marketing sulphur and other agricultural minerals and
chemicals; and
(v) except as set forth above, neither FTX, FCX
nor any of their subsidiaries, divisions and Affiliates
shall use the separate word "Freeport" as part of its
name.
ARTICLE IV
INFORMATION
Section 4.01. Access to Information. From and
after the date hereof, each party shall afford the other
party and its accountants, counsel and other designated
representatives reasonable access (including using
reasonable efforts to give access to persons or firms
possessing information) and duplicating rights during normal
business hours to all records, books, contracts,
instruments, computer data and other data and information in
such party's possession relating to the business and affairs
of such other party (other than data and information subject
to an attorney/client or other privilege or otherwise
required to be kept confidential pursuant to binding
agreements), insofar as such access is reasonably required
by such other party including, without limitation, for
audit, accounting, Tax and litigation purposes, as well as
for purposes of fulfilling disclosure and reporting
obligations.
Section 4.02. Litigation Cooperation. Each party
shall use reasonable efforts to make available to the other
party, upon written request, its officers, directors,
employees and agents as witnesses to the extent that such
persons may reasonably be required in connection with any
Action arising out of the business of such other party and
its predecessors, if any, in which the requesting party may
from time to time be involved.
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Section 4.03. Tax Cooperation. (a) Without
limiting the generality of Sections 3.03, 4.01, 4.02 or 4.05
and notwithstanding anything contained herein to the
contrary, FTX and FCX shall cooperate, and shall cause their
respective Affiliates to cooperate fully, at such time and
to the extent reasonably requested by the other party in
connection with (i) such other party's preparation and
filing of any Tax return or claim for refund of Tax, (ii)
such other party's ascertainment of the existence and amount
of any liability for, or refund of, Tax, or (iii) the
conduct of any audit, dispute or Action regarding Taxes in
which such other party is engaged. The cooperation under
this Section 4.03 by each party shall include, without
limitation, (i) the retention and provision on demand, until
the expiration of the applicable statute of limitations
(giving effect to any extension, waiver, or mitigation
thereof), of documentation and information regarding Taxes
and Tax returns that could be relevant to the Taxes of the
other party, (ii) the provision of additional information
and explanation of such documentation, information and
returns, (iii) the execution of any document regarding Taxes
that would be reasonably helpful to the other party, and
(iv) the use of a party's best efforts to obtain, from
governmental authorities or third parties, documentation or
information regarding Taxes that would be reasonably helpful
to the other party.
Section 4.04. Reimbursement. Each party providing
information or witnesses under Sections 4.01, 4.02 or 4.03
to any other party shall be entitled to receive from the
recipient, upon the presentation of invoices therefor,
payment for all out-of-pocket costs and expenses as may be
reasonably incurred in providing such information or
witnesses.
Section 4.05. Retention of Records. Except as
otherwise required by law or agreed to in writing, each
party shall preserve and retain all information relating to
the other party's business in accordance with the record
retention policies of such party as may be in effect from
time to time. Notwithstanding the foregoing, any party may
destroy or otherwise dispose of any information at any time;
provided that prior to such destruction or disposal, (i)
such party shall provide no less than 90 days prior written
notice to the other party, specifying the information
proposed to be destroyed or disposed of and (ii) if the
recipient of such notice shall request in writing prior to
the scheduled date for such destruction or disposal that any
of the information proposed to be destroyed or disposed of
be delivered to such requesting party, the party proposing
the destruction or disposal shall promptly arrange for the
9
delivery of such of the information as was requested at the
expense of the requesting party.
Section 4.06. Confidentiality. Each party shall
hold and shall cause its directors, officers, employees,
agents, consultants and advisors to hold in strict
confidence, unless compelled to disclose by judicial or
administrative process or, in the opinion of its counsel, by
other requirements of law, all information (other than any
such information relating solely to the business or affairs
of such party) concerning the other party (except to the
extent that such information can be shown to have been (i)
in the public domain through no fault of such party or (ii)
later lawfully acquired on a non-confidential basis from
other sources by the party to which it was furnished), and
neither party shall release or disclose such information to
any other person, except its auditors, attorneys, financial
advisors, bankers and other consultants and advisors who
shall be advised of and agree in writing to comply with the
provisions of this Section 4.06. Each party shall be deemed
to have satisfied its obligation to hold confidential
information concerning or supplied by the other party if it
exercises the same care as it takes to preserve
confidentiality for its own similar information.
ARTICLE V
REPRESENTATIONS AND COVENANTS
Section 5.01. Certain Prohibited Actions. (a) Each
of FTX and FCX covenants that it shall comply with Section
5.01(b), to the extent that the prohibited actions specified
therein apply to it, unless it shall have first (i) obtained
either an opinion of nationally recognized tax counsel or a
supplemental private letter ruling from the Internal Revenue
Service, stating that the contemplated actions would not
adversely affect the tax-free nature of the Distribution or
the ability of FTX to rely on the Ruling, (ii) presented
such opinion of counsel or supplemental private letter
ruling to the other party, and (iii) described all material
aspects of the contemplated actions to such other party.
