SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
Filed by the registrant [x]
Filed by a party other than the registrant [ ]
Check the appropriate box:
[x] Preliminary proxy statement
[ ] Definitive proxy statement
[ ] Definitive additional materials
[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
FREEPORT McMoRan COPPER & GOLD INC.
- - - - -----------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- - - - -----------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of filing fee (Check the appropriate box):
[x] $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2).
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule 14a-
6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
- - - - -----------------------------------------------------------------------------
(2) Aggregate number of securities to which transactions applies:
- - - - -----------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:
- - - - -----------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- - - - -----------------------------------------------------------------------------
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the form or schedule and the date of its filing.
(1) Amount previously paid:
- - - - -----------------------------------------------------------------------------
(2) Form, schedule or registration statement no.:
- - - - -----------------------------------------------------------------------------
(3) Filing party:
- - - - -----------------------------------------------------------------------------
(4) Date filed:
- - - - -----------------------------------------------------------------------------
PRELIMINARY COPY
- - - - ----------------
FREEPORT-McMoRan COPPER & GOLD INC.
One East First Street
Reno, Nevada 89501
------------- ---, 1995
Dear Stockholder:
On May 3, 1994, Freeport-McMoRan Inc. ("Freeport-McMoRan")
announced that it was taking steps to effect the tax-free distribution to its
common stockholders, on a pro-rata basis, of all of the Class B Common Stock
of Freeport-McMoRan Copper & Gold Inc. (the "Company") which it owns at the
time of such distribution (the "Distribution"). In anticipation of the
Distribution, the Company proposes to make certain changes to its capital
structure and corporate governance to ensure that the Distribution will be
tax-free for federal income tax purposes. The Company also proposes to make
certain additional changes to the Company's corporate governance to foster the
Company's long-term growth as an independent corporation following the
Distribution. Finally, the Company proposes to establish new stock option,
stock-based award and cash bonus plans for its directors, officers and
employees to become effective upon the Distribution.
As further described in the enclosed Consent Solicitation
Statement, the proposed Distribution results from significant changes in the
businesses of Freeport-McMoRan and the Company over the past seven years.
These changes were brought about by two world-class mineral discoveries in
1988, and management's decision to concentrate on the development and
growth of these properties.
The Company's current operating plan projects large capital
expenditures over the next several years. The Board of Directors of the
Company believes that the proposed Distribution will enable the Company to
meet its substantial capital needs at a lower cost than any possible
alternative and will provide the Company with flexibility with which to meet
new opportunities through the use of equity financing or by attracting a joint
venture partner for one or more projects. The Distribution will permit the
managements of Freeport-McMoRan and the Company to make business decisions
without being influenced by the competing financial needs of the other
business.
In order to complete the Distribution, the proposed actions by
the Company require the consent of the holders of Common Stock of the Company.
Consent of the holders of the Company's Common Stock is being sought for the
approval of (1) a proposal (the "Merger Proposal") for the merger of FM
Facilitating Company, Inc., a newly created, wholly owned Delaware subsidiary
of the Company ("Facilitating"), into the Company (the "Merger") which will
effect changes to the Company's capital structure and the voting rights of its
Common Stock and Preferred Stock in order to permit the Distribution to be
tax-free for federal income tax purposes and (2) a proposal (the "Corporate
Governance Proposal") that the Company's Certificate of Incorporation be
further amended to add certain corporate governance provisions, each as
further described in the enclosed Consent Solicitation Statement.
Under Delaware law and pursuant to the Company's certificate of
incorporation, the Merger Proposal and the Corporate Governance Proposal are
subject to approval of the registered holders of a majority of the outstanding
shares of Class A Common Stock and Class B Common Stock of the Company, voting
as a single class. However, even though not required by law or the Company's
certificate of incorporation, the Board of Directors of the Company has
determined that the registered holders of Class A Common Stock will also have
a separate vote on each of the Merger Proposal and the Corporate Governance
Proposal. Accordingly, each of the Merger Proposal and the Corporate
Governance Proposal will not be adopted without the approval of at least a
majority of the Class A Common Stock voted with respect to such Proposals (not
including Class A Common Stock owned by Freeport-McMoRan or its affiliates).
In addition, consents of the holders of Common Stock of the
Company are being sought for approval of the following proposed Company
benefit plans to become effective upon the Distribution: (1) an Adjusted
Stock Award Plan, (2) a 1995 Stock Option Plan, (3) a 1995 Stock Option Plan
for Non-Employee Directors, (4) an Annual Incentive Plan and (5) a 1995
Long-Term Performance Incentive Plan (collectively the "New Benefit Plan
Proposals"), each as further described in the enclosed Consent Solicitation
Statement. Each of the New Benefit Plan Proposals is subject to approval of
the registered holders of a majority of the outstanding shares of Class A
Common Stock and Class B Common Stock of the Company, voting as a single
class. Since the Class B Common Stock constitutes ___% of the combined total
of the Class A Common Stock and the Class B Common Stock and is held entirely
by Freeport-McMoRan which intends to vote in favor of the New Benefit Plan
Proposals, approval of such proposals is assured without the consent of any
holders of Class A Common Stock.
The period for solicitation of consents will terminate at 4:30
p.m., New York City time, on
, 1995 and all consents must be submitted by such time. All holders of
record of Common Stock of the Company at the close of business on
, 1995 will be entitled to vote on the Proposals described in the enclosed
Consent Solicitation Statement. To ensure that your consent will be taken
into account, please complete, date and sign the enclosed consent form and
return it promptly in the enclosed prepaid envelope.
Very truly yours,
James R. Moffett
Chairman of the Board
Freeport-McMoRan Copper & Gold Inc.
CONSENT SOLICITATION STATEMENT
FREEPORT-McMoRan COPPER & GOLD INC.
One East First Street
Reno, Nevada 89501
__________ __, 1995
This Statement and the enclosed form of consent are being furnished
to the holders of Common Stock of Freeport-McMoRan Copper & Gold Inc., a
Delaware corporation ("FCX" or the "Company"), in connection with a
solicitation of consents by the Board of Directors of the Company to seven
proposals (each, a "Proposal", and collectively, the "Proposals"). All seven
Proposals are related to the plan of Freeport-McMoRan Inc.
("Freeport-McMoRan"), which currently owns all of the outstanding shares of
the Company's Class B Common Stock, to distribute to its stockholders, on a
tax-free basis, all of the Class B Common Stock it owns at the time of the
distribution (the "Distribution"). The first two Proposals are as follows:
(1) a proposal (the "Merger Proposal") for the merger of FM
Facilitating Company, Inc., a newly created wholly owned
Delaware subsidiary of the Company ("Facilitating"), into the
Company (the "Merger"), which will effect changes to the
Company's capital structure and the voting rights of its Common
Stock and Preferred Stock in order to permit the Distribution
to be tax-free for federal income tax purposes; and
(2) a proposal (the "Corporate Governance Proposal") that the
Company's certificate of incorporation (the "Certificate")
following the Merger be further amended to add certain
corporate governance provisions.
In addition, consents of the holders of Common Stock of the Company
are being sought for approval of proposals (collectively, the "New Benefit
Plan Proposals") for the following Company benefit plans to become effective
upon the Distribution (each, a "Plan"):
(3) an Adjusted Stock Award Plan;
(4) a 1995 Stock Option Plan;
(5) a 1995 Stock Option Plan for Non-Employee Directors;
(6) an Annual Incentive Plan; and
(7) a 1995 Long-Term Performance Incentive Plan.
Each of the Proposals is further described herein.
Under Delaware law and pursuant to the Certificate, the Merger
Proposal and the Corporate Governance Proposal are subject to approval of
the holders of a majority of Class A Common Stock and Class B Common Stock
of the Company, voting as a single class. However, even though not
required by law or the Certificate, the Board of Directors of the Company
has determined that the holders of the Company's Class A Common Stock will
have a separate vote with respect to each of the Merger Proposal and the
Corporate Governance Proposal. Accordingly, each of the Merger Proposal
and the Corporate Governance Proposal will not be adopted without the
approval of at least a majority of the Class A Common Stock voted with
respect to such Proposals (not including Class A Common Stock owned by
Freeport-McMoRan or its affiliates).
Notwithstanding adoption of the Merger Proposal by the stockholders
of the Company, the Merger will not be consummated unless the management of
the Company believes at the time that there is no inhibition to the completion
of the Distribution. If adopted, the Merger Proposal is not subject to or
contingent on adoption of the Corporate Governance Proposal. However, the
Corporate Governance Proposal is subject to and contingent on adoption of the
Merger Proposal and consummation of the Merger.
Holders of the Company's Class A Common Stock will not have a
separate vote with respect to the New Benefit Plan Proposals, and instead will
vote with respect to each such Proposal as a single class with the holders of
the Company's Class B Common Stock. Since the Class B Common Stock constitutes
approximately ___% of the combined total of the Class A Common Stock and the
Class B Common Stock and is held entirely by Freeport-McMoRan, which intends
to vote in favor of the New Benefit Plan Proposals, approval of the New
Benefit Plan Proposals is assured without the consent of any other
stockholder. The New Benefit Plan Proposals will not be effective unless and
until the Distribution occurs.
The period for solicitation of consents will terminate at 4:30 p.m.,
New York City time on __________ __, 1995 and all consents must be submitted
by such time in order to be taken into account. All holders of record of
Common Stock of the Company at the close of business on __________ __, 1995
(the "Record Date") will be entitled to vote on the Proposals described in this
Consent Solicitation Statement. Stockholders are urged to review this Consent
Solicitation Statement in its entirety.
TABLE OF CONTENTS
Page
AVAILABLE INFORMATION.................................................. 1
SUMMARY................................................................ 2
Merger Proposal.................................................. 2
Corporate Governance Proposal.................................... 8
New Benefit Plan Proposals....................................... 8
Voting Procedure................................................. 9
MERGER PROPOSAL........................................................11
General Background...............................................11
Description of Capital Stock
Prior to and Following the Merger.............................15
Certain Additional Changes to the
Certificate of Incorporation and
By-Laws Resulting from the Merger.............................19
Certain Federal Income Tax Consequences
of the Merger.................................................20
Management After Distribution....................................20
CORPORATE GOVERNANCE PROPOSAL..........................................28
General Background...............................................28
Supermajority Voting/Fair Price Requirements.....................30
Limitations on Stockholder Action by
Written Consent...............................................30
Amendments to Certificate and By-Laws............................31
PROPOSAL FOR COMPANY ADJUSTED STOCK AWARD PLAN.........................31
PROPOSAL FOR COMPANY 1995 STOCK OPTION PLAN............................35
PROPOSAL FOR COMPANY 1995 STOCK OPTION PLAN
FOR NON-EMPLOYEE DIRECTORS...........................................38
PROPOSAL FOR COMPANY ANNUAL INCENTIVE PLAN.............................42
PROPOSAL FOR COMPANY 1995 LONG-TERM PERFORMANCE
INCENTIVE PLAN.......................................................46
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT.......................................................51
Stock Ownership of Directors and
Executive Officers............................................51
Stock Ownership of Certain Beneficial Owners.....................56
Compliance with the Securities
Exchange Act of 1934...........................................58
Freeport-McMoRan Stock Ownership of Certain
of its Beneficial Owners......................................58
INCORPORATION BY REFERENCE.............................................60
STOCKHOLDER PROPOSALS..................................................61
AVAILABLE INFORMATION
Both the Company and Freeport-McMoRan are subject to the
informational reporting requirements of the Securities Exchange Act of 1934,
as amended and, in accordance therewith, file reports and other information
with the Securities and Exchange Commission (the "Commission"). Such reports
and other information can be inspected and copied at the Public Reference Room
of the Commission at 450 Fifth Street, N.W., Room 1024, Washington, D.C. 20549
and at the Commission's regional offices at 7 World Trade Center, Suite 1300,
13th Floor, New York, New York 10048 and Northwestern Atrium Center, 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661, except that copies of the
exhibits may not be available at certain of the regional offices. In
addition, reports and other material concerning the Company and
Freeport-McMoRan can be inspected at the offices of The New York Stock
Exchange at 20 Broad Street, New York, New York 10005. Copies of such
material can also be obtained at prescribed rates by writing to the Public
Reference Section of the Commission at 450 Fifth Street, N.W., Washington,
D.C. 20549. See "Information Incorporated by Reference".
SUMMARY
The following is a brief summary of information contained elsewhere
in this Consent Solicitation Statement. This summary is not intended to be
complete and is qualified in all respects by reference to the detailed
information incorporated by reference or appearing elsewhere in this Consent
Solicitation Statement and in the Annexes attached hereto. Stockholders are
urged to read this Consent Solicitation Statement in its entirety.
Merger Proposal
As a result of the Merger, the shares of Class A Common Stock of the
Company (the "Class A Common Shares"), which at present vote as a single class
with the shares of Class B Common Stock of the Company (the "Class B Common
Shares", and collectively with the Class A Common Stock, the "Common Shares")
for the election of all directors of the Company, will have the right to vote,
together as a single class with the Preferred Stock of the Company outstanding
immediately after the Merger (the "Preferred Shares"), for the election of 20%
of the directors of the Company (the "20% Directors").(*) The Class A Common
Shares will have no right to vote for any of the other directors. The Class A
Common Shares will no longer be a series of Special Stock, but will be a
separate class of Common Stock.
In addition, the Class B Common Shares, which at present vote as a
single class with the Class A Common Shares for the election of directors,
will have the right to vote as a separate class for the election of 80% of the
directors of the Company (the "80% Directors").(*) The Class B Common Shares
will have no right to vote for any of the other directors. The Class B Common
Shares will be a separate class of Common Stock.
The Company currently has designated 88,600,000 Class A Common
Shares, which are a series of Special Stock. The Company also currently has
authorized 200,000,000 Class B Common Shares and 135,000,000 undesignated
shares of Special Stock.
As a result of the Merger, the Company's Certificate will be amended
to authorize 211,800,000 Class A Common Shares and 211,800,000 Class B Common
Shares. In the aggregate, the Certificate will authorize 423,600,000 Common
Shares, which equals the current aggregate number of authorized and designated
Class A Common Shares, authorized Class B Common Shares and authorized but
undesignated shares of Special Stock. See "Merger Proposal -- Description of
Capital Stock Prior to and Following the Merger".
Each of the shares of the Company's 7% Convertible Exchangeable
Special Preference Stock, par value $0.10 per share (the "Special Preference
Shares"), which at present constitute a class of Special Stock, will be
converted into shares of 7% Convertible Exchangeable Preferred Stock, par
value $0.10 per share, of the Company (the "Convertible Exchangeable Preferred
Shares"). Each Depositary Share which currently represents 2 16/17 Special
Preference Shares will represent 0.05 of a Convertible Exchangeable Preferred
Share, but the liquidation, dividend, redemption, conversion and exchange
rights of each Depositary Share following the Merger will be identical to the
existing Depositary Shares. The Convertible Exchangeable Preferred Shares
will be a series of Preferred Stock and will not constitute Special Stock of
the Company.
_________________
(*) The calculation of the number of directors which constitutes the "20%
Directors" will be rounded downward, if necessary, to the nearest whole
number. The calculation of the number of directors which constitutes the "80%
Directors" will be rounded upward, if necessary, to the nearest whole number.
Any such calculations also will not include any directors which holders of the
Preferred Shares have the exclusive right to elect if the Company fails to pay
dividends for a certain period of time.
Finally, the Convertible Exchangeable Preferred Shares to be issued
upon conversion in the Merger of the Special Preference Shares, as well as the
currently outstanding shares of the Company's Step-Up Convertible Preferred
Stock (the "Step-Up Preferred Shares"), Gold-Denominated Preferred Stock (the
"Gold-Denominated Preferred Shares"), Gold-Denominated Preferred Stock, Series
II (the "Gold-Denominated Preferred Series II Shares") and Silver-Denominated
Preferred Stock (the "Silver-Denominated Preferred Shares"), which at present
have no right to vote for the election of directors (unless the Company fails
to pay dividends for a certain period of time), will have the right to vote,
together as a single class with the Class A Common Shares, for the election
of the 20% Directors. The Preferred Shares will not be entitled to
participate in stockholder votes other than in connection with the election of
directors or as required by law. The other rights of the outstanding shares
of Preferred Stock will not be changed as a result of the Merger. See "Merger
Proposal -- Description of Capital Stock Prior to and Following the Merger".
The selected capitalization of the Company as of __________ __, 1995
and as adjusted to give effect to the Merger is shown in the following tables:
FCX Capitalization as of _________ __, 1995
<TABLE>
Authorized Outstanding
---------- -----------
<S> <C> <C>
Class B Common Stock 200,000,000 141,522,891
Special Stock (1)
Class A Common (2) 88,600,000 64,430,440
Special Preference (3) 26,400,000 26,341,176
Undesignated Special Stock 135,000,000 0
--------------------- -----------------------
Total Special Stock 250,000,000 90,771,616
Preferred Stock
Step-Up Convertible Preferred (4) 700,000 700,000
Gold-Denominated Preferred (5) 300,000 300,000
Gold-Denominated Preferred, Series II (6) 215,279 215,279
Silver-Denominated Preferred (7) 119,000 119,000
Undesignated Preferred Stock 48,665,721 0
--------------------- -----------------------
Total Preferred Stock 50,000,000 1,334,279
FCX Capitalization After Giving Effect to the Merger Proposal
Authorized Outstanding
---------- -----------
Common Stock
Class A Common 211,800,000 64,430,440(8)
Class B Common 211,800,000 141,522,891(8)
--------------------- ------------------------
Total Common Stock 423,600,000 205,953,331
Preferred Stock
Convertible Exchangeable Preferred (9) 447,800 447,800
Step-Up Convertible Preferred (4) 700,000 700,000
Gold-Denominated Preferred (5) 300,000 300,000
Gold-Denominated Preferred, Series II (6) 215,279 215,279
Silver-Denominated Preferred (7) 119,000 119,000
Undesignated Preferred Stock 48,217,921 0
--------------------- ------------------------
Total Preferred Stock 50,000,000 1,782,079
<FN>
___________________
(1) The Board of Directors of the Company has the right to designate authorized and unissued
shares of Special Stock as additional Class A Common Shares or as one or more additional
series of capital stock. The currently designated shares of Special Stock are 88,600,000
Class A Common Shares and 26,400,000 Special Preference Shares. See also notes (2) and
(9) below.
(2) In addition to the currently outstanding Class A Common Shares, additional Class A
Common Shares have been authorized for issuance upon conversion of the Special Preference
Shares (or if the Merger Proposal is adopted, the Convertible Exchangeable Preferred Shares)
and upon conversion of the Step-Up Convertible Preferred Shares. See also note (9) below.
(3) The Special Preference Shares currently are represented by an aggregate of 8,956,000
Depositary Shares, each representing 2 16/17 Special Preference Shares. See also note (9)
below.
(4) The Step-Up Convertible Preferred Shares are represented by an aggregate of 14,000,000
Depositary Shares, each representing 0.05 Step-Up Convertible Preferred Shares.
(5) The Gold-Denominated Preferred Shares are represented by an aggregate of 6,000,000
Depositary Shares, each representing 0.05 Gold-Denominated Preferred Shares.
(6) The Gold-Denominated Preferred Series II Shares are represented by an aggregate of
4,305,580 Depositary Shares, each representing 0.05 Gold-Denominated Preferred Series II
Shares.
(7) The Silver-Denominated Preferred Shares are represented by an aggregate of 4,760,000
Depositary Shares, each initially representing 0.025 Silver-Denominated Preferred Shares.
(8) Prior to the Merger, Freeport-McMoRan will exchange some Class B Common Shares that it
owns into Class A Common Shares in connection with its recapitalization. In addition,
Freeport-McMoRan has in the past exchanged, and may prior to the Merger exchange, Class
B Common Shares that it owns into Class A Common Shares for the purpose of making
property dividends of Class A Common Shares to Freeport-McMoRan common stockholders.
To the extent such exchanges are made, the number of outstanding Class B Common Shares
will be decreased and the number of outstanding Class A Common Shares will be increased.
Freeport-McMoRan will own all of the Class B Common Shares outstanding, constituting at
least a majority of the Common Shares outstanding at the time of the Distribution.
(9) If the Merger Proposal is adopted, the Convertible Exchangeable Preferred Shares will be
represented by an aggregate of 8,956,000 Depositary Shares, each representing 0.05 of a
Convertible Exchangeable Preferred Share.
</TABLE>
As indicated above, the changes effected by the Merger to the
Company's capital structure and the voting rights of its Common Shares and
Preferred Shares are designed to permit Freeport-McMoRan, which currently
owns all of the outstanding Class B Common Shares, to distribute to its
stockholders, on a tax-free basis for federal income tax purposes, all of
the Class B Common Shares it owns at the time of Distribution. The Boards
of Directors of the Company and of Freeport-McMoRan have determined that
the Distribution would be in the best interests of the stockholders of both
companies for a number of reasons. In the opinion of the Boards, the
Distribution should improve the credit capacity and access of the Company
to the public credit markets, reduce the costs of debt and equity financing
for the companies, eliminate certain restrictive covenants in the
companies' borrowing arrangements, better position the Company to enter
into strategic joint ventures and allow the companies' management to make
business decisions without being influenced by the competing financial
needs of the other business. See "Merger Proposal -- General Background".
The changes in voting power resulting from the Merger are designed to
enable Freeport-McMoRan to have sufficient voting rights with respect to the
Company in order to satisfy one of the prerequisites under the Internal
Revenue Code of 1986, as amended (the "Code") for the Distribution to be
tax-free for federal income tax purposes. Freeport-McMoRan has received a
ruling from the Internal Revenue Service confirming this tax result (the
"Private Letter Ruling"). The terms of the Proposals and the Distribution
described herein are consistent with the terms of the Private Letter Ruling.
In order to satisfy the requirements of the Internal Revenue Service
for the granting of the Private Letter Ruling, the Company represented that
there is no plan, intention or formal or informal understanding to change its
capital structure to eliminate the two-tiered voting structure after the
Distribution, and that there will be no change in the voting rights of its
stock for five years, or a vote within five years to change such voting rights
after five years. Accordingly, the separate classes will remain separate for
at least five years after the Distribution and will be combined only upon the
favorable vote thereafter of the holders of the Class A Common Shares and the
Class B Common Shares, voting together as a single class.
The Merger will not be consummated and the Distribution will not
be made until Freeport-McMoRan recapitalizes or refinances certain of its
existing indebtedness, including certain guarantees. Freeport-McMoRan has
discussed with several potential investors, including institutional
investors, possible transactions which would provide for the
recapitalization or refinancing of its debt. However, no agreements have
been reached with respect to any such transaction. It is anticipated that,
in connection with the Distribution, the Company and P.T. Freeport
Indonesia Company ("PT-FI"), a subsidiary of the Company, will enter into a
five-year senior secured revolving credit facility in a principal amount of
$750,000,000 with a syndicate of bank lenders. This facility, together
with a related and separate facility of Freeport-McMoRan, will replace or
constitute a modification of the existing Freeport-McMoRan credit facility
under which PT-FI has a borrowing capacity of $550,000,000.
The Merger will be effected pursuant to a Merger Agreement (the
"Merger Agreement") between the Company and Facilitating, which will, in
addition to providing for changes to the capital stock of the Company as
described above, provide for the designation of the Board of Directors and
executive officers of the Company upon the Merger. Following the Merger, the
Company's Board of Directors will be expanded from eight members to twenty
members, and will include all of its current directors (except one) and all of
the current directors of Freeport-McMoRan. The Board will also be classified
with three-year staggered terms. See "Merger Proposal -- Management After
Distribution".
The present executive officers of the Company are either employed or
retained by Freeport-McMoRan or PT-FI. The services of those executive
officers who are employed or retained by Freeport-McMoRan are provided to the
Company pursuant to a Management Services Agreement among Freeport-McMoRan,
the Company and PT-FI (the "Management Services Agreement"). Certain of such
executive officers and senior management will provide services to McMoRan Oil
& Gas Co. ("MOXY") and FM Properties Inc. ("FM Properties"), each of which is
a former subsidiary of Freeport-McMoRan, and Freeport-McMoRan Resource
Partners, Limited Partnership ("FRP"), an affiliate of Freeport-McMoRan,
pursuant to a management services agreement between Freeport-McMoRan and MOXY,
an administrative services agreement between Freeport-McMoRan and FM
Properties and the Amended and Restated Agreement of Limited Partnership of
FRP, as amended.
Pursuant to the Management Services Agreement a substantial number of
employees of Freeport-McMoRan also provide general executive, administrative,
financial, accounting, legal, insurance, sales and certain other services to
the Company and PT-FI. The Company currently does not directly employ any
individuals. However, PT-FI currently has approximately 5,800 employees and
has retained the services of approximately 9,000 contract workers for mining
and exploration operations and other activities in Indonesia. In addition,
Rio Tinto Minera, S.A. ("RTM"), a subsidiary of the Company, currently has
approximately ________ employees engaged in smelting and other activities in
Spain.
The Company currently expects that the Management Services Agreement
will remain in effect following the Distribution for a period not longer
than one year. Prior to the termination of the Management Services
Agreement, it is anticipated that a substantial number of persons,
including certain existing officers and employees of Freeport-McMoRan, will
become officers and/or employees of the Company or a wholly-owned
subsidiary of the Company that may be established to provide services to
the Company. Certain of such officers and employees may remain employed
by, and/or officers of, Freeport-McMoRan.
Following the Distribution, Freeport-McMoRan will retain its
interests in the sulphur and agricultural minerals businesses. It will remain
engaged in the business of mining and selling sulphur through its interest in
FRP, a Delaware limited partnership, and in the business of mining,
developing, producing and marketing phosphate fertilizers through its interest
in and through FRP's interest in a joint venture partnership, IMC-Agrico
Company ("IMC-Agrico").
Although the Merger and the change in voting power effected thereby
must be completed prior to the Distribution, the Merger will not be
consummated unless the management of the Company believes at the time that
there is no inhibition to the completion of the Distribution. It is
anticipated that, in connection with the Distribution, Freeport-McMoRan and
the Company will enter into an agreement defining their rights and
obligations with respect thereto, including a covenant not to take any
action which would or might reasonably be expected to adversely affect the
tax-free nature of the Distribution.
Corporate Governance Proposal
In addition to the Merger, the Board of Directors of the Company is
also seeking the consent of the holders of the Class A Common Shares to
several additional proposed amendments to the Company's Certificate related to
corporate governance. These include a "fair price" provision requiring a
higher percentage of stockholders than would otherwise be required to approve
certain business combinations unless certain procedural and fair price
requirements are satisfied; provisions limiting the right of stockholders to
act by written consent; and a provision requiring a higher percentage of
stockholders than would otherwise be required to amend, alter, change or
repeal certain of the provisions of the Certificate.
The purpose of the Corporate Governance Proposal is to make changes
to the Company's Certificate to reduce the vulnerability of the Company to an
unsolicited takeover proposal not deemed by the Board to be in the best
interests of the stockholders. See "Corporate Governance Proposal".
If adopted, the Corporate Governance Proposal is subject to and
contingent on adoption of the Merger Proposal and consummation of the Merger.
New Benefit Plan Proposals
The Board of Directors of the Company is also seeking stockholder
approval of (i) three stock option and stock-based award plans which are
described in more detail under "Proposal for Company Adjusted Stock Award
Plan", "Proposal for Company 1995 Stock Option Plan" and "Proposal for Company
1995 Stock Option Plan for Non-Employee Directors", and (ii) two cash bonus
plans which are described in more detail under "Proposal for Company Annual
Incentive Plan" and "Proposal for Company 1995 Long-Term Performance Incentive
Plan".
As indicated above, a substantial number of employees at
Freeport-McMoRan currently provide management and other services to the
Company pursuant to the Management Services Agreement. Also, most of the
executive officers of the Company are currently employees of Freeport-McMoRan.
Freeport-McMoRan compensates these individuals and allocates appropriate
portions of their compensation costs to the Company. Freeport-McMoRan also
maintains option and incentive award plans to attract, retain and reward
directors, officers and employees by allowing them to participate in the
future success of Freeport-McMoRan, the Company and their subsidiary
businesses, as a collective enterprise. Directors of the Company, and its
executive officers and key management, currently participate in
Freeport-McMoRan's option and incentive award plans. As a result, the Company
has not had its own compensation policies or plans.
Following the Distribution, the Company and Freeport-McMoRan will
continue to share many directors and engage many of the same individuals as
executive officers and in key management positions. However, because the
Company anticipates that it will eventually employ its executive officers, key
management and other personnel separately from Freeport-McMoRan, it intends to
establish its own compensation policies. In order to attract, retain and
reward its own directors, officers and employees, the Company believes that it
is also appropriate to establish option and incentive award plans tied to the
value of the Common Shares and to the future success of the Company's own
separate businesses.
