Exhibit 10.1
EMPLOYEE BENEFITS AGREEMENT
This EMPLOYEE BENEFITS AGREEMENT, dated as of December
22, 1997, entered into by FREEPORT-McMoRan RESOURCE PARTNERS,
LIMITED PARTNERSHIP, a Delaware limited partnership (together
with its successors and permitted assigns, "FRP"), FREEPORT-
McMoRan INC., a Delaware corporation (together with its
successors and permitted assigns, "FTX") and FREEPORT-McMoRan
SULPHUR INC., a Delaware corporation (together with its
successors and permitted assigns, "Company"),
WITNESSETH:
WHEREAS, the parties hereto have entered into a CONTRIBUTION
AND DISTRIBUTION AGREEMENT, which includes covenants regarding
assets and liabilities of FRP that are to be transferred to
Company; and
WHEREAS, the parties desire to provide for the transfer of
assets and liabilities pertaining to certain employee-benefit
plans maintained by FTX for the benefit of FTX employees who have
in the past provided services for FRP, and to provide regarding
the compensation and benefits of those of such employees who will
be employees of Company;
NOW, THEREFORE, the parties hereto agree as follows:
1. Definitions. For purposes of this Agreement, the
following terms shall have the meaning set forth below.
(a) "Adjusted Company Award" shall mean a non-
qualified stock option to purchase Company Shares with in tandem
"limited rights" that results from the adjustment and conversion
of an FTX Award pursuant to Paragraph 5.
(b) "Adjusted FTX Award" shall mean an FTX Award that
is adjusted in accordance with the provisions of Paragraph 5.
(c) "Adjusted Stock Award Plan" shall mean the Company
Adjusted Stock Award Plan, adopted pursuant to Paragraph 5.
(d) "Code" shall mean the Internal Revenue Code of
1986, as amended.
(e) "Company Pension Plan" shall mean a defined-
benefit pension plan sponsored by Company for the benefit of
Transferred Employees.
(f) "Company Shares" shall mean Common Stock, par
value $.01 per share, of the Company.
(g) "Distribution Date" shall mean the effective date
of the Distributions.
(h) "Effective Time" shall mean the date of the merger
of Freeport-McMoRan Inc. into IMC Global Inc.
(i) "ERISA" shall mean the Employee Retirement Income
Security Act of 1974, as amended.
(j) "Former Sulphur Employee" shall mean an employee
who (i) either (A) retired from FTX or an Affiliate under
circumstances making him eligible under one or more plans or
arrangements of FTX or the Affiliate to receive medical, dental
or life insurance benefits during retirement, or (B) terminated
employment from FTX or an Affiliate under circumstances making
him eligible for benefits under the FTX Pension Plan, and (ii)
during all of his or her last three years of employment, provided
services primarily for the Transferred Businesses.
(k) "FTX AIP" shall mean the Freeport-McMoRan Inc.
Annual Incentive Plan.
(l) "FTX Award" shall mean a stock option, stock
appreciation right, limited right, stock incentive unit or other
award relating to FTX Shares that has been granted under an FTX
Stock Plan and is outstanding on the Distribution Date and held
by any person other than an employee of IMC-Agrico Company.
(m) "FTX Benefit Arrangements" shall mean each
employment, severance, termination, consulting, retirement or
similar contract, arrangement or policy, and each plan or
arrangement (whether or not written) providing for severance
benefits, insurance coverage (including any self-insured
arrangements), disability benefits, supplemental unemployment
benefits, vacation benefits, retirement benefits, deferred
compensation, profit-sharing, bonuses, stock options, stock
appreciation rights or other forms of incentive compensation or
post-retirement insurance, compensation or benefits that (i) is
not an FTX Employee Plan, (ii) is entered into, maintained, or
contributed to, as the case may be, by FTX or any of its
affiliates and (iii) covers any Transferred Employee.
(n) "FTX EBP" shall mean the Freeport-McMoRan Inc.
Excess Benefits Plan.
(o) "FTX Employee Plans" shall mean each "employee
benefit plan," as defined in Section 3(3) of ERISA, that
(i) is subject to any provision of ERISA, (ii) is
maintained, administered or contributed to by FTX and
(iii) covers any Transferred Employee.
