Exhibit 10.14
RETIREMENT AGREEMENT
This Retirement Agreement ("Agreement") is entered into by and between
Phelps Dodge Corporation ("Company") and Manuel J. Iraola ("Iraola"). This
Agreement is entered into in order to (i) provide Iraola with special pay
and benefits upon his retirement from the Company, the payment of which
shall be contingent on Iraola executing a waiver and general release on or
after his retirement date with the Company; and (ii) resolve all matters
relating to Iraola's retirement from the Company.
The Company and Iraola, therefore, agree as follows:
1. Company previously announced its intentions to consider various
strategic options with respect to Phelps Dodge Industries ("PDI") (the
"Strategic Options"). After carefully evaluating those options Company
has determined that at the present time it will discontinue the
process of soliciting Strategic Option proposals with respect to PDI.
Based on these circumstances and Iraola's expressed desire to spend
more time on personal matters, Iraola has elected to retire from the
Company on June 30, 2002 (the "Retirement Date"). As of the Retirement
Date, Iraola will resign from all positions he holds with the Company,
and, as may be applicable, with each of the Company's subsidiaries and
affiliated entities. At the request of the Company, Iraola agrees to
execute any documents to effectuate or to facilitate his resignations.
Iraola acknowledges and agrees that all of the special benefits he
will receive under this Agreement are specifically contingent on him
executing a waiver and general release agreement, and otherwise
meeting his obligations under this Agreement. In addition, Iraola
agrees that the benefits provided under this Agreement are in lieu of
any and all benefits he may have been entitled to under the terms and
conditions of that certain Severance Agreement entered into by and
between Iraola and the Company dated October 27, 1997 ("Severance
Agreement"). Iraola acknowledges and agrees that upon the effective
date of this Agreement (as set forth in Paragraph 19 below), the
Severance Agreement will terminate and that neither he nor the Company
will have any further rights or obligations under that agreement.
2. Iraola agrees that until his Retirement Date he will continue to carry
out his duties for the Company faithfully, industriously, and to the
best of his ability, experience, and talents, and that he will
otherwise perform his duties and responsibilities to the reasonable
satisfaction of the Company. Except as otherwise modified by Paragraph
7 of this Agreement, between the execution date of this Agreement (as
set forth below) and the Retirement Date, Iraola will be entitled to
receive any salary increases, and stock option grants, to which he may
be entitled based on his service and performance and as are consistent
with Company's consistently applied plans, policies and procedures for
similarly situated AICP participants.
3. The Company will pay Iraola a special payment in the gross amount of
$859,947.50. In addition, the gross amount of this payment is subject
to further adjustment, either as an increase or decrease, based on the
actual Fair Market Value, as of the Retirement Date, of the 2,500
Iraola Agreement
Page 2
shares of Restricted Stock referenced in Paragraph 8 below. To the
extent the Fair Market value of the 2,500 shares of Restricted Stock
is greater than $137,500.00, then the gross amount of this special
payment will be decreased from the $859,947.50 amount set forth above
in an amount equal to the excess. [EXAMPLE: If as of the Retirement
Date, the Fair Market Value of the 2,500 Restricted Shares is $138,750
then the gross amount of this special payment will be reduced by
$1,250.00 ($138,750 - $137,500 = $1,250.00). In this example this
would result in the gross amount of the special payment being
$858,697.50 ($859,947.50 - $1,250 = $858,697.50).] To the extent the
Fair Market Value of the 2,500 shares of Restricted Stock is less than
$137,500.00, then the gross amount of the special payment will be
increased from the $859,947.50 amount set forth above in an amount
equal to the shortfall. [EXAMPLE: If as of the Retirement Date, the
Fair Market Value of the 2,500 Restricted Shares is $136,250 then the
gross amount of this special payment will be increased by $1,250.00
($137,500 - $136,250 = $1,250.00). In this example this would result
in the gross amount of the special payment being $861,197.50
($859,947.50 + $1,250 = $861,197.50).] All necessary taxes and
withholdings will be deducted from this amount. This special payment
will be paid to Iraola within 15 calendar days after his Retirement
Date or the effective date of that certain Waiver and Release
Agreement ("Waiver and Release") described in Paragraph 19 below,
whichever is later.