Voting Procedure
If consents in the enclosed form are properly executed and returned,
the Class A Common Shares represented thereby will be voted in accordance with
the stockholders' directions. This Consent Solicitation Statement and the
enclosed consent are being mailed to stockholders on or about __________ __,
1995. For the consent solicited hereby to be counted, the enclosed consent
must be signed, dated and received by the Company prior to the Solicitation
Termination Date, which will be __________ __, 1995, unless extended by the
Company to a date no later than __________ __, 1995. Shares represented by
duly executed consents will, in the absence of contrary directions, be voted
for the approval of each of the proposals.
Stockholders of record at the close of business on the Record Date
will be entitled to vote on the Proposals. On the Record Date there were
outstanding _____________ Class A Common Shares and _____________ Class B
Common Shares. Each of the Class A Common Shares and the Class B Common
Shares entitles the holder thereof to one vote on each of the Proposals.
On the Record Date there were also outstanding __________ Special
Preference Shares, __________ Step-Up Preferred Shares, ___________
Gold-Denominated Preferred Shares, ___________ Gold-Denominated Preferred
Series II Shares and ___________ Silver-Denominated Preferred Shares. None of
these shares have voting rights with respect to the Proposals, and consents
are not being solicited from their holders.
Under Delaware law and pursuant to the Certificate, adoption of each
of the Merger Proposal and the Corporate Governance Proposal requires the
approval of a majority of the outstanding Class A Common Shares and the
outstanding Class B Common Shares, voting as a single class.
Freeport-McMoRan, which owns a majority of the combined total of Class A
Common Shares and Class B Common Shares, intends to vote in favor of such
Proposals.
However, although not required by law or the Certificate, the Board
of Directors of the Company has determined that the Class A Common Shares will
also have a separate vote on each of the Merger Proposal and the Corporate
Governance Proposal. Accordingly, each of the Merger Proposal and the
Corporate Governance Proposal will not be adopted without the approval of at
least a majority of the Class A Common Shares voted with respect to such
Proposals (not including Class A Common Shares owned by Freeport-McMoRan or
its affiliates).
Notwithstanding adoption of the Merger Proposal by the stockholders
of the Company, the Merger will not be consummated unless the management of
the Company believes at the time that there is no inhibition to the completion
of the Distribution. If adopted, the Merger Proposal is not subject to or
contingent on adoption of the Corporate Governance Proposal. However, the
Corporate Governance Proposal is subject to and contingent on adoption of the
Merger Proposal and consummation of the Merger.
Each of the New Benefit Plan Proposals requires the approval of a
majority of the Class A Common Shares and the Class B Common Shares, voting as
a single class. The Class A Common Shares will not have a separate vote with
respect to any of the New Benefit Plan Proposals. In addition, the New
Benefit Plan Proposals will not be effective unless and until the Distribution
occurs.
Consents which are submitted may be revoked at any time before the
Solicitation Termination Date by submission of a written revocation to the
Secretary of the Company or by the due execution of a consent bearing a later
date and the delivery of such later consent to the Secretary of the Company
prior to the Solicitation Termination Date.
The cost of the solicitation of consents is being borne by the
Company. Copies of soliciting material will be furnished to brokerage houses,
fiduciaries and other nominees as required for forwarding to the beneficial
owners. The Company will reimburse such persons for their expenses in so
doing. The Company has retained Georgeson & Co., Inc., Wall Street Plaza, New
York, New York, to assist it in the solicitation of proxies. It is estimated
that the fees for the services of that firm will be $ _______; the Company
will also reimburse the firm for its reasonable out-of-pocket expense incurred
in connection with providing the services. Further solicitation may be
undertaken by mail, telegram, telephone and personal contact by directors,
officers and other employees of the Company, without extra remuneration.
Brokers who hold shares for the accounts of their clients may execute
consents either as directed by their clients or in their own discretion if
permitted by the stock exchange or other organization of which they are
members. Certain proposals are "non-discretionary" and brokers who have
received no instructions from their clients do not have discretion to execute
consents on those items.
Although the Merger will effect changes in the voting rights of its
stockholders, no physical substitution of stock certificates will be required,
but the existing certificates will thereafter represent the securities
resulting from the Merger.
However, upon consummation of the Merger, the Company will arrange
with the depositary for the Special Preference Shares for replacement of stock
certificates representing such shares with stock certificates representing the
Convertible Exchangeable Preferred Shares. In addition, holders of Depositary
Receipts formerly representing the Special Preference Shares (the "outstanding
Depositary Receipts") will be permitted, at their option, to exchange such
outstanding Depositary Receipts for new Depositary Receipts specifically
describing the Convertible Exchangeable Preferred Shares, although no such
exchange will be required in order for the outstanding Depositary Receipts to
represent the Convertible Exchangeable Preferred Shares.
MERGER PROPOSAL
General Background
On May 3, 1994, Freeport-McMoRan announced that it was taking steps
to effect the tax-free distribution to its common stockholders, on a pro rata
basis, of all of the Class B Common Shares of the Company which it owns at the
time of such Distribution.
The purpose of the Merger Proposal is to permit the Distribution to
be made. Because of the prohibitive tax cost that would result if the
Distribution were undertaken on a taxable basis, the Distribution is only
practicable if it can be accomplished on a tax-free basis for federal income
tax purposes. The proposed changes in the voting rights of the Class A and
Class B Common Shares and the Preferred Shares are essential to satisfy the
requirements for a tax-free distribution and, in the view of the Company and
its advisors, represent the minimum changes in the voting power of the Common
Shares and Preferred Shares that are necessary to achieve this result. The
Distribution cannot occur unless the Merger Proposal is approved.
The Board of Directors of the Company believes that the Distribution
is in the best interests of the Company and its stockholders, and unanimously
recommends that the holders of the Class A Common Shares give their consent to
the Merger Proposal.
The proposed Distribution results from significant changes in the
businesses of Freeport-McMoRan and the Company over the past seven years.
These changes were brought about by two world-class mineral discoveries in
1988 and management's decision to concentrate on the development and growth of
these properties. Freeport-McMoRan has been active through subsidiaries in
exploring for copper, gold and other minerals in Indonesia since 1967. The
Company was organized in 1987 to hold Freeport-McMoRan's Indonesian property
interests and first sold a minority stock interest to the public in May 1988.
At the time of the offering, the common equity market value of the Company was
less than one-quarter that of Freeport-McMoRan. Just seven years later, the
common equity market value of the Company has grown almost twelve-fold
so that its common equity market value is now almost double that of
Freeport-McMoRan. The Company believes that it is one of only a few
publicly-traded subsidiaries whose common equity market value exceeds that of
its publicly-traded parent corporation. Because of the Company's ongoing
capital needs and the potential for future conflicts between the capital needs
and priorities of Freeport-McMoRan and the Company, Freeport-McMoRan believes
that its continued majority control of the Company would increase the
Company's cost of capital and could impede the Company's ability to raise
capital, to continue growth and to develop its business opportunities.
The significant growth in the common equity market value of the
Company is due in large part to the discovery in 1988 by the Company's
principal subsidiary, PT-FI, of the Grasberg mineral deposit in Irian Jaya,
Indonesia. This deposit contains the world's largest proved gold reserve and
the world's third largest copper reserve. Since the discovery, the Company has
undertaken a substantial capital expenditure program to develop the Grasberg
property. To date, it has invested over two billion dollars in its Indonesian
operations.
Over the same period, Freeport-McMoRan has evolved primarily into a
holding company with two principal interests -- the stock in the Company and a
51.3% partnership interest in FRP. FRP made a major sulphur discovery in the
Gulf of Mexico in 1988 and spent over $600 million constructing the Main Pass
offshore production facility, which was completed in 1992. In 1993, FRP
transferred its other principal business -- the phosphate fertilizer business
- - - - -- to IMC-Agrico, a newly formed partnership with a subsidiary of IMC Global
Inc., in order to achieve substantial operating and administrative savings.
Freeport-McMoRan has sold or otherwise disposed of substantially all its other
business assets to concentrate on the development of these two properties.
The Company's development and growth are continuing at a rapid pace.
PT-FI is currently expanding its production capacity from 66,000 metric tons
per day ("MTPD") to 115,000 MTPD. This expansion project is expected to be
completed by the second half of 1995 and will almost double annual production
to approximately 1.1 billion pounds of copper and 1.5 million ounces of gold
from the 1993 levels of 658 million pounds of copper and 787 thousand ounces
of gold, respectively.
The Company's copper, gold and silver reserves have grown
substantially both through continued delineation of the Grasberg deposit
and other existing mineral deposits and as a result of the Company's active
exploration program. The Company's exploration activities are being
pursued both within the area in which its current mines are located and
within a 4.875 million acre exploration area covered by PT-FI's contract of
work with the Government of the Republic of Indonesia and the adjacent 2.5
million acre exploration area covered by a contract of work entered into by
the Company's subsidiary, P.T. IRJA Eastern Minerals Corporation ("P.T.
IRJA"). Preliminary exploration within the exploration areas has indicated
a number of promising targets, although no assurance can be given that any
of these targets contains commercially exploitable mineral deposits. The
contracts of work for PT-FI and P.T. IRJA contain provisions under which
PT-FI and P.T. IRJA must progressively relinquish a portion of their
rights to their respective contract of work area. In light of the
relinquishment provisions, each company has implemented an active
exploration program with a focus on identifying both what it believes to be
the most promising exploration opportunities in its contract of work area
as well as the areas that appear to it to hold the least promise.
The Company anticipates that the ongoing capital expenditures
required to develop its existing reserves, expand its milling and production
capacity in line with its reserve base, continue its exploration activities
and expand and develop its existing smelting capacity will require substantial
and ongoing access to financing sources, including but not limited to bank
credit facilities and the public and private securities markets. Estimated
capital expenditures will be determined by the results of the Company's
exploration activities and ongoing expansion programs. Estimated aggregate
capital expenditures for 1994 and 1995 are in excess of $1 billion for the
expansion to 115,000 MTPD of PT-FI's production capacity, ongoing capital
maintenance expenditures and the expansion to 270,000 tons of metal per year
of a smelter in Spain owned by RTM. [In addition, the Company recently
announced that PT-FI and RTM have taken the lead role in developing a proposed
smelter in Gresik, Indonesia to process 150,000 to 200,000 tons of copper per
year.]
The Distribution is designed to enable the Company to meet its
substantial capital needs at a lower cost than any possible alternative. The
transaction also will provide the Company with the flexibility to meet future
growth and new opportunities through the use of equity financing or by
attracting a joint venture partner for one or more projects.
The Distribution will permit the managements of Freeport-McMoRan and
the Company to make business decisions without being influenced by the
competing financial needs of the other business. In addition, the separation
of Freeport-McMoRan and the Company will allow the Company to avoid the cost
and administrative expense of complying with burdensome unitary state tax
laws. The Company has a limited presence in the United States and following
the Distribution should be subject to tax only in one or two states based on
its current business operations.
The Merger Proposal is, therefore, being unanimously recommended by
the Board of Directors of the Company because it will make possible the
Distribution which is believed to be very advantageous to the Company.
The Board of Directors also believes that, if the Merger Proposal is
approved and the Merger is consummated, the resulting change in the voting
rights of the holders of the Class A Common Shares may be advantageous to such
holders.
Holders of Class A Common Shares currently have limited effective
voting rights. Because Freeport-McMoRan owns Common Shares having a majority
of the aggregate votes entitled to be cast by all outstanding Class A and
Class B Common Shares, it has (and has exercised), for all practical purposes,
the power to elect all of the directors of the Company.
However, following the Distribution, the Class B Common Shares will
be widely dispersed among the thousands of current Freeport-McMoRan common
stockholders, rather than owned and voted by a single controlling stockholder.
Afterwards, Freeport-McMoRan will have no vote, and the holders of the Class A
Common Shares will be free from the effect of an overriding controlling vote.
The holders of the Class A Common Shares, in conjunction with the holders of
the Preferred Shares, will be assured of the right to elect the 20% Directors.
The changes resulting from the Merger, therefore, represent a
necessary step toward effecting a transaction that may enhance the effective
voting rights of the holders of the Class A Common Shares by freeing such
holders from the controlling influence of Freeport-McMoRan.
Description of Capital Stock Prior to and Following the Merger
As a result of the Merger, the Certificate of the Company will be
amended. The following is a general description of the relative rights of
holders of the Company's Common Shares and Preferred Shares prior to and
following the Merger.
Common Shares
General. On the Record Date, the Company had outstanding ___________
shares of Class A Common Shares and ______________ shares of Class B Common
Shares. On the Record Date, all authorized shares of Class B Common Shares
were held by Freeport-McMoRan and all outstanding shares of Class A Common
Shares were publicly held (except for _____________ shares of Class A Common
Shares which were held by Freeport-McMoRan). Prior to the Merger,
Freeport-McMoRan will exchange some Class B Common Shares that it owns into
Class A Common Shares in connection with its recapitalization. In addition,
Freeport-McMoRan has in the past exchanged, and may prior to the Merger
exchange, Class B Common Shares that it owns into Class A Common Shares for
the purpose of making property dividends of Class A Common Shares to
Freeport-McMoRan common stockholders. To the extent such exchanges are made,
the number of outstanding Class B Common Shares will be decreased and the
number of outstanding Class A Common Shares will be increased.
Freeport-McMoRan will own all of the Class B Common Shares, constituting at
least a majority of the Common Shares outstanding at the time of the
Distribution.
The Class A Common Shares are listed on the NYSE and the Australian
Stock Exchange; the Class B Common Shares are not currently listed on any
securities exchange. In connection with the Distribution, the Company intends
to list the Class B Common Shares on the NYSE and the Australian Stock
Exchange.
At present, the Company is authorized to issue an aggregate of
423,600,000 Class A Shares (a designated series of Special Stock), Class B
Shares and shares of undesignated Special Stock. As a result of the Merger,
the Company's Certificate will be amended to authorize 423,600,000 Common
Shares and to eliminate the separate class of Special Stock. The Certificate
will authorize 211,800,000 Class A Common Shares and 211,800,000 Class B
Common Shares.
At present, Class A Common Shares, together with Special Preference
Shares, are classified as Special Stock of the Company. The Board of
Directors currently has the power to fix various terms with respect to each
series of Special Stock, including voting powers, designations, preferences
and other rights, qualifications, limitations, restrictions and redemption,
conversion or exchangeability provisions. Following the Merger, the Board of
Directors will have the power to fix such terms only with respect to future
issuances of Preferred Shares.
On May 1, 1993, all provisions of Class A Common Shares that varied
from those of Class B Common Shares ceased to have effect. After consummation
of the Merger, the Class A Common Shares and the Class B Common Shares will
continue to be identical in all respects, except as otherwise described below.
Holders of Class A Common Shares and holders of Class B Common Shares
will share ratably in any cash dividend declared by the Board of Directors
with respect to Common Shares. Dividends consisting of shares of Class A
Common Shares or Class B Common Shares may be paid only as follows:
(i) shares of the Class A Common Shares may be paid only to holders
of the Class A Common Shares, and shares of the Class B Common Shares may be
paid only to holders of the Class B Common Shares; and
(ii) shares will be paid proportionally with respect to each
outstanding Class A Common Share or Class B Common Share.
The declaration and amount of future dividends, if any, will depend
upon appropriate action of the Board of Directors and economic and market
factors which cannot be predicted.
In the case of any reorganization or any consolidation of the
Company with one or more other corporations or a merger of the Company with
another corporation, each holder of a Class A Common Share will be entitled
to receive with respect to such share the same kind and amount of shares of
stock and other securities and property (including cash) receivable upon
such reorganization, consolidation or merger by a holder of a Class B
Common Share, and each holder of a Class B Common Share will be entitled to
receive with respect to such share the same kind and amount of shares of
stock and other securities and property (including cash) receivable upon
such reorganization, consolidation or merger by a holder of a Class A
Common Share, provided that, in any such transaction, holders of Class A
Common Shares and holders of Class B Common Shares may receive different
kinds of shares of stock if the only difference in such shares is the
inclusion of voting rights which continue the special voting rights with
respect to the election of directors as described below.
In the event the Company is liquidated, holders of the Class A Common
Shares and the Class B Common Shares will be entitled to receive on an equal
per share basis the assets of the Company which are legally available for
distribution, after payment of all debts and other liabilities and payment of
dividends and liquidation preferences in respect of any other stock of the
Company ranking senior to the Class A Common Shares and the Class B Common
Shares as to such payments.
Voting Rights. The Class A Common Shares and the Class B Common
Shares currently vote as a single class.
After consummation of the Merger, the holders of the Class A Common
Shares and the Preferred Shares, voting together as a single class, will have
the ability to elect the 20% Directors. Holders of the Class B Common Shares
will have the ability to elect the 80% Directors. Holders of the Preferred
Shares will not be entitled to participate in any stockholder votes other than
in connection with the election of directors. For a description of the
Company's Board of Directors upon consummation of the Merger, see "Merger
Proposal -- Management After Distribution", below.
Directors may be removed, with cause, by the holders of all classes
of stock entitled to vote at an election of directors, voting together as a
single class. Directors may not be removed without cause by stockholders.
Vacancies in a directorship may be filled by the vote of the class or classes
of shares that had previously elected the director creating that vacancy, or
by the remaining directors or director elected by such class or classes.
On all other matters subject to the vote of holders of Common Shares,
after the consummation of the Merger, each Class A Common Share and each Class
B Common Share will have one vote. Except for class votes as required by law
and as described above, the Class A Common Shares and the Class B Common
Shares will vote as a single class. There will be no cumulative voting.
Upon consummation of the Merger, the Certificate will provide that
the special voting rights of the Class A Common Shares and the Preferred
Shares, on the one hand, and the Class B Common Shares, on the other hand,
with respect to the election of directors may be eliminated by the
favorable vote of a majority of the Class A Common Shares and Class B
Common Shares present and voting at any annual or special meeting of
stockholders of the Company, voting together. However, the Company has
represented, in connection with the Private Letter Ruling, that there will
be no change in the special voting rights of the Company's stock for five
years after the Distribution, or a vote within the five years to change
such special voting rights after five years. In addition, these
representations provide that the Company has no plan, intention, or formal
or informal understanding to change the Company's capital structure to
eliminate the special voting rights.
Preferred Shares
General. On the Record Date, there were _______________ Preferred
Shares and Special Preference Shares issued and outstanding, as described
below. Following the Merger, the Company will be authorized to issue
________________ Preferred Shares. Based upon the number of authorized but
unissued Preferred Shares and Special Preference Shares as of the Record
Date, the number of authorized but unissued Preferred Shares immediately
following the Merger is expected to be _________.
Convertible Exchangeable Preferred Shares. On the Record Date, the
Company had outstanding _______________ Special Preference Shares, a series of
Special Stock. Upon consummation of the Merger, each Special Preference Share
will be converted into 0.017 of a Convertible Exchangeable Preferred Share.
The Special Preference Shares at present do not vote for the election of
directors. The Convertible Exchangeable Preferred Shares will be entitled to
vote with the Class A Common Shares and other Preferred Shares, all as a
single class, as described under "-- Common Shares", above, for the election
of the 20% Directors. Holders of Convertible Exchangeable Preferred Shares
will not be entitled to participate in any stockholder votes other than in
connection with the election of directors. The Convertible Exchangeable
Preferred Shares otherwise will have the same rights as the Special Preference
Shares. However, because the Special Preference Shares will be converted into
a smaller number of Convertible Exchangeable Preferred Shares, the Convertible
Exchangeable Preferred Shares will have proportionately greater per share
liquidation, dividend, redemption, conversion, exchange and other rights.
Each Depositary Share which currently represents 2 16/17 Special Preference
Shares will represent 0.05 of a Convertible Exchangeable Preferred Share, but
the liquidation, dividend, redemption, conversion, exchange and other rights of
each Depositary Share following the Merger will be identical to those of an
existing Depositary Share. The Convertible Exchangeable Preferred Shares will
be a series of Preferred Stock and will not constitute Special Stock of the
Company.
Other Preferred Shares. On the Record Date there were outstanding
_________ Preferred Shares, consisting of _______________ Step-Up Preferred
Shares, _____________ Gold-Denominated Preferred Shares, __________________
Gold-Denominated Preferred Series II Shares and ___________________________
Silver-Denominated Preferred Shares. The Preferred Shares at present do not
vote for the election of directors. Upon consummation of the Merger, each
Preferred Share will be entitled to vote with the Class A Common Shares and
other Preferred Shares (including the Convertible Exchangeable Preferred
Shares), all as a single class, as described under "-- Common Shares", above,
for the election of the 20% Directors. Holders of Preferred Shares will not
be entitled to participate in any stockholder votes other than in connection
with the election of directors. Each Depositary Share which represents a
fraction of the corresponding series of Preferred Shares will represent the
same fraction of Preferred Shares. The Preferred Shares following the Merger
will otherwise be identical to the Preferred Shares prior to the Merger. The
Preferred Shares following the Merger will also have rights relative to the
Common Shares and the other Preferred Shares following the Merger which are
identical to their current rights relative to the Common Shares and other
Preferred Shares.
Certain Additional Changes to the Certificate of
Incorporation and By-Laws Resulting from the Merger
Subject to the provisions described below, as a result of the Merger,
the Company's Certificate will be amended to provide for a classified Board of
Directors. These provisions may have the effect of discouraging certain types
of transactions that involve an actual or threatened change of control of the
Company. The proposed provisions of the Certificate are summarized below.
As a result of the Merger, the Company's By-Laws (the "By-Laws") will also be
amended, although the terms of the By-Laws will remain substantially the same.
Reference is made to the full text of the proposed Certificate, which is
attached hereto as Annex I. The following summary is qualified in its
entirety by such reference.
The Certificate will provide that, subject to the rights to elect
additional directors that may be granted exclusively to holders of any class
or series of Preferred Shares, the number of directors shall be fixed from
time to time by the directors, but may not consist of less than five persons.
The Certificate further provides that the directors, other than those who may
be elected solely by the holders of any class or series of Preferred Shares
under specified circumstances (such as the failure to pay dividends), shall be
classified, with respect to the time for which they severally hold office,
into three director classes, as nearly equal in number as possible, and that
one director class will be elected each year and serve for a three-year term.
See "Merger Proposal -- Management After Distribution".
The classification of directors will have the effect of making it
more difficult for stockholders to change the composition of the Board. As a
result, at least two annual meetings of stockholders may be required for the
stockholders to change a majority of the directors, whether or not a majority
of the Company's stockholders believes that such a change would be desirable.
The Certificate also will provide that all vacancies on the Company's
Board of Directors may be filled by a majority of the remaining directors
elected by the same class or classes of stock that elected the director whose
death, resignation or removal created the vacancy, even if the number of such
remaining directors is less than a quorum. The Certificate also will provide
that the Board may increase the number of directors and any newly-created
directorship so created may be filled by the Board. The Board may be so
enlarged only if, following such enlargement, 80% of the membership of such
enlarged Board consists of directors elected by the holders of the Class B
Common Shares (rounded upward, if necessary, to the nearest whole number and
not including directors which holders of the Preferred Shares have the
exclusive right to elect if the Company fails to pay dividends for a certain
period of time).
The Certificate also will provide that stockholders will not be
permitted to call special meetings of stockholders or to require the Board of
Directors to call a special meeting of stockholders, and a special meeting of
stockholders may be called only by a majority of the entire Board of
Directors, the Chairman of the Board, the Vice Chairman of the Board or the
President. Such provisions are currently contained in the Company's By-Laws.
Notwithstanding the foregoing general limitations, holders of Preferred Shares
may have the right to call special meetings of stockholders if the Company
fails to pay dividends for a certain period.
Certain Federal Income Tax Consequences of the Merger
No income, gain or loss will be recognized by holders of the Common
Shares, the Preferred Shares or the Special Preference Shares as a result of
the Merger for federal income tax purposes. Subsequent to the Merger, each
such holder's basis in the Common Shares and Preferred Shares will be its
basis in the corresponding shares prior to the Merger.
Management After Distribution
The Merger Agreement provides that, upon consummation of the Merger,
the Board of Directors of the Company will consist initially of [twenty]
members, divided into staggered classes. Each class of directors will
serve for three years, with one class being elected each year. [Four of the
directors named in the Merger Agreement, _______________, _______________,
______________ and _______________,] have been named on behalf of holders of
the Class A Common Shares and the Preferred Shares [, and will have terms
which initially expire at the first Annual Meeting of Stockholders to be held
after the Merger or until their respective successors have been appointed].
Each of such persons is currently a non-employee director of the Company. [At
the first Annual Meeting of Stockholders to be held after the Merger the
holders of the Class A Common Shares and the Preferred Shares will have the
opportunity to elect four directors, one of whose term will expire at the
second Annual Meeting of Stockholders to be held after the Merger, one of
whose term will expire at the third Annual Meeting of Stockholders to be held
after the Merger and two of whose terms will expire at the fourth Annual
Meeting of Stockholders to be held after the Merger]. The remaining [sixteen]
directors have been named on behalf of holders of the Class B Common Shares.
Of such directors, [__________, __________, __________, ___________ and
____________] have terms which expire at the first Annual Meeting of
Stockholders to be held after the Merger or until their successors have been
appointed; [__________, ___________, ___________, _____________, ___________
and ___________] have terms which expire at the second Annual Meeting of
Stockholders to be held after the Merger or until their successors have been
appointed and [___________, ___________, _____________, ___________ and
___________] have terms which expire at the third Annual Meeting of
Stockholders to be held after the Merger or until their successors have been
appointed. If any person who is expected to be a director upon consummation
of the Merger becomes unavailable for any reason, the Board of Directors may
provide a substitute nominee.
Following the Merger and the Distribution, it is anticipated that
James R. Moffett will serve as Chairman of the Board and Chief Executive
Officer of the Company, Rene L. Latiolais will serve as Vice Chairman of the
Board of the Company, George A. Mealey will serve as President and Chief
Operating Officer of the Company, Richard C. Adkerson will serve as Executive
Vice President and Chief Financial Officer of the Company, and Charles W.
Goodyear will serve as Senior Vice President and Chief Investment Officer of
the Company.
Information About Directors. For each of the persons who is a
director or who is expected to become a director as a result of the Merger,
the following table shows, as of January 1, 1995, each such person's age,
principal occupations and employment during the past five years, other
directorships and positions with the Company, Freeport-McMoRan, PT-FI, FRP and
MOXY, and the year in which each such person's term of office as a director of
the Company began or is anticipated to begin. Except for Freeport-McMoRan,
PT-FI and FRP, none of the organizations referred to in such table is an
affiliate of the Company.
[TO BE UPDATED]
<TABLE>
Year
Term of
Office as
Director
of the
Principal Occupations, Company
Other Directorships and Began or
Positions with the Company, Will
Name Age Freeport-McMoRan, PT-FI, FRP and MOXY Begin
______________________________________________________________________________________________________________________
<S> <C> <C> <C>
Robert W. Bruce III 49 President, The Robert Bruce Management Co., Inc., investment 1995
managers. Managing Partner, Steamboat Group, until 1992.
President and Chief Investment Officer of The Fund American
Companies, Inc., insurance, until 1990 and Executive Vice
President and Chief Investment Officer of such corporation
until 1989. Director of National Re Corporation. Director of
Freeport-McMoRan since 1989 and director of MOXY since
1994.
Thomas B. Coleman 50 Managing Partner and Chief Executive Officer, International- 1995
Matex Tank Terminals, bulk liquid storage. Director of
Freeport-McMoRan since 1987 and director of MOXY since
1994.
William H. Cunningham 49 Chancellor of the University of Texas System. President of the 1995
University of Texas at Austin until 1992. Director of
Jefferson-Pilot Corporation, La Quinta Motor Inns, Inc. and
each of the members of the Transamerica Fund Management
Company group of mutual funds. Director of
Freeport-McMoRan since 1987 and director of MOXY since
1994.
Robert A. Day 50 Chairman of the Board of Trust Company of the West. Director 1995
of Abex Inc. Director of Freeport-McMoRan since 1984 and
director of MOXY since 1994.
Leland O. Erdahl 65 Consultant. President and Chief Executive Officer of 1988
Albuquerque Uranium Corp., producer and seller of uranium
concentrates, until 1992. President and Chief Executive
Officer of Stolar Inc., mining industry services, products, and
equipment, until 1991. Director of Canyon Resources
Corporation, Hecla Mining Company and Original Sixteen to
One Mine, Inc. Trustee of Freedom Investment Trusts I, II,
and III.
William B. Harrison, Jr. 50 Vice Chairman of Chemical Banking Corporation and its 1995
subsidiary, Chemical Bank. Executive Vice President of
Chemical Bank until 1990. Director of Chemical Banking
Corporation and Dillard Department Stores, Inc. Director
of Freeport-McMoRan since 1992 and director of MOXY
since 1994.