(b) (i) FTX and FCX shall not initiate or support
any action during the Five-Year Period that would in any
way change the ability of the holders of the Class B
Common Stock to elect at least 80% of the members of the
FCX Board and the ability of the holders of the Class A
Common Stock and the Preferred Stock, voting together as
a single class, to elect the remaining members of the FCX
Board, including, without limitation, voting to combine
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the Class A Common Stock and the Class B Common Stock.
In addition, FCX shall not permit its shareholders to
vote during the Five-Year Period to change the described
voting structure.
(ii) During the Two-Year Period, FCX shall not
issue shares of any preferred stock that would not
entitle the holders to vote together with the Class A
Common Stock and the existing classes of Preferred Stock
in the election of certain members of the FCX Board.
(iii) During the Two-Year Period, FCX shall not
dispose of any of the common stock of PT-FI, subordinated
promissory notes of PT-FI or production payment loans of
PT-FI that it holds on the Distribution Date.
(iv) FCX shall use its best efforts to cause PT-FI
to (A) remain the operator under the Contract of Work
dated December 30, 1991 between PT-FI and the Government
of the Republic of Indonesia, and (B) continue the
conduct of its copper and gold business in a
substantially unchanged manner during the Two-Year Period
as such business is operated prior thereto and to use its
business assets in such business; provided that any
transaction contemplated or described in or in connection
with the following agreements shall not be taken into
account for the purposes of this Section 5.01(b)(iv): (I)
the Implementation Agreement, (II) the Participation
Agreement between PT-FI and an Indonesia limited
liability company to be formed as a wholly owned
subsidiary of RTZ, the form of which agreement is set
forth in Schedule 1 to the Implementation Agreement,
(III) the Credit Facility of up to $450 million between
PT-FI and a United Kingdom subsidiary of RTZ, the form of
which facility is set forth in Schedule 2 to the
Implementation Agreement, and (IV) any other agreements
between FTX, FCX, RTZ and their respective Affiliates.
(v) During the Two-Year Period, FTX shall not
dispose of the direct or indirect interests in FRP that
it holds on the Distribution Date; provided that FTX
shall be allowed to transfer interests in FRP pursuant to
compensatory or incentive stock options for employees,
officers or directors if FTX shall beneficially own at
least 50.1% of FRP following such transfer.
(vi) FTX shall use its best efforts to (A) remain
the administrative managing general partner of FRP during
the Two-Year Period, and (B) cause FRP to continue the
conduct of its sulphur and phosphate fertilizer
businesses in a substantially unchanged manner during the
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Two-Year Period as such businesses are operated prior
thereto and to use its business assets in such
businesses.
(vii) During the Two-Year Period, FTX, FRP, FCX and
PT-FI shall not take affirmative steps to merge into
another entity, to liquidate or to sell or otherwise
dispose of any of their assets except for asset
dispositions made in the ordinary course of business.
(viii) FTX and FCX shall not directly or indirectly
redeem or otherwise reacquire shares of the FTX Common
Stock and the Class B Common Stock, respectively, during
the Two-Year Period except to the extent that (A) a
corporate business purpose shall support such redemption
or reacquisition, (B) the redeemed or reacquired stock
shall be widely held, (C) the redemption or reacquisition
shall be made on the open market, (D) to the best of the
knowledge of FTX or FCX, as the case may be, the
redemption or reacquisition shall not be made from a
director or officer, or any shareholder owning 1% or more
of the outstanding stock of the corporation, and (E) FTX
and FCX shall have no plan or intention, as of the
Distribution Date, that the aggregate amount of stock
repurchased would equal or exceed 20% of the outstanding
stock of the relevant corporation; provided that these
prohibitions shall not be effective as to the receipt by
FTX or FCX, as the case may be, of FTX Common Stock or
Class B Common Stock, respectively, in lieu of the
payment of cash upon the exercise by an employee, officer
or director of compensatory or incentive stock options.
Neither FTX nor FCX shall initiate a periodic stock
redemption program during the Two-Year Period unless such
program shall be expected to comply with the requirements
set forth in (A) through (E) of this Section
5.01(b)(viii).
(ix) FCX shall not redeem or otherwise reacquire the
Class B Common Stock during the Two-Year Period, to the
extent that such redemption or reacquisition would result
in the Class B Common Stock representing less than 50% of
the common equity of FCX.
(x) After the expiration of one year from the
Distribution Date, FTX and FCX shall not operate under
the Management Services Agreement. Except for the
temporary supply of certain administrative services under
such agreement, each of FTX and FCX shall arrange for the
provision of the administrative services requisite to the
conduct of its business. FTX and FRP shall conduct their
sulphur and phosphate fertilizer businesses through
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employees, officers and directors of FTX or FRP or both
and FCX and PT-FI shall conduct their copper and gold
business through employees, officers and directors of FCX
or PT-FI or both; provided that the foregoing shall not
prevent certain individuals from being employees,
officers or directors of both FTX and FCX.
(c) For the purposes of this Section 5.01, a
transaction occurring at any point in time subsequent to the
expiration of the Two-Year Period or the Five-Year Period,
as the case may be, shall be deemed to occur within such
period if (i) such transaction results from a binding
commitment of the relevant entity entered into within such
period, or (ii) such transaction or a transaction of
substantially similar nature for Tax purposes shall have
been publicly announced, proposed (whether or not accepted)
or approved (in principle or otherwise) by its Board of
Directors (or, in the case of FRP, FTX) during such period.
