Exhibit 10(a)
CYPRUS AMAX MINERALS COMPANY
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
As Amended and Restated Effective January 29, 1998
TABLE OF CONTENTS
ARTICLE I DEFINITIONS..................................................... 1
1.1 "Accrued Benefit"............................................... 1
1.2 "Beneficiary"................................................... 1
1.3 "Board of Directors"............................................ 1
1.4 "Change in Control"............................................. 1
1.5 "Code".......................................................... 3
1.6 "Committee"..................................................... 3
1.7 "Company"....................................................... 3
1.8 "Compensation".................................................. 3
1.9 "Compensation Committee"........................................ 3
1.10 "Employee"...................................................... 3
1.11 "Normal Retirement Date"........................................ 3
1.12 "Participant"................................................... 3
1.13 "Plan".......................................................... 3
1.14 "Plan Year"..................................................... 3
1.15 "Retirement Plan"............................................... 4
1.16 "Supplemental Benefit".......................................... 4
1.17 "Trust"......................................................... 4
1.18 "Trust Agreement"............................................... 4
1.19 "Trustee"....................................................... 4
ARTICLE II ELIGIBILITY FOR PARTICIPATION................................... 4
ARTICLE III FUNDING......................................................... 4
ARTICLE IV VESTING......................................................... 4
ARTICLE V COMPUTATION OF SUPPLEMENTAL BENEFIT............................. 5
ARTICLE VI PAYMENT OF SUPPLEMENTAL BENEFIT................................. 5
6.1 Commencement of Supplemental Benefit Payments................... 5
6.2 Death Benefits.................................................. 5
6.3 Plan Interest Nonassignable..................................... 5
6.4 Distribution to Minors or Incapacitated Persons................. 5
6.5 Termination of Service.......................................... 6
6.6 Change in Control............................................... 6
6.7 Reduction of Supplemental Benefit in the Event of Payment From
Trust Upon Taxation of Interest in Trust........................ 6
ARTICLE VII ADMINISTRATION OF THE PLAN...................................... 6
7.1 Administration.................................................. 6
7.2 Claim Procedures................................................ 7
i
ARTICLE VIII AMENDMENTS AND TERMINATION.................................. 8
ARTICLE IX MISCELLANEOUS............................................... 8
9.1 Effect on Employment........................................ 8
9.2 Liability................................................... 8
9.3 Applicable Law.............................................. 9
9.4 Effect of Agreement......................................... 9
ii
ARTICLE I
DEFINITIONS
-----------
The following capitalized words when used in the Plan shall have the following
meanings set forth below. Words in the masculine gender include the feminine
gender, and vice versa. Wherever any words are used in the singular form, they
shall be construed as if they were also used in the plural form in all cases
where the plural form would so apply, and vice versa. Where the definitions
include rules regarding the definition, those rules shall apply. Wherever a
capitalized word is used herein but is not otherwise defined, it shall have the
same meaning as set forth in the Retirement Plan.
1.1 "Accrued Benefit" means a Participant's "Accrued Benefit" as that term is
---------------
defined in the Retirement Plan.
1.2 "Beneficiary" means any person to whom a Supplemental Benefit is payable
-------------
under the Plan on account of a Participant's death in accordance with the
provisions of Section 6.2.
1.3 "Board of Directors" means the Board of Directors of Cyprus Amax
------------------
Minerals Company.