Henry A. Kissinger 70 Chairman of the Board and Chief Executive Officer, Kissinger 1995
Associates, Inc., international consultants and consultants to
the Company and Freeport-McMoRan. Director of American
Express Company and CBS Inc. Director of Freeport-
McMoRan since 1988 and director of MOXY since 1994.
Bobby Lee Lackey 56 President and Chief Executive Officer of J.S. McManus 1995
Produce Company, Inc., grower of vegetables and shipper of
fruits and vegetables. Director of Freeport-McMoRan since
1987 and director of MOXY since 1994.
Rene L. Latiolais 51 Vice Chairman of the Board of the Company. President, Chief 1993
Operating Officer and member of the Office of the Chairman
of Freeport-McMoRan. President and Chief Executive Officer
of FRP. Commissioner of PT-FI. Executive Vice President
of Freeport-McMoRan until 1993. Senior Vice President of
Freeport-McMoRan until 1992. Director of Freeport-
McMoRan since 1993 and director of MOXY since 1994.
Gabrielle K. McDonald 51 Judge, International Criminal Tribunal for the Former 1995
Yugoslavia, and Distinguished Visiting Professor of Law,
Texas Southern University Thurgood Marshall School of Law.
Visiting Professor of Law, St. Mary's University School of
Law, and of counsel, Walker & Satterthwaite, law firm, until
1993. Shareholder, Matthews & Branscomb, law firm, until
1991. Director of Freeport-McMoRan since 1993 and director
of MOXY since 1994.
George A. Mealey 60 President and Chief Executive Officer of the Company. 1988
Executive Vice President and member of the Office of
the Chairman of Freeport-McMoRan. Director and
Executive Vice President of PT-FI.
James R. Moffett 55 Chairman of the Board of the Company. Chairman of the 1992
Board, Chief Executive Officer and member of the Office of
the Chairman of Freeport-McMoRan. President
Commissioner of PT-FI. Co-Chairman of the Board of
MOXY. Director of Freeport-McMoRan since 1981 and
director of MOXY since 1994.
George Putnam 67 Chairman of The Putnam Investment Management Company, 1995
Inc. and of each of the members of the Putnam group of
mutual funds. Director of The Boston Company, Inc., Boston
Safe Deposit and Trust Company, General Mills, Inc.,
Houghton-Mifflin Company, Marsh-McLennan Companies
Inc. and Rockefeller Group, Inc. Director of
Freeport-McMoRan since 1981 and director of MOXY since
1994.
B.M. Rankin, Jr. 63 Private investor. Consultant to Freeport-McMoRan. Director 1995
of Freeport-McMoRan since 1981 and director of MOXY
since 1994.
Benno C. Schmidt 80 Senior Partner, J.H. Whitney & Co., private venture capital 1995
investment firm. Consultant to the Company and Freeport-
McMoRan. Managing Partner of J.H. Whitney & Co. until
1992. Director of Genetics Institute, Inc., Gilead Sciences,
Inc., Matrix Pharmaceutical, Inc. and Vertex Pharmaceuticals
Incorporated. Mr. Schmidt was formerly a Director and
Chairman of the Board of Vitarine Pharmaceuticals, Inc.,
which filed a voluntary petition for bankruptcy under Chapter
11 of the United States Bankruptcy Code with the United
States Bankruptcy Court for the Southern District of New
York on May 24, 1991. Director of Freeport-McMoRan since
1981 and director of MOXY since 1994.
Wolfgang F. Siegel 61 Senior Vice President of Kreditanstalt fur Wiederaufbau, a bank 1988
owned by the Federal Republic of Germany (the "FRG") and
the states comprising the FRG.
Elwin E. Smith 71 Sole proprietor of Elwin Smith International, consultants to 1988
global industrial corporations.
Eiji Umene 68 Executive Advisor of Nippon Steel Corporation. Managing 1992
Director of Nippon Steel Corporation and President of its
subsidiary, Nippon Steel U.S.A., Inc., until 1989. Director
of Schlumberger Limited.
J. Taylor Wharton 55 Chairman of the Department of Gynecology at the University of 1995
Texas M.D. Anderson Cancer Center. Director of
Freeport-McMoRan since 1992 and director of MOXY since
1994.
Ward W. Woods, Jr. 51 President and Chief Executive Officer of Bessemer Securities 1995
Corporation, private investment firm. Director of BCP/Essex
Holdings Inc., Boise Cascade Corporation, Essex Group, Inc.,
Overhead Door Corporation and Stant Corporation. Director
of Freeport-McMoRan since 1981 and director of MOXY
since 1994.
</TABLE>
Corporate Governance. The current Board of Directors of the Company,
which held _______ meetings during 1994, has primary responsibility for
directing the management of the business and affairs of the Company. The
Board of Directors currently consists of eight members. Following the Merger
the Board of Directors will consist of twenty members. To provide for
effective direction and management of the Company's business, the Board of
Directors has established committees of the Board of Directors, including the
Audit Committee.
The Audit Committee reviews the financial statements of the Company
and exercises general oversight with respect to the activities of the
Company's independent auditors and Controller and related matters. The Audit
Committee met ________ during 1994. The Audit Committee currently consists of
Mr. Erdahl as Chairman, and Messrs. Siegel, Smith and Umene, none of whom is an
officer or an employee of the Company or any of its subsidiaries. The Board
of Directors will determine the membership of the Audit Committee following
the Merger. No member of the Audit Committee will be an officer or an
employee of the Company or any of its subsidiaries.
The Board of Directors of the Company plans to establish, in
connection with the Merger, a Corporate Personnel Committee. The Corporate
Personnel Committee will review and make recommendations to the Board of
Directors with respect to management personnel policies, plans and programs
and employee and officer compensation. The composition of the Corporate
Personnel Committee will be determined by the Board of Directors. No member
of the Corporate Personnel Committee will be an officer or an employee of the
Company or any of its subsidiaries.
The Board of Directors of the Company plans to establish, in
connection with the Merger, a Nominating Committee. The Nominating Committee
will make recommendations to the Board of Directors concerning the structure
of the Board of Directors, corporate governance, and proposed new members of
the Board of Directors and will nominate individuals to stand for election as
directors. The Nominating Committee will consider recommendations by
stockholders of the Company of potential nominees for election as directors.
The Secretary of the Company will, upon request by any stockholder, furnish
information concerning the procedures required in connection with such
recommendations. The composition of the Nominating Committee will be
determined by the Board of Directors. No member of the Nominating Committee
will be an officer or an employee of the Company or any of its subsidiaries.
Each of the present directors attended 75% or more of the 1994
meetings of the Board of Directors of the Company and of the committees on
which he served during the period of his Board membership and committee
service.
The address of each current member of the Board of Directors is c/o
Freeport-McMoRan Copper & Gold Inc., One East First Street, Reno, Nevada
89501. In connection with the Distribution, the Company intends to move its
principal executive office to the existing headquarters of Freeport-McMoRan at
1615 Poydras Street, New Orleans, Louisiana 70112, which will thereafter serve
as the address of each member of the Board of Directors.
Each current director of the Company who is not an officer of the
Company or any of its affiliated companies currently receives an annual fee of
$25,000 for serving on the Board of Directors and any of the committees of the
Board of Directors. Directors who are also officers of the Company or any of
its affiliated companies are not entitled to an annual fee. The compensation
arrangements for the directors of the Company after the Distribution will be
determined by the Board of Directors.
Executive Officers. At this time the Company does not employ any of
its executive officers, nor does it directly compensate them for their
services. The present executive officers of the Company are either employed
or retained by Freeport-McMoRan or PT-FI.
Pursuant to the Management Services Agreement, Freeport-McMoRan
currently furnishes general executive, administrative, financial, accounting,
legal, insurance, sales and certain other services to the Company and PT-FI
(collectively, the "Company Group"). The services of all but one of the
present executive officers of the Company and the services of certain officers
and employees of PT-FI are currently provided to the Company Group under the
Management Services Agreement. The Company and PT-FI have heretofore
reimbursed Freeport-McMoRan at Freeport-McMoRan's cost, including allocated
overhead, for such services. The Management Services Agreement also provides
for the use of the services of certain of the Company Group's employees by
Freeport-McMoRan and its subsidiaries on a similar cost reimbursement basis.
All but one of the present executive officers of the Company are compensated
exclusively by Freeport-McMoRan for their services to the Company Group. All
the present executive officers of the Company are currently eligible to
participate in certain Freeport-McMoRan benefit plans and programs. The total
costs to Freeport-McMoRan for the present executive officers of the Company,
including the costs borne by Freeport-McMoRan with respect to such plans and
programs, are allocated to the Company, to the extent practicable, in
proportion to the time spent by such executive officers on Company Group
affairs. No other payment is made by the Company to Freeport-McMoRan for
providing such compensation and benefit plans and programs to the present
executive officers of the Company. The total amount charged by
Freeport-McMoRan to the Company Group for all services under the Management
Services Agreement was approximately $____________ in 1994.
In recognition of the services of Hoediatmo Hoed as President
Director of PT-FI, and to enhance the probability that such services will
continue in the future, PT-FI made a non-interest bearing demand loan to Mr.
Hoed in 1992. The balance, as of January 1, 1994, of the principal amount
outstanding on such loan was $222,401. As additional compensation for
services, PT-FI forgave in 1994 $25,663 of the principal amount of such loan.
The balance, as of December 31, 1994, of the principal amount outstanding on
such loan was $196,738.
The Company currently expects that the Management Services Agreement
will be terminated within one year following the Distribution, and thereafter
the Company will not contract with Freeport-McMoRan for the services of the
Company's executive officers and other key management personnel. The
compensation arrangements for the Company's executive officers after the
Distribution will be determined by the Corporate Personnel Committee of the
Company's Board of Directors.
Stock Option and Stock Incentive Unit Plans. Certain directors,
executive officers and employees of Freeport-McMoRan and the Company have
received awards under Freeport-McMoRan stock option and stock incentive unit
plans for employees, officers and directors (collectively, the "FTX Stock
Plans").
The exercise or grant price of each stock option, stock appreciation
right ("SAR") or stock incentive unit that has been granted under the FTX
Stock Plans is not less than 100% of the market value of Freeport-McMoRan
common stock on the date of grant, and the term of each such award generally
is not greater than 10 years. The awards become exercisable generally over a
four-year period or upon certain changes in control of Freeport-McMoRan.
A stock incentive unit entitles the holder thereof to receive, upon
exercise, a cash payment equal to the excess, if any, of the per share fair
market value of Freeport-McMoRan common stock on the date of exercise over the
exercise price of the stock incentive unit.
Certain of the awards granted under the FTX Stock Plans contain a
"tax-offset payment" feature whereby, upon exercise of the award, the holder
is entitled to a cash payment in an amount approximately equal to the
recipient's federal income tax liability arising in connection with such
exercise and such payment. Also, certain of the awards granted under the FTX
Stock Plans contain limited rights ("Limited Rights"), which generally entitle
the holder to exercise such right within 90 days after certain tender offers,
exchange offers and similar transactions related to Freeport-McMoRan and to
receive upon exercise, for each share subject to such award, the excess of the
highest per share price to be paid for Freeport-McMoRan common stock in such
offer or transaction over the exercise price or grant price of such award.
The FTX Stock Plans are administered by the Corporate Personnel
Committee of the Freeport-McMoRan Board of Directors, which is composed of
directors who are not employees of Freeport-McMoRan. Certain executive
officers of the Company who are also employees or officers of Freeport-McMoRan
after the Distribution will continue to be eligible for options and other
awards under the FTX Stock Plans following the Distribution.
Conversion of Stock Options and Other FTX Stock Plan Awards. Each
option to purchase Freeport-McMoRan common stock (an "FTX Option") granted
under any stock option plan of Freeport-McMoRan will be converted into an
adjusted option to purchase Freeport-McMoRan common stock (the "Adjusted FTX
Option") plus a new option to purchase Class B Common Shares (the "Company
Option") granted under the Company Adjusted Stock Award Plan, which is
described below, subject to stockholder approval of such plan. See "Proposal
for Company Adjusted Stock Award Plan". Thus, each holder of an FTX Option
will, after the Distribution, hold an Adjusted FTX Option and a Company
Option. The number of shares of Freeport-McMoRan common stock subject to the
Adjusted FTX Option will be the same as the number of shares subject to the
FTX Option, and the number of Class B Common Shares subject to the Company
Option will be the number of Class B Common Shares that a holder of record of
the number of shares of Freeport-McMoRan common stock subject to the FTX
Option would be eligible to receive in the Distribution. Company Options will
not be exercisable for Class B Common Shares until ninety days following the
Distribution. If any Company Options would expire before the one hundred and
eightieth day following the Distribution, the period for their exercise will
be automatically extended until and including the one hundred and eightieth day
following the Distribution.
The exercise price of each FTX Option will be allocated between the
Adjusted FTX Option and the Company Option based on the relative fair market
values of the Freeport-McMoRan common stock and the Class B Common Shares at
the time of the Distribution. Each Adjusted FTX Option and Company Option
will have the same remaining term and other terms and conditions and will be
exercisable to the same extent (except as indicated above) as the FTX Option
from which it was derived.
Freeport-McMoRan SARs will be converted, in accordance with the
procedures described above, into an adjusted Freeport-McMoRan SAR and a stock
appreciation right relating to Class B Common Shares of the Company.
Freeport-McMoRan stock incentive units will be converted, in accordance with
the procedures described above, into an adjusted Freeport-McMoRan stock
incentive unit and a stock incentive unit relating to Class B Common Shares of
the Company. If the original FTX Option contains a Limited Right feature, the
resultant Company Option will also contain a Limited Right feature relating to
Class B Common Shares. If the FTX Option being converted contains a
tax-offset payment right feature, the Company Option derived from such option
will also have a tax-offset payment right feature.
Performance Award Adjustments. Certain officers and employees
of Freeport-McMoRan have been granted performance awards under the Long
Term Performance Incentive Plan of Freeport-McMoRan, which is similar to
the proposed 1992 Long-Term Performance Plan of the Company (the
"Long-Term Plan") hereinafter described in the proposal for shareholder
approval of such Plan. Holders of such awards will be granted awards under
the Long-Term Plan in connection with the Distribution that will have
performance periods corresponding to the remaining performance periods of
the Freeport-McMoRan performance awards held by such individuals,
respectively, at the time of the Distribution.
CORPORATE GOVERNANCE PROPOSAL
General Background
The Board of Directors of the Company is seeking the consent of the
holders of the Class A Common Shares to several proposed provisions to the
Company's Certificate and By-Laws in addition to the provisions that would be
included in the Certificate solely as a result of the Merger (as described
under "Merger Proposal -- Certain Additional Changes to the Certificate of
Incorporation Resulting from the Merger", above). If approved, the Corporate
Governance Proposal will provide for the inclusion in the Company's
Certificate following the Merger of a "fair price" provision requiring a
higher percentage of stockholders than would otherwise be required to approve
certain business combinations unless certain procedural and fair price
requirements are satisfied; a provision limiting the right of stockholders to
act by written consent; and a provision requiring a higher percentage of
stockholders than would otherwise be required to amend, alter, change or
repeal certain of the provisions of the Certificate and By-Laws. These
provisions are substantially similar to provisions contained in
Freeport-McMoRan's certificate of incorporation, except that the minimum
thresholds proposed by the Company are lower for stockholder actions.
These provisions are designed in part to make it more difficult and
time-consuming for certain persons to obtain control of the Company unless
they pay a certain value to the Company's stockholders or to obtain majority
control of the Board of Directors of the Company or otherwise bring a matter
before stockholders without the Board's consent, and thus reduce the
vulnerability of the Company to an unsolicited takeover proposal. These
provisions are designed to enable the Company, particularly in the initial
years of its existence as an independent company, to develop its business in a
manner which will foster its long-term growth, with the threat of a takeover
not deemed by the Board to be in the best interests of the Company and its
stockholders, and the potential disruption entailed by such a threat, reduced
to the extent practicable. Establishment of the Company as an independent
company as a result of the Distribution would, absent these provisions,
increase its vulnerability to such attempted takeovers. On the other hand,
these provisions may have an adverse effect on the ability of stockholders to
influence the governance of the Company.
The Board of Directors of the Company believes that the independence
of the Company is in the best interests of the Company and its stockholders,
and unanimously recommends that the holders of Class A Common Shares give
their consent to the Corporate Governance Proposal.
If adopted, the Merger Proposal is not subject to or contingent on
the adoption of the Corporate Governance Proposal. However, the Corporate
Governance Proposal is subject to and contingent on adoption of the Merger
Proposal and consummation of the Merger.
The provisions that would be included in the Company's Certificate
and By-Laws if the Corporate Governance Proposal is adopted are summarized
below. Reference is made to the full text of proposed Certificate provisions,
which are included as italicized items in Annex I attached hereto. The
following summary is qualified in its entirety by such reference.
Supermajority Voting/Fair Price Requirements
If the Corporate Governance Proposal is adopted, the Certificate will
provide that, following the Distribution, the approval of the holders of 66
2/3% of the Common Shares is required to approve (a) any merger or
consolidation of the Company or any of its subsidiaries with or into any
person or entity, or any affiliate thereof (an "Interested Party"), who was
within the two years prior to the relevant transaction a beneficial owner of
20% or more of the Common Shares or any series thereof, (b) any merger or
consolidation of an Interested Party with or into the Company or any of its
subsidiaries, (c) any sale, lease, pledge, transfer or other disposition of
more than 10% of the fair market value of the assets of the Company or any of
its subsidiaries in one or more transactions involving an Interested Party,
(d) the adoption of any plan or proposal for liquidation or dissolution of the
Company proposed by or on behalf of any Interested Party, (e) the issuance or
transfer by the Company or any of its subsidiaries of securities having a fair
market value of $10,000,000 or more to any Interested Party or (f) any
recapitalization, reclassification, merger or consolidation of the Company or
any of its subsidiaries which would increase an Interested Party's voting
power in the Company or such subsidiary; provided that the 66 2/3% voting
requirement will not be applicable if (i) a majority of a vote of the
Company's directors, which vote includes not less than a majority of the
entire number of Continuing Directors (defined as a director, and any
successor thereof, who is not an affiliate of an Interested Party and who was
a member of the Board prior to the time the Interested Party involved in any
of the foregoing transactions became an Interested Party) has approved the
transaction, (ii) the transaction is between the Company and any of its
subsidiaries or between any of its subsidiaries or (iii) the transaction is a
merger or consolidation and the consideration to be received by the Company's
stockholders is at least as high as the highest price per share paid by the
Interested Party for the Common Shares on the date last acquired or during a
period of two years prior thereto.
Limitations on Stockholder Action by Written Consent
The Certificate and By-Laws will provide that any action required or
permitted to be taken by stockholders must be effected at a duly called annual
or special meeting and may not be effected by written consent, unless action
by such consent has been previously authorized by the Board of Directors.
Amendments to Certificate and By-Laws
The affirmative vote of 66 2/3% or more of the Company's outstanding
Common Shares will be required to amend, alter, change or repeal any of the
foregoing provisions in the Certificate or By-Laws, provisions in the
Certificate providing for a classified Board of Directors with staggered
three-year terms, provisions in the Certificate relating to filling vacancies
and increasing the size of the Board of Directors and provisions in the
Certificate and By-Laws limiting the ability of stockholders to call special
meetings of stockholders, as further described above. See "Merger Proposal --
Certain Additional Changes to the Certificate of Incorporation and By-Laws
Resulting from the Merger".
PROPOSAL FOR COMPANY ADJUSTED STOCK AWARD PLAN
The Company is hereby seeking stockholder approval of the
Freeport-McMoRan Copper & Gold Inc. Adjusted Stock Award Plan (the "Company
Adjusted Stock Award Plan"). The following summary of such plan is qualified
in its entirety by reference to the complete text thereof, which is attached
hereto as Annex II.
The purpose of the Company Adjusted Stock Award Plan is to provide
for the issuance of the Company stock options, SARs and stock incentive units
described under "Merger Proposal -- Management After Distribution", above. No
other awards will be made under the Company Adjusted Stock Award Plan.
The maximum number of Class B Common Shares in respect of which
awards may be granted under the Company Adjusted Stock Award Plan will be
determined in accordance with the conversion procedures described under
"Merger Proposal -- Management After Distribution", above. The Class B Common
Shares to be delivered under the Company Adjusted Stock Award Plan will be made
available from the authorized but unissued shares of Class B Common Shares or
from treasury shares.
The Company Adjusted Stock Award Plan will be administered by the
Corporate Personnel Committee of the Board of Directors (the "Committee"),
upon which no director who is an officer of the Company may serve. Current
and former employees, officers and directors of Freeport-McMoRan who hold
awards under the stock option and stock incentive unit plans of
Freeport-McMoRan at the time of the Distribution are eligible to receive
awards under the Company Adjusted Stock Award Plan. It is estimated that
approximately [250] persons will receive awards under the Company Adjusted
Stock Award Plan pursuant to the conversion of Freeport-McMoRan stock options,
SARs and stock incentive units described below.
Stock options, SARs and stock incentive units granted under the
Company Adjusted Stock Award Plan will have the terms described herein under
"Merger Proposal -- Management After Distribution". If the Committee
determines that any stock split, stock dividend or other distribution (whether
in the form of cash, securities or other property), recapitalization,
reorganization, merger, consolidation, split-up, spin-off, combination,
repurchase or exchange of shares, issuance of warrants or other rights to
purchase shares at a price below fair market value, or other similar corporate
event affects the Class B Common Shares such that an adjustment is required to
preserve the benefits intended under the Company Adjusted Stock Award Plan,
then the Committee has discretion to (i) make equitable adjustments in the
number and kind of shares (or other securities or property) subject to
outstanding awards and the respective grant or exercise prices thereof and
(ii) if appropriate, provide for the payment of cash to a participant.
The Company Adjusted Stock Award Plan may be amended at any time by
the Board of Directors of the Company, except that no amendment may be made
without stockholder approval if such approval is necessary to comply with any
tax or regulatory requirement, including any approval requirement that is a
prerequisite for exemptive relief from Section 16 of the Securities Exchange
Act of 1934, as amended (the "Exchange Act").
The Company Adjusted Stock Award Plan is not subject to any provision
of ERISA and is not qualified under Section 401(a) of the Code.
The number of securities underlying options, SARs, and stock incentive
units to be granted under the Company Adjusted Stock Award Plan is dependent
upon (i) the relative number of Class B Common Shares to be distributed in
respect of each share of Freeport-McMoRan common stock in connection with the
Distribution and (ii) the relative value of the Freeport-McMoRan common stock
and Class B Common Shares at the time of the Distribution. The number of
securities underlying options, SARs, and stock incentive units to be granted
under the Company Adjusted Stock Award Plan and the dollar value of such
awards, and the number of securities underlying options, SARs, and stock
incentive units that would have been granted under such plan had it been in
effect in any previous year and the dollar value of such awards, thus cannot
be determined until the time of the Distribution in regard to any individual,
including (i) the chief executive officer of the Company and each person who
is expected to be one of the four most highly compensated executive officers
of the Company (other than the chief executive officer) at the end of the
fiscal year in which the Distribution occurs (collectively, the "Named
Executive Officers"), (ii) all persons who are anticipated to be the executive
officers of the Company immediately after the Distribution (the "Executive
Officers"), (iii) all persons who are anticipated to be the directors of the
Company immediately after the Distribution (the "Directors") and (iv) all
persons other than the Executive Officers who are anticipated to be
participants in any Plan immediately after the Distribution as a group, which
include all persons other than the Executive Officers who are anticipated to
be the employees of the Company immediately after the Distribution (the
"Employees") and all persons other than the Executive Officers of the
Company who are anticipated to be the officers of the Company immediately
after the Distribution (the "Non-Executive Officers").
Certain Federal Income Tax Consequences. When an optionee exercises
an option other than an incentive stock option (a "non-qualified option"), the
difference between the option price and any higher fair market value of the
Class B Common Shares, generally on the date of exercise, will be ordinary
income to the optionee (subject to withholding) and will be generally allowed
as a deduction at that time for federal income tax purposes to the employer.
Any gain or loss realized by an optionee on disposition of the Class
B Common Shares acquired upon exercise of a non-qualified option will
generally be capital gain or loss to such optionee, long-term or short-term
depending on the holding period, and will not result in any additional federal
income tax consequences to the employer. The optionee's basis in the Class B
Common Shares for determining gain or loss on the disposition will be the fair
market value of such Class B Common Shares determined generally at the time of
exercise.
When an optionee exercises an incentive stock option while employed
by the Company or a subsidiary or within three months (one year for
disability) after termination of employment by reason of retirement or death,
no ordinary income will be recognized by the optionee at that time, but the
excess (if any) of the fair market value of the Class B Common Shares acquired
upon such exercise over the option exercise price will be an adjustment to
taxable income for purposes of the federal alternative minimum tax applicable
to individuals. If the Class B Common Shares acquired upon exercise of the
incentive stock option are not disposed of prior to the expiration of one year
after the date of acquisition and two years after the date of grant of the
option, the excess (if any) of the sales proceeds over the aggregate option
exercise price of such Class B Common Shares will be long-term capital gain,
but the employer will not be entitled to any tax deduction with respect to
such gain. Generally, if the Class B Common Shares are disposed of prior to
the expiration of such periods (a "Disqualifying Disposition"), the excess of
the fair market value of such Class B Common Shares at the time of exercise
over the aggregate option exercise price (but not more than the gain on the
disposition if the disposition is a transaction on which a loss, if realized,
would be recognized) will be ordinary income at the time of such Disqualifying
Disposition (and the employer will generally be entitled to a federal income
tax deduction in a like amount). Any gain realized by the optionee as the
result of a Disqualifying Disposition that exceeds the amount treated as
ordinary income will be capital in nature, long-term or short-term depending on
the holding period. If an incentive stock option is exercised more than three
months (one year for disability) after termination of employment, the federal
income tax consequences are the same as described above for non-qualified
stock options.
Except as noted below, when a participant receives payment with
respect to an award granted to him other than as described in the preceding
paragraphs, the amount of cash and the fair market value of any securities
received, net of any amount paid by the participant, will be ordinary income
to such participant (subject to withholding) and will generally be allowed as
a deduction at that time for federal income tax purposes to the employer.
Special rules may apply to a participant who is subject to Section 16
of the Exchange Act. Certain additional special rules apply if the exercise
price for an option is paid in Common Shares previously owned by the optionee
rather than in cash.
Section 162(m) of the Code may limit the deductibility of an
executive's compensation in excess of $1,000,000 per year. The Company
believes that taxable compensation arising in connection with awards under any
Plan, as explained above, should be fully deductible to the employer for
purposes of Section 162(m).
Awards under any Plan that are granted, accelerated or enhanced upon
the occurrence of a change of control may give rise, in whole or in part, to
excess parachute payments within the meaning of Section 280G of the Code to
the extent that such payments, when aggregated with other payments subject to
Section 280G, exceed the limitations contained therein. Such excess parachute
payments will be nondeductible to the employer and subject the recipient of
the payments to a 20% excise tax.
The foregoing discussion summarizes the federal income tax
consequences of the Company Adjusted Stock Award Plan, the Company Stock Plan
and the Company Directors Plan based on current provisions of the Code, which
are subject to change. This summary does not cover any foreign, state or
local tax consequences of participation in such Plans.
This Proposal requires the approval of a majority of the Class A
Common Shares and the Class B Common Shares, voting as a single class. The
Board of Directors of the Company unanimously recommends that the holders of
the Class A Common Shares approve the Company Adjusted Stock Award Plan.
PROPOSAL FOR COMPANY 1995 STOCK OPTION PLAN
The Company is hereby seeking stockholder approval of the
Freeport-McMoRan Copper & Gold Inc. 1995 Stock Option Plan (the "Company Stock
Plan"). The following summary of such plan is qualified in its entirety by
reference to the complete text thereof, which is attached hereto as Annex III.
The purpose of the Company Stock Plan is to motivate and reward key
personnel by giving them a proprietary interest in the Company's continued
success.
The maximum number of Class B Common Shares in respect of which
awards may be granted under the Company Stock Plan is 10,000,000. No
individual may receive in any year awards under the Company Stock Plan that
relate to more than 1,750,000 Class B Common Shares. Class B Common Shares
subject to awards that are forfeited or cancelled will again be available for
awards. The Class B Common Shares to be delivered under the Company Stock
Plan will be made available from the authorized but unissued shares of Class B
Common Shares or from treasury shares.
The Company Stock Plan will be administered by the Committee, upon
which no director who is an officer of the Company may serve. Officers and
key employees of the Company and its existing or future subsidiaries, and
officers and employees of any entity with which the Company has contracted to
receive executive or management services and who provide services to the
Company under such arrangement, in each case who can make substantial
contributions to the successful performance of the Company, are eligible to
participate in the Company Stock Plan. The Committee may delegate to certain
executive officers of the Company the power to make awards to eligible persons
who are not executive officers or directors of the Company, subject to
limitations to be established by the Committee. It is anticipated that the
Committee's determinations of which eligible individuals will be granted
awards and the terms thereof will be based on each individual's present and
potential contribution to the success of the Company and its subsidiaries. It
is estimated that approximately [7,750] persons will initially be eligible for
awards under the Company Stock Plan; however, it is anticipated that only
about [140] persons will participate in the Company Stock Plan.