Section 5.02. Representations and Covenants Set
Forth In the Ruling. Each of FTX and FCX hereby reaffirms
that the representations and covenants set forth in the
Ruling are valid as of the date hereof and covenants to
reaffirm on the Distribution Date that such representations
and covenants are valid on such date, in each case to the
extent that such representations and covenants apply to it.
Section 5.03. State and Local Taxes. Each of FTX
and FCX covenants that, in the event the two parties are
treated as members of a consolidated, combined or unitary
group in any taxable year for the purposes of state and
local income taxes in California, Kansas, Minnesota,
Montana, Nebraska or North Dakota or with respect to the
foreign metals business, it shall indemnify, defend and hold
harmless the other party and its Affiliates from and against
the portion of such taxes, together with any interest,
penalty, addition to tax or additional amount related to
such taxes, that is allocable to the indemnifying party
using principles analogous to those described in paragraph 4
of the Management Services Agreement dated May 1, 1988,
except for paragraphs 4(h) and 4(i) thereof.
Section 5.04. Applicability of the Management
Services Agreement. Subject to Section 5.01(b)(x), FTX, FCX
and PT-FI shall continue to comply with, and be bound by,
such provisions of the Management Services Agreement dated
May 1, 1988 as shall be applicable, including, without
limitation, paragraph 4 thereof.
Section 5.05. Employee Matters. Each of FTX and
FCX covenants that, except as otherwise agreed by FTX and
13
FCX, all employee matters and employee benefits arrangements
shall be governed by the Employee Benefits Allocation
Agreement, the form of which is attached hereto as
Exhibit A.
ARTICLE VI
MISCELLANEOUS
Section 6.01. Expenses. Except as specifically
provided in this Agreement, each of FTX and FCX shall pay
all costs and expenses incurred by it or on its behalf in
connection with this Agreement, the Distribution and the
transactions contemplated hereby and thereby, including,
without limitation, the fees and expenses of its own legal
counsel, accountants and financial and other advisors.
Section 6.02. Notices. All notices, requests and
other communications under this Agreement to any party shall
be in writing (including facsimile or similar writing) and
shall be given
if to FTX, to:
Freeport-McMoRan Inc.
0000 Xxxxxxx Xxxxxx
Xxx Xxxxxxx, Xxxxxxxxx 00000
Attention: General Counsel
Telecopier: (000) 000-0000
if to FCX, to:
Freeport-McMoRan Copper & Gold Inc.
0000 Xxxxxxx Xxxxxx
Xxx Xxxxxxx, Xxxxxxxxx 00000
Attention: General Counsel
Telecopier: (000) 000-0000
or to such other address or telecopier number as such party
may hereafter specify for the purpose by notice to the other
parties. Each such notice, request or other communication
shall be effective (i) if given by facsimile, when such
facsimile is transmitted to the telecopier number specified
in this Section 6.02 and transmission of the appropriate
number of pages is confirmed or (ii) if given by any other
means, when delivered at the address specified in this
Section 6.02.
Section 6.03. Amendment and Waiver. This Agreement
may not be altered or amended, nor may rights hereunder be
14
waived, except by an instrument in writing executed by each
party, or in the case of a waiver by an instrument in
writing executed by the party against whom such waiver is to
be effective. No waiver of any terms, provision or
condition of or failure to exercise or delay in exercising
any rights or remedies under this Agreement, in any one or
more instances, shall be deemed to be, or construed as, a
further or continuing waiver of any such term, provision,
condition, right or remedy or as a waiver of any other term,
provision or condition of this Agreement.
Section 6.04. Arbitration. All disputes between
FTX and its Affiliates, on the one hand, and FCX and its
Affiliates, on the other, arising out of or in connection
with this Agreement, or the breach thereof, shall be settled
by arbitration in New Orleans, Louisiana, in accordance with
the Rules of the American Arbitration Association in effect
at the time of such reference. Judgment upon the award
rendered may be entered in any court having jurisdiction or
application may be made to such court for a judicial
acceptance of the award and a order of enforcement, as the
case may be. The parties hereto agree to cooperate in good
faith to expedite to the maximum practicable extent the
conduct of any arbitral proceedings commenced under this
Agreement.
Section 6.05. Counterparts. This Agreement may be
executed in one or more counterparts, each of which shall be
deemed an original instrument, but all of which together
shall constitute but one and the same Agreement.
Section 6.06. Governing Law. This Agreement shall
be construed in accordance with, and governed by, the laws
of the State of Delaware.
Section 6.07. Entire Agreement. This Agreement and
the Employee Benefits Allocation Agreement shall constitute
the entire understanding of the parties hereto with respect
to the subject matter hereof, superseding all negotiations,
prior discussions and prior agreements and understandings
relating to such subject matter.
Section 6.08. Parties in Interest. Neither party
hereto may assign any of its rights or delegate any of its
duties under this Agreement without the prior written
consent of the other party. This Agreement shall be binding
upon, and shall inure to the benefit of, the parties hereto
and their respective successors and permitted assigns.
