Execution Copy
Executive Employment Agreement
This Executive Employment Agreement ("Agreement") between
Freeport-McMoRan Copper & Gold Inc., a Delaware corporation (the
"Company"), and Richard C. Adkerson (the "Executive") is dated
effective as of April 30, 2001 (the "Agreement Date").
W I T N E S S E T H:
WHEREAS, 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, 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
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 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 President. 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 Chairman of
the Board and Chief Executive Officer or the Company's Board of
Directors (the "Board"), which duties shall be consistent with
the position of President.
2. 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 Corporate Personnel Committee of the Board,
beneficially own 5 percent 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 percent
of the equity interests of any business 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 $1,250,000, 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 the
Company's affiliate, FM Services 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 Annual Incentive Plan,
as amended, that covers certain individuals designated by the
Corporate Personnel Committee of the Board (the "Committee"), or
any incentive or bonus compensation plan that is a successor or
substitute therefor. For Fiscal Years 2001 and 2002, the
Executive will be eligible to receive a Bonus not greater than
$1,375,000. Any Bonus awarded will be paid in cash not later
than 60 days following the end of the Fiscal Year in which the
Bonus has been earned; provided that, if the Company maintains a
restricted stock program that allows executives to receive
restricted stock units in lieu of all or part of their annual
cash bonus, then the Executive may, at his sole option, elect to
receive restricted stock units in lieu of all or part of his
Bonus in accordance with the restricted stock program. The
Executive acknowledges and agrees that this Section 2 imposes no
obligation on the Company to award any bonus to the Executive.
3. Stock Options and Long-Term Performance Units. Any and
all stock options and long-term performance units will be awarded
to the Executive in accordance with current and successor plans
at the discretion 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 the 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.
Article III
Termination of Status as Officer and Employee; 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; or
(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.
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, the instructions of a more senior
officer of the Company 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 the conduct described in
subparagraph (a), (b) or (c) 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, 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.
5. Voluntary 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 3 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 Change of Control
Agreement between the Executive and the Company dated effective
April 30, 2001 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 the 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 the Agreement will remain valid and
enforceable, and the rights of Executive to indemnification shall
remain in effect.
Article IV
Obligations upon Termination
1. Death or Disability. If (A) the Executive's status as
an officer and employee is terminated by reason of the
Executive's death or (B) the Company terminates the Executive's
status as an officer and employee by reason of Executive's
Disability then, subject to Article IV, Section 6 hereof:
(a) The Company will pay the Executive or his legal
representatives the sum of (i) the amount of the Executive's Base
Salary earned through the Termination Date to the extent not
previously paid and (ii) any compensation previously deferred by
the Executive (together with any accrued interest on earnings
thereon) to the extent not previously paid in accordance with the
terms of the deferred compensation plans under which such
compensation was deferred (the sum of the amounts described in
clauses (i) and (ii) being hereinafter referred to as the
"Accrued Obligations");
(b) The Company will pay to the Executive or his legal
representatives a pro rata bonus in an amount determined by
calculating the bonus that the Executive would receive for the
Fiscal Year in which the Termination Date occurs based upon the
level of achievement of the applicable performance goals through
the end of the fiscal quarter in which the Termination Date
occurs, annualized as if such level of performance had continued
throughout the entire Fiscal Year and then multiplying such bonus
amount by the fraction obtained by dividing the number of days in
the year through the Termination Date by 365 (the "Pro Rata
Bonus");
(c) All stock options granted to the Executive under the
Company's stock option and stock incentive plans ("Stock
Options") that are exercisable on the Termination Date and all
Stock Options that would have become exercisable within one year
after the Termination Date, will remain exercisable until the
earlier of (i) for death, the first anniversary of the
Termination Date; for Disability, the third anniversary of the
Termination Date, or (ii) the expiration date specified in the
Stock Option;
(d) The Company will pay to the Executive or his legal
representatives an amount equal to $900,000;
(e) 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 the applicable common stock of the
Company;
(f) The Executive's performance units under the Company's
1995 and 1999 Long-Term Performance Incentive Plans and any
successor plans (the "Long-Term Performance Incentive Plans")
will be credited with the annual earnings per share or net loss
per share (as defined in the plans) 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; and
(g) The Company will pay or deliver, as appropriate, all
other benefits earned by the Executive or accrued for his benefit
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.