Stock options, stock appreciation rights and limited rights may be
granted under the Company Stock Plan at the discretion of the Committee.
Options granted under the Company Stock Plan may be either non-qualified
options or incentive stock options. Only employees of the Company and its
subsidiaries will be eligible to receive incentive stock options. Stock
appreciation rights and limited rights may be granted in conjunction with or
unrelated to other awards and, if in conjunction with an outstanding option or
other award, may be granted at the time of such award or thereafter, at the
exercise price of such other award. The Committee has discretion to fix the
exercise price of such options, stock appreciation rights and limited rights
at a price not less than 100% of the fair market value of the underlying Class
B Common Shares at the time of grant thereof (or at the time of grant of the
related award in the case of a stock appreciation right or limited right
granted in conjunction with an outstanding award), except that this limitation
on the Committee's discretion does not apply in the case of awards granted in
substitution for outstanding awards previously granted by an acquired company
or a company with which the Company combines. The Committee has broad
discretion as to the terms and conditions upon which options and stock
appreciation rights are exercisable, but under no circumstances will an
option, a stock appreciation right or a limited right have a term exceeding 10
years after the date of grant.
The option exercise price may be satisfied in cash or, in the
discretion of the Committee, by exchanging Class B Common Shares owned by the
optionee or by a combination of cash and Class B Common Shares. The ability
to pay the option exercise price in Class B Common Shares would permit an
optionee to engage in a series of successive stock-for-stock exercises of an
option (sometimes referred to as "pyramiding") and thereby fully exercise an
option with little or no cash investment; however, it is expected that the
Committee's policy will be to require any stock tendered in payment of the
exercise price to be in certificated form and to have been held by the
exercising optionee for such time as is sufficient to avoid any adverse
accounting consequence to the Company resulting from the permitting of
stock-for-stock exercises.
Upon the exercise of a stock appreciation right with respect to a
Class B Common Share, a participant would be entitled to receive, for each
such share subject to the right, the excess of the fair market value of such
share on the date of exercise over the exercise price of such right. The
Committee has the authority to determine whether the value of a stock
appreciation right is paid in cash or Class B Common Shares or a combination
thereof.
Limited rights generally are exercisable only during a period
beginning not earlier than one day and ending not later than ninety days after
the expiration date of any tender offer, exchange offer or similar transaction
which results in any person or group becoming the beneficial owner of more
than 40% of all classes and series of the Company's stock outstanding, taken
as a whole, that have voting rights with respect to the election of directors
of the Company (not including Preferred Shares which may be issued in the
future that have the right to elect directors only if the Company fails to pay
dividends). Upon the exercise of a limited right granted under the Company
Stock Plan, a participant would be entitled to receive, for each Class B
Common Share subject to such right, the excess, if any, of the highest price
paid in or in connection with such transaction over the grant price of the
limited right.
The Company Stock Plan also authorizes the Committee to grant to
participants awards of Class B Common Shares and other awards that are valued
in whole or in part by reference to, or are otherwise based on, the value of
Class B Common Shares ("Other Stock-Based Awards"). The Committee has
discretion to determine the participants to whom Other Stock-Based Awards are
to be made, the times at which such awards are to be made, the size of such
awards and all other conditions of such awards, including any restrictions,
deferral periods or performance requirements. The provisions of the Other
Stock-Based Awards will be subject to such rules and regulations as the
Committee determines at the time of grant.
Any award under the Company Stock Plan may provide that the
participant has the right to receive currently or on a deferred basis
dividends or dividend equivalents or other cash payments in addition to or in
lieu of such award, all as the Committee determines.
If the Committee determines that any stock split, stock dividend or
other distribution (whether in the form of cash, securities or other
property), recapitalization, reorganization, merger, consolidation, split-up,
spin-off, combination, repurchase or exchange of shares, issuance of warrants
or other rights to purchase shares at a price below fair market value, or other
similar corporate event affects the Class B Common Shares such that an
adjustment is required in order to preserve the benefits intended under the
Company Stock Plan, then the Committee has discretion to (i) make equitable
adjustments in (a) the number and kind of shares that may be the subject of
future awards under the Company Stock Plan and (b) the number and kind of
shares (or other securities or property) subject to outstanding awards and the
respective grant or exercise prices thereof and (ii) if appropriate, provide
for the payment of cash to a participant.
No award may be granted under the Company Stock Plan after the fifth
anniversary of the effective date of the Company Stock Plan.
The Company Stock Plan may be amended or terminated at any time by
the Board of Directors, except that no amendment may be made without
stockholder approval if such approval is necessary to comply with any tax or
regulatory requirement, including any approval requirement that is a
prerequisite for exemptive relief from Section 16 of the Exchange Act.
The Company Stock Plan is not subject to any provision of ERISA and
is not qualified under Section 401(a) of the Code. For a description of
certain federal income tax consequences of awards under the Company Stock
Plan, see "Proposal for Company Adjusted Stock Award Plan -- Certain Federal
Income Tax Consequences", above.
As the receipt of awards under the Company Stock Plan is entirely in
the discretion of the Committee, the number of awards that will be granted in
the future or that would have been received during the previous fiscal year
had the Company Stock Plan been in effect cannot be determined.
This Proposal requires the approval of a majority of the Class A
Common Shares and the Class B Common Shares, voting as a single class. The
Board of Directors of the Company unanimously recommends that the holders of
the Class A Common Shares approve the Company Stock Plan.
PROPOSAL FOR COMPANY 1995 STOCK OPTION
PLAN FOR NON-EMPLOYEE DIRECTORS
The Company is hereby seeking stockholder approval of the
Freeport-McMoRan Copper & Gold Inc. 1995 Stock Option Plan for Non-Employee
Directors (the "Company Directors Plan"). The following summary of such plan
is qualified in its entirety by reference to the complete text thereof, which
is attached hereto as Annex IV.
The purpose of the Company Directors Plan is to align more closely
the interests of the Company's non-employee directors with that of the
Company's stockholders by providing for the automatic grant of stock options
to such directors in accordance with the terms of the Company Directors Plan.
The maximum number of Class B Common Shares in respect of which
options may be granted under the Company Directors Plan is 2,000,000. Class B
Common Shares subject to options that are forfeited or cancelled will again be
available for awards. The Class B Common Shares to be delivered under the
Company Directors Plan will be made available from the authorized but unissued
Class B Common Shares or from treasury shares.
The Company Directors Plan will be administered by the Committee;
however, the Committee will have no discretion to determine the timing,
exercise price or amount of options granted under the Company Directors Plan
or to modify the class of individuals eligible for awards under the Company
Directors Plan.
All directors of the Company who are not employees or officers of
the Company or any of its affiliated companies and who are not employees or
officers of any entity with which the Company has contracted to receive
executive or management services will be Eligible Directors under the
Company Directors Plan. It is estimated that there will initially be 17
Eligible Directors. The Company Directors Plan provides that, on the first
day of the first month following the month in which the Distribution
occurs, and on the anniversary of such date in each subsequent year through
2004, each Eligible Director on such date will receive a grant of options
to purchase 10,000 Class B Common Shares.
Options granted under the Company Directors Plan will be
non-qualified options. The exercise price of options granted under the
Company Directors Plan will be 100% of the fair market value of the underlying
shares of Class B Common Shares on the date of grant. Each option will become
exercisable in 25% annual increments beginning on the first anniversary of the
date of grant, and will have a term of 10 years after the date of grant. Upon
retirement from service as a director, a retiring director's options that were
exercisable on the date of retirement or could have become exercisable within
one year after such date will remain exercisable until the earlier of (i) the
third anniversary of the date of such retirement or (ii) the expiration date
of the option.
The option exercise price may be satisfied in cash or by exchanging
Class B Common Shares owned by the optionee. Each option granted under the
Company Directors Plan will provide for a cash payment by the Company to the
optionee upon exercise of the option in whole or in part. Such payment is
calculated pursuant to a formula in the Company Directors Plan and is intended
to compensate the optionee fully for any federal income tax liability incurred
as a result of such exercise and the receipt of such payment.
In the event of the payment of any dividend payable in Class B Common
Shares, or in the event of any subdivision or combination of such Common
Shares, the number of shares that may be purchased under the Company Directors
Plan and the number of shares subject to each option granted under the Company
Directors Plan shall be increased or decreased proportionately, as the case
may be, and the number of shares deliverable upon the exercise thereafter of
any outstanding option (whether or not then exercisable) will be increased or
decreased proportionately, as the case may be, without change in the aggregate
exercise price. In the event the Company is merged or consolidated into or
with another corporation in a transaction in which the Company is not the
survivor, or in the event that substantially all of the Company's assets are
sold to another entity not affiliated with the Company, any holder of an
option, whether or not then exercisable, will be entitled to receive (unless
the Company takes such alternative action as may be necessary to preserve the
economic benefit of the option for the optionee) on the effective date of any
such transaction, in cancellation of such option, an amount in cash equal to
the excess, if any, of the fair market value on the effective date of any such
transaction of the shares underlying such option over the aggregate exercise
price thereof.
No award may be granted under the Company Directors Plan after the
tenth anniversary of the effective date of the Company Directors Plan.
The Company Directors Plan may be amended or terminated at any time
by the Board of Directors, except that no amendment may be made without
stockholder approval if such approval is necessary to comply with any tax or
regulatory requirement, including any approval requirement that is a
prerequisite for exemptive relief from Section 16 of the Exchange Act. In
addition, the provisions of the Company Directors Plan relating to the amount,
timing and exercise price of options granted under the Company Directors Plan
may not be amended more often than once every six months.
The Company Directors Plan is not subject to any provision of ERISA
and is not qualified under Section 401(a) of the Code. For a description of
certain federal income tax consequences of options under the Company Directors
Plan, see "Proposal for Company Adjusted Stock Award Plan -- Certain Federal
Income Tax Consequences", above.
The following table sets forth information with respect to the
benefits or amounts under the Company Directors Plan, as proposed to be
approved, that would have been received in 1994 by or allocated in 1994 to (i)
each of the Directors who is not an Executive Officer and (ii) all Directors
who are not Executive Officers as a group if the Company Directors Plan, as
proposed to be approved, had been in effect in 1994. None of the Named
Executive Officers, Non-Executive Officers or Employees of the Company nor any
associate of any Director or Executive Officer is anticipated to be eligible
to participate in the Company Directors Plan. No person who is not identified
in the following table is anticipated to receive more than 5% of the awards
that may be granted under the Company Directors Plan.
New Plan Benefits
Company 1995 Stock Option Plan for
Non-Employee Directors
-----------------------------------
Number of Securities
Name and Position Dollar Value ($) Underlying Options
- - - - ------------------------------------ ---------------- ---------------------
Robert W. Bruce III, Director (a) 10,000
Thomas B. Coleman, Director (a) 10,000
William H. Cunningham, Director (a) 10,000
Robert A. Day, Director (a) 10,000
Leland O. Erdahl, Director (a) 10,000
William B. Harrison, Jr., Director (a) 10,000
Henry A. Kissinger, Director (a) 10,000
Bobby Lee Lackey, Director (a) 10,000
Gabrielle K. McDonald, Director (a) 10,000
George Putnam, Director (a) 10,000
B.M. Rankin, Jr., Director (a) 10,000
Benno C. Schmidt, Director (a) 10,000
Wolfgang F. Siegel, Director (a) 10,000
Elwin E. Smith, Director (a) 10,000
Eiji Umene, Director (a) 10,000
J. Taylor Wharton, Director (a) 10,000
Ward W. Woods, Jr., Director (a) 10,000
Non-Executive Officer Director Group (a) 170,000
______________________
(a) The respective dollar value of each stock option to be granted under the
Company Directors Plan depends upon the fair market value of Class B Common
Shares at the time of the exercise of such stock option and is thus not
determinable at this time.
This Proposal requires the approval of a majority of the Class A
Common Shares and the Class B Common Shares, voting as a single class. The
Board of Directors of the Company unanimously recommends that the holders of
the Class A Common Shares approve the Company Directors Plan.
PROPOSAL FOR COMPANY ANNUAL INCENTIVE PLAN
The Company is hereby seeking stockholder approval of the
Freeport-McMoRan Copper & Gold Inc. Annual Incentive Plan. The following
summary of such plan is qualified in its entirety by reference to the complete
text thereof, which is attached hereto as Annex V.
The purpose of the proposed Annual Incentive Plan (the "Annual Plan")
is to provide annual cash incentive bonuses for senior executives of the
Company whose performance in fulfilling the responsibilities of their
positions can have a major impact on the Company's profitability and future
growth.
Officers or employees of the Company or any of its subsidiaries
(including officers or employees who are also directors) are eligible to
receive awards. In addition, holders of performance awards under the long
term performance incentive plan of Freeport-McMoran will be eligible to
receive transaction performance units described below.
It is estimated that approximately [7,750] persons will be
eligible to receive awards; however, it is anticipated that only about ten
persons will participate in the Annual Plan. Awards will be made by the
Committee, which will consist of not fewer than two members of the Board of
Directors of the Company, each of whom is expected to qualify as an "outside
director" for purposes of meeting the requirements for performance-based
compensation under Section 162(m) of the Code. See "-- Certain Federal Income
Tax Consequences", below.
Awards will be made for any year and will be paid in cash the
following year unless and to the extent that a participant has made an
effective election to defer payment for up to ten years after such
individual's termination of services with the Company and certain
affiliates and related entities of the Company. Generally, unpaid deferred
amounts will accrue interest at a rate that is equal to the prime
commercial lending rate announced from time to time by The Chase Manhattan
Bank, N.A. or at such other rate as determined by the Committee.
The Annual Plan provides that the amount of any award made by the
Committee with respect to any year to a "Covered Officer" (as defined in the
Annual Plan) will be equal to a specified percentage of "Net Cash Provided by
Operating Activities" (as defined in the Annual Plan) for such year, although
the Committee retains the discretion to reduce or eliminate the amount of any
such award to any "Covered Officer". The definition of "Covered Officer"
provided in the Annual Plan is intended generally to include all "covered
employees" as defined in Section 162(m) of the Code. See "-- Certain Federal
Income Tax Consequences", below.
The Annual Plan provides as a guideline that the aggregate amount
of all awards granted for any particular calendar year should not exceed 2
1/2% of "Net Cash Provided by Operating Activities" for such year (the
"Plan Funding Amount"). For awards relating to 1995, the Plan Funding
Amount will be determined with respect to that portion of Net Cash
Provided by Operating Activities for such year that is earned subsequent to
the Distribution. The Annual Plan also limits the maximum annual aggregate
amount of possible awards to "Covered Officers" made under the Annual Plan
to the Plan Funding Amount. The Plan Funding Amount is allocated among
"Covered Officers" as follows: the Chief Executive Officer - 35%; the Chief
Operating Officer - 20%; the Chief Financial Officer - 20%; the Chief
Investment Officer - 15% and the Vice Chairman of the Board or, if there is
no such individual, any other Covered Officer - 10%; however, the Committee
has the discretion to reduce or eliminate all or any portion of such awards
to "Covered Officers".
No awards will be made with respect to any calendar year if the
average of the "Return on Investment" (as defined in the Annual Plan) for such
year and each of the four preceding calendar years, after giving effect to any
amounts awarded or credited with respect to such prior years and the amounts
that would have been so awarded or credited in such year, is less than 6%.
The Annual Plan may be terminated at any time, in whole or in part,
and may be amended from time to time by the Board or, upon delegation, by the
Committee. No such amendment or termination is permitted, however, to affect
adversely any awards previously made to a participant and deferred by such
participant pursuant to the Annual Plan.
The adoption of the Annual Plan, as proposed, does not preclude the
Company from adopting or continuing in effect other compensation arrangements,
which may be either generally applicable or applicable only in specific cases.
Certain Federal Income Tax Consequences. Amounts received by
participants are required to be recognized as ordinary income by such
participants (subject to withholding), and the Company is generally entitled
to a corresponding deduction at that time; however, Section 162(m) of the Code
limits tax deductions for executive compensation under certain circumstances.
The deduction restrictions relate to the compensation of "covered employees"
as defined in Section 162(m), which are the chief executive officer and the
four other highest paid executive officers of the Company for the previous
fiscal year. Under Section 162(m), certain performance-based compensation
will be tax deductible without regard to the limitation imposed by Section
162(m) if the compensation is paid upon the achievement of preestablished
performance goals and the material terms of the arrangements are approved by
stockholders of the taxpaying corporation.
The Board of Directors of the Company believes that the Annual Plan
is structured such that amounts paid thereunder should qualify as
performance-based compensation for purposes of Section 162(m) and thus will be
fully deductible.
The Annual Plan is not subject to any provision of ERISA and is not
qualified under Section 401(a) of the Code.
The following table sets forth information about the approximate
benefits or amounts under the Annual Plan, as proposed to be approved, that
would have been allocated with respect to 1994 to (i) each of the Named
Executive Officers, (ii) all Executive Officers as a group, (iii) all
Directors who are not Executive Officers as a group and (iv) all persons
other than the Executive Officers who are anticipated to be the
participants in the Annual Plan immediately after the Distribution as a
group (which includes all Employees and all Non-Executive Officers) if the
Annual Plan, as proposed to be approved, had been in effect in 1994.
New Plan Benefits
Company Annual Incentive Plan
<TABLE>
Dollar Value ($) Number of Units
Name and Position (a) (b)
- - - - --------------------------------------------------------------- ------------------- -----------------
<S> <C> <C>
James R. Moffett, Chairman of the Board and Chief $ 0
Executive Officer -------------------
Rene L. Latiolais, Vice Chairman of the Board $ 0
-------------------
George A. Mealey, President and Chief Operating $ 0
Officer -------------------
Richard C. Adkerson, Executive Vice President and $ 0
Chief Financial Officer -------------------
Charles W. Goodyear, Senior Vice President and $ 0
Chief Investment Officer -------------------
Executive Group (c) 0
Non-Executive Officer Director Group (d) 0 0
Non-Executive Officer Employee Group (c) 0
<FN>
________________________
(a) The amounts of awards that may be granted under the Annual Plan in 1995
will be determined by reference to "Net Cash Provided by Operating
Activities" for 1995 and are thus not determinable at this time. The
amounts set forth in this column of this table are the approximate maximum
amounts of awards that would have been allocated with respect to 1994 if
the Annual Plan had been in effect in 1994 and if the Committee had
determined to award the maximum amount possible under the Annual Plan to
each of the "Covered Officers" as defined therein.
(b) No units will be awarded under the Annual Plan.
(c) The members of the referenced group are subject to change and the amounts
of awards that may be granted to persons other than "Covered Officers" are
not precisely specified in the Annual Plan; thus these benefits or amounts
for the referenced group are not determinable.
(d) The Directors who are not Executive Officers are not eligible to
participate in the Annual Plan.
</TABLE>
This Proposal requires the approval of a majority of the Class A
Common Shares and the Class B Common Shares, voting as a single class. The
Board of Directors of the Company unanimously recommends that the holders of
the Class A Common Shares approve the Company Annual Plan.
PROPOSAL FOR COMPANY 1995 LONG-TERM PERFORMANCE INCENTIVE PLAN
The Company is hereby seeking stockholder approval of the
Freeport-McMoRan Copper & Gold Inc. 1995 Long-Term Performance Incentive Plan
(the "Long-Term Plan"). The following summary of such plan is qualified in
its entirety by reference to the complete text thereof, which is attached
hereto as Annex VI.
The purpose of the Long-Term Plan is to provide incentive awards
based on long-term performance for senior executives of the Company whose
performance in fulfilling the responsibilities of their positions can have a
major impact on the Company's profitability and future growth.
Officers or employees of the Company or any of its subsidiaries
(including officers or employees who are also directors) are eligible to be
granted performance awards. In addition, holders of performance awards
under the 1992 Long-Term Performance Incentive Plan of Freeport-McMoRan
will be eligible to receive transition awards of performance units
described below. It is estimated that approximately [7,750] persons will
be eligible to receive performance awards; however, it is anticipated that
only about thirty persons will participate in the Long-Term Plan.
Performance awards will be made by the Committee, which will consist of not
fewer than two members of the Board of Directors of the Company, each of
whom is expected to qualify as an "outside director" for purposes of
meeting the requirements for performance-based compensation under Section
162(m) of the Code. See "Proposal for Company Annual Incentive Plan --
Certain Federal Income Tax Consequences", above. A participant may hold
more than one outstanding performance award at any time.
A performance award consists of a number of performance units,
which are credited to a performance award account. Each such account is
credited, as of December 31 of each year, with an amount equal to the
"Annual Earnings Per Share" or "Net Loss Per Share", as defined in the
Long-Term Plan, of the Company's Common Shares for each performance unit
then credited to such account. With respect to 1995, credits will relate
only to Company earnings after the Distribution. With respect to any
performance award account established in connection with any performance
award granted after December 31, 1995, the balance in the account is paid
to the participant in cash as soon as practicable after December 31 of the
third year following the date of grant, unless the participant's employment
or service with the Company or a "Related Entity", as defined in the Long-
Term Plan to include Freeport-McMoRan and certain of its affiliates or
former affiliates, terminates prior to that date.
Special rules apply to the duration of the performance period
applicable to performance units covered by grants during calendar year
1995. As indicated below, the number of performance units covered by the
performance award granted to each "Covered Officer" (as defined in the
Long-Term Plan) during calendar year 1995 will exceed the number of
performance units available for award to such individual in later years.
Conversely, as set forth in Schedule A to Annex VI attached hereto
("Schedule A"), the performance periods applicable to such excess
performance units have been shortened. The corresponding balance in each
performance award account attributable to each series of such excess
performance units will be paid to the participant in cash as soon as
practicable after the applicable "Award Valuation Date" set forth in
Schedule A, unless the participant's employment or service with the
Company or a Related Entity terminates prior to the applicable date.
Transition awards similar to those awards described in Schedule A for
"Covered Officers" may be granted to all holders of Freeport-McMoRan
performance awards under the 1992 Long-Term Performance Incentive Plan of
Freeport-McMoRan on the date of the Distribution in adjustment of such
Freeport-McMoRan awards.
If a participant's employment with the Company or a Related Entity
terminates or if a participant ceases to provide services to the Company or a
Related Entity prior to December 31 of the third year following the date of
grant (or, if earlier, the last day of the applicable performance period for
performance units granted during calendar year 1995) for any reason other than
death, disability or retirement (and other than within two years of a change
in control of the Company), the balances in such participant's performance
award accounts are forfeited. If such termination or cessation is as a result
of an event other than a "Discharge for Cause", as defined in the Long-Term
Plan, the Committee has, however, the discretion to determine that, as a
result of special mitigating circumstances, no forfeiture will occur. If such
termination of employment or cessation of services is by virtue of death,
disability or retirement, or is within two years following a change in
control, performance award account balances will be paid to such participant
as soon as practicable after December 31 of the year in which such termination
or cessation occurs. In addition, notwithstanding the foregoing, the
Committee may pay a supplemental amount to a former participant, determined as
if the term of a performance period applicable to any portion of a performance
award of such former participant had been extended for up to an additional
three years after the date of termination of such participant's employment
with the Company or a Related Entity or after the date such participant ceased
to provide services to the Company, its subsidiaries or a Related Entity.
Under the Long-Term Plan, the Committee may suspend the making of any
or all credits that would otherwise have been made to performance award
accounts belonging to all or certain participants. The Committee may
determine that account balances will bear interest during any such suspension
period.
A participant may elect to defer for up to ten years the payment
of all or a portion of any amount to which he has become entitled. Unpaid
deferred amounts will accrue interest at a rate that is equal to the prime
commercial lending rate announced from time to time by The Chase Manhattan
Bank, N.A. or at such other rate as determined by the Committee.
The number of performance units outstanding at any time under the
Long-Term Plan may not exceed 3,000,000, subject to adjustment as described
below. Performance units that have been forfeited, or in respect of which
payment has been made or deferred, as provided in the Long-Term Plan, are no
longer considered to be outstanding under the Long-Term Plan and may be
re-granted. No performance awards may be granted under the Long-Term Plan
after December 31, 1999.
The Long-Term Plan may be terminated at any time, in whole or in
part, and may be amended from time to time by the Board or, upon delegation,
by the Committee. No such amendment or termination is permitted, however, to
affect adversely the amounts credited to the performance award account of a
participant with respect to performance awards previously made to such
participant.
The adoption of the Long-Term Plan, as proposed, does not preclude
the Company from adopting or continuing in effect other compensation
arrangements, which may be either generally applicable or applicable only in
specific cases.
The Long-Term Plan provides that the Committee will, from time to
time in its sole discretion, determine which officers and employees will be
granted performance awards under the Long-Term Plan and the number of
performance units covered by such performance awards; however, with respect to
any performance award made by the Committee in any year to a "Covered Officer"
(as defined in the Long-Term Plan), the Long-Term Plan specifies the number
of performance units to be covered by such performance award in any such year.
With respect to performance awards granted to "Covered Officers" after
December 31, 1995, such specified annual numbers are, respectively, 110,000
for the Chief Executive Officer, 65,000 for the Chief Operating Officer,
35,000 for the Vice Chairman of the Board and 30,000 for any other "Covered
Officer" of the Company. The definition of "Covered Officer" provided in
the Long-Term Plan is intended generally to include all "covered employees"
as defined in Section 162(m). See "Proposal for Company Annual Incentive
Plan -- Certain Federal Income Tax Consequences", above.
With respect to performance awards granted to "Covered Officers"
during 1995, the number of performance units covered by such performance
awards will consist of several series of transition performance units which
in the aggregate will be 400,000 for the Chief Executive Officer, 160,000
for the Chief Operating Officer, 230,000 for the Vice Chairman of the
Board, and 120,000 for each other Covered Officer, subject to adjustment as
described below. The "Award Valuation Dates" applicable to the various
series of transition awards are set forth in Schedule A to Annex VI.
The Long-Term Plan provides that, upon effectiveness of the Plan,
the number of performance units to be granted as transition awards,
as well as the number of performance units available for grant under the
Long-Term Plan, will be adjusted to reflect the ratio of the average number
of Common Shares outstanding in 1995 to the average number of shares of
common stock of Freeport-McMoRan outstanding in 1994.
The Long-Term Plan permits the Committee to make adjustments to "Net
Income", "Annual Earnings Per Share" or "Net Loss Per Share" (as such terms
are defined in the Long-Term Plan) as it deems appropriate in its judgment
when making credits or payments in respect of performance awards under the
Long-Term Plan. The Committee is prohibited, however, from making such
adjustments to payments with respect to performance awards of, or credits to
performance award accounts of, any "Covered Officers", if the effect of any
such adjustment would be to increase the amount credited or paid to a Covered
Officer under the Plan.
"Annual Earnings Per Share" with respect to any year is defined, for
purposes of the Long-Term Plan, as the result obtained by dividing net income
(or net loss) of the Company and its consolidated subsidiaries for such year
as well as the minority interests' share in the net income or net loss of the
Company's consolidated subsidiaries for such year by the average number of
issued and outstanding Common Shares during such year.
The Board of Directors of the Company believes that the Long-Term
Plan is structured such that amounts paid thereunder should qualify as
performance-based compensation for purposes of Section 162(m) of the Code and
thus will be fully deductible. See "Proposal for Company Annual Incentive
Plan -- Certain Federal Income Tax Consequences", above. The Long-Term Plan is
not subject to any provision of ERISA and is not qualified under Section
401(a) of the Code.
The following table sets forth information about the benefits or
amounts under the Long-Term Plan, as proposed to be approved, that would have
been received with respect to 1994 by or allocated with respect to 1994 to (i)
each of the Named Executive Officers, (ii) all Executive Officers as a group,
(iii) all Directors who are not Executive Officers as a group and (iv) all
persons other than the Executive Officers who are anticipated to be the
participants in the Long-Term Plan immediately after the Distribution as a
group (which includes all Employees and all Non-Executive Officers) if the
Long-Term Plan, as proposed to be approved, had been in effect in 1994.