(p) "FTX ECAP" shall mean the Freeport-McMoRan Inc.
Employee Capital Accumulation Program.
(q) "FTX Grandfathered Plan" shall mean the Freeport-
McMoRan Inc. Grandfathered Retirement Benefit Plan.
(r) "FTX LTPIP" shall mean either or both of the
Freeport-McMoRan Inc. 1987 Long-Term Performance Incentive
Plan and the Freeport-McMoRan Inc. 1992 Long-Term-
Performance Incentive Plan.
(s) "FTX Pension Plan" shall mean the FMI Employee
Retirement Plan.
(t) "FTX PIAP" shall mean the Freeport-McMoRan Inc.
Performance Incentive Awards Program.
(u) "FTX PAP" shall mean the Freeport-McMoRan Inc.
President's Award Program.
(v) "FTX SECAP" shall mean the Freeport-McMoRan Inc.
Supplemental Executive Capital Accumulation Plan.
(w) "FTX Shares" shall mean shares of FTX common
stock, par value $.01 per share.
(x) "Retired Employees" shall mean all former and
retired employees of FTX and its subsidiaries, and long-term
disabled employees of FTX and its subsidiaries who did not
work primarily for the Transferred Businesses, as of the
Effective Time, including those persons who retire from FTX
at any time up to the date of the Merger.
(y) "Rule 16b-3" shall mean Rule 16b-3 promulgated
under Section 16 of the Securities Exchange Act of 1934, and
any successor provision.
(z) "Section 162(m)" shall mean Section 162(m) of the
Code and any memoranda or decisions issued by the Internal
Revenue Service or the Department of the Treasury with
respect thereto.
(aa) "Securities Act" shall mean the Securities Act of
1933, as amended.
(bb) "Transferred Employees" shall mean those employees
of FTX or its subsidiaries who by mutual agreement between
FTX and Company become employees of Company on or about the
Effective Time, or who are actively employed in the
Transferred Businesses (as defined in the Contribution and
Distribution Agreement) on the Effective Time. Employees of
FM Services Inc. and its subsidiaries are not Transferred
Employees.
Capitalized terms used in this document that are not defined
herein shall have the meanings set forth in the Contribution and
Distribution Agreement having the same date and entered into by
the same parties.
2. Employment by the Company.
(a) Each Transferred Employee will become an employee
of Company on or before the Effective Time. Except as otherwise
provided in this Agreement, Company will not assume the
liabilities of FTX in respect of the Transferred Employees for
accrued but unpaid salaries, wages, or other compensation or
benefits with respect to service prior to the Effective Time,
which liabilities shall remain with FTX.
(b) No provision of this Agreement shall preclude or
impair the ability of Company to terminate the employment of any
Transferred Employee or to change the terms, conditions or
location of employment following the Effective Time.
3. Pension Plans.
(a) As of the Effective Time, FTX shall cause to be
transferred to a newly-created separate defined-benefit pension
plan (the "Spin-Off Plan") the assets and liabilities of the FTX
Pension Plan that are attributable to the Transferred Employees.
The Spin-Off Plan shall have substantially the same terms and
conditions as the FTX Pension Plan, subject to any limitation
required by Company regarding accrual of benefits after the
Effective Time. In connection with the transfer, FTX shall make
all filings and submissions to governmental agencies as are
required by law, and shall make all amendments to the FTX Pension
Plan and related trust agreement as are necessary. The accrued
benefits attributable to the Transferred Employees shall be 100%
vested. The transfer shall be made as of the "Transfer Date",
which shall be the Effective Time, or at such other time as is
mutually agreed upon by FTX and Company.
(b) The amount of the assets required under Paragraph
(a) to be transferred (the "Transfer Amount") shall be equal to
the Account Balances of the Transferred Employees under the FTX
Plan as of the Effective Time, including Annual Additions with
respect to Earnings throught the Effective Time and Annual
Interest Credits through the Effective Time. The Transfer Amount
shall in no event be less than the minimum amount necessary to
satisfy all requirements of the Code and regulations. The
Transfer Amount shall be transferred within 30 days after the
Effective Time. The terms Account Balance, Earnings, Annual
Additions, and Annual Interest Credits as used in this paragraph
have the same meaning as in the FTX Pension Plan.