1.4 "Change in Control" means the happening of any of the following events:
-----------------
(a) The acquisition by any individual, entity, or group (within the
meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act
of 1934, as amended (the "Exchange Act")) (a "Person") of beneficial
------------ ------
ownership (within the meaning of Rule 13d-3 promulgated under the
Exchange Act) of 20% or more of either (i) the then outstanding shares
of common stock of the Company (the "Outstanding Company Common
--------------------------
Stock") or (ii) the combined voting power of the then outstanding
voting securities of the Company entitled to vote generally in the
election of directors (the "Outstanding Company Voting Securities");
-------------------------------------
provided, however, that the following acquisitions shall not
-------- -------
constitute a Change in Control: (A) any acquisition directly from the
Company, (B) any acquisition by the Company, (C) any acquisition by
any employee benefit plan (or related trust) sponsored or maintained
by the Company or any corporation controlled by the Company, or (D)
any acquisition by any corporation pursuant to a transaction described
in Sections 1.4(c) (i), (ii), and (iii); or
(b) Individuals who, as of January 1, 1990, constituted the Board of
Directors (the "Incumbent Board") cease for any reason to constitute
at least a majority of the Board of Directors; provided, however, that
-------- -------
any individual becoming a member of the Board of Directors subsequent
to January 1, 1990, whose election or nomination for election by the
Company's shareholders was approved by a vote of at least a majority
of the directors then comprising the Incumbent Board shall be
considered as though such individual were a member of the Incumbent
Board, but excluding, for this purpose, any such individual whose
initial membership on the Board of Directors occurs as a result of an
actual or threatened election contest with respect to the election or
removal of directors or other actual or threatened solicitation of
proxies or consents by or on behalf of a Person other than the Board
of Directors; or
1
(c) Approval by the shareholders of the Company of a reorganization,
merger, or consolidation (a "Business Combination"), in each case,
--------------------
unless, following such Business Combination, (i) all or substantially
all of the individuals and entities who were the beneficial owners,
respectively, of the Outstanding Company Common Stock and Outstanding
Company Voting Securities immediately prior to such Business
Combination beneficially own, directly or indirectly, more than 80%
of, respectively, the then outstanding shares of common stock and the
combined voting power of the then outstanding voting securities
entitled to vote generally in the election of directors, as the case
may be, of the corporation resulting from such Business Combination
(including, without limitation, a corporation which as a result of
such transaction owns the Company through one or more subsidiaries) in
substantially the same proportions as their ownership, immediately
prior to such Business Combination of the Outstanding Company Common
Stock and Outstanding Company Voting Securities, as the case may be,
(ii) no Person (excluding any employee benefit plan (or related trust)
of the Company or such corporation resulting from such Business
Combination) beneficially owns, directly or indirectly, 20% or more
of, respectively, the then outstanding shares of common stock of the
corporation resulting from such Business Combination or the combined
voting power of the then outstanding voting securities of such
corporation except to the extent that such ownership existed prior to
the Business Combination, and (iii) at least a majority of the members
of the board of directors of the corporation resulting from such
Business Combination were members of the Incumbent Board at the time
of the execution of the initial agreement, or at the time of the
action of the Board of Directors, in either case providing for such
Business Combination; or
(d) Approval by the shareholders of the Company of (i) a complete
liquidation or dissolution of the Company or (ii) the sale or other
disposition of all or substantially all of the assets of the Company,
other than to a corporation with respect to which following such sale
or other disposition, (A) more than 80% of, respectively, the then
outstanding shares of common stock of such corporation and the
combined voting power of the then outstanding voting securities of
such corporation entitled to vote generally in the election of
directors is then beneficially owned, directly or indirectly, by all
or substantially all of the individuals and entities who were the
beneficial owners, respectively, of the Outstanding Company Common
Stock and Outstanding Company Voting Securities immediately prior to
such sale or other disposition in substantially the same proportion as
their ownership, immediately prior to such sale or other disposition,
of the Outstanding Company Common Stock and Outstanding Company Voting
Securities, as the case may be, (B) less than 20% of, respectively,
the then outstanding shares of common stock of such corporation and
the combined voting power of the then outstanding voting securities of
such corporation entitled to vote generally in the election of
directors is then beneficially owned, directly or indirectly, by any
Person (excluding any employee benefit plan (or related trust) of the
Company or such corporation), except to the extent that such Person
owned 20% or more of the Outstanding Company Common Stock or
Outstanding Company Voting Securities prior to the sale or
disposition, and (C) at least a majority of the members of the board
of directors of such corporation were members of the Incumbent Board
at the time of the execution of the initial agreement, or at the time
of the action of the Board of Directors, in either case providing for
such sale or other disposition of
2
assets of the Company or were elected, appointed or nominated by the
Board of Directors.