Nothing contained in this Agreement, express or implied, is
intended to confer upon any Person other than the parties
hereto, any benefits, rights or remedies.
15
Section 6.09. Specific Enforcement. FTX and FCX
acknowledge that the other would be irreparably harmed by a
breach of any provision of Section 5.01 or 5.02 of this
Agreement and that there would be no adequate remedy at law
or in damages to compensate for such breach. Each agrees
that the other shall be entitled to injunctive relief
requiring specific performance by FTX or FCX, as the case
may be, of any provision of Section 5.01 or 5.02 of this
Agreement and consents to the entry thereof.
IN WITNESS WHEREOF the parties hereto have caused
this Agreement to be executed as of the date first above
written.
FREEPORT-McMoRan INC.
By /s/ Xxxx X. Xxxxxxxxx
Name: Xxxx X. Xxxxxxxxx
Title: President and
Chief Operating Officer
FREEPORT-McMoRan COPPER & GOLD INC.
By /s/ Xxxxxx X. Xxxxxx
Name: Xxxxxx X. Xxxxxx
Title: President and
Chief Operating Officer
16
Exhibit A
EMPLOYEE BENEFITS ALLOCATION AGREEMENT
This Employee Benefits Allocation Agreement dated as
of July 5, 1995 is entered into between Freeport-McMoRan
Inc., a Delaware corporation ("FTX"), and Freeport-McMoRan
Copper & Gold Inc., a Delaware corporation ("FCX" or the
"Company").
Background
1. FTX currently owns common stock of FCX
representing a controlling interest in FCX.
2. From the date of its inception, FCX has employed
no United States employees, but has relied on FTX for
management and other services that have been provided
pursuant to a management services agreement among, inter
alia, FTX and FCX.
3. FTX intends to distribute to its common
stockholders, on a tax-free basis, all of the Class B Common
Stock, par value $0.10 per share, of FCX owned by FTX at the
time of such distribution (the "Distribution").
4. In connection with the Distribution, the parties
intend that FTX will continue for a period of time to
provide employment and management services to FCX pursuant
to the existing management services agreement and that
certain FTX employees will at a future time become employees
of FCX.
5. FTX and FCX wish to agree as to the allocation
of liabilities and responsibilities relating to the
transferred employees in connection with employee
compensation and benefit arrangements.
Agreement
1. Definitions. For purposes of this Agreement,
the following terms shall have the meaning set forth below.
17
(a) "Adjusted FCX Award" shall mean an option to
purchase, or stock appreciation right or stock incentive
unit relating to, FCX Shares that results from the
adjustment and conversion of an FTX Award pursuant to
Paragraph 6.
(b) "Adjusted FTX Award" shall mean an FTX Award
that is adjusted in accordance with the provisions of
Paragraph 6.
(c) "Adjusted Stock Award Plan" shall mean the
Freeport-McMoRan Copper & Gold Inc. Adjusted Stock Award
Plan, adopted pursuant to Paragraph 6.
(d) "Code" shall mean the Internal Revenue Code of
1986, as amended, and the regulations (including
temporary and proposed regulations) promulgated
thereunder.
(e) "Directors Plan" shall mean the Freeport-
McMoRan Copper & Gold Inc. 1995 Stock Option Plan for
Non-Employee Directors, adopted pursuant to
paragraph 6.
(f) "Distribution Date" shall mean the effective
date of the Distribution.
(g) "Dual Employee" shall mean an employee who
becomes a Transferred Employee but who thereafter also
remains employed by FTX or its subsidiaries (other than
FCX).
(h) "Effective Date" shall mean, with respect to
any Transferred Employee, such Employee's date of hire by
FCX or one of its subsidiaries.
(i) "ERISA" shall mean the Employee Retirement
Income Security Act of 1974, as amended.
(j) "FCX Individual Account Plan" shall mean one or
more defined contribution plans to be established or
designated by FCX for the benefit of Transferred
Employees, pursuant to Paragraph 5.
(k) "FCX Pension Plan" shall mean one or more
defined benefit pension plans to be established or
designated by FCX for the benefit of Transferred
Employees, pursuant to Paragraph 4.
(l) "FCX Shares" shall mean Class B Common Stock,
par value $0.10 per share, of FCX.
18
(m) "FTX AIP" shall mean the Freeport-McMoRan Inc.
Annual Incentive Plan.
(n) "FTX Award" shall mean an option, stock
appreciation right, limited right, stock incentive unit
or other award relating to FTX Shares that has been
granted under an FTX Stock Plan and is outstanding on the
Effective Date.
(o) "FTX Benefit Arrangements" shall mean each
employment, severance or similar contract, arrangement or
policy (exclusive of any such contract, arrangement or
policy that is terminable within 30 days without
liability of FTX or any of its affiliates), and each plan
or arrangement (whether or not written) providing for
severance benefits, insurance coverage (including any
self-insured arrangements), workers' compensation,
disability benefits, supplemental unemployment benefits,
vacation benefits, retirement benefits or for deferred
compensation, profit-sharing, bonuses, stock options,
stock appreciation rights or other forms of incentive
compensation or post-retirement insurance, compensation
or benefits that (i) is not an FTX Employee Plan, (ii) is
entered into or maintained, as the case may be, by FTX or
any of its affiliates (other than FCX) and (iii) covers
any Transferred Employee.