(c) As of the Effective Time (or such other date as
agreed to by the Company and FTX) Company shall become the
sponsor of the Spin-Off Plan referred to in Paragraph (a)
(hereafter "Company Pension Plan") and its related trust, which
will hold the Transfer Amount. Company shall take all necessary
steps, including the prompt filing of an application to the
Internal Revenue Service for a favorable determination letter, to
assure that the Company Pension Plan is qualified under Internal
Revenue Code Section 401(a). As of the date of the transfer of
the Transfer Amount, the Company Pension Plan shall assume the
liabilities of the FTX Pension Plan that are attributable to the
Transferred Employees, and the FTX Pension Plan (and FTX as
sponsor of the FTX Pension Plan) shall have no further liability
with respect to the Transferred Employees. Company shall be
under no obligation to accrue benefits under the Company Pension
Plan after the Effective Time at the same rate as under the FTX
Pension Plan, and may terminate the Company Pension Plan.
Company shall have no obligations or liabilities arising under or
attributable to the FTX Pension Plan, other than as described
above.
(d) As of the Effective Time, Company shall assume the
liabilities in respect of Transferred Employees under the FTX EBP
and the FTX Grandfathered Plan, and FTX shall have no further
obligation under such plans with respect to such employees. As
consideration for the assumption of such liabilities by Company,
FTX shall pay to Company an amount, estimated at $700,000, that
the plans' actuary shall determine is equal to the value as of
the Effective Time of the benefits accrued under the plans by the
Transferred Employees. The value of a Transferred Employee's
accrued benefit under the FTX EBP shall be equal to the
difference between the Participant's actual Account Balance under
the FTX Pension Plan and the Account Balance the Participant
would have had under the assumptions set forth in the FTX EBP.
The value of a Transferred Employee's accrued benefit under the
FTX Grandfathered Plan shall be determined under the assumptions
of that plan as if the Transferred Employee had retired as of the
Effective Time and elected to receive an immediate lump-sum
benefit. The payment with respect to the FTX Grandfathered Plan
shall be made only with respect to the Transferred Employees (if
any) who have reached the age of 55 by the Effective Time.
Company shall have no obligation to allow Transferred Employees
to continue to accrue benefits under such plans after the
Effective Time.
4. Individual Account Plans
(a) As of the Effective Time, Company shall adopt the
FTX ECAP and its related trust, and the documents governing said
plan and trust shall be amended by FTX and the Company to provide
that, commencing at the Effective Time, FTX will no longer have
any powers or duties with respect to said plan and trust, and the
Company will have all powers and duties with respect to the plan
and trust that pertain to a plan sponsor. Within 15 days
following the Effective Time, FTX shall pay to the trustee of
said trust any amounts payable to the trust that it has received
or withheld from participants, and any matching contributions due
under said plan.
(b) The FTX ECAP will be amended prior to the
Effective Time to permit it to hold Company shares.
(c) As of the Effective Time, the FTX SECAP document
shall be amended by FTX and the Company to provide that the
Company assumes all liabilities in respect of Transferred
Employees under the FTX SECAP, and that FTX has no further
obligation under the FTX SECAP with respect to the account
balances of Transferred Employees. As consideration for the
assumption of such liabilities by Company, FTX shall pay to
Company an amount equal to the account balances of the
Transferred Employees valued as of the date of the transfer. As
the vehicle for satisfying the liabilities assumed under this
Paragraph (c), Company shall establish a Company SECAP. All
account balances of Transferred Employees in the Company SECAP
shall be 100% vested. Company shall have the right to amend or
terminate the Company SECAP at any time, provided that no
amendment shall reduce participant account balances.
(d) The FTX SECAP will be amended prior to the
Effective Time to require immediate payout with respect to all
participants other than the Transferred Employees.
5. Stock Plan Adjustments; Establishment of New Adjusted
Stock Award Plan.