Upon the occurrence of an event described in Sections 1.4(a), (b), (c), or
(d), the Company shall be obligated, and without limitation Milton H. Ward,
or in the event of his death, disability, retirement, incapacity, or
inability to act, Philip C. Wolf, or in the event of his death, disability,
retirement, incapacity, or inability to act, the Committee as it was
comprised prior to the Change in Control, shall be duly authorized, to give
written notice to the Trustee of the occurrence of such event, to determine
within a reasonable time period the amount of payments due to Participants
under Section 6.6, to direct the Trustee regarding payment of such benefits
which payments shall be used to reduce the Company's liability under the
Plan, and to take any and all necessary administrative action with regard
to the Plan.
1.5 "Code" means the Internal Revenue Code of 1986, as amended from time to
----
time, and any rules or regulations promulgated thereunder.
1.6 "Committee" means the Cyprus Amax Minerals Company Benefits Committee,
---------
which is the management committee established by the Compensation and
Benefits Committee of the Board of Directors and to whom the Compensation
Committee has delegated the responsibility for administering and amending
the Plan. The Committee's authority shall be subject to any restrictions
imposed by the Compensation Committee. The Committee shall act in
accordance with its own internal procedures.
1.7 "Company" means Cyprus Amax Minerals Company and any affiliate that is
-------
a participating company in the Retirement Plan.
1.8 "Compensation" means a Participant's "Compensation" as that term is
------------
defined in the Retirement Plan.
1.9 "Compensation Committee" means the Compensation and Benefits Committee of
----------------------
the Board of Directors of Cyprus Amax Minerals Company, or such other
committee of the Board of Directors which has authority with respect to the
Plan.
1.10 "Employee" means an individual who is an "Employee" as that term is
--------
defined in the Retirement Plan.
1.11 "Normal Retirement Date" means the date which is the later to occur of a
----------------------
Participant's attainment of age 65 or the fifth anniversary of the
Participant's commencement of participation in the Retirement Plan.
1.12 "Participant" means an Employee who has become a Participant in the Plan in
-----------
accordance with Article II.
1.13 "Plan" means this Cyprus Amax Minerals Company Supplemental Executive
----
Retirement Plan, as amended from time to time.
1.14 "Plan Year" means the calendar year.
---------
3
1.15 "Retirement Plan" means the Cyprus Amax Minerals Company Retirement Plan
---------------
for Salaried Employees, as amended from time to time.
1.16 "Supplemental Benefit" means the supplemental retirement benefit as
--------------------
determined under Article V.
1.17 "Trust" means the nonqualified grantor trust that may be established
-----
by the Company to assist it, to the extent necessary, to satisfy its
benefit payment obligations under the Plan.
1.18 "Trust Agreement" means the agreement entered into between the Company
---------------
and the Trustee establishing the Trust.
1.19 "Trustee" means the trustee or trustees of the Trust pursuant to the
-------
Trust Agreement.
ARTICLE II
ELIGIBILITY FOR PARTICIPATION
-----------------------------
Each Employee of the Company shall automatically become a Participant in the
Plan effective as of the first day of the first pay period in which the Employee
is a Participant in the Retirement Plan and his Accrued Benefit under the
Retirement Plan has been limited by application of the requirements of Section
415 and/or Section 401(a)(17) of the Code.