New Plan Benefits
Company 1995 Long-Term Performance
Incentive Plan
<TABLE>
Dollar Value ($) Number of Units
Name and Position (a) (b)
- - - - ---------------------------------------------------------------- ------------------- ------------------
<S> <C> <C>
James R. Moffett, Chairman of the Board and Chief (a) 110,000
Executive Officer
Rene L. Latiolais, Vice Chairman of the Board (a) 35,000
George A. Mealey, President and Chief Operating (a) 65,000
Officer
Richard C. Adkerson, Executive Vice President and (a) 30,000
Chief Financial Officer
Charles W. Goodyear, Senior Vice President and Chief (a) 30,000
Investment Officer
Executive Group (a) (c)
Non-Executive Officer Director Group (d) 0 0
Non-Executive Officer Employee Group (a) (c)
<FN>
________________________
(a) The amounts of payments that may be made with respect to performance
awards that may be granted under the Long-Term Plan in 1995 will be
determined by reference to "Annual Earnings Per Share" or "Net Loss Per
Share" for 1995, 1996, 1997, and 1998 and are thus not determinable at this
time. Similarly, the amounts of payments that would be made with respect
to performance awards that would have been granted in 1994 if the Long-Term
Plan had been in effect in 1994 would be determined by reference to "Annual
Earnings Per Share" or "Net Loss Per Share" for 1994, 1995, 1996 and 1997
and would thus not be determinable at this time.
(b) The numbers of units set forth in this column of this table are the
maximum numbers of performance units that would have been granted in 1994
in accordance with the terms of the Long-Term Plan if the Committee had
awarded in 1994 the maximum number of performance units possible under the
Long-Term Plan to each of the "Covered Officers" as defined therein in
any year other than 1995, exclusive of the adjustment indicated above to
reflect the ratio of the average number of Common Shares outstanding in
1995 to the average number of shares of common stock of Freeport-McMoRan
outstanding in 1994. As indicated above, several series of "Transition
Awards" may be granted with respect to 1995 only.
(c) The members of the referenced group are subject to change and the amounts
of performance units that may be granted to persons other than "Covered
Officers" are not precisely specified in the Long-Term Plan; thus these
benefits or amounts for the referenced group are not determinable.
(d) The Directors who are not Executive Officers are not eligible to
participate in the Long-Term Plan.
</TABLE>
This proposal requires the approval of a majority of the Class A
Common Shares and the Class B Common Shares, voting as a single class. The
Board of Directors of the Company unanimously recommends that the holders of
the Class A Common Shares approve the Company Long-Term Plan.
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
Stock Ownership of Directors and Executive Officers
According to information furnished by each of the individuals who
will serve as Directors or Executive Officers of the Company (including an
officer of PT-FI who is deemed by the Company to be an executive officer of
the Company for purposes of federal securities laws) following the
Distribution, the number of Class A Common Shares and shares of
Freeport-McMoRan common stock ("Freeport-McMoRan Shares") beneficially owned
by each of them as of December 31, 1994, was as follows:
[TO BE UPDATED]
Number of Class
A Common Shares Number of Freeport-McMoRan Shares
Name of Individual or Beneficially Beneficially Owned (a)
Identity of Group Owned (a)
- - - - ------------------------------------------------------------------------------
Richard C. Adkerson 5,503 (b) 192,651 (b)(c)(d)
Robert W. Bruce III 0 25,132 (c)
Thomas B. Coleman 11,760 (e) 65,097 (c)(e)
William H. Cunningham 0 36,905 (c)
Robert A. Day 909,426 (f) 35,451 (c)(f)
Leland O. Erdahl 11,578 (g) 0
Charles W. Goodyear 0 188,597 (c)(d)(h)
William B. Harrison, Jr. 0 4,200 (i)
Henry A. Kissinger 0 30,020 (c)
Bobby Lee Lackey 0 38,107 (c)(j)
Rene L. Latiolais 4,000 517,590 (c)(d)
Gabrielle K. McDonald 0 0
George A. Mealey 16,000 254,799 (c)(d)
James R. Moffett 56,712 (k) 3,313,162 (c)(d)(k)
George Putnam 1,947,775 (l) 2,047,608 (c)(l)
B.M. Rankin, Jr. 41,912 (m) 886,041 (c)(m)
Benno C. Schmidt 0 718,382 (c)
Wolfgang F. Siegel 0 0
Elwin E. Smith 34,271 (n) 934
Eiji Umene 0 0
J. Taylor Wharton 2,965 (o) 31,484 (o)
Ward W. Woods, Jr. 0 95,865 (c)
27 Directors and
Executive Officers as a
group, including those
persons named above 3,116,712 (p) 8,990,542 (p)
- - - - -----------------------------
(a) Except as otherwise noted, the individuals referred to have sole voting
and investment power with respect to such Shares. With the exceptions
of Mr. Day (who beneficially owns 1.4% of the outstanding Class A Common
Shares), Mr. Moffett (who beneficially owns 2.3% of the outstanding
Freeport-McMoRan Shares), and Mr. Putnam (who beneficially owns 3.0% of
the outstanding Class A Common Shares and 1.5% of the outstanding
Freeport-McMoRan Shares), each of the individuals referred to holds less
than 1% of the outstanding Class A Common Shares and Freeport-McMoRan
Shares, respectively.
(b) Includes 5,503 Class A Common Shares held in trust for the benefit of
Mr. Adkerson, 724 Freeport-McMoRan Shares that may be acquired upon the
conversion of 6.55% Convertible Subordinated Notes due January 15, 2001
of Freeport-McMoRan ("Freeport-McMoRan Notes") held in trust for the
benefit of Mr. Adkerson, 2,682 Freeport-McMoRan Shares that may be
acquired upon the conversion of Zero Coupon Convertible Subordinated
Debentures due 2006 of Freeport-McMoRan ("Freeport-McMoRan Debentures")
held in trust for the benefit of Mr. Adkerson, and 90 Freeport-McMoRan
Shares that may be acquired upon the conversion of Freeport-McMoRan
Notes held in trust for the benefit of the former spouse of Mr. Adkerson.
(c) Includes Freeport-McMoRan Shares that could be acquired within sixty
days after December 31, 1994, upon the exercise of options granted
pursuant to Freeport-McMoRan stock option plans, as follows: Mr.
Adkerson, 186,420 Freeport-McMoRan Shares; Mr. Bruce, 15,132
Freeport-McMoRan Shares; Mr. Coleman, 35,465 Freeport-McMoRan Shares;
Mr. Cunningham, 35,465 Freeport-McMoRan Shares; Mr. Day, 30,343
Freeport-McMoRan Shares; Mr. Goodyear, 186,420 Freeport-McMoRan Shares;
Mr. Kissinger, 25,220 Freeport-McMoRan Shares; Mr. Lackey, 35,465
Freeport-McMoRan Shares; Mr. Latiolais, 332,426 Freeport-McMoRan Shares;
Mr. Mealey, 229,386 Freeport-McMoRan Shares; Mr. Moffett, 1,764,434
Freeport-McMoRan Shares; Mr. Putnam, 35,465 Freeport-McMoRan Shares; Mr.
Rankin, 35,465 Freeport-McMoRan Shares; Mr. Schmidt, 35,465
Freeport-McMoRan Shares; Mr. Woods, 35,465 Freeport-McMoRan Shares; all
Directors and Executive Officers as a group (20 persons), 3,359,000
Freeport-McMoRan Shares.
(d) Includes Freeport-McMoRan Shares held by the trustee under the
Freeport-McMoRan Employee Capital Accumulation Program, as follows: Mr.
Adkerson, 2,735 Freeport-McMoRan Shares; Mr. Goodyear, 2,113
Freeport-McMoRan Shares; Mr. Latiolais, 15,191 Freeport-McMoRan Shares;
Mr. Mealey, 9,513 Freeport-McMoRan Shares; Mr. Moffett, 21,293
Freeport-McMoRan Shares; all Directors and Executive Officers as a group
(8 persons), 77,093 Freeport-McMoRan Shares.
(e) Includes 11,760 Class A Common Shares and 27,762 Freeport-McMoRan Shares
held by three trusts established for the benefit of Mr. Coleman's three
daughters with respect to which Mr. Coleman holds sole voting and
investment power but with respect to which he disclaims beneficial
ownership.
(f) Includes 909,426 Class A Common Shares that may be acquired upon the
conversion of Step-Up Preferred Shares held by accounts and funds
managed by affiliates of a corporation of which Mr. Day is the chief
executive officer and in which he is a stockholder. Mr. Day has shared
voting and investment power with respect to such Shares but disclaims
beneficial ownership thereof. Mr. Day is a beneficiary of a trust that
holds 600,000 Freeport-McMoRan Shares. Mr. Day has no voting or
investment power with respect to such Shares and disclaims beneficial
ownership thereof.
(g) Includes a total of 1,100 Class A Common Shares and a total of 2,478
Class A Common Shares that may be acquired upon the conversion of
Step-Up Preferred Shares held in retirement accounts for the benefit of
Mr. Erdahl.
(h) Includes 64 Freeport-McMoRan Shares held in a retirement trust for the
benefit of Mr. Goodyear.
(i) Includes 1,200 Freeport-McMoRan Shares owned by Mr. Harrison's wife.
(j) Includes 1,434 Freeport-McMoRan Shares held in a retirement trust for
the benefit of Mr. Lackey and 364 Freeport-McMoRan Shares held for the
benefit of Mr. Lackey by the custodian under the Freeport-McMoRan
Automatic Stock Purchase Plan.
(k) Includes a total of 30,102 Class A Common Shares and 85,140
Freeport-McMoRan Shares held for the benefit of two trusts created by
Mr. Moffett for the benefit of his two children, who are adults. An
Executive Officer and another individual, as co-trustees of the two
trusts, have sole voting and investment power with respect to such
Shares held for the benefit of such trusts but have no beneficial
interest therein. Mr. Moffett and such Executive Officer disclaim
beneficial ownership of such Shares held for the benefit of such trusts.
Includes a total of 26,610 Class A Common Shares and 214,648
Freeport-McMoRan Shares held for the benefit of a trust with respect to
which Mr. Moffett and an Executive Officer, as co-trustees of such
trust, have sole voting and investment power but have no beneficial
interest therein. Mr. Moffett and such Executive Officer disclaim
beneficial ownership of such Shares held for the benefit of such trust.
Includes a total of 88,000 Freeport-McMoRan Shares held for the benefit
of a trust created by Mr. Moffett for the benefit of an educational fund
and his two children, who are adults. An Executive Officer and another
individual, as co-trustees of such trust, have sole voting and
investment power with respect to such Freeport-McMoRan Shares held for
the benefit of such trust but have no beneficial interest therein. Mr.
Moffett and such Executive Officer disclaim beneficial ownership of such
Freeport-McMoRan Shares held for the benefit of such trust.
(l) Includes 1,342,730 Class A Common Shares and 1,560,500 Freeport-McMoRan
Shares held by mutual funds with respect to which Mr. Putnam holds
shared voting and investment power but with respect to which he
disclaims beneficial ownership. Includes 605,045 Class A Common Shares
that may be acquired upon the conversion of Step-Up Preferred Shares,
222,847 Freeport-McMoRan Shares that may be acquired upon the conversion
of $4.375 Convertible Exchangeable Preferred Stock of Freeport-McMoRan
("Freeport-McMoRan Preferred Stock"), and 207,858 Freeport-McMoRan
Shares that may be acquired upon the conversion of Freeport-McMoRan
Debentures held by such mutual funds with respect to which Mr. Putnam
holds shared voting and investment power but with respect to which he
disclaims beneficial ownership. Includes 3,230 Freeport-McMoRan Shares
held by a charitable trust with respect to which Mr. Putnam holds as
co-trustee shared voting and investment power but with respect to which
he disclaims beneficial ownership. Includes 2,200 Freeport-McMoRan
Shares held by a trust with respect to which Mr. Putnam holds as
co-trustee shared voting and investment power but with respect to which
he disclaims beneficial ownership. Includes 2,000 Freeport-McMoRan
Shares held by a trust with respect to which Mr. Putnam holds as trustee
sole voting and investment power.
(m) Includes 3,304 Class A Common Shares that may be acquired upon the
conversion of Step-Up Preferred Shares. Includes 32,000 Class A Common
Shares and 348,372 Freeport-McMoRan Shares with respect to which Shares
Mr. Rankin has under a power of attorney sole voting and investment
power but with respect to which he disclaims beneficial ownership.
Includes 6,608 Class A Common Shares that may be acquired upon the
conversion of Step-Up Preferred Shares with respect to which Mr. Rankin
has under powers of attorney sole voting and investment power but with
respect to which he disclaims beneficial ownership.
(n) Includes 21,200 Class A Common Shares held for the benefit of a trust of
which Mr. Smith is the sole beneficiary. Also includes 1,652 Class A
Common Shares that may be acquired upon the conversion of Step-Up
Preferred Shares and 2,219 Class A Common Shares that may be acquired
upon the conversion of Special Preference Shares held in such trust.
As the trustee of such trust, Mr. Smith has sole voting and investment
power with respect to such Shares held for the benefit of such trust.
(o) Includes 420 Class A Common Shares held in a retirement trust for the
benefit of Mr. Wharton, 2,385 Class A Common Shares and 8,930
Freeport-McMoRan Shares held by Mr. Wharton's wife, 160 Class A Common
Shares held in a retirement trust for the benefit of Mr. Wharton's wife,
and a total of 4,736 Freeport-McMoRan Shares held by Mr. Wharton as
custodian for his daughters. Includes Freeport-McMoRan Shares held by
the custodian under the Freeport-McMoRan Automatic Stock Purchase Plan
as follows: 4,192 Freeport-McMoRan Shares for the benefit of Mr.
Wharton, 3,392 Freeport-McMoRan Shares for the benefit of Mr. Wharton's
wife, and a total of 1,940 Freeport-McMoRan Shares for the benefit of
Mr. Wharton as custodian for his daughters.
(p) See notes (b) through (o) above. Includes 8,420 Class A Common Shares
and 1,516 Freeport-McMoRan Shares held in trust for the benefit of one
of the Executive Officers, a total of 2,180 Class A Common Shares and 92
Freeport-McMoRan Shares held by or in trust for the benefit of the
spouse of such Executive Officer as to which beneficial ownership is
disclaimed, and a total of 13,210 Class A Common Shares and 1,000
Freeport-McMoRan Shares held by such Executive Officer as custodian as
to which beneficial ownership is disclaimed. These total numbers
represent approximately 4.8% of the outstanding Class A Common Shares
and approximately 6.3% of the outstanding Freeport-McMoRan Shares,
respectively.
Stock Ownership of Certain Beneficial Owners
According to information furnished by the person known to the
Company to be a beneficial owner of more than 5% of the Class A Common Shares,
the number of Class A Common Shares beneficially owned by such person as of
December 31, 1994, was as follows:
[TO BE UPDATED]
Number of Class
A Common Shares
Beneficially Percent
Name and Address of Person Owned of Class
- - - - ----------------------------------------------------------------------------
J.P. Morgan & Co. Incorporated 10,526,768(a) 16.4%
60 Wall Street
New York, New York 10260
________________________
(a) J.P. Morgan & Co. Incorporated has sole voting power as to 6,545,848 of
such Class A Common Shares, shared voting power as to 99,360 of such
Class A Common Shares, sole investment power as to 10,402,208 of such
Class A Common Shares, and shared investment power as to 124,560 of such
Class A Common Shares. Of such 10,526,768 Class A Common Shares, 384,896
may be acquired upon the conversion of Special Preference Shares and
116,665 may be acquired upon the conversion of Step-Up Preferred Shares.
As of the Record Date, all 141,522,891 Class B Common Shares and
__________ Class A Common Shares were owned by Freeport-McMoRan. Thus, as of
the Record Date, Freeport-McMoRan, which has its principal executive offices
at 1615 Poydras Street, New Orleans, Louisiana 70112, owned directly
____________, or approximately ___%, of all the outstanding Common Shares.
Freeport-McMoRan has sole voting and investment power with respect to all the
Common Shares held of record by it.
According to information furnished by the person known to the
Company to be a beneficial owner of more than 5% of the Step-Up Preferred
Shares, the number of Depositary Shares representing Step-Up Preferred Shares
beneficially owned by such person as of December 31, 1994, was as follows:
[TO BE UPDATED]
Number of
Depositary
Shares
Representing
Step-Up
Preferred
Shares
Beneficially Percent
Name and Address of Person Owned of Class
- - - - ----------------------------------------------------------------------
The TCW Group, Inc. 1,101,000(a) 7.9%
865 South Figueroa Street
Los Angeles, California 90017
________________________
(a) The TCW Group, Inc. has sole voting and investment power as to all
1,101,000 Depositary Shares.
No person is known by the Company to be a beneficial owner of more
than 5% of any other equity security of the Company.
Compliance with the Securities Exchange Act of 1934
According to (i) the Forms 3 and 4 and any amendments thereto
filed pursuant to Section 16(a) of the Exchange Act ("Section 16") and
furnished to the Company during 1994 by persons subject to Section 16 at any
time during 1994 with respect to securities of the Company ("Company Section 16
Insiders"), (ii) the Forms 5 with respect to 1994 and any amendments thereto
filed pursuant to Section 16 and furnished to the Company by Company Section
16 Insiders and (iii) the written representations from Company Section 16
Insiders that no Form 5 with respect to the securities of the Company was
required to be filed by such Company Section 16 Insider, respectively, with
respect to 1994, no Company Section 16 Insider failed to file altogether or
timely any Forms 3, 4 or 5 required by Section 16 with respect to the
securities of the Company or to disclose on such Forms transactions required
to be reported thereon.
As a consequence of the voting rights conferred upon the Preferred
Shares pursuant to the Merger, persons who beneficially own the Preferred
Shares after the Merger may be subject to certain disclosure requirements and
trading limitations under the Exchange Act. Beneficial owners of more than 5%
of the Preferred Shares will be subject to the disclosure requirements and
other provisions of Section 13 of the Exchange Act and the rules promulgated
thereunder with respect to such Preferred Shares. Beneficial owners of more
than 10% of the Preferred Shares will be subject to the disclosure
requirements, trading limitations and other provisions of Section 16 of the
Exchange Act and the rules promulgated thereunder with respect to such
Preferred Shares. Holders of Preferred Shares who may beneficially own more
than 5% of the Preferred Shares after the Merger should consult their legal
advisor to determine whether and the extent to which such Exchange Act
provisions may apply.
Freeport-McMoRan Stock Ownership of Certain of its Beneficial Owners
Upon the Distribution, Freeport-McMoRan will distribute all the
Class B Common Shares to the holders of Freeport-McMoRan Shares on a pro-rata
basis. According to information furnished by each of the persons known to the
Company to be a beneficial owner of more than 5% of Freeport-McMoRan Shares,
the number of Freeport-McMoRan Shares beneficially owned by each of them as of
December 31, 1994, was as follows:
[TO BE UPDATED]
<TABLE>
<S> <C> <C>
Number of
Freeport-McMoRan Shares
Beneficially Percent
Name and Address of Person Owned of Class
- - - - ------------------------------------------------------------------------------
Delaware Management Company, Inc. 8,667,138(a) 6.2%
1818 Market Street
Philadelphia, Pennsylvania 19103
Oppenheimer Group, Inc. 24,600,880(b) 17.6%
Oppenheimer Tower
World Financial Center
New York, New York 10281
The Capital Group, Inc. 13,365,490(c) 9.4%
333 South Hope Street
Los Angeles, California 90071
________________________
(a) Delaware Management Company, Inc. has sole voting power as to
6,007,400 of such Freeport-McMoRan Shares, sole investment power as
to 8,517,138 of such Freeport-McMoRan Shares, shared voting power as
to 51,700 of such Freeport-McMoRan Shares, and shared investment
power as to 150,000 of such Freeport-McMoRan Shares.
(b) Oppenheimer Group, Inc. has, indirectly through subsidiaries, shared
voting and investment power as to all 24,600,880 Freeport-McMoRan
Shares. Oppenheimer Group, Inc. disclaims beneficial ownership of all
24,600,880 Freeport-McMoRan Shares.
(c) The Capital Group, Inc. has, indirectly through five subsidiaries,
sole voting power as to 6,108,580 of such Freeport-McMoRan Shares and
sole investment power as to all 13,365,490 Freeport-McMoRan Shares.
Of such 13,365,490 Freeport-McMoRan Shares, 849,220 may be acquired
upon the conversion of Freeport-McMoRan Preferred Stock, 393,400 may
be acquired upon the conversion of Freeport-McMoRan Notes, and
517,840 may be acquired upon the conversion of Freeport-McMoRan
Debentures. The Capital Group, Inc. disclaims beneficial ownership
of all 13,365,490 Freeport-McMoRan Shares.
INCORPORATION BY REFERENCE
This Consent Solicitation Statement incorporates by reference
the Company's Annual Report on Form 10-K for the fiscal year ended December
31, 1993, the Company's quarterly reports on Form 10-Q for the quarters ended
March 31, June 30 and September 30, 1994, the Company's Current Reports on
Form 8-K dated January 7, 1994 (as amended by the Company's Form 8-K/A dated
April 6, 1994), January 12, 1994, March 2, 1994 (as amended by the Company's
Form 8-K/A dated April 6, 1994) and September 29, 1994, as filed by the
Company with the Commission under the Exchange Act. All documents filed by
the Company pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act
after the date of this Consent Solicitation Statement and prior to the Merger
shall be deemed to be incorporated by reference into this Consent Solicitation
Statement and to be a part hereof from the date of filing of such documents.
Any statement contained in a document incorporated or deemed to
be incorporated by reference herein shall be deemed to be modified or
superseded for purposes hereof to the extent that a statement contained herein
(or in any other subsequently filed document that is or is deemed to be
incorporated by reference herein) modifies or supersedes such previous
statement. Any statement so modified or superseded shall not be deemed to
constitute a part hereof except as so modified or superseded.
All information appearing in this Consent Solicitation
Statement is qualified in its entirety by the information and financial
statements (including notes thereto) appearing in the documents incorporated
herein by reference.
Copies of the above documents (excluding exhibits) may be
obtained upon request without charge from the Company, 1615 Poydras Street,
New Orleans, Louisiana 70112 (telephone (504) 582-4000), attention: Michael C.
Kilanowski, Jr., Secretary.
STOCKHOLDER PROPOSALS
If any stockholder of the Company would like to
present a proposal for action at the Company's 1995 Annual Meeting of
Stockholders and wishes to have such proposal included in the proxy materials
for such meeting, such proposal must be received in writing by the Secretary,
Freeport-McMoRan Copper & Gold Inc., 1615 Poydras Street, New Orleans,
Louisiana 70112, no later than ____________, 1995.
Stockholders are urged to forward their consents without delay.
A prompt response will be greatly appreciated.
ANNEX I
CERTIFICATE OF INCORPORATION
OF
FREEPORT-McMoRan COPPER & GOLD INC.
FIRST: The name of the corporation is Freeport-McMoRan Copper & Gold
Inc.
SECOND: The address of the registered office of the corporation in
the State of Delaware is 1209 Orange Street, in the City of Wilmington, County
of New Castle, and the name of its registered agent at such address is the
Corporation Trust Company.
THIRD: The nature of the business or purposes to be conducted or
promoted are:
(a) To enter into, maintain, operate and carry on the business of
mining in all its branches in the United States of America and in any other
part of the world, and to quarry, mine, pump, extract, remove and otherwise
produce, and to grind, treat, concentrate, smelt, refine, dress and otherwise
prepare, produce, buy, sell and in every way deal in and with minerals, ores,
concentrates and other mineral and chemical substances of all kinds, metallic
and nonmetallic, including, but without in any way limiting the generality of
the foregoing, antimony, barite, chromium, coal, cobalt, copper, gas, gold,
iron, lead, molybdenum, nickel, oil, potash, salt, silica, sand, silver,
sulphur, tantalum, tin, titanium, tungsten, uranium, zinc, and ores and
concentrates thereof.
(b) To purchase, locate, denounce or otherwise acquire, take, hold
and own, and to assign, transfer, lease, exchange, mortgage, pledge, sell or
otherwise dispose of and in any manner deal with and contract with reference
to, mines, wells, mining claims, mining rights, mineral lands, mineral leases,
mineral rights, royalty rights, water rights, timber lands, timber and timber
rights, and real and personal property of every kind, and any interest
therein, in the United States of America or in any other country, to prospect,
explore, work, exercise, develop, manage, operate and turn the same to
account, and to engage in mining, geological, economic, feasibility,
development, and other studies in the United States of America or in any other
country.
(c) To make, manufacture, treat, process, produce, buy, sell and in
every way deal in and with minerals, ores, concentrates and chemicals of every
description, organic or inorganic, natural or synthetic, in the form of raw
materials, intermediate or finished products and any other related products
and substances whatsoever related thereto or of a like or similar nature or
which may enter into the manufacture of any of the foregoing or be used in
connection therewith, and derivatives and by-products derived from the
manufacture thereof and products to be made therefrom and generally without
limitation by reference of the foregoing, all other products and substances of
every kind, character and description.
(d) To engage in any lawful act or activity, whether or not related
to the foregoing, for which corporations may be organized under the General
Corporation Law of Delaware.
FOURTH: (a) Authorized Stock. The total number of shares of capital
stock that the corporation shall have authority to issue is 473,600,000
shares, consisting of 50,000,000 shares of Preferred Stock, par value $0.10
per share, 211,800,000 shares of Class A Common Stock, par value $0.10 per
share, and 211,800,000 shares of Class B Common Stock, par value $0.10 per
share. The Class A Common Stock and the Class B Common Stock are collectively
referred to herein as the "Common Stock". Of the authorized number of shares
of Preferred Stock, 447,800 of such shares shall be a series of Preferred
Stock designated as "7% Convertible Exchangeable Preferred Stock"; 700,000 of
such shares shall be a series of Preferred Stock designated as "Step-Up
Convertible Preferred Stock"; 300,000 of such shares shall be a series of
Preferred Stock designated as "Gold-Denominated Preferred Stock"; 215,279 of
such shares shall be a series of Preferred Stock designated as
"Gold-Denominated Preferred Stock, Series II"; and 119,000 of such shares
shall be a series of Preferred Stock designated as "Silver-Denominated
Preferred Stock" (collectively referred to herein as the "Existing Preferred
Stock").
(b) Common Stock. The Class A Common Stock and the Class B
Common Stock shall be identical in all respects, except as otherwise expressly
provided herein, and the relative powers, preferences, rights, qualifications,
limitations and restrictions of the shares of Class A Common Stock and Class B
Common Stock shall be as follows:
(1) Cash or Property Dividends. Subject to the rights and
preferences of the Preferred Stock as set forth in any resolution or
resolutions of the Board of Directors providing for the issuance of
such stock pursuant to Section (c) of this Article FOURTH, and except
as otherwise provided for herein, the holders of Class A Common Stock
and Class B Common Stock are entitled to receive dividends out of
assets legally available therefor at such times and in such equal per
share amounts as the Board of Directors may from time to time
determine.
(2) Stock Dividends. If at any time a dividend is to be paid
in shares of Class A Common Stock or shares of Class B Common Stock
(a "stock dividend"), such stock dividend may be declared and paid
only as follows: only Class A Common Stock may be paid to holders of
Class A Common Stock and only Class B Common Stock may be paid to
holders of Class B Common Stock, and whenever a stock dividend is
paid, the same rate or ratio of shares shall be paid in respect of
each outstanding share of Class A Common Stock and Class B Common
Stock.
(3) Stock Subdivisions and Combinations. The corporation
shall not subdivide, reclassify or combine stock of either class of
Common Stock without at the same time making a proportionate
subdivision or combination of the other class.
(4) Voting. Voting power shall be divided between the classes
and series of stock as follows:
(A) Subject to Section (b)(4)(B) of this Article
FOURTH, with respect to the election of directors, holders of
Class A Common Stock and holders of Voting Preferred Stock (as
defined below), voting together, shall be entitled to elect that
number of directors which constitutes 20% of the authorized number
of members of the Board of Directors (or, if such 20% is not a
whole number, then the nearest lower whole number of directors
that is closest to 20% of such membership). Each share of Class A
Common Stock and each share of Voting Preferred Stock shall have
one vote in the election of such directors. Subject to Section
(b)(4)(B) of this Article FOURTH, holders of Class B Common Stock
shall be entitled to elect the remaining directors. Each share of
Class B Common Stock shall have one vote in the election of such
directors. For purposes of this Section (b)(4) and Section (b)(5)
of this Article FOURTH, references to the authorized number of
members of the Board of Directors (or the remaining directors)
shall not include any directors which the holders of any shares of
Preferred Stock have the exclusive right to elect as granted in
accordance with Section (c)(6) of this Article FOURTH. For
purposes of this Section (b)(4), "Special Voting Rights" means the
different voting rights of the holders of Class A Common Stock,
holders of Class B Common Stock and holders of Voting Preferred
Stock with respect to the election of the applicable percentage of
the authorized number of members of the Board of Directors as
described in this Section (b)(4)(A). The "Voting Preferred Stock"
means (i) each series of the Existing Preferred Stock, in each
case so long as such series remains outstanding and (ii) any other
series of Preferred Stock upon which the right to vote for
directors pursuant to this Section (b)(4) has been conferred in
accordance with Section (c)(6) of this Article FOURTH.