(a) Effective as of the Distribution Date, the Company
shall adopt the Adjusted Stock Award Plan and shall take all
action necessary in regard to such Plan, the benefits provided
thereunder, and the transactions contemplated thereby to ensure
compliance with Rule 16b-3, Section 162(m) and the Securities
Act, as applicable and as deemed desirable by the Company. The
Adjusted Stock Award Plan shall be established for the exclusive
purpose of granting the Adjusted Company Awards as described in
this Paragraph 5.
(b) Each outstanding FTX Award on the Distribution
Date shall be converted, in accordance with the procedures
described in this Paragraph 5, into an Adjusted FTX Award and an
Adjusted Company Award. The number of Company Shares subject to
an Adjusted Company Award shall be that number of Company Shares
that a record holder of the number of FTX Shares underlying the
related FTX Award would have received in the FTX Distribution.
Notwithstanding the foregoing, if the FTX Award from which the
Adjusted Company Award is derived contains a right to receive a
cash payment upon exercise of such FTX Award related to and
intended to defray the income tax liability associated therewith,
the number of Company Shares to be subject to the Adjusted
Company Award, determined according to the provisions of this
Paragraph 5(b) (without disregarding fractional Company Shares),
shall be multiplied by 1.6556 and any fractional Company Share
resulting from such adjustment shall be disregarded. Such
adjustment shall not affect the calculation of the per Company
Share exercise price of the Adjusted Company Award as set forth
in Paragraph 5(e) below.
(c) Each Adjusted Company Award and each Adjusted FTX
Award will have the same remaining duration as the FTX Award from
which it was derived.
(d) The exercise price of an Adjusted FTX Award shall
be determined by multiplying the exercise price of the FTX Award
from which such Adjusted FTX Award was derived by a fraction, the
numerator of which is the FTX Net Distribution Value, as defined
below, and the denominator of which is the FTX Distribution
Value, as defined below.
(e) The exercise price of an Adjusted Company Award
shall be determined by multiplying the exercise price of the FTX
Award from which such Adjusted Company Award was derived by a
fraction, the numerator of which is the Company Distribution
Value, as defined below, and the denominator of which is the FTX
Distribution Value.
(f) For purposes of the foregoing, the "Company
Distribution Value" shall be the weighted average per share price
of the Company Shares on the New York Stock Exchange on the first
day that Company Shares are traded on the New York Stock Exchange
after the effective date of the merger of Freeport-McMoRan Inc.
into IMC Global Inc.; the "FTX Distribution Value" shall be the
weighted average per share price of the FTX Shares on the New
York Stock Exchange on the last day that FTX Shares are traded on
the New York Stock Exchange before the effective date of the
merger of Freeport-McMoRan Inc. into IMC Global Inc. and the "FTX
Net Distribution Value" shall be (i) the FTX Distribution Value
minus (ii) the product of the Distribution Ratio, as hereinafter
defined, and the Company Distribution Value. The "Distribution
Ratio" shall mean the number of Company Shares distributed in the
FTX Distribution per FTX Share, rounded to the nearest one-
millionth (.000001) of a Company Share.
6. Deferred Compensation Liabilities. As of the
Distribution, FTX shall calculate the liability of FTX and its
subsidiaries in respect of the Transferred Employees' deferred
compensation, including without limitation deferred awards under
the FTX PIAP, FTX AIP, FTX LTPIP, and predecessor plans, if any.
In consideration of a cash payment made promptly after the
Distribution Date by FTX to the Company in an amount equal to
such accrued liability, the Company will assume such liability in
respect of Transferred Employees.
7. Welfare Plans.
(a) As of the Effective Time, Transferred Employees
shall cease participation in all FTX Employee Plans and FTX
Benefit Arrangements. Except as otherwise set forth in this
Agreement or in the Merger Agreement, FTX shall retain all
obligations and liabilities under the FTX Employee Plans and FTX
Benefit Arrangements.