4. Until Iraola reaches age 65, and subject to him making those
contributions, if any, required of employees to participate in the
Company's medical and dental plans for active employees, Iraola and
his eligible dependents will be eligible to participate in the similar
group health and dental plans sponsored by the Company ("Similar
Active Plan"). At age 65, Iraola may elect, for himself and his
eligible dependents, to continue participation in a group medical plan
sponsored by Company, which is similar to the Company's retiree
medical plan then in effect (if the Company continues such a plan for
retirees) ("Similar Retiree Plan"), and subject to any changes in the
retiree medical plan that may be adopted from time to time. Any
election to participate in the Similar Retiree Plan is subject to
Iraola making the required payments to participate in the plan.
Iraola's cost to participate in the Similar Retiree Plan shall be
determined by the provisions and costs of the applicable retiree
medical plan in which he would have participated had he remained in
the employ of the Company until such time as he reached age 65. To the
extent Iraola, prior to age 65, is required to make contributions to
the Similar Active Plan, Company will notify him in writing of his
obligation to do so and the amount of the monthly contribution.
Company and Iraola agree that should Iraola predecease his spouse, she
may continue to participate in the similar plans contemplated by this
Paragraph 4. Iraola, upon his retirement, will have all of the rights
to which he is entitled under COBRA, including the election of up to
18 months of continuation coverage for himself, his spouse, and
eligible dependents. To obtain his COBRA continuation coverage he must
elect such coverage in accordance with the election notices provided
to him and he must be eligible for the coverage elected under the
rules of COBRA. Iraola will be responsible for making the monthly
premium payments required for any elected COBRA continuation coverage
and the cost of any other benefits he desires to continue.
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Page 3
5. Until Iraola reaches age 55, the Company will provide him with a
special, nonqualified monthly retirement benefit of $24,000.00,
subject to all applicable tax and other withholdings. When Iraola
reaches age 55 he will retire under the Phelps Dodge Retirement Plan
and he will receive the qualified monthly retirement benefit to which
he is entitled under that plan. In addition, he will receive a
special, nonqualified monthly retirement benefit in an amount
sufficient to bring his combined qualified and nonqualified monthly
retirement benefit after age 55 to $24,000.00, subject to all
applicable tax and other withholdings. (The retirement benefit amounts
set forth in this Paragraph have been calculated on the basis of a
single life annuity. Should Iraola elect a payment option other than
as a single life annuity this monthly amount will be reduced in
accordance with the applicable provisions of the Phelps Dodge
Retirement Plan.) Monthly payment of this special, nonqualified
monthly retirement benefit will begin the month following Iraola's
Retirement Date or the effective date of the Waiver and Release,
whichever is later.
6. In accordance with the terms of the Annual Incentive Compensation Plan
("AICP"), Iraola shall receive an AICP payment for the calendar year
in which his Retirement Date occurs. This payment will be calculated
based upon Iraola's salary earned through his Retirement Date, the
actual performance level of the Company and Phelps Dodge Industries,
and the target performance level for Iraola's support goals. This AICP
payment will be paid to Iraola in the calendar year following the year
in which his Retirement Date occurs at the same time that the AICP
payments are made to other AICP eligible individuals. Any AICP payment
made under this Paragraph 6 shall be subject to all applicable tax and
other withholdings.