(B) In the event that a majority of the shares of Class A
Common Stock and Class B Common Stock present and voting at any annual
or special meeting of stockholders of the corporation are voted to
eliminate the Special Voting Rights, then Section (b)(4)(A) of this
Article FOURTH shall have no further force or effect, and thereafter
holders of Common Stock and holders of Voting Preferred Stock, voting
together, shall be entitled to elect all members of the Board of
Directors.
(C) Any director may be removed, with cause, by a vote
of the holders of Class A Common Stock, holders of Class B Common
Stock, and holders of Voting Preferred Stock, voting together.
(D) Except as otherwise specified herein, the holders of
Class A Common Stock and holders of Class B Common Stock (i) shall in
all matters not otherwise specified in this Section (b)(4) or Section
(b)(5) of this Article FOURTH vote together (including, without
limitation, with respect to increases or decreases in the authorized
number of shares of any class of Common Stock), with each share of
Class A Common Stock and Class B Common Stock having one vote, and
(ii) shall be entitled to vote as separate classes only when required
by law to do so under mandatory statutory provisions that may not be
excluded or overridden by a provision in the certificate of
incorporation or as provided herein.
(E) Except as set forth in this Section (b)(4) or
Section (b)(5) of this Article FOURTH, the holders of Class A Common
Stock shall have exclusive voting power (except for any voting powers
of any Preferred Stock) on all matters at any time when no Class B
Common Stock is issued and outstanding, and the holders of Class B
Common Stock shall have exclusive voting power (except for any voting
powers of any Preferred Stock) on all matters at any time when no
Class A Common Stock is issued and outstanding.
(5) Vacancies; Increases or Decreases in Size of the Board of
Directors. Any vacancy in the office of a director created by the
death, resignation or removal of a director elected by (or appointed
on behalf of) the holders of a class or classes of stock may be
filled by a vote of holders of such class of stock, or if applicable,
classes of stock, voting together, unless the Special Voting Rights
have been eliminated in accordance with Section (b)(4)(B) of this
Article FOURTH. Notwithstanding anything in this Section (b)(5) or
Section (b)(4) of this Article FOURTH to the contrary, any vacancy
in the office of a director may also be filled by the vote of the
majority of the directors (or the sole remaining director) elected by
(or appointed on behalf of) the same class or classes of stock that
elected that director (or on behalf of which that director was
appointed) whose death, resignation or removal created the vacancy,
unless there are no such directors or the Special Voting Rights have
been eliminated in accordance with Section (b)(4)(B) of this Article
FOURTH, in which case such vacancy may be filled by the vote of the
majority of the directors or by the sole remaining director,
regardless, in each instance, of any quorum requirements set out in
the by-laws. Any director elected by some or all of the directors or
by the stockholders to fill a vacancy shall hold office for the
remainder of the full term of the director whose vacancy is being
filled and until such director's successor shall have been elected
and qualified unless removed and replaced pursuant to Section
(b)(4)(C) of this Article FOURTH and this Section (b)(5). The Board
may increase the number of directors and any newly-created
directorship so created may be filled by the Board, provided that
(unless the Special Voting Rights have been eliminated in accordance
with Section (b)(4)(B) of this Article FOURTH) the Board may be so
enlarged by the Board only to the extent that 20% (or, if such 20% is
not a whole number, then the nearest lower whole number of directors
that is closest to 20%) of the authorized number of members of the
enlarged Board consists of directors elected by (or appointed on
behalf of) the holders of Class A Common Stock and Voting Preferred
Stock. Any director elected (or appointed) in accordance with the
preceding sentence shall hold office for the remainder of the full
term of the class of directors in which the new directorship was
created and until such director's successor shall have been elected
and qualified unless removed and replaced pursuant to Section
(b)(4)(C) of this Article FOURTH and this Section (b)(5). No
decrease in the number of directors constituting the Board of
Directors shall shorten the term of any incumbent director. If the
number of directors is changed, any increase or decrease shall be
apportioned among the classes of directors established pursuant to
Article FIFTH so as to maintain the number of directors in each class
as nearly equal as possible.
(6) Merger or Reorganization. In case of any
reorganization or any consolidation of the corporation with one or
more other corporations or a merger of the corporation with
another corporation, each holder of a share of Class A Common
Stock shall be entitled to receive with respect to such share the
same kind and amount of shares of stock and other securities and
property (including cash) receivable upon such reorganization,
consolidation or merger by a holder of a share of Class B Common
Stock, and each holder of a share of Class B Common Stock shall be
entitled to receive with respect to such share the same kind and
amount of shares of stock and other securities and property
(including cash) receivable upon such reorganization,
consolidation or merger by a holder of a share of Class A Common
Stock; provided that, in any such transaction, the holders of
shares of Class A Common Stock and the holders of shares of Class
B Common Stock may receive different kinds of shares of stock if
the only difference in such shares is the inclusion of voting
rights which continue the Special Voting Rights.
(7) Liquidation. In the event of any liquidation,
dissolution or winding up of the corporation, the holders of the Class A
Common Stock and Class B Common Stock shall participate equally per share in
any distribution to stockholders, without distinction between classes.
(c) Preferred Stock. The Preferred Stock may be divided into
and issued in series. The Board of Directors is hereby expressly authorized,
at any time or from time to time, to divide any or all of the shares of the
Preferred Stock into series, and in the resolution or resolutions establishing
a particular series, before issuance of any of the shares thereof, to fix and
determine the powers, designations, preferences and relative, participating,
optional or other rights, and any qualifications, limitations or restrictions,
of the series so established, to the fullest extent now or hereafter permitted
by the laws of the State of Delaware, including, but not limited to, the
variations between the different series in the following respects:
(1) The distinctive serial designation of such series;
(2) The annual dividend rate for such series, and the date or
dates from which dividends shall commence to accrue;
(3) The redemption price or prices, if any, for shares of such
series and the terms and conditions on which such shares may be
redeemed;
(4) The sinking fund provisions, if any, for the redemption or
purchase of shares of such series;
(5) The preferential amount or amounts payable upon shares of
such series in the event of the voluntary or involuntary liquidation
of the corporation;
(6) The voting rights of shares of such series;
(7) The terms and conditions, if any, upon which shares of
such series may be converted and the class or classes or series of
shares of the corporation into which such shares may be converted; and
(8) Such other terms, limitations and relative rights and
preferences, if any, of shares of such series as the Board of
Directors may, at the time of such resolutions, lawfully fix and
determine under the laws of the State of Delaware.
All shares of the Preferred Stock shall be of equal rank with
each other, regardless of series.
The number, voting powers, designations, preferences, rights,
qualifications, limitations and restrictions of the 7% Convertible Exchangeable
Preferred Stock shall be as set forth in Exhibit A attached hereto.
The number, voting powers, designations, preferences, rights,
qualifications, limitations and restrictions of the Step-Up Convertible
Preferred Stock shall be as set forth in Exhibit B attached hereto.
The number, voting powers, designations, preferences, rights,
qualifications, limitations and restrictions of the Gold-Denominated Preferred
Stock shall be as set forth in Exhibit C attached hereto.
The number, voting powers, designations, preferences, rights,
qualifications, limitations and restrictions of the Gold-Denominated Preferred
Stock, Series II shall be as set forth in Exhibit D attached hereto.
The number, voting powers, designations, preferences, rights,
qualifications, limitations and restrictions of the Silver-Denominated
Preferred Stock shall be as set forth in Exhibit E attached hereto.
(d) General. (1) Except as otherwise required by law and
except for such voting powers with respect to the election of directors as are
provided for herein for the Existing Preferred Stock or as may be stated in
the resolution or resolutions of the Board of Directors providing for the
issue of any series of Preferred Stock, the holders of any such series of
Preferred Stock shall have no voting power whatsoever. Subject to such
restrictions as may be stated in the resolution or resolutions of the Board of
Directors providing for the issue of any series of Preferred Stock, any
amendment to the Certificate of Incorporation which shall increase or decrease
the authorized stock of any class or classes may be adopted by the affirmative
vote of the holders of a majority of the outstanding shares of the Common
Stock of the corporation irrespective of the provisions of Section 242(b)(2)
of Delaware General Corporation Law.
(2) No holder of stock of any series or class of stock of the
corporation shall as such holder have under this Certificate of Incorporation
any preemptive or preferential right of subscription to any stock of any
series or class of stock of the corporation or to any obligations convertible
into stock of the corporation, issued or sold, or to any right of subscription
to, or to any warrant or option for the purchase of any thereof.
(3) Except as otherwise stated in this Certificate of
Incorporation, the corporation may from time to time issue and dispose of any
of the authorized and unissued shares of Common Stock or of Preferred Stock
for such consideration, not less than its par value, as may be fixed from time
to time by the Board of Directors, without action by the stockholders. The
Board of Directors may provide for payment therefor to be received by the
corporation in cash, property or services rendered. Any and all such shares
of Common Stock or Preferred Stock the issuance of which has been so
authorized, and for which consideration so fixed by the Board of Director has
been paid or delivered, shall be deemed fully paid stock and shall not be
liable to any further call or assessment thereon.
FIFTH: (a) Subject to such rights to elect additional directors
under specified circumstances as may be granted to holders of any shares of
the Preferred Stock pursuant to the provisions of Article FOURTH, the
number of directors of the corporation shall be fixed from time to time by
the Board of Directors but shall not be less than five. The directors,
other than those who may be elected solely by the holders of any class or
series of Preferred Stock, if any, shall be classified, with respect to the
time for which they severally hold office, into three classes, as nearly
equal in number as possible, as determined by the Board of Directors, one
class ("Class I") to hold office initially for a term expiring at the first
annual meeting of stockholders to be held after the date this Certificate
of Incorporation is initially filed with the Delaware Secretary of State
(the ``Initial Filing Date''), another class ("Class II") to hold office
initially for a term expiring at the second annual meeting of stockholders
to be held after the Initial Filing Date, and another class ("Class
III") to hold office initially for a term expiring at the third annual
meeting of stockholders to be held after the Initial Filing Date,
with the members of each class to hold office until their successors are
elected and qualified. Directors elected by a class of stock, or if
applicable, classes of stock voting together, shall be divided as evenly as
possible, as determined by the Board of Directors, among Class I, Class II
and Class III. Notwithstanding the foregoing, each Director initially
appointed on behalf of the Class A Common Stock and Existing Preferred
Stock, shall hold office initially for a term expiring at the first annual
meeting of stockholders to be held after the Initial Filing Date. Subject
to the immediately preceding sentence, at each annual meeting of
stockholders, the successors of the class of directors whose term expires
at that meeting shall be elected to hold office for a term expiring at the
annual meeting of stockholders held in the third year following the year of
their election.
(b) Notwithstanding any other provision of this certificate of
incorporation or any provision of law which might otherwise permit a lesser
vote or no vote, the affirmative vote of the holders of 66 2/3% or more of the
outstanding shares of Common Stock shall be required to amend, alter, change
or repeal this Article FIFTH.(1)
SIXTH:(2) (a) Subject to such rights to act by written consent
under specified circumstances as may be granted to holders of any shares of
the Preferred Stock pursuant to the provisions of Section (c) of Article
FOURTH, no action that is required or permitted to be taken by the
stockholders of the corporation at any annual or special meeting of
stockholders may be effected by written consent of stockholders in lieu of a
meeting of stockholders, unless the action to be effected by written consent
of stockholders and the taking of such action by such written consent have
expressly been approved in advance by the Board of Directors of the
corporation.
(b) Subject to such rights to call special meetings of
stockholders under specified circumstances as may be granted to holders of any
shares of the Preferred Stock pursuant to the provisions of Section (c) of
Article FOURTH, special meetings of the stockholders may be called only by the
Chairman of the Board, the Vice Chairman of the Board or the President of the
corporation, or at the request in writing or by vote of a majority of the
Board of Directors, and not by any other persons. Any request for a special
meeting made by the Board of Directors shall state the purpose or purposes of
the proposed meeting.
(c) Notwithstanding any other provision of this Certificate of
Incorporation or any provision of law which might otherwise permit a lesser
vote or no vote, the affirmative vote of the holders of 66 2/3% or more of the
outstanding shares of Common Stock shall be required to amend, alter, change
or repeal this Article SIXTH.
SEVENTH: In furtherance and not in limitation of the powers
conferred by law, (a) the Board of Directors is expressly authorized to adopt,
amend or repeal the by-laws of the corporation in any manner not inconsistent
with the laws of the State of Delaware or the certificate of incorporation of
the corporation, subject to the power of the stockholders to adopt, amend or
repeal the by-laws or to limit or restrict the power of the Board of Directors
to adopt, amend or repeal the by-laws, and (b) the corporation may in its
by-laws confer powers and authorities upon its Board of Directors in addition
to those conferred upon it by statute.
EIGHTH:(3) The affirmative vote of the holders of not less than 66
2/3% of the outstanding shares of Common Stock shall be required for the
approval or authorization of any Business Combination; provided, however, that
(a) the Board of Directors of the corporation by affirmative
vote which shall include not less than a majority of the entire
number of Continuing Directors (1) has approved in advance the
acquisition of those outstanding shares of Common Stock which
caused the Interested Party to become an Interested Party or (2)
has approved the Business Combination;
(b) the Business Combination is solely between the corporation
and one or more other corporations all of the common stock of each of
which other corporations is owned directly or indirectly by the
corporation or between two or more of such other corporations; or
(c) the Business Combination is a merger or consolidation
and the cash and/or fair market value of the property, securities
or other consideration to be received per share by holders of
Common Stock in the Business Combination is at least equal to the
highest price per share (after giving effect to appropriate
adjustments for any recapitalizations and for any stock splits,
stock dividends and like distributions) paid by the Interested
Party in acquiring any shares of Common Stock on the date when
last acquired or during a period of two years prior thereto.
(d) For purposes of this Article EIGHTH:
(1) The terms "affiliate" and "associate" shall have the
respective meanings assigned to those terms in Rule 12b-2 under
the Securities Exchange Act of 1934, as such Rule was in effect at
[insert date of amendment].
(2) A person shall be deemed to be a "beneficial owner" of any
Common Stock
(A) which such person or any of its affiliates or
associates beneficially owns, directly or indirectly; or
(B) which such person or any of its affiliates or
associates has the right to acquire (whether such right is
exercisable immediately or only after the passage of time),
pursuant to any agreement, arrangement or understanding or upon
the exercise of conversion rights, exchange rights, warrants or
options, or otherwise, or has the right to vote pursuant to any
agreement, arrangement or understanding; or
(C) which are beneficially owned, directly or
indirectly, by any other person with which such person or any
of its affiliates or associates has any agreement, arrangement
or understanding for the purpose of acquiring, holding, voting
or disposing of any shares of Common Stock.
(3) The term "Business Combination" shall mean (A) any
merger or consolidation of the corporation or a subsidiary of the
corporation with or into an Interested Party, (B) any merger or
consolidation of an Interested Party with or into the corporation
or a subsidiary, (C) any sale, lease, exchange, mortgage, pledge,
transfer or other disposition (in one transaction or a series of
transactions) of all or any Substantial Part of the assets either
of the corporation (including without limitation any voting
securities of a subsidiary) or of a subsidiary, in which an
Interested Party is involved, (D) the adoption of any plan or
proposal for the liquidation or dissolution of the corporation
proposed by or on behalf of any Interested Party, (E) the issuance
or transfer (in one transaction or a series of transactions) by
the corporation or a subsidiary of the corporation to an
Interested Party of any securities of the corporation or such
subsidiary, which securities have a fair market value of
$10,000,000 or more, or (F) any recapitalization,
reclassification, merger or consolidation involving the
corporation or a subsidiary of the corporation that would have the
effect of increasing, directly or indirectly, the Interested
Party's voting power in the corporation or such subsidiary.
(4) The term "Interested Party" shall mean and include (A) any
individual, corporation, partnership, trust or other person or entity
which, together with its affiliates and associates, is (or with
respect to a Business Combination was within two years prior thereto)
a beneficial owner of shares aggregating 20% or more of the
outstanding Common Stock or any class thereof, and (B) any affiliate
or associate of any such individual, corporation, partnership, trust
or other person or entity. For the purposes of determining whether a
person is an Interested Party the number of shares deemed to be
outstanding shall include shares deemed beneficially owned through
application of subclause (B) of the foregoing clause (2) but shall
not include any other shares of Common Stock which may be issuable
pursuant to any agreement, arrangement or understanding, or upon
exercise of conversion rights, warrants or options, or otherwise.
(5) The term "Substantial Part" shall mean more than 10% of
the fair market value of the total assets of the particular
corporation.
(6) The term "Continuing Director" shall mean a director
who is not an affiliate of an Interested Party and who was a
member of the Board of Directors of the corporation immediately
prior to the time that the Interested Party involved in a Business
Combination became an Interested Party, and any successor to a
Continuing Director who is not such an affiliate and who is
nominated to succeed a Continuing Director by a majority of the
Continuing Directors in office at the time of such nomination.
(7) For the purposes of Section (c) of this Article EIGHTH,
the term "other consideration to be received" shall include
without limitation Common Stock retained by its existing public
stockholders in the event of a Business Combination in which the
corporation is the surviving corporation.
(e) The provisions of this Article EIGHTH shall be construed
liberally to the end that the consideration paid to holders whose
Common Stock is acquired by an Interested Party in connection with a
Business Combination to which Section (c) of this Article EIGHTH is
applicable shall be not less favorable than that paid to holders of
such Common Stock prior to such Business Combination. Nothing
contained in this Article EIGHTH shall be construed to relieve any
Interested Party from any fiduciary duties or obligations imposed by
law, nor shall anything herein be deemed to supersede any vote of
holders of any series or class of stock other than Common Stock that
shall be required by law, by or pursuant to this certificate of
incorporation or by the by-laws of the corporation.
(f) Notwithstanding any other provisions of this certificate of
incorporation or the by-laws of the corporation and notwithstanding
the fact that a lesser percentage may be specified by law, this
certificate of incorporation or the by-laws of the corporation, the
affirmative vote of the holders of 66 2/3% or more of the shares of
the outstanding Common Stock shall be required to amend or repeal, or
adopt any provisions inconsistent with, this Article EIGHTH.
NINTH: (a) A director of this corporation shall not be liable to the
corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director, except for liability (1) for any breach of the director's
duty of loyalty to the corporation or its stockholders, (2) for acts or
omissions not in good faith or which involve intentional misconduct or a
knowing violation of the law, (3) under Section 174 of the Delaware General
Corporation Law, or (4) for any transaction from which the director derived an
improper personal benefit.
(b) The corporation shall indemnify any person who is or was a
director, officer, employee or agent of the corporation, or is or was serving
at the request of the corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise, to
the fullest extent permitted by applicable law. The determination as to
whether such person has met the standard required for indemnification shall be
made in accordance with applicable law.
Expenses incurred by such a director, officer, employee or
agent in defending a civil or criminal action, suit or proceeding shall be
paid by the corporation in advance of the final disposition of such action,
suit or proceeding upon receipt of an undertaking by or on behalf of such
person to repay such amount if it shall ultimately be determined that he is
not entitled to be indemnified by the corporation as authorized in this
Article NINTH.
(c) The provisions of this Article NINTH shall be deemed to be a
contract between the corporation and each person who serves as such director,
officer, employee or agent of the corporation in any such capacity at any time
while this Article NINTH is in effect. No repeal or modification of the
foregoing provisions of this Article NINTH nor, to the fullest extent
permitted by law, any modification of law shall adversely affect any right or
protection of a director, officer, employee or agent of the corporation
existing at the time of such repeal or modification.
The foregoing indemnification shall not be deemed exclusive of
any other rights to which those seeking indemnification may be entitled under
any applicable law, by-law, agreement, vote of stockholders or disinterested
directors or otherwise.
TENTH: The corporation reserves the right to amend, alter, change or
repeal any provision contained in this certificate of incorporation, in the
manner now or hereafter prescribed by statute, and all rights conferred upon
stockholders herein are granted subject to this reservation.
________________
1 Section (b) of Article FIFTH will only be included in the
Certificate of Incorporation following the Merger if the Corporate
Governance Proposal described in the Consent Solicitation Statement is
adopted.
2 Article SIXTH will only be included in the Certificate of
Incorporation following the Merger if the Corporate Governance Proposal
described in the Consent Solicitation Statement is adopted. If the
Corporate Governance Proposal is not adopted and this Article is
consequently omitted, subsequent Articles hereto will be renumbered
accordingly.
3 Article EIGHTH will only be included in the Certificate of
Incorporation following the Merger if the Corporate Governance Proposal
described in the Consent Solicitation Statement is adopted. If the
Corporate Governance Proposal is not adopted and this Article is
consequently omitted, subsequent Articles hereto will be renumbered
accordingly.
EXHIBIT A - TERMS OF THE 7% CONVERTIBLE EXCHANGEABLE
PREFERRED STOCK
EXHIBIT B - TERMS OF THE STEP-UP CONVERTIBLE PREFERRED STOCK
EXHIBIT C - TERMS OF THE GOLD-DENOMINATED PREFERRED STOCK
EXHIBIT D - TERMS OF THE GOLD-DENOMINATED PREFERRED STOCK,
SERIES II
EXHIBIT E - TERMS OF THE SILVER-DENOMINATED PREFERRED STOCK
EXHIBIT A
TERMS
OF
7% CONVERTIBLE EXCHANGEABLE PREFERRED STOCK
(Par Value $0.10 Per Share)
OF
FREEPORT-McMoRan COPPER & GOLD INC.
The number, voting powers, designations, preferences, rights,
qualifications, limitations and restrictions of the corporation's 7%
Convertible Exchangeable Preferred Stock are as set forth below:
1. Designation. (a) 448,800 shares of Preferred Stock of the
corporation are hereby constituted as a series of Preferred Stock designated
as "7% Convertible Exchangeable Preferred Stock" (hereinafter called "this
Series"). Each share of this Series shall be identical in all respects with
the other shares of this Series except as to the dates from and after which
dividends thereon shall be cumulative. The Board of Directors is authorized
to increase or decrease (but not below the number of shares of this Series
then outstanding) the number of shares of this Series.
(b) Shares of this Series which have been redeemed, converted
into Class A Common Stock, exchanged into Debentures (as hereinafter defined),
as hereinafter provided, or purchased by the corporation shall be canceled,
and shall revert to authorized but unissued Preferred Stock undesignated as to
series, and may be reissued as a part of this Series or may be reclassified
and reissued as part of a new or existing series of Preferred Stock to be
created by resolution or resolutions of the Board of Directors, all subject to
the conditions or restrictions on issuance set forth in any resolution or
resolutions adopted by the Board of Directors providing for the issue of such
series of Preferred Stock.
2. Dividends. (a) The holders of shares of this Series shall
be entitled to receive, but only out of funds legally available therefor, cash
dividends as hereinafter provided. Such dividends shall be paid when, as and
if declared by the Board of Directors on the first day of February, May,
August and November in each year (each such date being referred to herein as a
"Dividend Payment Date") to holders of record on the record date determined by
the Board of Directors in advance of the payment of each particular dividend.
Such dividends shall be cumulative from the date of original issuance of the
shares of this Series.
(b) So long as any shares of this Series shall be outstanding,
the corporation shall not, unless full cumulative dividends for all past
dividend periods shall have been paid or declared and set apart for payment
upon all outstanding shares of this Series and the shares of any other class
or series of Preferred Stock (including the Gold-Denominated Preferred Stock,
the Gold-Denominated Preferred Stock, Series II, the Silver-Denominated
Preferred Stock and the Step-Up Convertible Preferred Stock) and any other
class or series of stock of the corporation ranking, as to dividends, on a
parity with the shares of this Series (the shares of any other class or series
of Preferred Stock and any other class or series of stock of the corporation
ranking as to dividends, on a parity with the shares of this Series being
herein referred to as "Parity Dividend Stock"), (i) declare, pay or set apart
any amounts for dividends on, or make any other distribution in cash or other
property in respect of, the Class A Common Stock of the corporation, the Class
B Common Stock of the corporation or any other stock of the corporation
ranking junior to this Series as to dividends or distribution of assets upon
liquidation, dissolution or winding up of the affairs of the corporation (the
Class A Common Stock, the Class B Common Stock and any such other stock being
herein referred to as "Junior Stock"), other than a dividend payable solely in
Junior Stock, (ii) purchase, redeem or otherwise acquire for value any shares
of Junior Stock, directly or indirectly, other than as a result of a
reclassification, exchange or conversion of one Junior Stock for or into
another Junior Stock, or other than through the use of proceeds of a
substantially contemporaneous sale of other Junior Stock, or (iii) make any
payment on account of, or set aside money for, a sinking or other like fund
for the purchase, redemption or other acquisition for value of any shares of
Junior Stock. For purposes of this Section 2, if any depositary shares have
been issued with respect to any series of stock, actions with respect to such
depositary shares, including acquisition of and payments on or with respect to
such depositary shares, shall be regarded as actions with respect to such
series of stock.
(c) If the funds available for the payment of dividends are
insufficient to pay in full the dividends payable on all outstanding shares of
this Series and shares of Parity Dividend Stock, the total available funds to
be paid in partial dividends on the shares of this Series and shares of Parity
Dividend Stock shall be divided among this Series and the Parity Dividend
Stock in proportion to the aggregate amounts of dividends accrued and unpaid
with respect to this Series and the Parity Dividend Stock. Accruals of
dividends shall not bear interest.
3. Dividend Rate. The Dividend Rate on the shares of this
Series for each Dividend Period shall be $[35.00] per annum. The term
"Dividend Period", as used herein, means, with respect to any Dividend Payment
Date, the period commencing on the day following the immediately preceding
Dividend Payment Date to and including such Dividend Payment Date.
4. Redemption. (a) The shares of this Series shall not be
redeemable prior to August 1, 1995. On and after that date, the corporation
may, at its option, redeem the shares of this Series, in whole or in part, at
any time or from time to time, upon notice given as hereinafter specified, at
the following redemption prices per share if redeemed during the twelve month
period commencing on August 1 of the years indicated:
Year Price
- - - - ---------------------------------- ------------
1995 $[524.50]
1996 [521.00]
1997 [517.50]
1998 [514.00]
1999 [510.50]
2000 [507.00]
2001 [503.50]
and at $[500.00] per share thereafter, plus, in each case, an amount equal to
all accrued and unpaid dividends on the shares being redeemed to and including
the date fixed for such redemption. Notwithstanding any provision of this
Section 4 to the contrary, any accrued and unpaid dividends in respect of
shares of this Series to be redeemed shall be payable to the holder of record
of such shares, as determined on the relevant record date.
(b) Notice of redemption shall be mailed by the corporation by
first class mail, postage prepaid, not less than 30 nor more than 60 days
before the date fixed for redemption, to each transfer agent for the shares of
this Series to be redeemed and to each holder of record of such shares
addressed to such holder at his address shown on the registry books of the
corporation. Such notice of redemption shall set forth the date fixed for
redemption, the number of shares of this Series to be redeemed and, if less
than all of the shares held by such holder are to be redeemed, the number of
shares to be redeemed from such holder, the applicable redemption price and
the place or places (including a place in the Borough of Manhattan, The City
of New York) at which stockholders may obtain payment of such redemption price
plus accrued dividends upon the surrender of the certificates representing
their shares. Failure to mail such notice, or any defect therein or in the
mailing thereof, to any particular holder shall not affect the validity of the
proceeding for the redemption of any shares so to be redeemed from any other
holder.
(c) If less than all the outstanding shares of this Series are
to be redeemed, the number of shares of this Series to be redeemed and the
method of effecting such redemption, whether by lot or pro rata, shall be as
determined by the Board of Directors.
(d) At any time after a notice of redemption has been given in
the manner prescribed herein and prior to the date fixed for redemption, the
corporation may deposit in trust, with a bank or trust company identified in
the notice of redemption having capital, surplus and undistributed profits
aggregating at least $50,000,000, an aggregate amount of funds sufficient for
such redemption (including dividends accrued on the shares of this Series
called for redemption to the date fixed for redemption) for immediate payment
in the appropriate amounts upon surrender of certificates for such shares.
Any interest accrued on such funds shall be paid to the corporation from time
to time. Such deposit in trust shall be irrevocable, except that any funds
deposited by the corporation which shall not be required for the redemption
for which they were deposited because of the exercise of rights of conversion
subsequent to the date of deposit shall be returned to the corporation
forthwith, and any funds deposited by the corporation which are unclaimed at
the end of two years from the date fixed for such redemption shall be paid
over to the corporation upon its request, and upon such repayment the holders
of the shares so called for redemption shall look only to the corporation for
payment of the appropriate amount.