ARTICLE III
FUNDING
-------
Nothing contained in the Plan and no action taken pursuant to the provisions of
the Plan shall create or be construed to create a trust of any kind, or a
fiduciary relationship between the Company and a Participant, a Beneficiary, or
any other person. The title to and beneficial ownership of any assets, whether
cash or investments, which the Company may designate to pay the Supplemental
Benefits under the Plan, shall at all times remain with the Company and neither
a Participant nor a Beneficiary shall have any right or property interest
whatsoever in any such asset of the Company. The Company shall not be required
to fund its obligations under the Plan in any manner, whether by purchase of
insurance contracts, by contributions to a trust, by deposits in an escrow
account or otherwise. However, if the Company does establish such a trust,
purchase any such contract or deposit funds in any such account, then neither a
Participant nor a Beneficiary, shall have any right or interest in such
contracts, trusts, or accounts but may look solely to the Company's unsecured
promise to pay in accordance with the provisions of the Plan. The Plan is
intended to constitute a plan which is unfunded and is maintained by an employer
primarily for the purpose of providing deferred compensation for a select group
of management or highly compensated employees for purposes of Sections 201(2),
301(a)(3), 401(a)(1) and 4021(b)(6) of the Employee Retirement Income Security
Act of 1974, as amended from time to time.
ARTICLE IV
VESTING
-------
4
A Participant at all times shall be fully vested in his Supplemental Benefit.
ARTICLE V
COMPUTATION OF SUPPLEMENTAL BENEFIT
-----------------------------------
A Participant's Supplemental Benefit under the Plan shall be equal to the
difference between (a) the Participant's vested Accrued Benefit payable under
the Retirement Plan and (b) the vested Accrued Benefit that would have been
payable under the Retirement Plan to the Participant (i) had the limitations of
Section 415 and Section 401(a)(17) of the Code, as applicable, not been applied,
and (ii) had any compensation, included in the year of deferral, which is
deferred under any deferred compensation plan sponsored by the Company been
included in the Participant's Compensation for purposes of the Retirement Plan.
ARTICLE VI
PAYMENT OF SUPPLEMENTAL BENEFIT
-------------------------------
6.1 Commencement of Supplemental Benefit Payments. Payment of a Participant's
---------------------------------------------
Supplemental Benefit under the Plan shall be made as of the date on which
the payment of the Participant's Accrued Benefit on account of early
retirement or normal retirement under the Retirement Plan commences.
Supplemental Benefits under the Plan shall be paid in the form of an
actuarially equivalent lump sum cash payment. For purposes of the Plan,
actuarial equivalence shall be computed on the basis of the actuarial
assumptions specified in the Retirement Plan for such purpose. Supplemental
Benefits under the Plan that are paid before a Participant's Normal
Retirement Date shall be reduced in accordance with the provisions of the
Retirement Plan governing payment of benefits before the "Normal Retirement
Age" thereunder.
6.2 Death Benefits. A death benefit shall be paid to the Beneficiary of a
--------------
Participant who dies prior to the payment of the Participant's Supplemental
Benefit under the Plan. The death benefit shall be equal to the
Supplemental Benefit accrued by the Participant as of the date of the
Participant's death. The death benefit shall be paid to the Beneficiary in
an actuarial equivalent lump sum payment and at the time any death benefit
is paid to the Beneficiary under the Retirement Plan. The Beneficiary
under the Retirement Plan shall be the Beneficiary under the Plan.
6.3 Plan Interest Nonassignable. Neither a Participant nor a Beneficiary
---------------------------
shall not have any right to commute, sell, assign, transfer, or otherwise
convey the right to receive any payments under the Plan. Payments will not
be subject to the claim of any creditor of a Participant or a Beneficiary,
nor can payments be taken in execution by attachment or garnishment or by
any other legal or equitable proceeding.
6.4 Distribution to Minors or Incapacitated Persons. If the Committee shall
-----------------------------------------------
find that any person to whom any payment is to be made under the Plan is
unable to care for such person's affairs because of illness or accident, or
is a minor, any payment due (unless a prior claim has been made by a duly
appointed guardian or other legal representative) may be paid to the
spouse, a child, a parent, or to any person deemed by the Committee
5
to have incurred expenses for care of the person otherwise entitled to
payment, in such manner and proportions as the Committee shall determine.
Any such payment shall be a complete discharge of the liabilities of the
Company under the Plan.
6.5 Termination of Service. Nothing in the Plan shall be construed to give a
----------------------
Participant the right to be retained as an employee of the Company or to
impair the right of the Company to terminate a Participant's services at
any time with or without cause.