7. In accordance with the Phelps Dodge 1998 Stock Option and Restricted
Stock Plan, as amended ("Restricted Stock Plan") and notwithstanding
Iraola's election to retire as of the Retirement Date, each of
Iraola's currently outstanding stock options that is exercisable as of
his Retirement Date will remain exercisable until the earlier of the
option's expiration date or one month after his Retirement Date. Any
of his exercisable options that are not exercised as of the date
specified above will terminate, and any of his outstanding stock
options that are not exercisable as of his Retirement Date will
terminate on that date (collectively, the "Cancelled Options"). To
compensate Iraola for the loss of value associated with his Cancelled
Options, the Company hereby grants to him a number of stock
appreciation units (the "Units") equal to the number of Cancelled
Options. The "Expiration Date" of the particular Units shall be the
earlier of the expiration dates of the Cancelled Options that were the
basis for the issuance of the particular Units or five years after his
Retirement Date ("Retirement Date + 5"). At any time prior to the
occurrence of an Expiration Date, Iraola may notify the Company of his
desire to "exercise" all or part of the Units. Any Units that he does
not exercise as of the Expiration Date for the applicable Units will
be deemed to be exercised for him on the applicable Expiration Date.
Each such Unit shall entitle Iraola to receive, upon the exercise
thereof, a lump-sum cash payment, less any required tax withholdings,
equal to the excess, if any, of (i) the Fair Market Value (as defined
below) of a Common Share on the date of exercise over (ii) the Base
Value (as defined below) for such Unit. For purposes of this
Agreement:
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The "Base Value" of each Unit shall be an amount equal to
the per share exercise price of the Cancelled Option to
which such Unit corresponds. Because he has more than one
Option Agreement, the Base Value of his Units will vary as
shown in the following table:
---------------------------------------------------
Units Base Value Expiration Date
---------------------------------------------------
6,567 $47.1250 December 2, 2002
15,000 $57.8750 December 7, 2004
15,000 $53.1250 February 1, 2005
35,000 $67.3750 December 6, 2005
30,000 $71.6250 December 4, 2006
4,933 $82.1250 December 1, 2003
32,000 $65.3750 June 30, 2007
4,204 $66.5000 December 2, 2002
3,210 $66.5000 December 1, 2003
45,000 $55.2500 June 30, 2007
63,000 $51.8125 June 30, 2007
60,000 $51.9375 June 30, 2007
55,000 $34.6700 June 30, 2007
The "Fair Market Value" of a Common Share on any date shall
mean the mean of the high and low prices thereof on such
date as reported on the New York Stock Exchange Consolidated
Trading Tape (or if there are no reported trades on such
date, on the next preceding day on which such trades are
reported). If the Base Value for a Unit exceeds the Fair
Market Value, the value of the Unit will be zero.
Iraola may exercise his Units by written notice to the Company (which
shall be delivered to the attention of Manager - Executive
Compensation, Phelps Dodge Corporation, One North Central Avenue,
Phoenix, Arizona 85004), specifically identifying the Unit being
exercised and the date as of which such Unit is to be exercised (which
may not be earlier than the date of such notice). A Unit does not
entitle Iraola to receive shares of the Company's stock as a result of
an exercise. Rather, the Company will only pay him in cash any
difference between the Fair Market Value and the Base Value of a Unit,
less any required tax withholdings. Iraola acknowledges that Company
may take action that reprices or otherwise affects the price of the
stock options of those individuals participating in the Restricted
Stock Plan
Iraola Agreement
Page 5
("Repricing Action"). Company agrees that if such action materially
affects the Base Value of the Units prior to the their respective
Expiration Date, it will take such action with respect to those Units,
for which the Expiration Date has not passed, consistent with the
affect that the Repricing Action had on the outstanding stock options
of those individuals participating in the Restricted Stock Plan.
Iraola understands that the Company is considering whether it is
appropriate for the Company to adopt a plan or program (which may
include an amendment to the Restricted Stock Plan), that may allow
participants in the Restricted Stock Plan to possibly exchange certain
of their current exercisable stock options for restricted stock of the
Company (the "Exchange Program"). Iraola understands that the Company
has made no final determination on whether it may adopt any such
Exchange Program and that this Agreement has been negotiated based on
certain specific terms of understanding between the parties, which are
not speculative. Iraola also understands that those terms of
understanding did not include the consideration of any speculative
economic value that may be related to any Exchange Program that may be
under consideration by the Company, and that the consideration of any
such speculative economic benefit for purposes of this Agreement would
directly affect the other terms and conditions of this Agreement.