(b) FTX and its FTX Employee Plans and FTX Benefit
Arrangements shall retain responsibility for the administration,
liability, cost of coverage and all amounts payable by reason of
claims incurred by Transferred Employees (and their dependents
and beneficiaries) on or before the Effective Time, by reason of
claims incurred by Retired Employees, and by reason of claims
incurred by FTX employees who as of the Effective Time were on a
leave of absence or were receiving long term disability benefits,
sick leave benefits, or similar benefits. However, the Company
shall assume responsibility for the administration, liability,
cost of coverage, and all amounts payable by reason of employee
benefit plan claims incurred by FTX employees (and their
dependents) who at the time the employees ceased active work for
FTX performed services primarily for the Transferred Businesses
and who as of the Effective Time were on a leave of absence or
were receiving long term disability benefits, sick leave
benefits, or similar benefits. For such purpose, unless
otherwise agreed by FTX and the Company, a claim is deemed
incurred on the date of the occurrence of (i) death,
dismemberment, accident, or other loss in the case of claims
under life insurance and accidental death and dismemberment
benefits, (ii) in the case of a hospital stay, based on the date
any such hospitalization is initiated, or (iii) the date on which
the treatment or other service was rendered or the medicine,
equipment, supply or other material was furnished, as the case
may be, which resulted in the charge or expense giving rise to
the claim in the case of all other claims. This paragraph 7(b)
shall not apply to claims under applicable workman's compensation
laws, the Jones Act, 46 U.S.C. S 688, the Longshore and Harbor
Workers' Compensation Act, 33 U.S.C. S 901, et. seq., or under
similar laws, or arising in connection with any occupational
injury or disease.
(c) As of the Effective Time, Company shall be
responsible for post-retirement benefit liabilities in respect of
Transferred Employees and FTX shall have no further obligation
for such liabilities with respect to such employees. FTX shall
pay to Company an amount that equals the liability that has been
accrued for such employees in accordance with the Financial
Accounting Standard Board No. 106 as provided in the Freeport-
McMoRan Inc. Retiree Benefit Plan's January 1, 1997 valuation
report.
(d) The Company shall reimburse FTX for any payment (a
"Reimbursable Payment") that FTX properly makes to or on behalf
of a Former Sulphur Employee with respect to claims made after
the Effective Time (or to an insurance company to provide
coverage for a Former Sulphur Employee after the Effective Time)
under the terms of any retiree medical, dental or life insurance
plan or arrangement of FTX. No later than 30 days following the
end of each calendar quarter, FTX shall provide the Company with
a report providing in reasonable detail its calculation of the
total amount of Reimbursable Payments made by FTX during the
quarter, less any refunds or other offsetting payments or credits
received by FTX. The amount that Company shall reimburse FTX
shall be equal to the net amount of Reimbursable Payments by FTX,
less the Credit Amount. The Credit Amount for each calendar
quarter shall be equal to 25% of 9.5% of a fraction of the
"Surplus", as defined below, which fraction shall be derived by
dividing the liabilities under the FTX Pension Plan as of the
Effective Time attributable to the Former Sulphur Employees by
the total liabilities of the FTX Pension Plan as of the Effective
Time. The Surplus shall be the fair market value of the assets
of the FTX Pension Plan, less the total liabilities of the FTX
Pension Plan, as of the Effective Time. The assets and
liabilities used in this Paragraph 7(d) to calculate the Surplus
and the appropriate fraction of the Surplus shall be determined
as of the Effective Time, but only with regard to the portion of
the FTX Pension Plan that remains after the transfer described in
Section 3(b) of this Agreement. Furthermore, for purposes of
this Section 7(d), the assets and liabilities of the FTX Pension
Plan (after the transfer described in Section 3(b) shall be
determined on a FAS 87/88 basis. If the Credit Amount for the
current calendar quarter (plus any carried-forward excess from
the preceding calendar quarter) exceeds the Reimbursable Payments
in a quarter no payment shall be made between the parties. Any
excess Credit Amount for the current calendar quarter shall be
carried forward to the next calendar quarter. Company shall have
the right to request an annual audit of the Reimbursable Payments
by an independent certified public accountant. This paragraph is
not intended to limit any rights that FTX may have to reduce its
obligations under any such plans or arrangements. However, FTX
shall have no right to increase its cost of benefits for any
Former Sulphur Employee without obtaining 30-days advance
approval from Company. Nor shall FTX have the right to reduce
the cost of coverage for any Retired Employees who are not Former
Sulphur Employees without likewise reducing the cost of coverage
for the Former Sulphur Employees.