6.6 Change in Control. In the event of a Change in Control, each Participant
-----------------
shall be paid the actuarial equivalent (determined using the actuarial
assumptions specified in the Retirement Plan) of the Participant's
Supplemental Benefit amount computed under Article V of the Plan as though
the Participant terminated employment with the Company on the date the
Change in Control is deemed to have occurred. Such Supplemental Benefit
shall be paid in the form of a lump sum cash payment as soon as
administratively feasible after the Change in Control is deemed to have
occurred, and if the payment date is before the date the Participant
attains his Normal Retirement Date, such Supplemental Benefit shall be
reduced in accordance with the provisions of the Retirement Plan governing
the payment of benefits before the "Normal Retirement Age" thereunder.
6.7 Reduction of Supplemental Benefit in the Event of Payment From Trust Upon
-------------------------------------------------------------------------
Taxation of Interest in Trust. In the event any Participant or
-----------------------------
Beneficiary is determined to be subject to Federal income tax on any amount
held in the Trust and said amount determined to be taxable is distributed
to such Participant or Beneficiary from the Trust pursuant to Section 3.06
of the Trust Agreement, the Supplemental Benefits payable under the Plan to
such Participant or Beneficiary shall be reduced by the amount so
distributed from the Trust that is applied to reduce the Company's
liability to pay Supplemental Benefits under the Plan.
ARTICLE VII
ADMINISTRATION OF THE PLAN
--------------------------
7.1 Administration. The Plan shall be administered by the Committee, which
--------------
is specifically given the discretionary authority and such powers as are
necessary for the proper administration of the Plan, including, but not
limited to, the following:
(a) to maintain any records necessary in connection with the operation of
the Plan;
(b) to calculate the amount of benefits due to Participants and
Beneficiaries;
(c) to have the authority and discretion to interpret the Plan, to decide
questions and disputes, to supply omissions, and to resolve
inconsistencies and ambiguities arising under the Plan, which
interpretations and decisions shall be final and binding on all
Participants and Beneficiaries;
(d) to retain counsel, employ agents, and provide for such clerical,
accounting, actuarial, and consulting services as it deems necessary
or desirable to assist it in the administration of the Plan;
6
(e) to retain the right, authority, and discretion to make benefit
payments and predetermination of benefit decisions upon appeal to the
extent it has the authority to make such appeal determinations under
Section 7.2;
(f) to establish rules and regulations for the administration of the Plan;
and
(g) to otherwise administer the Plan in accordance with its terms.
No determination of the Committee in one case shall create a bias or
retroactive adjustment in any other case. Expenses for the administration
of the Plan shall be paid by the Company and shall not affect any
Participant's or Beneficiary's right to or amount of benefits under the
Plan.
7.2 Claim Procedures.
----------------
(a) A Participant or the Beneficiary or the duly authorized representative
of either (a "claimant") may file a claim for a benefit under the Plan
to which the claimant believes that such Participant or Beneficiary is
entitled. Such a claim must be in writing and delivered to the
Committee by certified mail. Within 90 days after receipt of a claim,
the Committee shall send to the claimant by certified mail, postage
prepaid, notice of the granting or denying, in whole or in part, of
such claim, unless special circumstances require an extension of time
for processing the claim. In no event may such an extension exceed 90
days from the end of the initial 90-day period. If such extension is
necessary, the claimant will be given a written notice to this effect
prior to the expiration of the initial 90-day period. The Committee
shall have full discretion to deny or grant a claim in whole or in
part. If notice of the denial of a claim is not furnished in
accordance with this Section 7.2(a), the claim shall be deemed denied
and the claimant shall be permitted to exercise the claimant's right
to review pursuant to Section 7.2(c).
(b) If a claim for benefits made pursuant to Section 7.2(a) is denied, the
Committee shall provide to the claimant written notice setting forth
in a manner calculated to be understood by the claimant:
(i) the specific reason or reasons for the denial;
(ii) specific reference to pertinent Plan provisions upon which the
denial is based;
(iii) a description of any additional material or information
necessary for the claimant to perfect the claim and an
explanation of why such material is necessary; and
(iv) an explanation of the claim review procedure.