Therefore, Company and Iraola acknowledge and agree that,
notwithstanding any other provision of this Agreement or any of the
terms and conditions that may be included in any Exchange Program that
may be adopted by Company (if any), Iraola will not be entitled to
participate in any manner in any such Exchange Program if adopted.
Company and Iraola acknowledge and agree that, should the Company
eventually determine that it is appropriate to adopt any such Exchange
Program, such action shall not be deemed to be a Repricing Action for
purposes of this Agreement and as defined above.
8. In accordance with the terms and conditions of the Restricted Stock
Plan and notwithstanding his election to retire as of the Retirement
Date, Iraola's 2,500 shares of Restricted Stock (as that term is
defined in the Restricted Stock Plan) will revert to the Company on
the Retirement Date. To compensate Iraola for the value of this
Restricted Stock, Company agrees to pay Iraola a cash amount equal to
the Fair Market Value (as that phrase is defined in Paragraph 7 above)
of these 2,500 shares of Restricted Stock as of his Retirement Date.
Iraola acknowledges and agrees that this payment will be subject to
all applicable tax and other withholdings. This payment will be made
to Iraola within 15 calendar days after his Retirement Date or the
effective date of the Waiver and Release, whichever is later.
9. The Company will, at its cost, provide Iraola with a reasonable amount
of the services of AYCO Corporation through April 15 of the calendar
year following Iraola's Retirement Date. The services of AYCO will be
provided to Iraola under the same conditions and at the same level as
those services are provided to similarly situated active employees of
the Company during that time.
10. The Company will provide Iraola with sufficient payments to fund an
ELIP death benefit equal to one-times his annual base salary. These
payments will be as required following his Retirement Date and shall
be reduced by required tax and other withholdings.
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Page 6
11. Company will make a special cash payment to Iraola with respect to his
contributions to the Strategic Options process in the gross amount of
$532,000. This cash payment amount will be subject to all applicable
tax and other withholdings and will be paid to Iraola in the same
manner as the payment described in Paragraph 3 above.
12. Iraola shall deliver to the Company (a) any and all documents,
materials, files, or computer files, or copies, reproductions,
duplicates, transcriptions, or replicas thereof, relating to the
Company's business or affairs, which are in Iraola's possession or
control, or of which Iraola is aware, and (b) any and all documents,
materials, files, computer files or copies, reproductions, duplicates,
transcriptions or replicas thereof, which are in Iraola's possession
or control, or of which Iraola is aware, belonging to the Company or
any other affiliated entities. Iraola will make a diligent search for
such documents, materials, files, computer files and other property.
Iraola will deliver these items to the Company by his Retirement Date.
13. Iraola agrees that during the course of his employment with the
Company, he had access to confidential and proprietary information
concerning the Company including but not limited to such matters as
the Company's trade secrets, strategic plans, financial data, programs
(including, without limitation, the Company's computer software
programs), procedures, manuals, confidential reports and
communications, lists of customers, sources of supply, patents, and
new technology developments. That information was disclosed to Iraola
in confidence and solely for use by or on behalf of the Company.
Iraola has no ownership right or interest in that confidential and
proprietary information. Iraola agrees that he will keep that
information confidential at all times after his employment, and that
he will not, directly or indirectly, disclose, divulge, reveal,
report, publish, transfer, or use, for any purpose whatsoever, that
information on his own behalf or on behalf of any other person or
entity. This obligation is in addition to any other obligation that
Iraola, by virtue of his position with the Company, may have under the
applicable law to not disclose confidential, trade secret, or
proprietary information of the Company.
14. Iraola acknowledges that all of the following information and
materials are "Protected Information" belonging to the Company and
shall be subject to the provisions of Paragraph 13 of this Agreement
and shall be kept strictly confidential, even if not physically marked
as such:
a. Production processes, strategic plans, marketing techniques
and arrangements, mailing lists, purchasing information,
pricing policies, quoting procedures, financial information,
customer and prospect names and requirements, employee,
customer, supplier and distributor data, and other materials
and information relating to the Company's business and
activities and the manner in which the Company does
business;
b. Discoveries, concepts, and ideas including, without
limitation, the nature and
Iraola Agreement
Page 7
results of research and development activities, processes,
formulas, inventions, equipment or technology, techniques,
"know-how," designs, drawings and specifications, and patent
applications;
c. Any other materials or information related to the
Company's business or activities which are not generally
known to others engaged in similar businesses or activities
and which are not in the public domain; and
d. All ideas which are derived from or relate to Iraola's
access to or knowledge of any of the above enumerated
materials and information.