(e) With respect to employees and their dependents
(other than Transferred Employees) who experience a qualifying
event as defined in 29 U.S.C. S 603 as a result of the
transactions contemplated in the Contribution and Distribution
Agreement and the Merger Agreement and who elect COBRA
continuation group health coverage under 29 U.S.C. SS 601, et.
seq. ("COBRA Coverage"), the Company shall reimburse FTX for any
Reimbursable Payment that FTX properly makes to or on behalf of
such employees or dependents with respect to claims made after
the Effective Time under the plan providing such COBRA coverage
(or to an insurance company to provide COBRA Coverage for such
employees or dependents after the Effective Time) in accordance
with the procedures set forth in 7(d) above.
(f) The employee benefit plans established by the
Company for the benefit of Transferred Employees shall give
effect, in determining or applying any copayments, benefit
limits, deductibles and maximum out-of-pocket limitations to
claims incurred, amounts paid by, and amounts reimbursed to, such
employees under the corresponding FTX Employee Plans or FTX
Benefit Arrangements maintained by FTX for their benefit
immediately prior to the Effective Time. Further, the employee
benefit plans established by the Company for the Transferred
Employees shall give credit for service at FTX and its
subsidiaries for purposes of any eligibility waiting periods and
pre-existing condition limitations. The employee benefit plans
established by the Company that provide a maximum annual benefit,
such as a vacation plan or wage and salary continuation, will
take into account benefits used by the Transferred Employees
under the corresponding FTX Employee Plans or FTX Benefit
Arrangements maintained by FTX for their benefit immediately
prior to the Effective Time.
(g) The Company will give Transferred Employees full
credit for purposes of eligibility, vesting, benefit accrual and
benefit entitlement (as such purposes may be applicable) under
the employee benefit plans of the Company for such employees'
respective service recognized or applied for such purposes under
the corresponding FTX Employee Plan or FTX Benefit Arrangement,
to the extent applicable.
(h) FTX and the Company shall provide each other with
copies of such records as are reasonably required to enable the
parties to perform their obligations hereunder.
8. Cash Bonuses. As of the Effective Time, FTX shall in
good faith determine the total amount of cash incentive payments
that it would have made to the Transferred Employees under the
FTX PIAP and the FTX PAP for 1997 (without proration for a
partial year), which determination shall be subject to the
limitations and other terms and conditions of Schedule 5.8(c) to
the Merger Agreement. In consideration of a cash payment made
promptly after the Effective Time by FTX to the Company in an
amount equal thereto, the Company will assume the payment of such
amounts to the Transferred Employees, which will be made as soon
as feasible after 1997 in accordance with any procedures it may
establish with respect to the payment of any cash incentive
payments to Company employees.
9. Expenses. Each of the Company and FTX shall pay its
own expenses in connection with the performance of its
obligations under this Agreement.
10. Governing Law. This Agreement shall be governed by and
construed in accordance with the internal laws of the State of
Louisiana.
11. Amendment and Waiver. This Agreement may not be
altered or amended, nor may rights hereunder be waived, except by
an instrument in writing executed by each party, or in the case
of a waiver by an instrument in writing executed by the party
against whom such waiver is to be effective. No waiver of any
term, provision or condition of or failure to exercise or delay
in exercising any rights or remedies under this Agreement, in any
one or more instances, shall be deemed to be, or construed as, a
further or continuing waiver of any such term, provision,
condition, right or remedy or as a waiver of any other term,
provision or condition of this Agreement.
12. Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original
instrument but all of which together shall constitute but one and
the same Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed as of the date first above written.
FREEPORT-McMoRan INC.
By: /s/ Michael J. Arnold
Name: Michael J. Arnold
Title: Senior Vice President
FREEPORT-McMoRan RESOURCE PARTNERS,
LIMITED PARTNERSHIP
By: FREEPORT-McMoRan INC.,
Administrative Managing General Partner
By: /s/ Michael J. Arnold
Name: Michael J. Arnold
Title: Senior Vice President
FREEPORT-McMoRan SULPHUR INC.
By: /s/ Robert M. Wohleber
Name: Robert M. Wohleber
Title: President and Chief Executive
Officer