(e) From and after the date fixed for redemption (unless the
corporation shall default in making payment of the amount payable upon such
redemption), whether or not certificates for shares so called for redemption
have been surrendered by the holders thereof as described below, dividends on
the shares of this Series so called for redemption shall cease to accrue, and
from and after the date of the deposit of trust funds for the redemption of
shares of this Series in accordance with the provisions of Section 4(d)
hereof, such shares shall be deemed to be no longer outstanding, and all
rights of the holders thereof as stockholders of the corporation (except the
right to receive from the corporation the amount payable upon such redemption
and, up to the close of business on the date fixed for such redemption, the
right to convert such shares as set forth in Section 7 hereof) shall cease and
terminate. Upon surrender in accordance with the notice of redemption of the
certificates for any shares of this Series so redeemed (properly endorsed or
assigned for transfer if the Board of Directors shall so require and the
notice shall so state), the holder thereof shall be entitled to receive
payment of the redemption price plus an amount equal to all accrued and unpaid
dividends as aforesaid. If less than all of the shares represented by any
such surrendered certificate are redeemed, the corporation shall execute and
deliver to the holder thereof, or to his written order, a certificate or
certificates representing the unredeemed shares.
(f) In no event shall the corporation redeem less than all the
outstanding shares of this Series and shares of any other series of stock of
the corporation ranking, as to dividends and distribution of assets upon
liquidation, dissolution or winding up of the affairs of the corporation, on a
parity with the shares of this Series ("Parity Stock") pursuant to this
Section 4 unless full cumulative dividends for all past dividend periods shall
have been paid or declared and set apart for payment upon all outstanding
shares of this Series and the shares of such Parity Stock.
(g) In connection with any redemption of shares of this
Series, the corporation may enter into an agreement with one or more
investment bankers or other purchasers for the purchase of the shares to be
redeemed from the holders thereof and the conversion of such purchased shares
into shares of Class A Common Stock as provided in Section 7 hereof. Such
agreement shall provide that the amount to be paid by such purchasers to the
holders of the shares of this Series to be redeemed shall not be less than the
redemption price for such shares together with all accrued and unpaid
dividends thereon to and including the date fixed for redemption and may
provide further that such amount be deposited in trust, on or before the close
of business on the date fixed for redemption, with a bank or trust company
designated by the corporation meeting the requirements set forth in Section
4(d) hereof. Notwithstanding anything to the contrary contained in this
Section, the obligation of the corporation to pay the redemption price of the
shares of this Series to be redeemed, together with accrued and unpaid
dividends thereon to the date fixed for redemption, shall be deemed to be
satisfied and discharged to the extent such amount is so paid by such
purchasers. If such an agreement is entered into, any shares of this Series
to be redeemed that have not been duly surrendered for conversion by the
holders thereof may, at the option of the corporation, be deemed, to the
fullest extent permitted by law, acquired by such purchasers from such holders
and (notwithstanding anything to the contrary contained in this subsection (g)
or in Section 7 hereof) surrendered by such purchasers for conversion, all as
of immediately prior to the close of business on the date fixed for
redemption, subject to payment of the above amount as aforesaid.
(h) For purposes of this Section 4, "accrued and unpaid
dividends" in respect of any share of this Series shall mean an amount
computed at the Dividend Rate for this Series from the date on which dividends
on such share became cumulative to and including the date to which such
dividends are to be accrued, less the aggregate amount of all dividends
theretofore paid thereon. The amount accrued subsequent to the most recent
Dividend Period shall be computed by dividing the quarterly dividend payment
by the actual number of days in the uncompleted quarter, and thereafter
multiplying this figure by the number of days in such quarter up to and
including the date to which dividends are to be accrued.
5. Voting Rights. (a) Except for the voting rights described
below and except as otherwise required by law, the holders of shares of this
Series shall not be entitled to vote on any matter or to receive notice of, or
to participate in, any meeting of the stockholders of the corporation.
(b) The shares of this Series shall be entitled to vote with
respect to the election of directors in accordance with Sections I(A)(4) and
II(B)(2) of Article FOURTH of the certificate of incorporation.
(c) Whenever dividends payable on shares of this Series shall
be in default in an aggregate amount equal to or exceeding six full quarterly
dividends on all shares of this Series at the time outstanding, the number of
directors then constituting the Board of Directors of the corporation shall be
increased by two, and holders of shares of this Series shall, in addition to
any other voting rights, have the right, voting separately as a class together
with holders of all other series of stock of the corporation ranking on a
parity with shares of this Series either as to dividends or the distribution
of assets upon liquidation, dissolution or winding up and upon which like
voting rights have been conferred and are exercisable (such other series of
stock being herein referred to as "Other Voting Stock"), to elect such two
additional directors. In such case, the Board of Directors will be increased
by two directors, and the holders of Preferred Stock of such series (either
alone or with the holders of Other Voting Stock) will have the exclusive right
as members of such class, as described above, to elect two directors at the
next annual meeting of stockholders. Whenever such right of the holders of
shares of this Series shall have vested, such right may be exercised initially
either at a special meeting of such holders as provided in Section 5(d) hereof
or at any annual meeting of stockholders held for the purpose of electing
directors, and thereafter at such annual meetings. The right of the holders
of shares of this Series to vote together as a class with the holders of
shares of any Other Voting Stock shall continue until such time as all
dividends accrued on outstanding shares of this Series to the Dividend Payment
Date next preceding the date of any such determination shall have been paid in
full, or declared and set apart in trust for payment, at which time the right
of the holders of shares of this Series so to vote shall terminate, except as
herein or by law expressly provided, subject to revesting upon the occurrence
of a subsequent default of the character mentioned above.
(d) At any time when the right of the holders of shares of
this Series to elect directors as provided in Section 5(c) hereof shall have
vested, and if such right shall not already have been initially exercised, a
proper officer of the corporation, upon the written request of holders of
record of at least 10% of the aggregate number of shares of this Series and
shares of any Other Voting Stock at the time outstanding, addressed to the
Secretary of the corporation, shall call a special meeting of the holders of
shares of this Series and of such Other Voting Stock for the purpose of
electing directors. Such meeting shall be held at the earliest practicable
date upon the same form of notice as is required for annual meetings of
stockholders at the place for the holding of annual meetings of stockholders
of the corporation (or such other suitable place as is designated by such
officer). If such meeting shall not be called by a proper officer of the
corporation within 20 days after personal service of such written request upon
the Secretary of the corporation, or within 20 days after mailing the same
within the United States of America, addressed to the Secretary of the
corporation at its principal office (such mailing to be evidenced by the
registry receipt issued by the postal authorities), then the holders of record
of at least 10% of the aggregate number of shares of this Series and shares of
any Other Voting Stock at the time outstanding may designate in writing one of
their number to call such a meeting at the expense of the corporation, and
such meeting may be called by such person so designated upon the same form of
notice as is required for annual meetings of stockholders and shall be held at
the place for the holding of annual meetings of stockholders of the
corporation (or such other suitable place as is designated by such person).
Any holder of shares of this Series so designated shall have access to the
registry books of the corporation for the purpose of causing a meeting of
stockholders to be called pursuant to this subsection 5(d). Notwithstanding
anything to the contrary contained in this subsection 5(d), no such special
meeting shall be called during the period within 90 days immediately preceding
the date fixed for the next annual meeting of stockholders of the corporation.
(e) At any meeting held for the purpose of electing directors
at which holders of shares of this Series shall have the right, voting
together as a class with holders of shares of any Other Voting Stock to elect
directors as provided in Section 5(c) hereof, the presence, in person or by
proxy, of the holders of 33 1/3% of the aggregate number of shares of this
Series and shares of such Other Voting Stock at the time outstanding shall be
required and be sufficient to constitute a quorum of such class for the
election of directors pursuant to such Section 5(c). At any such meeting or
adjournment thereof, (i) the absence of a quorum of the shares of this Series
and shares of such Other Voting Stock shall not prevent the election of the
directors to be elected otherwise than pursuant to Section 5(c) hereof and
(ii) in the absence of a quorum, either of the shares of this Series and
shares of such Other Voting Stock or of any other shares of stock of the
corporation, or both, a majority of the holders, present in person or by
proxy, of the class or classes of stock which lack a quorum shall have the
power to adjourn the meeting for the election of directors whom they are
entitled to elect, from time to time without notice other than announcement at
the meeting, until a quorum shall be present.
(f) During any period when the holders of shares of this
Series shall have the right to vote together as a class with the holders of
shares of any Other Voting Stock for directors as provided in Section 5(c)
hereof, (i) the directors so elected by such holders shall continue in office
until their successors shall have been elected by such holders or until
termination of the rights of such holders to vote as a class for directors and
(ii) any vacancies in the Board of Directors shall be filled only by a
majority (even if that be only a single director) of the remaining directors
theretofore elected by the holders of the class or classes of stock which
elected the director whose office shall have become vacant. Immediately upon
termination of the right of holders of this Series and any Other Voting Stock
to vote as a class for directors, (i) the term of office of the directors so
elected shall terminate and (ii) the number of directors shall be such number
as may be provided for in the by-laws of the corporation irrespective of any
increase pursuant to the provisions of Section 5(c) hereof.
(g) In addition to any other vote required by law, the
corporation shall not change the preferences, rights or limitations with
respect to this Series, if such action would materially adversely affect the
interests of the holders thereof, without the affirmative vote or consent of
the holders of at least two-thirds of the aggregate number of shares of this
Series at the time outstanding, voting as a separate class; provided, that
nothing herein contained shall require such a class vote in connection with
any increase in the total number of authorized shares of Common Stock (or any
series thereof) or Preferred Stock (or any series thereof), or the creation,
authorization or issuance of any Junior Stock or any series of stock of the
corporation ranking, as to dividends or distribution of assets upon
liquidation, dissolution or winding up of the affairs of the corporation,
prior to or on a parity with the shares of this Series; provided, further,
that no such vote of the holders of shares of this Series shall be required
if, at or prior to the time when the actions described in this subsection 5(g)
shall become effective, provision is made in accordance with Section 4 hereof
for the redemption of all shares of this Series at the time outstanding.
6. Preference upon Liquidation. (a) In the event of any
voluntary or involuntary liquidation, dissolution or winding up of the affairs
of the corporation, after payment or provision for payment of the debts and
other liabilities of the corporation and of dividends and liquidation
preferences in respect of any stock of the corporation ranking senior to the
shares of this Series as to such payments, the holders of shares of this
Series shall be entitled to receive, out of the remaining net assets of the
corporation, the amount of $[500.00] in cash for each share of this Series,
plus an amount equal to all dividends (whether or not earned or declared)
accrued and unpaid on each such share up to the date fixed for distribution,
before any distribution shall be made to or set apart for the holders of any
Junior Stock. If, after payment or provision for payment of the debts and
other liabilities of the corporation and of dividends and liquidation
preferences in respect of any stock of the corporation ranking senior to the
shares of this Series as to such payments, the remaining net assets of the
corporation are not sufficient to pay to the holders of shares of this Series
the full amount of their preference set forth above, then the remaining net
assets of the corporation shall be divided among and paid to the holders of
shares of this Series, holders of shares of any other class or series of
Preferred Stock and holders of shares of any stock of the corporation on a
parity with this Series as to dividends and distribution of assets upon
liquidation, dissolution or winding up of the affairs of the corporation
ratably per share in proportion to the full per share amounts to which they
respectively are entitled. For purposes of this subsection (a) and Section
6(b) hereof, a consolidation or merger of the corporation with one or more
other corporations or the sale of all or substantially all of the assets of
the corporation shall not be deemed to be a voluntary or involuntary
liquidation, dissolution or winding up of the affairs of the corporation.
(b) Subject to the rights of the holders of shares of any
series or class of stock ranking prior to this Series and of the holders of
shares of any stock of the corporation ranking on a parity as to dividends and
distribution of assets upon liquidation, dissolution or winding up of the
affairs of the corporation, after payment shall have been made in full to the
holders of this Series as provided in Section 6(a) hereof and this subsection
(b), the holders of any Junior Stock shall, subject to the respective terms
and provisions (if any) applying thereto, be entitled to receive any and all
assets remaining to be paid or distributed, and shares of this Series shall not
be entitled to share therein.
7. Conversion Privilege. (a) Subject to and upon compliance
with the provisions of this Section 7, at the option of the holder thereof,
each share of this Series may, at any time (unless shares of this Series shall
be called for redemption, then, with respect to shares of this Series so
called, until and including, but, if the corporation shall not default in
making payment of the amount payable on such redemption, not after, the close
of business on the date fixed for redemption), be converted into a number of
fully paid and nonassessable shares of Class A Common Stock equal to the
quotient obtained by dividing $[500.00] by the Conversion Price (as
hereinafter defined) in effect at the Date of Conversion (as hereinafter
defined).
(b) In order to exercise the conversion privilege, any holder
of shares of this Series to be converted shall surrender such shares to the
corporation at any time during usual business hours at the place or places
(including a place in the Borough of Manhattan, The City of New York)
maintained for such purpose, accompanied by a fully executed written notice,
in substantially the form set forth on the reverse of the certificate
representing shares of this Series, that the holder elects to convert such
shares. Such notice shall also state the name or names (with address) in
which the certificate or certificates for shares of Class A Common Stock shall
be issued. Shares of this Series surrendered for conversion shall (if so
required by the corporation) be properly endorsed or assigned for transfer by
the holder or his attorney duly authorized in writing. The holders of shares
of this Series at the close of business on any record date for the payment of
dividends on such shares will be entitled to receive the dividend payable on
such shares on the corresponding Dividend Payment Date notwithstanding the
conversion thereof or the corporation's default in the payment of the dividend
due on such Dividend Payment Date. Shares of this Series surrendered for
conversion during the period from the close of business on any record date for
the payment of dividends on such shares to the opening of business on the
corresponding Dividend Payment Date (except shares called for redemption on a
redemption date during the period from such record date to and including the
Dividend Payment Date) must be accompanied by payment of an amount equal to the
dividend payable on such shares on such Dividend Payment Date. A holder of
shares of this Series on a record date for the payment of dividends on such
shares who converts such shares on a Dividend Payment Date will receive the
dividend payable on such shares by the corporation on such date, and the
converting holder need not include a payment in the amount of any such
dividend upon surrender of such shares for conversion. As promptly as
practicable after the receipt of such notice and the surrender of such shares
of this Series as aforesaid, the corporation shall, subject to the provisions
of Section 10 hereof, issue and deliver at such place or places referred to in
this subsection (b) to such holder, or on his written order, a certificate or
certificates for the number of full shares of Class A Common Stock issuable on
such conversion of shares of this Series in accordance with the provisions of
this Section 7, and cash, as provided in Section 7(c) hereof, in respect of
any fraction of a share of Class A Common Stock otherwise issuable upon such
conversion. Such conversion shall be deemed to have been effected immediately
prior to the close of business on the date (herein called, the "Date of
Conversion") on which such notice shall have been received by the corporation
and such shares of this Series shall have been surrendered as aforesaid, and
the person or persons in whose name or names any certificate or certificates
for shares of Class A Common Stock shall be issuable upon such conversion
shall be deemed to have become on the Date of Conversion the holder or holders
of record of the shares of Class A Common Stock represented thereby; provided,
that any such surrender on any date when the registry books of the corporation
shall be closed shall constitute the person or persons in whose name or names
the certificate or certificates for such shares are to be issued as the record
holder or holders thereof for all purposes at the opening of business on the
next succeeding day on which such registry books are open, but such conversion
shall nevertheless be at the Conversion Price in effect at the close of
business on the date when such shares of this Series shall have been so
surrendered with the conversion notice. In the case of conversion of a
portion, but less than all, of the shares of this Series represented by a
certificate surrendered for conversion, the corporation shall execute, and
deliver to the holder thereof, or on his written order, a certificate or
certificates representing the shares of this Series which the holder has not
elected to convert into shares of Class A Common Stock. No payment or
adjustment shall be made for dividends accrued on the shares of this Series
converted as provided in this Section 7 or for dividends or distributions
accrued on any Class A Common Stock.
(c) No fractions of shares or scrip representing fractions of
shares shall be issued upon conversion of shares of this Series. If more than
one share of this Series shall be surrendered for conversion at one time by
the same holder, the number of full shares of Class A Common Stock which shall
be issuable upon conversion of such shares shall be computed on the basis of
the aggregate number of shares of this Series surrendered for conversion. If
any fraction of a share of Class A Common Stock would, except for the
provisions of this subsection (c), be issuable on the conversion of any shares
of this Series, the corporation shall make payment in lieu thereof in an
amount of United States dollars equal to the value of such fraction computed
on the basis of the closing price of the Class A Common Stock as reported on
the Composite Tape for New York Stock Exchange - Listed Stocks (or if the Class
A Common Stock is not listed or admitted to trading on such exchange on the
Date of Conversion, then on the principal national or regional securities
exchange on which the Class A Common Stock is then listed or admitted to
trading, or, if not listed or admitted to trading on any national or regional
securities exchange, then as reported by the National Association of
Securities Dealers, Inc. through NASDAQ or a similar organization if NASDAQ is
no longer reporting information) on the last Trading Day (as hereinafter
defined) prior to the Date of Conversion or if no such sale takes place on
such day, the last sale price for such day shall be the average of the closing
bid and asked prices regular way on the New York Stock Exchange (or if the
Class A Common Stock is not listed or admitted to trading on such exchange, on
the principal national securities exchange on which the Class A Common Stock
is then listed or admitted to trading, or, if not listed or admitted to
trading on any national securities exchange, the average of the highest bid
and lowest asked prices as reported by the National Association of Securities
Dealers, Inc. through NASDAQ or a similar organization if NASDAQ is no longer
reporting information) (any such last sale price being herein referred to as
the "Last Sale Price"). If on such Trading Day the Class A Common Stock is
not quoted by any such organization, the fair value of such Class A Common
Stock on such day, as determined by the Board of Directors, shall be used.
For the purpose of this subsection (c), the term "Trading Day" shall mean each
Monday, Tuesday, Wednesday, Thursday and Friday, other than any day on which
securities are not traded on such exchange or in such market.
(d) The Conversion Price per share of Class A Common Stock
issuable upon conversion of shares of this Series (herein called the
"Conversion Price") shall initially be $[o] as of _______________, 1994. The
Conversion Price shall be subject to adjustment from time to time as follows:
(i) In case the corporation shall (1) pay a dividend or
make a distribution in shares of Class A Common Stock, (2)
subdivide its outstanding shares of Class A Common Stock into a
greater number of shares or (3) combine its outstanding shares
of Class A Common Stock into a smaller number of shares, the
Conversion Price in effect immediately prior to such action
shall be adjusted so that the holder of any shares of this
Series thereafter surrendered for conversion shall be entitled
to receive the number of shares of Class A Common Stock which
he would have owned or have been entitled to receive
immediately following such action had such shares been converted
immediately prior thereto. An adjustment made pursuant to this
subsection (d)(i) shall become effective immediately, except as
provided in subsection (d)(v) below, after the record date in
the case of a dividend or distribution and shall become
effective immediately after the effective date in the case of a
subdivision or combination.
(ii) In case the corporation shall issue rights,
warrants or options to all holders of Class A Common Stock
entitling them (for a period not exceeding 45 days from the
date of such issuance) to subscribe for or purchase shares of
Class A Common Stock at a price per share less than the Recent
Market Price per share (as determined pursuant to subsection
(d)(iv) below) of the Class A Common Stock on the record date
mentioned below, the Conversion Price shall be adjusted to a
price, computed to the nearest cent, so that the same shall
equal the price determined by multiplying:
(1) the Conversion Price in effect immediately
prior to the date of issuance of such rights or warrants
by a fraction, of which
(2) the numerator shall be (A) the number of
shares of Class A Common Stock outstanding on the date of
issuance of such rights, warrants or options, immediately
prior to such issuance, plus (B) the number of shares
which the aggregate offering price of the total number of
shares so offered for subscription or purchase would
purchase at such Recent Market Price (determined by
multiplying such total number of shares by the exercise
price of such rights, warrants or options and dividing
the product so obtained by such Recent Market Price), and
of which
(3) the denominator shall be (A) the number of
shares of Class A Common Stock outstanding on the date of
issuance of such rights, warrants or options, immediately
prior to such issuance, plus (B) the number of additional
shares of Class A Common Stock which are so offered for
subscription or purchase.
Such adjustment shall become effective immediately, except as
provided in subsection (d)(v) below, after the record date for the
determination of holders entitled to receive such rights, warrants or options.
(iii) In case the corporation shall distribute to
substantially all holders of Class A Common Stock evidences of
indebtedness, equity securities (including equity interests in
the corporation's Subsidiaries (as hereinafter defined)) other
than Class A Common Stock, or other assets (other than cash
dividends paid out of earned surplus of the corporation or, if
there shall be no earned surplus, out of net profits for the
fiscal year in which the dividend is made and/or the preceding
fiscal year), or shall distribute to substantially all holders
of Class A Common Stock rights or warrants to subscribe for
securities (other than those referred to in subsection (d)(ii)
above), then in each such case the Conversion Price shall be
adjusted so that the same shall equal the price determined by
multiplying:
(1) the Conversion Price in effect immediately
prior to the date of such distribution by a fraction, of
which
(2) the numerator shall be the Recent Market Price
per share (as determined as provided in subsection
(d)(iv) below) of the Class A Common Stock on the record
date mentioned below less the then fair market value (as
determined by the Board of Directors, whose determination
shall be conclusive evidence of such fair market value,
and described in a resolution of the Board of Directors
filed with the transfer agent for the shares of this
Series) of the portion of the assets, evidences of
indebtedness and equity securities so distributed or of
such subscription rights or warrants applicable to one
share of Class A Common Stock, and of which
(3) the denominator shall be such Recent Market
Price per share of the Class A Common Stock. Such
adjustment shall become effective immediately, except as
provided in subsection (d)(v) below, after the record
date for the determination of stockholders entitled to
receive such distribution. As used herein, the term
"Subsidiary" means (i) any corporation or other entity of
which securities or other ownership interests having
ordinary voting power to elect a majority of the Board of
Directors or other persons performing similar functions
are at the time directly or indirectly owned by the
corporation or (ii) any partnership of which more than
50% of the partnership interests are owned by the
corporation or any Subsidiary.
(iv) For purposes of any computation under subsections
(d)(ii) and (d)(iii) above, the Recent Market Price per share
of Class A Common Stock on any date shall be deemed to be the
average of the Last Sale Prices of a share of Class A Common
Stock for the five consecutive Trading Days commencing not more
than 20 Trading Days before and ending not later than the
earliest of the date in question and the date before the "ex"
date with respect to the issuance or distribution requiring
such computation. If on any such Trading Day the Class A
Common Stock is not quoted by any organization referred to in
the definition of Last Sale Price in Section 7(c) hereof, the
fair value of the Class A Common Stock on such day, as
determined by the Board of Directors, shall be used. For
purposes of this paragraph, the term "'ex' date", when used
with respect to any issuance or distribution, means the first
date on which the Class A Common Stock trades regular way on
the principal national securities exchange on which the Class A
Common Stock is listed or admitted to trading (or, if not so
listed or admitted, on NASDAQ or a similar organization if
NASDAQ is no longer reporting trading information) without the
right to receive such issuance or distribution.
(v) In any case in which this subsection (d) shall
require that an adjustment be made immediately following a
record date, the corporation may elect to defer the
effectiveness of such adjustment (but in no event until a date
later than the effective time of the event giving rise to such
adjustment), in which case the corporation shall, with respect
to any shares of this Series converted after such record date
and before such adjustment shall have become effective (1)
defer paying any cash payment pursuant to Section 7(c) hereof
or issuing to the holder of shares of this Series the number of
shares of Class A Common Stock issuable upon conversion in
excess of the number of shares of Class A Common Stock issuable
thereupon only on the basis of the Conversion Price prior to
adjustment and (2) not later than five business days after such
adjustment shall have become effective, pay to such holder the
appropriate cash payment pursuant to Section 7(c) hereof and
issue to such holder the additional shares of Class A Common
Stock and other capital stock of the corporation issuable on
such conversion.
(vi) No adjustment in the Conversion Price shall be
required unless such adjustment would require an increase or
decrease of at least 1% in the Conversion Price; provided, that
any adjustments which by reason of this subsection (d)(vi) are
not required to be made shall be carried forward and taken into
account in any subsequent adjustment. All calculations under
this Section 7 shall be made to the nearest cent or to the
nearest one-hundredth of a share, as the case may be.
(vii) Whenever the Conversion Price is adjusted as herein
provided, the corporation shall promptly (1) file with the
transfer agent for the shares of this Series a certificate of
an officer of the corporation (an "Officer's Certificate")
setting forth the Conversion Price after such adjustment and
setting forth in reasonable detail the facts requiring such
adjustment and the calculations on which the adjustment is
based, which certificate shall be conclusive evidence of the
correctness of such adjustment and (2) mail or cause to be
mailed a notice of such adjustment to each holder of shares of
this Series at his address as the same appears on the registry
books of the corporation.
Notwithstanding anything in this Section 7 to the contrary, the corporation
shall be entitled to make such reductions in the Conversion Price, in addition
to those required by this Section 7, as it in its discretion shall determine
to be advisable in order that any stock dividend, subdivision or combination
of shares, distribution of rights or warrants to purchase stock or securities,
distribution of securities convertible into or exchangeable for stock, or
distribution of assets (other than cash dividends) hereafter made by the
corporation to its stockholders shall not be taxable.
(e) In case of any reclassification or change of outstanding
shares of Class A Common Stock (other than a change in par value, or from par
value to no par value, or from no par value to par value, or as a result of a
subdivision or combination), or in case of any consolidation of the
corporation with, or merger of the corporation into, any other Person, or any
merger of another Person into the corporation (other than a merger which does
not result in any reclassification, change, conversion, exchange or
cancellation of outstanding shares of Class A Common Stock) or any sale or
transfer of all or substantially all of the assets of the corporation, the
corporation, or the Person formed by such consolidation or resulting from such
merger or which acquires such assets, as the case may be, shall make effective
provision in the articles or certificate of incorporation, providing that the
holder of each share of this Series then outstanding shall have the right
thereafter to convert such share only into the kind and amount of securities,
cash and other property receivable upon such reclassification, change,
consolidation, merger, sale or transfer, by a holder of the number of shares
of Class A Common Stock into which such shares of this Series might have been
converted immediately prior to such reclassification, change, consolidation,
merger, sale or transfer, assuming such holder of Class A Common Stock of the
corporation (i) is not a Person with which the corporation consolidated or
into which the corporation merged or which merged into the corporation or to
which such sale or transfer was made, as the case may be ("constituent
Person"), or an Affiliate (as hereinafter defined) of a constituent Person and
(ii) failed to exercise his rights of election, if any, as to the kind or
amount of securities, cash and other property receivable upon such
reclassification, change, consolidation, merger, sale or transfer (provided
that if the kind or amount of securities, cash and other property receivable
upon such reclassification, change, consolidation, merger, sale or transfer is
not the same for each share of Class A Common Stock of the corporation held
immediately prior to such reclassification, change, consolidation, merger,
sale or transfer by others than a constituent Person or an Affiliate thereof
and in respect of which such rights of election shall not have been exercised
("non-electing share"), then for the purpose of this subsection (e) the kind
and amount of securities, cash and other property receivable upon such
reclassification, change, consolidation, merger, sale or transfer by each
non-electing share shall be deemed to be the kind and amount so receivable per
share by a plurality of the non-electing shares). Such articles or
certificate of incorporation shall provide for adjustments which, for events
subsequent to the effective date of such articles or certificate of
incorporation, shall be as nearly equivalent as may be practicable to the
adjustments provided for herein. The above provisions of this subsection (e)
shall similarly apply to successive reclassifications, changes,
consolidations, mergers, sales or transfers.
For the purpose of this subsection (e), the term "Person" means
any individual, corporation, partnership, joint venture, trust, unincorporated
organization or government or any agency or political subdivision thereof, and
the term "Affiliate" of any specified Person means any other Person directly
or indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of the definition of
"Affiliate", the term "control" when used with respect to any specified Person
means the power to direct the management and policies of such Person, directly
or indirectly, whether through the ownership of voting securities, by contract
or otherwise; and the terms "controlling" and "controlled" have meanings
correlative to the foregoing.
(f) The corporation shall reserve, free from preemptive
rights, out of its authorized but unissued shares, sufficient shares of Class
A Common Stock to provide for the conversion of the shares of this Series from
time to time outstanding as such shares of this Series are presented for
conversion.
(g) The corporation covenants that all shares of Class A Common
Stock which may be issued upon conversion of shares of this Series will upon
issue be duly and validly issued, fully paid and nonassessable by the
corporation and except as provided in Section 10 hereof free from all taxes,
liens and charges with respect to the issue thereof.