15. Iraola acknowledges that in the course of his employment with the
Company, he has had direct or indirect contact with the Company's
existing and prospective customers and others having business dealings
with the Company and has thereby had the opportunity to meet and
develop, on the Company's behalf, goodwill and working relationships
with those persons, firms, or entities. Iraola acknowledges that such
goodwill and relationships are valuable assets of the Company, and he
understands and agrees that, because of the nature of the Company's
business, it is necessary to afford fair protection to the Company for
those assets. Therefore, Iraola covenants and agrees that, for the
period beginning on the date of this Agreement and ending two (2)
years after his Retirement Date, he shall not compete with the
business of the Company by: (i) engaging in the business of copper
mining; molybdenum mining; the milling, smelting, or refining of
copper or molybdenum; the producing of copper rod or molybdenum
products; energy wire and cable; magnet wire; high performance
conductor; or carbon black, whether international or domestic, whether
as a proprietor, partner, co-venturer, director, officer, employer,
employee, servant, agent, or representative of an operation engaging
in such business; (ii) soliciting, directly or indirectly, any
existing or prospective customer of the Company with whom he has
gained significant business contacts while employed by the Company;
(iii) advising, directly or indirectly, any existing or prospective
customer of the Company with whom he has gained significant business
contacts while employed by the Company, to withdraw, curtail, or
cancel business or negotiations with the Company; or (iv) serving as a
consultant or contractor to any entity engaged in the business of
copper mining; molybdenum mining; the milling, smelting, refining of
copper or molybdenum; the producing of copper rod or molybdenum
products; energy wire and cable; magnet wire; high performance
conductor; or carbon black, whether international or domestic. Iraola
acknowledges and agrees that the geographic scope of this provision
has not been limited because the Company's business and customers are
worldwide and the Company has a legitimate, protectible business
interest in its goodwill and relationships with its customers in
preventing the solicitation of its customers regardless of the
geographical location of its customers or where Iraola is employed.
Company and Iraola acknowledge that in the event of the closing of a
Strategic Option, the entity entering into that transaction with
Company may request that Iraola consult with it on a periodic basis
with respect to the continued operations of the business. In the event
Iraola wishes to provide such services, Iraola agrees to submit a
written request to Company asking for a waiver of the provisions of
Iraola Agreement
Page 8
this Paragraph. This request will include a full disclosure of the
facts related to the consulting opportunity for which he is seeking a
waiver. The granting of any waiver contemplated by this Paragraph
shall be at Company's sole discretion; provided, however, that the
granting of any such waiver by Company shall not be unreasonably
withheld. Notwithstanding any other provision of this Paragraph 15 to
the contrary, Company and Iraola agree that in the event of a Change
of Control (as defined in Paragraph 26 below) occurring after the
effective date of this Agreement, Iraola shall not be bound by any of
the non-compete provisions of this Paragraph 15.
16. Iraola acknowledges that the Company's employees are an integral part
of the Company's business, and he understands and agrees that, because
of the nature of the Company's business, it is necessary to afford
fair protection to the Company from the loss of any such employees.