(p) "FTX EBP" shall mean the Freeport-McMoRan Inc.
Excess Benefits Plan.
(q) "FTX Employee Plans" shall mean each "employee
benefit plan", as defined in Section 3(3) of ERISA, that
(i) is subject to any provision of ERISA, (ii) is
maintained, administered or contributed to by FTX or any
of its affiliates (other than FCX) and (iii) covers any
Transferred Employee.
(r) "FTX Executive Plans" shall mean the FTX AIP,
the FTX LTPIP, the FTX PIAP, the FTX SECAP and the FTX
EBP.
(s) "FTX Individual Account Plan" shall mean the
Freeport-McMoRan Inc. Employee Capital Accumulation
Program.
(t) "FTX LTPIP" shall mean either or both of the
Freeport-McMoRan Inc. 1987 Long-Term Performance
Incentive Plan and the Freeport-McMoRan Inc. 1992 Long-
Term-Performance Incentive Plan.
19
(u) "FTX Pension Plan" shall mean the Freeport-
McMoRan Inc. Employee Retirement Plan.
(v) "FTX PIAP" shall mean the Freeport-McMoRan Inc.
Performance Incentive Awards Program.
(w) "FTX SECAP" shall mean the Freeport-McMoRan
Inc. Supplemental Executive Capital Accumulation Plan.
(x) "FTX Shares" shall mean shares of FTX common
stock, par value $1 per share.
(y) "FTX Stock Plan" shall mean any plan of FTX,
other than an FTX Executive Plan, under which any award
is or has been granted to FTX employees, officers or
directors and is outstanding on the Effective Date, which
award relates to FTX Shares, including, without
limitation, options, stock appreciation rights,
performance units, stock incentive units, Limited Rights,
as defined in any such Plan, tax-offset payment rights,
etc.
(z) "Retired Employees" shall mean all former,
retired and long-term disabled employees of FTX and its
subsidiaries (including FCX), as of the Distribution
Date.
(aa) "Rule 16b-3" shall mean Rule 16b-3 promulgated
under Section 16 of the Securities Exchange Act of 1934,
and any successor provision.
(bb) "Section 162(m)" shall mean Section 162(m) of
the Code and any memoranda or decisions issued by the
Internal Revenue Service or the Department of the
Treasury with respect thereto.
(cc) "Securities Act" shall mean the Securities Act
of 1933, as amended.
(dd) "SIU Plan" shall mean the Freeport-McMoRan
Copper & Gold Inc. Stock Incentive Unit Plan, adopted
pursuant to paragraph 6.
(ee) "Stock Plan" shall mean the Freeport-McMoRan
Copper & Gold Inc. 1995 Stock Option Plan, adopted
pursuant to Paragraph 6.
(ff) "Transferred Employees" shall mean those active
employees of FTX or its subsidiaries (other than FCX) who
by mutual agreement between FTX and FCX become employees
of FCX or one of its subsidiaries following the
20
Distribution. Any such employee shall be considered a
Transferred Employee whether or not such employee remains
employed by FTX following the Distribution.
2. Employment by FCX. (a) As used in this
Agreement, unless otherwise expressly stated or required by
context, "FTX employee", or words with similar effect, shall
refer to employees of any of FTX and its subsidiaries other
than FCX, and "FCX employee", or words with similar effect,
shall refer to employees of any of FCX and its subsidiaries.
(b) Each Transferred Employee will become an
employee of FCX as of such Transferred Employee's Effective
Date. Such employment shall initially be upon the same
terms and conditions, with the same wage or salary level,
seniority and job location as those on which or at which
such employees were employed by FTX immediately prior to
such Effective Date; provided, however, that in the case of
Dual Employees, such employment shall be on such terms and
conditions as are determined by the Board of Directors of
FCX. No provision of this Agreement shall preclude or
impair the ability of FCX to terminate the employment of any
Transferred Employee or to change the terms, conditions or
location of employment following the Effective Date.
3. Representations. (a) FTX has furnished or made
available to FCX copies or descriptions of all FTX Employee
Plans and FTX Benefit Arrangements.
(b) The FTX Pension Plan and the FTX Individual
Account Plan have each received a favorable determination
letter from the Internal Revenue Service and FTX knows of no
event or circumstance occurring or existing since the date
of such letter, in either case, that would cause such plan
to fail to be qualified under Section 401(a) of the Code, or
that would cause the trust related to such plan to fail to
be exempt from taxation under Section 501(a) of the Code.
(c) Each FTX Employee Plan and FTX Benefit
Arrangement has been maintained in substantial compliance
with its terms and with the requirements prescribed by any
and all statutes, orders, rules and regulations, including
but not limited to ERISA and the Code, that are applicable
thereto.
(d) No FTX Employee Plan is a "multiemployer plan",
as described in Sections 3(37) or 4001(a)(3) of ERISA.
(e) As of December 31, 1994, the fair market value
of the assets of the FTX Pension Plan (excluding for these
purposes any accrued but unpaid contributions) exceeded the
21
"Accumulated Benefit Obligation" of such Plan, as determined
for purposes of GAAP, using methods and assumptions required
under GAAP.