(c) Within 60 days after receipt by the claimant of written notification
pursuant to Section 7.2(a) of the denial in whole or in part of a
timely made claim pursuant to Section 7.2(a), the claimant, upon
written application to the Committee in person or by certified mail,
postage prepaid, may request a review of such denial, may review
pertinent documents, and may submit issues and comments in writing.
Upon receipt of the request for review, the Committee shall review the
claim and
7
denial and shall communicate its decision to the claimant. The
decision on review shall be written in a manner calculated to be
understood by the claimant and shall include specific reasons for the
decision and specific references to the pertinent Plan provisions upon
which the decision is based. The decision on review shall be made not
later than 60 days after the Committee's receipt of a request for
review under this Section 7.2(c), unless special circumstances require
an extension of time for processing, in which case a decision shall be
rendered not later than 120 days after the Committee's receipt of a
request for review under this Section 7.2(c). If such extension is
necessary, the claimant shall be given written notice of the extension
prior to the expiration of the initial 60-day period. If notice of the
decision on the review is not furnished in accordance with this
Section 7.2(c), the claim shall be deemed denied.
ARTICLE VIII
AMENDMENTS AND TERMINATION
--------------------------
The Company expects the Plan to be permanent, but as future conditions affecting
the Company cannot be foreseen, the Company hereby reserves the right to amend,
modify, suspend, or terminate the Plan by or pursuant to action of the Board of
Directors or the Compensation Committee, or, to the extent such authority has
been delegated to the Committee, to the Committee. Any such amendment,
modification, suspension, or termination of the Plan shall be effective not
earlier than the date on which the Company shall have given notice of such
action to affected Participants and Beneficiaries. An amendment, modification,
suspension, or termination of the Plan may affect future Participants, but shall
not reduce the Supplemental Benefit under the Plan of any Participant or
Beneficiary as determined immediately prior to the effective date of such
amendment, modification, suspension, or termination.
ARTICLE IX
MISCELLANEOUS
-------------
9.1 Effect on Employment. Nothing contained in the Plan shall be construed
--------------------
as a contract of employment between the Company and any of its employees.
Participation in the Plan shall not alter or otherwise affect the
responsibilities of any employee of the Company to fully perform his duties
in a satisfactory and workmanlike manner, nor shall it affect the Company's
right to discipline, discharge, or take any other action with respect to
any employee.
9.2 Liability.
---------
(a) The Board of Directors, the Compensation Committee, the Committee, and
the Company shall not be liable for any action or determination made
in good faith thereby with respect to the Plan or the rights of any
person under the Plan.
8
(b) If the Committee is in doubt as to the right of any person to receive
any amount, the Company may retain such amount, which shall continue
to accrue interest, on the basis of the interest rate specified in the
Retirement Plan, until the rights thereto are determined, or the
Company may pay such amount into any court of appropriate
jurisdiction, and such payment shall be a complete discharge of the
liability of the Plan, the Board of Directors, the Company, the
Compensation Committee and the Committee therefor. Any payment made
pursuant to this Section 9.2(b) shall be made as soon as practicable
under the circumstances.
9.3 Applicable Law. The Plan shall be construed in accordance with and
--------------
governed by the laws of the State of Colorado to the extent not superseded
by federal law.
9.4 Effect of Agreement. The Plan shall be binding upon and shall inure to
-------------------
the benefit of the Company, its successors and assigns, and each
Participant and Beneficiary and their heirs, personal representatives, and
legal representatives.
IN WITNESS WHEREOF, Cyprus Amax Minerals Company has caused this amendment
and restatement of the Plan to be effective as of the 29th day of January, 1998.
CYPRUS AMAX MINERALS COMPANY
By: /s/ B.B. Turner
-------------------------------
B.B. Turner
Chairman, Compensation and Benefits
Committee
9