Therefore, Iraola agrees that, for the period beginning on his
Retirement Date and ending two years after his Retirement Date, he
shall not, directly or indirectly, hire or engage, or attempt to hire
or engage any individual who shall have been an employee of the
Company at any time during the one-year period before the date of this
Agreement, whether for or on his behalf or for any entity in which he
shall have a direct or indirect interest (or any subsidiary or
affiliate of any such entity), whether as a proprietor, partner,
co-venturer, financier, investor or stockholder, director, officer,
employer, employee, servant, agent, representative, or otherwise. Any
failure by Iraola to comply with this provision, after receiving
written notice from Company of any violation, or potential violation,
of this provision and giving Iraola a reasonable opportunity to
correct any such violation (not to exceed 15 days), shall constitute a
material breach of this Agreement and shall entitle the Company to
full reimbursement of the pay and benefits he received pursuant to
this Agreement, in addition to any other damages and relief to which
the Company may be entitled. Notwithstanding any other provision of
this Paragraph 16 to the contrary, Company and Iraola agree that in
the event of a Change of Control (as defined in Paragraph 26 below)
occurring after the effective date of this Agreement, Iraola shall not
be bound by any of the prohibitions on hiring set forth in this
Paragraph 16.
17. Iraola understands that the special pay and benefits he will receive
by this Agreement are not required by the Company's policies. Iraola
also understands that if he and the Company had not entered into this
Agreement, and do not enter into the contemplated Waiver and Release,
he will not receive the special pay and benefits set forth in this
Agreement. Iraola and the Company agree that the fact that they are
making this Agreement and the Agreement and General release does not
mean that the Company had any obligation or liability to Iraola.
18. Iraola will keep this Agreement confidential. He will only talk about
it with his immediate family, his attorney, and his accountant or tax
and financial advisor, and they will not discuss it with anyone else.
19. Company and Iraola acknowledge and agree that this Agreement, and the
obligations of the parties pursuant to this Agreement, shall not
become effective unless and until such time as
Iraola Agreement
Page 9
Company and Iraola execute and deliver the Waiver and Release
contemplated by this Agreement, and the Waiver and Release becomes
effective pursuant to its terms and conditions. Company and Iraola
agree that this Waiver and Release will not be executed by the parties
until his Retirement Date or thereafter. This Waiver and Release shall
be in substantially such form as is attached hereto as Exhibit 1.
Company and Iraola acknowledge and agree that this Agreement will not
become effective should he die after execution of this Agreement, but
before his Retirement Date and this Agreement becomes effective as
described above. Accordingly, in the event of such death no benefits
will be paid under this Agreement to any person or entity, including
his estate, spouse, beneficiaries, heirs, executors, or personal
administrators.
20. This Agreement may not be changed orally, but only by a written
agreement signed by Iraola and the Company.
21. Iraola understands and agrees that the Company will suffer irreparable
harm in the event that he breaches any of his obligations under this
Agreement and that monetary damages will be inadequate to compensate
the Company for such breach. Accordingly, Iraola agrees that, in the
event of his breach or threatened breach of any of the provisions of
this Agreement, the Company, after providing Iraola written notice of
any breach or threatened breach of this Agreement and giving Iraola a
reasonable period of time to correct any such breach or threatened
breach (not to exceed 15 days), in addition to and not in limitation
of any other rights, remedies, or damages available to the Company at
law or in equity, shall be entitled to a temporary restraining order,
preliminary injunction, and permanent injunction in order to prevent
or to restrain any such breach by Iraola or by any or all of his
partners, co-venturers, employers, employees, servants, agents,
representatives, and any and all persons directly or indirectly acting
for, or on behalf of, or with him. The Company may seek such relief
pursuant to a court action notwithstanding the arbitration provision
set forth in Paragraph 24 of this Agreement.
22. The provisions of this Agreement are severable. This means that if any
provision is invalid, it will not affect the validity of the other
provisions. If the scope of any restrictions of this Agreement should
ever be deemed to exceed that permitted by applicable law or be
otherwise overbroad, Iraola agrees that a court of competent
jurisdiction shall enforce that restriction to the maximum scope
permitted by law under the circumstances.
23. The laws of the State of Arizona will apply to this Agreement.
24. Any disputes arising in connection with this Agreement, other than
disputes arising under Paragraphs 13, 14, 15, 16, 17, and 24 shall be
resolved by binding arbitration in accordance with the rules and
procedures of the American Arbitration Association. Judgment upon any
award rendered by the arbitrator may be entered in any court having
jurisdiction of this matter. Costs of the arbitration shall be borne
equally by the parties. Unless the arbitrator otherwise determines,
the party that does not prevail in any such action shall reimburse the
Iraola Agreement
Page 10
other party for his or its reasonable attorneys' fees incurred with
respect to such arbitration.