(f) The representations set forth in this Paragraph
3 shall survive until the obligations of the parties
hereunder have been fully performed.
4. Pension Plan. (a) At such time following the
Distribution Date as is agreed by FTX and FCX, FTX shall
cause the trustee of the FTX Pension Plan to segregate, in
accordance with the spin-off provisions set forth under
Section 414(l) of the Code and in accordance with the
provisions set forth below, the assets of the FTX Pension
Plan allocable to Transferred Employees (other than Dual
Employees) and shall make any and all filings and
submissions to the appropriate governmental agencies arising
in connection with such segregation of assets and all
necessary amendments to the FTX Pension Plan and related
trust agreement to provide for such segregation of assets
and the transfer of assets as described below. The assets
of the FTX Pension Plan allocable to Transferred Employees
shall be segregated in the form of cash and marketable
securities.
(b) The amount of such assets (the "Transfer
Amount") shall be equal to the Accumulated Benefit
Obligation of Transferred Employees other than Dual
Employees, determined under GAAP in accordance with SFAS 87,
or, if greater, the minimum amount that is necessary to
comply with Section 414(l) of the Code. The Transfer Amount
shall be determined as of a date mutually agreed by FTX and
FCX and shall be increased by appropriate earnings
attributable to the period from the date of such segregation
to the date of transfer described herein and reduced by a
pro rata share of the administrative expenses of the FTX
Pension Plan for such period and any benefit payments made
to Transferred Employees prior to the date of transfer of
the Transfer Amount. FTX shall provide the actuary
designated by FCX with all information necessary to verify
the calculation of the Transfer Amount.
(c) The disposition of the accrued benefits of Dual
Employees under the FTX Pension Plan and the FTX EBP, and
assets of the plan allocable thereto, if any, shall be as
mutually agreed by FTX and FCX.
(d) At such time as is agreed by FTX and FCX, FCX
shall establish or designate the FCX Pension Plan, which
shall be substantially comparable to the FTX Pension Plan,
shall take all necessary action to qualify such Plan under
22
the applicable provisions of the Code and shall make any and
all filings and submissions to the appropriate governmental
agencies required to be made by it in connection with the
transfer of assets described in this Paragraph 4. As soon
as practicable following the earlier of the receipt of a
favorable determination letter from the Internal Revenue
Service regarding the qualified status of the FCX Pension
Plan as amended to the date of transfer, or the issuance of
indemnities satisfactory to FTX and FCX, FTX shall cause the
trustee of the FTX Pension Plan to transfer the Transfer
Amount to the appropriate trustee designated by FCX under
the trust agreement forming a part of the FCX Pension Plan.
(e) In consideration for the transfer of assets
described herein, FCX shall, or shall cause one of its
subsidiaries to, effective as of the date of transfer
described herein, assume all of the obligations of FTX and
its subsidiaries in respect of benefits accrued by
Transferred Employees under the FTX Pension Plan (exclusive
of benefits paid prior to the date of transfer described
herein) on or prior to the mutually agreed date. Neither
FCX nor any of its affiliates shall assume any other
obligations or liabilities arising under or attributable to
the FTX Pension Plan.
(f) The liabilities of Transferred Employees under
the FTX EBP shall be calculated in accordance with the
methods and procedures specified above with respect to the
qualified pension plan to which the FTX EBP relates. In
consideration of a payment by FTX to FCX of an amount in
cash equal to the present value of such liabilities, FCX
will, or will cause one or more of its subsidiaries to,
assume all such liabilities of Transferred Employees.
5. Individual Account Plan. (a) At such time
following the Distribution Date as is agreed by FTX and FCX,
FTX shall (i) cause the trustee of the FTX Individual
Account Plan to identify the assets of the FTX Individual
Account Plan representing the full account balances of
Transferred Employees (other than Dual Employees) as of a
date mutually agreed by FTX and FCX, (ii) make any and all
filings and submissions to the appropriate governmental
agencies arising in connection with such segregation of
assets and (iii) make all necessary amendments to the FTX
Individual Account Plan and related trust agreement to
provide for such identification of assets and the transfer
of assets as described below. The manner in which the
account balances of Transferred Employees under the FTX
Individual Account Plan are invested shall not be affected
by such identification of assets.
23
(b) At such time as is agreed by FTX and FCX, FCX
shall establish or designate the FCX Individual Account
Plan, which shall be substantially comparable to the FTX
Individual Account Plan, shall take all necessary action to
qualify such plan under the applicable provisions of the
Code and register such plan under the Securities Act, if
applicable, and shall make any and all filings and
submissions to the appropriate governmental agencies
required to be made by it in connection with the transfer of
assets described in this Paragraph 5. As soon as
practicable following the earlier of the delivery to FTX of
a favorable determination letter from the Internal Revenue
Service regarding the qualified status of the FCX Individual
Account Plan as amended to the date of transfer, or the
issuance of indemnities satisfactory to FTX and FCX, FTX
shall cause the trustee of the FTX Individual Account Plan
to transfer in the form of cash or marketable securities (or
such other form, including participant loans, as may be
agreed by FCX and FTX) the full account balances of
Transferred Employees under the FTX Individual Account Plan
(which account balances will have been credited with
appropriate earnings attributable to the period from the
date of the identification thereof pursuant to Paragraph
5(a) to the date of transfer described herein), reduced by
any necessary benefit or withdrawal payments to or in
respect of Transferred Employees occurring during such
period, to the appropriate trustee as designated by FCX
under the trust agreement forming a part of the FCX
Individual Account Plan.