The compensation described in paragraphs (b), (c), (e) and (f)
above was intended at the time of grant to qualify as
"performance-based compensation" under Section 162(m) of the
Internal Revenue Code. In order that such compensation may
continue to qualify and notwithstanding any provision of any such
paragraph or Article IV, Section 6, the payment of any such
compensation hereunder shall be subject to, and reduced if
necessary to comply with, the applicable requirements of Section
162(m), including but not limited to (i) satisfaction of all
applicable performance goals for the period prior to termination
of the Executive's status as an officer and employee or such
shorter or longer period provided herein, (ii) certification of
the satisfaction of the applicable performance goals by a
committee of the Board, the members of which qualify as outside
directors under Section 162(m), and (iii) the application of a
discount to reflect the time value of money where the payment of
the compensation is accelerated as a result of termination of the
Executive's status as an officer and employee.
2. Retirement. If the Executive terminates his status as
an officer and employee by reason of Retirement, then, subject to
Article IV, Section 6 hereof:
(a) The Company will pay to the Executive (i) the Accrued
Obligations and (ii) the Pro Rata Bonus;
(b) All Stock Options that are exercisable on the
Termination Date and all Stock Options that would have become
exercisable within one year after the Termination Date, will
remain exercisable until the earlier of (i) the third anniversary
of the Termination Date or (ii) the expiration date specified in
the Stock Option;
(c) The Company will pay to the Executive an amount equal
to $900,000;
(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 the applicable common stock of the
Company;
(e) The Executive's performance units under the Long-Term
Performance Incentive Plans will be credited with the annual
earnings per share or net loss per share (as defined in the
plans) 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) 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. 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
Executive than the most favorable of such coverages and benefits
as of the Termination Date. If 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 Executive with compensation or benefits substantially
similar or comparable in value to those 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. To the maximum
extent permitted by law, the Executive will be eligible for
coverage under the Consolidated Omnibus Budget Reconciliation Act
("COBRA") at the end of the Continuation Period or earlier
cessation of the Company's obligation under the foregoing
provisions of this paragraph; and
(g) The Company will pay or deliver, as appropriate, all
other benefits earned by the Executive or accrued for his benefit
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.
The compensation described in paragraphs (a)(ii), (b), (d) and
(e) above was intended at the time of grant to qualify as
"performance-based compensation" under Section 162(m) of the
Internal Revenue Code. In order that such compensation may
continue to qualify and notwithstanding any provision of any such
paragraph or Article IV, Section 6, the payment of any such
compensation hereunder shall be subject to, and reduced if
necessary to comply with, the applicable requirements of Section
162(m), including but not limited to (i) satisfaction of all
applicable performance goals for the period prior to termination
of the Executive's status as an officer and employee or such
shorter or longer period provided herein, (ii) certification of
the satisfaction of the applicable performance goals by a
committee of the Board, the members of which qualify as outside
directors under Section 162(m), and (iii) the application of a
discount to reflect the time value of money where the payment of
the compensation is accelerated as a result of termination of the
Executive's status as an officer and employee.
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 earned by the
Executive or accrued for his benefit 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.
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 Article IV, Section 6 hereof:
(a) The Company will pay to the Executive (i) the Accrued
Obligations and (ii) the Pro Rata Bonus;
(b) Within twenty business days of the Termination Date,
the Company will pay to the Executive an amount equal to four
times the sum of (i) the Executive's Base Salary in effect at the
Termination Date and (ii) the lesser of (A) the highest Bonus
paid to the Executive for any of the immediately preceding three
Fiscal Years or (B) two times Base Salary in effect at the
Termination Date;
(c) All Stock Options will become immediately exercisable
as of the Termination Date and will remain exercisable until the
expiration date specified in the 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 the applicable common stock of the
Company;
(e) The Executive's performance units under the Long-Term
Performance Incentive Plans will be credited with the annual
earnings per share or net loss per share (as defined in the
plans) 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) For 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. 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
Executive and his dependents and beneficiaries than the most
favorable of such coverages and benefits as of the Termination
Date; provided, however, in the event of the disability of
Executive during the Continuation Period, disability benefits
shall, to the maximum extent possible, not be paid for the
Continuation Period but shall instead commence immediately
following the end of the Continuation Period. If 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 Executive with compensation or
benefits substantially similar or comparable in value to those
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.