25. This agreement supercedes and replaces all prior discussions,
understandings, and agreements between the parties, whether oral or
written, and contains the entire agreement between them on the matters
herein contained.
26. Iraola acknowledges that he has entered in to that certain Change of
Control Agreement dated January 16, 1999 ("Change of Control
Agreement"), by which he will receive certain benefits and payments in
the event of a change of control as that term is defined in that
agreement (a "Change of Control"). Iraola understands and agrees that
it is the intent of the parties to this Agreement that he shall not be
entitled to receive, and the Company shall not be obligated to pay,
benefits and payments under both this Agreement and his Change of
Control Agreement. Therefore, Company and Iraola agree that upon the
effective date of this Agreement (as described in Paragraph 19 above),
his Change of Control Agreement shall terminate, be of no further
force and effect, and the Company shall have no further obligation to
pay him any amounts under his Change of Control Agreement. In the
event of a Change of Control prior to the effective date of this
Agreement (as described in Paragraph 19 above), Company and Iraola
acknowledge and agree that this Agreement shall be immediately
terminated on such Change of Control, be of no further force and
effect, and Company shall have no obligation to pay him any of the
special pay and benefits provided by this Agreement.
Company, by and through its duly authorized representative, and Iraola have
executed this Agreement on the 6 day of March, 2002.
Manuel J. Iraola Phelps Dodge Corporation
--------------------------- ---------------------------
David L. Pulatie
Senior Vice President, Human Resources
EXHIBIT 1
WAIVER AND RELEASE AGREEMENT
This Waiver and Release Agreement ("Agreement") is entered into by and
between Phelps Dodge Corporation ("Company") and Manuel J. Iraola ("Iraola").
This Agreement is entered into for the purpose of providing Company with
protection against any claims by Iraola.
WHEREAS, Company and Iraola have entered into that certain Retirement
Agreement, dated ______________, 2002; and
WHEREAS, among other things, the Retirement Agreement provides that
Company will pay Iraola certain special pay and benefits as a result of Iraola's
retirement from the Company; and
WHEREAS, pursuant to the terms and conditions of the Retirement
Agreement, the Company's payment of any such special pay and benefits to Iraola,
and all other obligations of the parties under the Retirement Agreement, are
specifically contingent on Company and Iraola executing and delivering this
Agreement.
NOW THEREFORE, in consideration of the obligations set forth in the
Retirement Agreement, the payment of the special pay and benefits described
therein, and such other good and valuable consideration, the adequacy and
sufficiency of which are hereby acknowledged by the parties, Company and Iraola
agree as follows:
1. Consideration for Agreement. Iraola acknowledges and agrees
that the payment of the special pay and benefits as provided
for under the terms and conditions of the Retirement Agreement
are fair and adequate consideration for this waiver, release,
agreement not to sue, and other obligations of Iraola under
this Agreement. Iraola acknowledges and agrees that the
special pay and benefits to be provided under the terms and
conditions of the Retirement Agreement are not required by
Company policy and that Iraola is not otherwise entitled to
the receipt of any such special pay and benefits.
2. Waiver and Release. Iraola agrees not to bring any suit or
claim against the Company or any of its related entities or
individuals with respect to any matter, including those
related to his employment with the Company or his retirement
from the Company . Therefore, Iraola, for himself and his
heirs, executors, administrators, representatives, agents, and
assigns, forever releases the Company and its parents,
subsidiaries, successors, predecessors, and affiliated
entities, and their officers, directors, agents, employees,
shareholders, attorneys, and representatives, from any and all
claims, demands, liabilities, obligations, suits, charges,
actions, and causes of action, whether known or unknown, past
or present, accrued or not accrued, as of the date Iraola
signs this Agreement. The items released
include, but are not limited to, matters relating to or
arising out of his employment or retirement from the Company .