(c) Unless otherwise agreed by FTX and FCX, and
notwithstanding any other provision of this Paragraph 5 to
the contrary, any portion of such transferred account
balances that is invested in equity securities of either FCX
or FTX shall be transferred in the form of such securities.
After the Effective Date, the FTX Individual Account Plan
shall not be obligated to permit further investment in FCX
equity securities, and the FCX Individual Account Plan shall
not be obligated to permit further investment in FTX equity
securities.
(d) The disposition of the account balances of Dual
Employees under the FTX Individual Account Plan and FTX
SECAP shall be as mutually agreed by FTX and FCX.
(e) In consideration for the transfer of assets
described herein, FCX shall, or shall cause one or more of
its subsidiaries to, effective as of the date of transfer
described herein, assume all of the obligations of FTX and
its subsidiaries in respect of the account balances
accumulated by Transferred Employees under the FTX
24
Individual Account Plan (exclusive of any portion of such
account balances that are paid or otherwise withdrawn prior
to the date of transfer described herein) on or prior to the
mutually agreed date. Neither FCX nor any of its affiliates
shall assume any other obligations or liabilities arising
under or attributable to the FTX Individual Account Plan.
(f) The account balances of Transferred Employees
in the FTX SECAP will be transferred to FCX or one or more
of its subsidiaries using the same methods and procedures as
are specified above for the qualified plan to which the FTX
SECAP relates. In consideration of a cash payment by FTX to
FCX in an amount equal to such account balances of
Transferred Employees, FCX will, or will cause one or more
of its subsidiaries to, assume liability therefor.
6. Stock Plan Adjustments; Establishment of New
Stock Plans. (a) Effective as of the Effective Date, FCX
shall adopt the Adjusted Stock Award Plan, the Stock Plan,
the SIU Plan and the Directors Plan and shall take all
action necessary in regard to such plans to ensure
compliance with Rule 16b-3, Section 162(m) and the
Securities Act, as applicable and as deemed desirable by
FCX. The Adjusted Stock Award Plan shall be established for
the exclusive purpose of granting the Adjusted FCX Awards as
described in this Paragraph 6.
(b) Each outstanding FTX Award on the Effective
Date shall be converted, in accordance with the procedures
described in this Paragraph 6, into an Adjusted FTX Award
and an Adjusted FCX Award with the same features as such FTX
Award. The number of FCX Shares subject to an Adjusted FCX
Award shall be that number of FCX Shares that a record
holder of the number of FTX Shares underlying the related
FTX Award would have received in the Distribution.
(c) Each Adjusted FCX Award and each Adjusted FTX
Award will have the same remaining duration and other terms
and conditions as the FTX Award from which it was derived;
provided, however, that if an Adjusted FCX Award provides
the holder thereof with a stock option and if the FTX Award
from which such Adjusted FCX Award is derived has a term
that will expire prior to one hundred and eighty days after
the Effective Date, the term of such Adjusted FCX Award
shall expire on the one hundred and eightieth day after the
Effective Date; and further provided, however, that no
Adjusted FCX Award providing the holder thereof with a stock
option shall be exercisable prior to the ninetieth day after
the Effective Date. Without limiting the generality of the
foregoing, if an FTX Award contains a feature providing for
a cash payment upon exercise to defray in whole or in part
25
income tax obligations arising in connection therewith, then
the resulting Adjusted FCX Award and Adjusted FTX Award will
have such feature, and, if an FTX Award contains "limited
rights", then the resulting Adjusted FCX Award and Adjusted
FTX Award will have "limited rights".
(d) The exercise price of an Adjusted FTX Award
shall be determined by multiplying the exercise price of the
FTX Award from which such Adjusted FTX Award was derived by
a fraction, the numerator of which is the FTX Net
Distribution Value, as defined below, and the denominator of
which is the FTX Distribution Value, as defined below.
(e) The exercise price of an Adjusted FCX Award
shall be determined by multiplying the exercise price of the
FTX Award from which such Adjusted FCX Award was derived by
a fraction, the numerator of which is the FCX Distribution
Value, as defined below, and the denominator of which is the
FTX Distribution Value.
(f) For purposes of the foregoing, the "FCX
Distribution Value" shall be the weighted average when-
issued per share price of the FCX Shares on the New York
Stock Exchange on the first day on which the FCX Shares are
traded on a when-issued basis on the New York Stock
Exchange; the "FTX Distribution Value" shall be the weighted
average per share price of the FTX Shares on the New York
Stock Exchange on such trading day (trading with due bills,
if such date is after the record date of the Distribution)
and the "FTX Net-Distribution Value" shall be (i) the FTX
Distribution Value minus (ii) the product of the
Distribution Ratio, as hereinafter defined, and the FCX
Distribution Value. The "Distribution Ratio" shall mean the
number of FCX Shares distributed in the Distribution per FTX
Share, rounded to the nearest one-millionth (.000001) of an
FCX Share.