To the maximum extent permitted by law, the Executive will be
eligible for coverage under COBRA at the end of the Continuation
Period or earlier cessation of the Company's obligation under the
foregoing provisions of this paragraph; and
(g) The Company will pay or deliver, as appropriate, all
benefits earned by the Executive or accrued for his benefit
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.
The compensation described in paragraphs (a)(ii), (c), (d) and
(e) above was intended at the time of grant to qualify as
"performance-based compensation" under Section 162(m) of the
Internal Revenue Code. In order that such compensation may
continue to qualify and notwithstanding any provision of any such
paragraph or Article IV, Section 6, the payment of any such
compensation hereunder shall be subject to, and reduced if
necessary to comply with, the applicable requirements of Section
162(m), including but not limited to (i) satisfaction of all
applicable performance goals for the period prior to termination
of the Executive's status as an officer and employee or such
shorter or longer period provided herein, (ii) certification of
the satisfaction of the applicable performance goals by a
committee of the Board, the members of which qualify as outside
directors under Section 162(m), and (iii) the application of a
discount to reflect the time value of money where the payment of
the compensation is accelerated as a result of termination of the
Executive's status as an officer and employee.
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.
6. Most Favorable Benefits. It is the intention of the
parties that the terms of this Agreement shall provide payments
and benefits to the Executive that are equivalent or more
beneficial to the Executive than are otherwise available to the
Executive under the terms of any applicable benefit plan or
related compensation agreement. To that end, the terms of this
Agreement shall govern the payments and benefits to which the
Executive shall be entitled upon the termination of Executive's
status as an officer and employee as provided herein, except that
if the terms of any applicable benefit plan or related
compensation agreement provide more favorable benefits to the
Executive than are provided hereunder, then the terms of such
plan or agreement shall control unless such terms would cause any
compensation to fail to meet the requirements of Section 162(m).
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
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 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. Executive
will hold in a fiduciary capacity for the benefit of the Company
all Confidential Information obtained by Executive during
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, 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 Executive has
prepared with respect thereto. In the event that the provisions
of any applicable law or the order of any court would require
Executive to disclose or otherwise make available any
Confidential Information, 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, 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
Parish of Orleans, Louisiana, and the countries of Indonesia and
Spain (collectively, the "Subject Areas"), 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 Executive from making
passive investments as long as Executive does not beneficially
own more than 2 percent 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) 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) 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, 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, 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
Executive.
4. Injunctive Relief; Other Remedies. Executive
acknowledges that a breach by Executive of Section 2 or 3 of this
Article V would cause immediate and irreparable harm to the
Company for which an adequate monetary remedy does not exist;
hence, Executive agrees that, in the event of a breach or
threatened breach by Executive of the provisions of Section 2 or
3 of this Article V, the Company will be entitled to injunctive
relief restraining 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 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 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
Executive under Article IV or, at the Company's option, suspend
payments otherwise due to 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 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.
5. 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 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.
6. 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 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.
7. 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 Executive and
the length of time it 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)
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 New Orleans, Louisiana.
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.
Article VII
Miscellaneous
1. Term. The term of this Agreement will commence on the
Agreement Date and will continue through April 30, 2005;
provided, however, that commencing on April 30, 2005, and each
April 30 thereafter, the term of this Agreement will
automatically be extended for one additional year unless not
later than August 1 of the immediately preceding year, the
Corporate Personnel Committee has given written notice to the
Executive that it does not wish to extend this Agreement.
2. 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 for 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.
3. 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.
1615 Poydras Street
New Orleans, Louisiana 70112
Attention: Chairman of Corporate Personnel Committee
If to the Executive, to:
Richard C. Adkerson
1217 Burgundy Street
New Orleans, Louisiana 70116
or such other address as to which any party hereto may have
notified the other in writing.
4 Governing Law. This Agreement will be construed and
enforced in accordance with and governed by the internal laws of
the State of Louisiana without regard to principles of 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.
5 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.
6 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. 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.
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 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.
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.
IN WITNESS WHEREOF, the Company and the Executive have
caused this Agreement to be executed as of the Agreement Date.
Freeport-McMoRan Copper & Gold Inc.
By:
H. Devon Graham, Jr.
Director and Chairman of the
Corporate Personnel Committee
of the
Board of Directors
Executive
Richard C. Adkerson
Signature Page of Executive Employment Agreement
between Freeport-McMoRan Copper & Gold Inc.
and Richard C. Adkerson