Some examples of items released are claims under federal,
state, or local laws, such as the Age Discrimination in
Employment Act, as amended; Title VII of the Civil Rights Act
of 1964, as amended; the Employee Retirement Income Security
Act of 1974, as amended; the Americans with Disabilities Act,
the Family and Medical Leave Act, the Arizona Civil Rights Act
(or any similar statute of any other jurisdiction that may be
applicable in this case), any common law, tort, or contract
claims, and any claims for attorneys' fees and costs. This
provision, of course, does not affect Iraola's rights, if any,
to benefits under the Company's benefit plans in accordance
with the terms of those plans, or to make a complaint to any
state or federal agency with respect to issues related to his
employment with the Company.
3. Agreement not to Challenge. Iraola agrees not to challenge
this Agreement. If he attempts to do so, he must first return
to the Company all of the pay and benefits he received as
consideration for entering into this Agreement within 14 days
of the Company's written demand for payment. Notwithstanding
any other provision of this Paragraph 3 to the contrary, the
parties acknowledge and agree that Iraola's rights to
challenge the validity of this Agreement under the ADEA, as
amended by the Older Workers Benefit Protection Act, including
any challenge of the knowing and voluntary nature of this
Agreement, are not otherwise affected by the above provisions
of this Paragraph 3 or any other provision of this Agreement.
Company and Iraola acknowledge and agree that Iraola is not
required to return or tender back any consideration received
for this Agreement in the event he brings a claim challenging
the validity of this Agreement under the ADEA, as amended. In
the event Iraola successfully challenges the validity of this
Agreement and prevails on the merits of any ADEA claim, the
Company is entitled to set-off, recoupment, or restitution
against any consideration paid Iraola under this Agreement or
the Retirement Agreement to the extent of the consideration
paid or the damages awarded, whichever is the lesser.
4. Consultation with an Attorney. Iraola has been advised by the
Company to talk with an attorney of his choice before signing
this Agreement. He has been given a period of at least 21 days
to consider this Agreement, and he has had an opportunity to
talk with an attorney about this Agreement.
5. Revocation of Agreement. Iraola may revoke this Agreement.
Iraola may do so during the seven calendar days after the date
he signs it. The Agreement will not become effective until the
eighth calendar day after Iraola signs it. If Iraola wishes to
revoke the Agreement, he must do so in writing and his written
notice of revocation must be sent to David L. Pulatie
("Pulatie"), Senior Vice President, Human Resources, Phelps
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Dodge Corporation, One North Central Avenue, Phoenix, AZ
85004. To be effective, Pulatie must receive the revocation of
the Agreement during the seven calendar days after the day
Iraola signs it.
6. Understanding of Purpose. Iraola has carefully considered his
obligations as stated in this Agreement and agrees that the
restrictions contained in this Agreement are fair and
reasonable and are reasonably required for the Company's
protection. Iraola has carefully read this Agreement, he has
had an opportunity to ask questions about it, he understands
it, and he agrees to all of its provisions. Iraola understands
that by signing this Agreement, he agrees not to sue or bring
any claim against the Company or any other entity or person he
has released from claims. Iraola has made this Agreement
voluntarily and without any duress.
7. Miscellaneous.
a. The provisions of this Agreement are severable. This
means that if any provision is invalid, it will not
affect the validity of the other provisions. If the
scope of any restrictions of this Agreement should
ever be deemed to exceed that permitted by applicable
law or be otherwise overbroad, Iraola agrees that a
court of competent jurisdiction shall enforce that
restriction to the maximum scope permitted by law
under the circumstances.
b. The laws of the State of Arizona will apply to this
Agreement.
c. This agreement supercedes and replaces all prior
discussions, understandings, and oral agreements
between the parties and contains the entire agreement
between them on the matters herein contained.
d. This Agreement may not be changed orally, but only by
a written agreement signed by Iraola and Company.
Manuel J. Iraola Phelps Dodge Corporation
--------------------------- ---------------------------
David L. Pulatie
Senior Vice President
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Date Date
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