7. Deferred Compensation Liabilities. As of the
Transferred Employees' respective Effective Dates, FTX shall
calculate the liability of FTX and its subsidiaries other
than FCX in respect of such Transferred Employees' deferred
compensation, including without limitation deferred awards
under the FTX PIAP, FTX AIP, FTX LTPIP and predecessor
plans, if any. In consideration of a cash payment by FTX to
FCX in an amount equal to such accrued liability, FCX will,
or will cause one or more of its subsidiaries to, assume
such liability in respect of Transferred Employees.
Notwithstanding the foregoing, FTX liability in respect of
Dual Employees will be allocated as agreed by FTX and FCX.
26
8. Welfare Plans. (a) As of their respective
Effective Dates, subject to the provisions of Paragraph
8(d), Transferred Employees shall cease participation in all
FTX Employee Plans and FTX Benefit Arrangements providing
for health, medical, dental and life insurance or similar
benefits ("welfare plan"). Except as otherwise set forth in
this Agreement, FTX shall retain all obligations and
liabilities under the FTX Employee Plans and FTX Benefit
Arrangements.
(b) FTX's welfare plans shall retain liability for
and shall pay when due all benefits described in Paragraph
8(a) that are attributable to claims incurred prior to a
Transferred Employee's Effective Date by such Transferred
Employees (and his or her eligible dependents). FCX and its
welfare plans shall be liable for and shall pay when due all
such benefits attributable to claims incurred on or after a
Transferred Employee's Effective Date by such Transferred
Employees (and his or her eligible dependents). For such
purpose, unless otherwise agreed by FTX and FCX, a claim is
deemed incurred when the services that are the subject of
the claim are performed, when the death occurs (in the case
of life insurance), as of the date beginning a period of
absence eventually resulting in entitlement to benefits (in
the case of long-term disability benefits) and in the case
of a hospital stay, based on the date any such
hospitalization is initiated.
(c) The group health plans established by FCX for
the benefit of Transferred Employees shall (i) waive any
pre-existing condition limitations, (ii) waive any
eligibility waiting periods and (iii) give effect, in
determining or applying any deductible and maximum out-of-
pocket limitations to claims incurred, amounts paid by, and
amounts reimbursed to, such employees under the group health
plans maintained by FTX for their benefit immediately prior
to the applicable Effective Date.
(d) FCX will give Transferred Employees full credit
for purposes of eligibility, vesting and benefit accrual (as
such purposes may be applicable) under the employee benefit
plans of FCX for such employees' respective service
recognized for such purposes under the corresponding FTX
Employee Plan or FTX Benefit Arrangement.
(e) Notwithstanding any other provision of this
Paragraph 8 to the contrary, the welfare benefits of Dual
Employees after their respective Effective Dates shall be
provided as agreed by FTX and FCX.
27
(f) FTX and FCX shall provide each other with
copies of such records as are reasonably required to enable
the parties to perform their obligations hereunder.
(g) In respect of the Accumulated Post-Retirement
Benefit Obligation ("APBO") of FTX employees and FCX
employees under SFAS 106, FCX agrees to pay to FTX an amount
in cash equal to the excess, if any, of (i) the decrease in
FCX SFAS 106 APBO liability after the Distribution which is
attributable to the assumption by FTX of SFAS 106 APBO
liability which prior to the Distribution was reflected on
the audited balance sheet of FCX over (ii) the increase in
FCX SFAS 106 APBO liability after the Distribution which is
attributable to the assumption by FCX of SFAS 106 APBO
liability which prior to the Distribution was reflected on
the audited balance sheet of FTX. For purposes of this
Paragraph 8(g), APBO shall be calculated as of employees'
Effective Dates that relate to or coincide with the
termination of the management services agreement referred to
in Paragraph 4 under "Background", above. In the event that
the amount described in clause (ii) of this Paragraph 8(g)
exceeds the amount described in clause (i), FTX agrees to
pay to FCX an amount in cash equal to such excess.
9. Expenses. Each of FCX and FTX shall pay its own
expenses in connection with the performance of its
obligations under this Agreement.
10. Third-Party Beneficiaries. No provision of
this Agreement shall create any third party beneficiary
rights in any Transferred Employee, Retired Employee or any
employee or former employee of FTX (including any
beneficiary or dependent thereof), including any rights in
respect of continued employment or resumed employment, and
no provision of this Agreement shall create any rights in
any such persons in respect of any benefits that may be
provided, directly or indirectly, under any employee benefit
plan or arrangement.
11. Governing Law. This Agreement shall be
governed by and construed in accordance with the internal
laws of the State of Delaware.
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IN WITNESS WHEREOF, the parties hereto have caused
this Agreement to be executed as of the date first above
written.
FREEPORT-McMoRan COPPER & GOLD INC.
By: /s/ Xxxxxx X. Xxxxxx
Name: Xxxxxx X. Xxxxxx
Title: President and Chief
Operating Officer
FREEPORT-McMoRan INC.
By: /s/ Xxxx X. Xxxxxxxxx
Name: Xxxx X. Xxxxxxxxx
Title: President and Chief
Operating Officer
29