8. Exchange. (a) The shares of this Series are exchangeable
in whole, but not in part, at the option only of the corporation on any
Dividend Payment Date for the corporation's 7% Convertible Subordinated
Debentures Due 2007 issued under the Subordinated Indenture dated as of July
21, 1992, as amended (the "Indenture"), between the corporation and Chemical
Bank, as trustee, (the "Debentures"); provided that on or prior to the date of
exchange the corporation shall have paid to or declared and set aside for
payment to the holders of outstanding shares of this Series all accrued and
unpaid dividends on shares of this Series through the Exchange Date (as
hereinafter defined). The holders of shares of this Series will be entitled
to receive $[500.00] principal amount of Debentures in exchange for each share
of this Series held by them at the time of exchange. The corporation will mail
to each holder of record of the shares of this Series written notice of its
intention to exchange not less than 30 nor more than 60 days prior to the date
fixed for the exchange (the "Exchange Date"). Each such notice shall state:
(i) the Exchange Date, (ii) the place or places where certificates for shares
of this Series are to be surrendered for exchange into Debentures and (iii)
that dividends on the shares of this Series to be exchanged will cease to
accrue on the Exchange Date. Prior to giving notice of intention to exchange,
the corporation shall execute and deliver with a bank or trust company
selected by the corporation an Indenture in substantially the form filed as an
exhibit to the Registration Statement on Form S-3 (Registration No. 33-45787)
filed with the Securities and Exchange Commission (the "Commission") on
February 18, 1992, as amended as declared effective by the Commission on June
26, 1992 referred to above with such changes as may be required by law or
usage. The corporation will cause the Debentures to be authenticated on the
Dividend Payment Date on which the exchange is effective, and will pay
interest on the Debentures at the rate and on the dates specified in such
Indenture from the Exchange Date.
(b) The corporation will not give notice of its intention to
exchange under Section 8(a) hereof unless it shall file at the place or places
(including a place in the Borough of Manhattan, The City of New York)
maintained for such purpose an opinion of counsel (who may be an employee of
the corporation) to the effect that (i) the Indenture has been duly
authorized, executed and delivered by the corporation, has been duly qualified
under the Trust Indenture Act of 1939 (or that such qualification is not
necessary) and constitutes a valid and binding instrument enforceable against
the corporation in accordance with its terms (subject, as to enforcement, to
bankruptcy, insolvency, reorganization and other laws of general applicability
relating to or affecting creditors' rights and to general equity principles,
and subject to such other qualifications as are then customarily contained in
opinions of counsel experienced in such matters), (ii) the Debentures have
been duly authorized and, when executed and authenticated in accordance with
the provisions of the Indenture and delivered in exchange for the shares of
this Series, will constitute valid and binding obligations of the corporation
entitled to the benefits of the Indenture (subject as aforesaid), (iii)
neither the execution nor delivery of the Indenture or the Debentures nor
compliance with the terms, conditions or provisions of such instruments will
result in a breach or violation of any of the terms or provisions of, or
constitute a default under, any indenture, mortgage, deed of trust or
agreement or instrument, known to such counsel to which the corporation or any
of its Subsidiaries is a party or by which it or any of them is bound, or any
decree, judgment, order, rule or regulation, known to such counsel, of any
court or governmental agency or body having jurisdiction over the corporation
and such Subsidiaries or any of their properties, and (iv) the Debentures have
been duly registered for such exchange with the Securities and Exchange
Commission under a registration statement that has become effective under the
Securities Act of 1933 (the "Act") or that the exchange of the Debentures for
the shares of this Series is exempt from registration under the Act.
(c) If notice has been mailed as aforesaid, from and after the
Exchange Date (unless the corporation shall default in issuing Debentures in
exchange for shares of this Series or in making or providing for the payment
of accrued and unpaid dividends on the outstanding shares of this Series to
the Exchange Date) dividends on the shares of this Series shall cease to
accrue, and such shares shall be deemed to be no longer outstanding, and all
rights of the holders thereof as stockholders of the corporation shall cease
and terminate. Upon surrender in accordance with said notice of the
certificates for shares of this Series so exchanged (properly endorsed or
assigned for transfer if the Board of Directors shall so require and the
notice shall so state), such shares shall be exchanged by the corporation into
Debentures as aforesaid.
9. Notice of Certain Events. In case:
(a) the corporation shall declare a dividend (or any other
distribution) payable to the holders of Class A Common Stock (otherwise than
cash dividends paid out of the earned surplus of the corporation or, if there
shall be no earned surplus, out of net profits for the fiscal year in which
the dividend is made and/or the preceding fiscal year, and dividends payable
in Class A Common Stock); or
(b) the corporation shall authorize the granting to the
holders of Class A Common Stock of rights to subscribe for or purchase any
shares of stock of any class or of any other rights or warrants; or
(c) the corporation shall authorize any reclassification or
change of the Class A Common Stock (other than a subdivision or combination of
its outstanding shares of Class A Common Stock or a change in par value, or
from par value to no par value, or from no par value to par value), or any
consolidation, merger or share exchange to which the corporation is a party
and for which approval of any stockholders of the corporation is required, or
the sale or conveyance of all or substantially all the property or business of
the corporation; or
(d) there shall be proposed any voluntary or involuntary
dissolution, liquidation or winding-up of the corporation; then, the
corporation shall cause to be filed at the place or places maintained for the
purpose of conversion of shares of this Series as provided in Section 7(b)
hereof, and shall cause to be mailed to each holder of shares of this Series,
at his address as it shall appear on the registry books of the corporation, as
promptly as possible but in any event at least 20 days before the date
hereinafter specified (or the earlier of the dates hereinafter specified, in
the event that more than one date is specified), a notice stating the date on
which (i) a record is expected to be taken for the purpose of such dividend,
distribution, rights or warrants, or if a record is not to be taken, the date
as of which the holders of Class A Common Stock of record to be entitled to
such dividend, distribution, rights or warrants are to be determined, or (ii)
such reclassification, change, consolidation, merger, share exchange, sale,
transfer, conveyance, dissolution, liquidation or winding-up is expected to
become effective and the date, if any is to be fixed, as of which it is
expected that holders of Class A Common Stock of record shall be entitled to
exchange their shares of Class A Common Stock for securities or other property
deliverable upon such reclassification, change, consolidation, merger, share
exchange, sale, transfer, conveyance, dissolution, liquidation or winding-up.
10. Taxes. The corporation will pay any and all documentary,
stamp or similar taxes payable to the United States of America or any
political subdivision or taxing authority thereof or therein in respect of the
issue or delivery of (a) certificates for shares of this Series on redemption
of less than all of the shares represented by any certificate for such shares
surrendered for redemption or (b) certificates for shares of Class A Common
Stock on conversion of shares of this Series pursuant to Section 7 hereof;
provided, that the corporation shall not be required to pay any tax which may
be payable in respect of any transfer involved in the issue or delivery of
certificates for shares of this Series or Class A Common Stock, as the case
may be, in a name other than that of the holder of shares of this Series to be
redeemed or converted and no such issue or delivery shall be made unless and
until the person requesting such issue or delivery has paid to the corporation
the amount of any such tax or has established, to the satisfaction of the
corporation, that such tax has been paid. The corporation extends no
protection with respect to any other taxes imposed in connection with such
redemption or conversion of shares of this Series.
11. No Other Rights. The shares of this Series shall not have
any relative, participating, optional or other special rights and powers
other than as set forth herein and other than any which may be provided by
law.
12. Miscellaneous. Capitalized terms which are defined in
this Exhibit are defined only for the purposes of this Exhibit, and not for
the purposes of other Exhibits to the certificate of incorporation. Unless
otherwise indicated, section references contained in this Exhibit refer to the
corresponding sections of this Exhibit.
EXHIBIT B
TERMS
OF
STEP-UP CONVERTIBLE PREFERRED STOCK
(Par Value $0.10 Per Share)
OF
FREEPORT-McMoRan COPPER & GOLD INC.
The number, voting powers, designations, preferences, rights,
qualifications, limitations and restrictions of the corporation's Step-Up
Convertible Preferred Stock are as set forth below:
1. Designation. (a) 700,000 shares of Preferred Stock of the
corporation are hereby constituted as a series of Preferred Stock designated
as "Step-Up Convertible Preferred Stock" (hereinafter called "this Series").
Each share of this Series shall be identical in all respects with the other
shares of this Series except as to the dates from and after which dividends
thereon shall be cumulative. The Board of Directors is authorized to increase
or decrease (but not below the number of shares of this Series then
outstanding) the number of shares of this Series.
(b) Shares of this Series which have been converted into Class A
Common Stock of the corporation, redeemed for cash, Class A Common Stock or a
combination thereof, as hereinafter provided, or purchased by the corporation
shall be canceled, and shall revert to authorized but unissued shares of
Preferred Stock undesignated as to series, and may be reissued as a part of
this Series or may be reclassified and reissued as part of a new or existing
series of Preferred Stock to be created by resolution or resolutions of the
Board of Directors, all subject to the conditions or restrictions on issuance
set forth in any resolution or resolutions adopted by the Board of Directors
providing for the issue of such series of Preferred Stock.
2. Dividends. (a) The holders of shares of this Series shall be
entitled to receive, but only out of funds legally available therefor, cash
dividends as hereinafter provided. Such dividends shall be paid when, as and
if declared by the Board of Directors on the first day of February, May,
August and November in each year (each such date being referred to herein as a
"Dividend Payment Date") to holders of record on the record date determined by
the Board of Directors in advance of the payment of each particular dividend.
Such dividends shall be cumulative from the date of original issuance of the
shares of this Series.
(b) So long as any shares of this Series shall be outstanding,
the corporation shall not, unless full cumulative dividends for all past
dividend periods shall have been paid or declared and set apart for payment
upon all outstanding shares of this Series and the shares of any other class
or series of Preferred Stock (including the Gold-Denominated Preferred Stock,
the Gold-Denominated Preferred Stock, Series II, the Silver-Denominated
Preferred Stock and the 7% Convertible Exchangeable Preferred Stock) and any
other class or series of stock of the corporation ranking, as to dividends, on
a parity with shares of this Series (the shares of any other class or series
of Preferred Stock and any other class or series of stock of the corporation
ranking, as to dividends, on a parity with shares of this Series being herein
referred to as "Parity Dividend Stock"), (i) declare, pay or set apart any
amounts for dividends on, or make any other distribution in cash or other
property in respect of, the Class A Common Stock of the corporation, Class B
Common Stock of the corporation or any other stock of the corporation ranking
junior to this Series as to dividends or distribution of assets upon
liquidation, dissolution or winding up of the affairs of the corporation (the
Class A Common Stock, the Class B Common Stock and any such other stock being
herein referred to as "Junior Stock"), other than a dividend payable solely in
Junior Stock, (ii) purchase, redeem or otherwise acquire for value any shares
of Junior Stock, directly or indirectly, other than as a result of a
reclassification, exchange or conversion of one Junior Stock for or into
another Junior Stock, or other than through the use of proceeds of a
substantially contemporaneous sale of other Junior Stock, or (iii) make any
payment on account of, or set aside money for, a sinking or other like fund
for the purchase, redemption or other acquisition for value of any shares of
Junior Stock. For purposes of this Section 2, if any depositary shares have
been issued with respect to any series of stock, actions with respect to such
depositary shares, including acquisition of and payments on or with respect to
such depositary shares, shall be regarded as actions with respect to such
series of stock.
(c) If the funds available for the payment of dividends are
insufficient to pay in full the dividends payable on all outstanding shares of
this Series and shares of Parity Dividend Stock, the total available funds to
be paid in partial dividends on the shares of this Series and shares of Parity
Dividend Stock shall be divided among this Series and the Parity Dividend
Stock in proportion to the aggregate amounts of dividends accrued and unpaid
with respect to this Series and the Parity Dividend Stock. Accruals of
dividends shall not bear interest.
3. Dividend Rate. The Dividend Rate on the shares of this Series
for the period from the date of original issue thereof to and including August
1, 1996, shall be $25.00 per annum per share and for each Dividend Period
thereafter shall be $35.00 per annum per share. The term "Dividend Period",
as used herein, means, with respect to any Dividend Payment Date, the period
commencing on the day following the immediately preceding Dividend Payment
Date to and including such Dividend Payment Date.
4. Redemption. (a) The shares of this Series shall not be
redeemable prior to August 1, 1996. On and after that date, the corporation
may, at its option, redeem the shares of this Series, in whole or in part, at
any time or from time to time, as set forth herein, subject to the provisions
described below.
(b)(i) The shares of this Series may be redeemed for Class A
Common Stock, at the option of the corporation, at any time on or after August
1, 1996 and prior to August 1, 1999 only if, for 20 Trading Days within any
period of 30 consecutive Trading Days, including the last Trading Day of such
period, the Current Market Price of the Class A Common Stock on each of such
20 Trading Days exceeds 125% of the Conversion Price in effect on such Trading
Day. In order to exercise this redemption option, the corporation must issue
a press release announcing the redemption (the "Press Release") prior to the
opening of business on the third Trading Day after the condition in the
preceding sentence has been met but in no event prior to August 1, 1996. The
Press Release shall announce the redemption and set forth the number of shares
of this Series which the corporation intends to redeem. The corporation may
redeem shares of this Series pursuant to this Section subsection(b) only if
the Class A Common Stock is listed or admitted to trading on a national or
regional securities exchange in the United States or reported by the National
Association of Securities Dealers Automated Quotation System ("NASDAQ").
(ii) Upon redemption of shares of this Series by the corporation
in accordance with Section 4(b)(i) hereof on the date specified in the notice
to holders required under Section 4(b)(iii) hereof (the "Redemption Date"),
each share of this Series so redeemed shall be redeemed for a number of shares
of Class A Common Stock equal to $500.00 divided by the Conversion Price as of
the opening of business on the Redemption Date. The Redemption Date shall be
selected by the corporation, shall be specified in the notice of redemption
and shall be not less than 15 days or more than 60 days after the date on which
the corporation issues the Press Release.
Upon any redemption of this Series for Common Stock pursuant to
this subsection (b), the corporation shall pay any accrued and unpaid
dividends for any Dividend Period ending on or prior to the Redemption Date.
If a Redemption Date falls after a dividend payment record date and prior to
the corresponding Dividend Payment Date, then each holder of shares of this
Series at the close of business on such dividend payment record date shall be
entitled to the dividend payable on such shares on the corresponding Dividend
Payment Date notwithstanding the redemption of such shares before such
Dividend Payment Date. In the case of any Redemption Date occurring prior to
the record date for the November 1, 1996 Dividend Payment Date, the holders of
the shares of this Series to be redeemed on such Redemption Date shall be
entitled to any accrued and unpaid dividends through August 1, 1996 but not
thereafter. Except as provided above, the corporation shall make no payment
or allowance for unpaid dividends, whether or not in arrears, on shares of
this Series called for redemption under this subsection (b) for Class A Common
Stock or on the shares of Class A Common Stock issued upon such redemption.
(iii) If the corporation elects to redeem shares of this Series
pursuant to Section 4(b)(i) hereof, notice of such redemption shall be given
not more than four Business Days after the date on which the corporation
issues the Press Release, to each holder of record of the shares to be
redeemed. Such notice shall be provided by first class mail, postage prepaid,
at such holder's address as the same appears on the stock records of the
corporation, and shall state, as appropriate: (1) the Redemption Date; (2)
the number of shares of this Series (expressed in one-twentieths of a share of
this Series) to be redeemed and, if fewer than all the shares held by such
holder are to be redeemed, the number of such shares (expressed in
one-twentieths of a share of this Series) to be redeemed from such holder; (3)
the number of shares of Class A Common Stock to be issued with respect to each
one-twentieth of a share of this Series; (4) the place or places at which
certificates for such shares are to be surrendered for certificates
representing shares of Class A Common Stock; and (5) the date on which
dividends on the shares to be redeemed shall cease to accrue as provided
herein. Failure to mail such notice, or any defect therein or in the mailing
thereof, to any particular holder shall not affect the validity of the
proceeding for the redemption of any shares so to be redeemed from any other
holder.
At the close of business on the Redemption Date, each holder of
shares of this Series to be redeemed (unless the corporation defaults in the
delivery of the shares of Class A Common Stock or cash payable on such
Redemption Date) shall be deemed to be the record holder of the number of
shares of Class A Common Stock into which such shares of this Series are to be
redeemed, regardless of whether such holder has surrendered the certificates
representing such holder's shares of this Series that have been redeemed. As
promptly as practicable after the surrender in accordance with said notice of
the certificates for any such shares so redeemed (properly endorsed or
assigned for transfer, if the corporation shall so require and the notice
shall so state), such shares shall be exchanged for certificates of shares of
Class A Common Stock and any cash (without interest thereon) for which such
shares have been redeemed.
(c)(i) At any time on or after August 1, 1999, the shares of this
Series may be redeemed, in whole or in part, at the option of the corporation
at a redemption price of $500.00 per share, plus an amount equal to all
accrued and unpaid dividends to and including the date fixed for redemption.
The corporation may, except as provided below, pay the redemption price in
cash, Class A Common Stock or any combination thereof; provided that the
corporation may elect to pay the redemption price in whole or in part in Class
A Common Stock only if the Class A Common Stock is listed or admitted to
trading on a national or regional securities exchange in the United States or
reported by NASDAQ; and provided, further that any accrued and unpaid
dividends must be paid in cash.
(ii) At least 15 days but no more than 60 days prior to the date
fixed for the redemption of the shares of this Series in accordance with
Section 4(c)(i) hereof (the "Call Date"), a written notice will be mailed to
each holder of record (and each beneficial owner to the extent required by
law) of shares of this Series to be redeemed, notifying such holder of the
corporation's election to redeem such shares, stating the Call Date, stating
the corporation's election with respect to whether the payment of the
redemption price is to be made in cash, Class A Common Stock or a combination
thereof, and calling upon such holder to surrender to the corporation on the
Call Date at the place designated in such notice the certificate or
certificates representing the shares called for redemption. On or after the
Call Date, each holder of shares of this Series to be redeemed must present
and surrender his certificate or certificates for such shares to the
corporation at the place designated in such notice and thereupon the
redemption price of such shares, in the manner elected by the corporation,
will be paid and/or delivered to or on the order of the person whose name
appears on such certificate or certificates as the owner thereof and each
surrendered certificate will be canceled. Except as provided in Section
4(c)(iv) hereof, the corporation may not change the form of consideration (or
components or percentages of components thereof) to be paid by the corporation
in respect of such redemption once the corporation has given, or caused to be
given, the applicable redemption notice. At the close of business on the
Redemption Date, each holder of shares of this Series to be redeemed (unless
the corporation defaults in the delivery of the shares of Class A Common Stock
or cash payable on such Redemption Date) shall be deemed to be the record
holder of the number of shares of Class A Common Stock into which such shares
of this Series are to be redeemed, regardless of whether such holder has
surrendered the certificates representing such holder's shares of this Series
that have been redeemed, dividends on the shares of this Series so redeemed
shall cease to accrue, such shares shall be deemed to be no longer
outstanding, and all rights of the holders thereof as holders of shares of
this Series shall cease and terminate.
(iii) If the corporation elects to pay the redemption price by
the delivery of Class A Common Stock, in whole or in part, the number of
shares to be delivered in respect of the specified percentage of the
redemption price to be paid in Class A Common Stock shall be equal to the
dollar amount of such specified percentage of the redemption price divided by
the Market Price of a share of Class A Common Stock.
(iv) If the Market Price of the Class A Common Stock is less than
90 per cent of the Weighted Average Price of the Class A Common Stock over the
five Trading Days immediately prior to the date of the notice of redemption
provided for in Section 4(c)(ii) hereof, the corporation, at its option, may
elect to pay the entire redemption price on such Call Date in cash, rather
than in whole or in part with the shares of Class A Common Stock specified in
the notice of redemption; provided that, if the corporation so elects to pay
the entire redemption price in cash, the payment thereof shall be deferred
until as of the tenth Business Day following publication of the notice of such
election (the "Adjourned Call Date"), and in such event the corporation shall
pay, in addition to the redemption price, all accrued and unpaid dividends on
the shares of this Series to be redeemed through the Adjourned Call Date.
Upon determination of the actual number of shares of Class A Common Stock
issuable in accordance with the foregoing provisions, the corporation will
publish such determination (and, if it is entitled to and so elects,
notification of any exercise of the election provided for in the preceding
sentence, of the Adjourned Call Date) promptly in The Wall Street Journal or
another daily newspaper of national circulation.
(d) No fractional shares or scrip representing fractions of
shares of Class A Common Stock shall be issued upon redemption of this Series.
Instead of any fractional interest in a share of Class A Common Stock that
would otherwise be deliverable upon the redemption of a share of this Series,
the corporation shall pay to the holder of such share an amount in cash
(computed to the nearest cent) based upon the Market Price of Class A Common
Stock. If more than one share shall be surrendered for redemption at one time
by the same holder, the number of full shares of Class A Common Stock issuable
upon redemption thereof shall be computed on the basis of the aggregate number
of shares of this Series so surrendered.
(e) The corporation covenants that any shares of Class A Common
Stock issued upon redemption of this Series shall be duly and validly issued,
fully paid and non-assessable, shall be issued from its authorized but
unissued shares and, except as provided in Section 9 hereof, will be free from
all taxes, liens and charges with respect to the issue thereof. The
corporation shall endeavor to list the shares of Class A Common Stock required
to be delivered upon redemption of this Series, prior to such redemption, upon
each national securities exchange, if any, upon which the outstanding Class A
Common Stock is listed at the time of such delivery. The corporation shall
endeavor to take any action necessary to ensure that any shares of Class A
Common Stock issued upon the redemption of this Series are freely transferable
and not subject to any resale restrictions under the Securities Act of 1933,
as amended (the "Act"), or any applicable state securities or blue sky laws.
(f) If less than all the outstanding shares of this Series are to
be redeemed, the number of shares of this Series to be redeemed and the method
of effecting such redemption, whether by lot or pro rata, shall be as
determined by the Board of Directors.
(g) At any time after a notice of redemption has been given in
the manner prescribed herein with respect to a redemption in which the
corporation has elected to pay the redemption price in whole in cash, and
prior to the date fixed for redemption, the corporation may deposit in trust,
with a bank or trust company identified in the notice of redemption having
capital, surplus and undistributed profits aggregating at least $50,000,000,
an aggregate amount of funds sufficient for such redemption (including
dividends accrued on the shares of this Series called for redemption to the
date fixed for redemption) for immediate payment in the appropriate amounts
upon surrender of certificates for such shares. Any interest accrued on such
funds shall be paid to the corporation from time to time. Such deposit in
trust shall be irrevocable, except that any funds deposited by the corporation
which shall not be required for the redemption for which they were deposited
because of the exercise of rights of conversion subsequent to the date of
deposit shall be returned to the corporation forthwith, and any funds
deposited by the corporation which are unclaimed at the end of two years from
the date fixed for such redemption shall be paid over to the corporation upon
its request, and upon such repayment the holders of the shares so called for
redemption shall look only to the corporation for payment of the appropriate
amount.
(h) From and after the date fixed for redemption (unless the
corporation shall default in making payment of the amount payable upon such
redemption), whether or not certificates for shares so called for redemption
have been surrendered by the holders thereof as described below, dividends on
the shares of this Series so called for redemption shall cease to accrue, and
from and after the date of the deposit of trust funds for the redemption of
shares of this Series in accordance with the provisions of Section 4(g)
hereof, such shares shall be deemed to be no longer outstanding, and all
rights of the holders thereof as stockholders of the corporation (except the
right to receive from the corporation the amount payable upon such redemption
and, up to the close of business on the date fixed for such redemption, the
right to convert such shares as set forth in Section 7 hereof) shall cease and
terminate. Upon surrender in accordance with the notice of redemption of the
certificates for any shares of this Series so redeemed (properly endorsed or
assigned for transfer if the corporation shall so require and the notice shall
so state), the holder thereof shall be entitled to receive payment of the
redemption price plus an amount equal to all accrued and unpaid dividends as
aforesaid. If less than all of the shares represented by any such surrendered
certificate are redeemed, the corporation shall execute and deliver to the
holder thereof, or to his written order, a certificate or certificates
representing the unredeemed shares.
(i) In no event shall the corporation redeem less than all the
outstanding shares of this Series and shares of any other series of stock of
the corporation ranking, as to dividends and distribution of assets upon
liquidation, dissolution or winding up of the affairs of the corporation, on a
parity with the shares of this Series ("Parity Stock") pursuant to this
Section 4 unless full cumulative dividends for all past dividend periods shall
have been paid or declared and set apart for payment upon all outstanding
shares of this Series and the shares of such Parity Stock.
(j) In connection with any redemption of shares of this Series
solely for cash, the corporation may enter into an agreement with one or more
investment bankers or other purchasers for the purchase of the shares to be
redeemed from the holders thereof and the conversion of such purchased shares
into shares of Class A Common Stock as provided in Section 7 hereof. Such
agreement shall provide that the amount to be paid by such purchasers to the
holders of the shares of this Series to be redeemed shall not be less than the
redemption price for such shares together with all accrued and unpaid
dividends thereon to and including the date fixed for redemption and may
provide further that such amount be deposited in trust, on or before the close
of business on the date fixed for redemption, with a bank or trust company
designated by the corporation meeting the requirements set forth in Section
4(g) hereof. Notwithstanding anything to the contrary contained in this
Section 4, the obligation of the corporation to pay the redemption price of
the shares of this Series to be redeemed, together with accrued and unpaid
dividends thereon to the date fixed for redemption, shall be deemed to be
satisfied and discharged to the extent such amount is so paid by such
purchasers. If such an agreement is entered into, any shares of this Series
to be redeemed that have not been duly surrendered for conversion by the
holders thereof may, at the option of the corporation, be deemed, to the
fullest extent permitted by law, acquired by such purchasers from such holders
and (notwithstanding anything to the contrary contained in this subsection (j)
or in Section 7 hereof) surrendered by such purchasers for conversion, all as
of immediately prior to the close of business on the date fixed for
redemption, subject to payment of the above amount as aforesaid.
(k) Definitions. For purposes of this Section 4, the following
terms shall have the meanings indicated:
(i) "accrued and unpaid dividends" in respect of any share
of this Series shall mean an amount computed at the Dividend Rate
for this Series from the date on which dividends on such share
became cumulative to and including the date to which such
dividends are to be accrued, less the aggregate amount of all
dividends theretofore paid thereon. The amount accrued subsequent
to the most recent Dividend Period shall be computed by dividing
the quarterly dividend payment by the actual number of days in the
uncompleted quarter, and thereafter multiplying this figure by the
number of days in such quarter up to and including the date to
which dividends are to be accrued.
(ii) "Business Day" shall mean any day other than a
Saturday or Sunday or a day on which state or federally chartered
banking institutions in New York, New York are not required to be
open.
(iii) "Conversion Price" shall have the meaning set forth
in, and shall be subject to adjustment from time to time as
provided in, Section 7(d) hereof.
(iv) "Current Market Price" in respect of the Class A
Common Stock means the last reported sales price, regular way, on
such day, or, if no sale takes place on such day, the average of
the reported closing bid and asked prices on such day, regular
way, in either case as reported in the composite transactions for
the New York Stock Exchange or, if such security is not listed or
admitted for trading on the New York Stock Exchange, on the
principal national or regional securities exchange in the United
States on which the Class A Common Stock is listed or admitted to
trading, or if the Class A Common Stock is not listed or admitted
to trading on a national or regional securities exchange in the
United States, on the National Market System of NASDAQ or, if the
Class A Common Stock is not quoted on such National Market System,
the average of the closing bid and asked prices on such day in the
over-the-counter market as reported by NASDAQ, or if bid and asked
prices for such security on such day shall not have been reported
through NASDAQ or by the National Quotation Bureau Incorporated,
the average of the bid and asked prices on such day as furnished
by any New York Stock Exchange member firm regularly making a
market in such security selected for such purpose by the Board of
Directors of the corporation.
(v) "Market Price" means the Weighted Average Price of a
share of Class A Common Stock over the five Trading Day period
ending on the third Business Day prior to the applicable
Redemption Date or Call Date (or, if such third Business Day is
not a Trading Day, on the last Trading Day prior to such Business
Day), appropriately adjusted to take into account the occurrence,
during the period commencing on the first of such Trading Days and
ending on such Redemption Date or Call Date, of any event
described in Section 7(d) hereof.
(vi) "Trading Day" shall mean any day on which the
securities in question are traded on the New York Stock Exchange,
or if such securities are not listed or admitted for trading on
the New York Stock Exchange, on the principal national or regional
securities exchange on which such securities are listed or
admitted, or if not listed or admitted for trading on any national
or regional securities exchange, on the National Market System of
NASDAQ, or if such securities are not quoted on such National
Market System, in the applicable securities market in which the
securities are traded.
(vii) "Weighted Average Price" of a share of Class A Common
Stock on any Trading Day or over any period of Trading Days means
the weighted average per share sale price for all sales of shares
of Class A Common Stock on such Trading Day or during such period,
as the case may be (or, if the information necessary to calculate
such weighted average per share sale price is not reported, the
average of the high and low sale prices or, if no sales prices are
reported, the average of the bid and ask prices or, if more than
one in either case, the average of the average bid and average ask
prices) as reported in the composite transactions for the New York
Stock Exchange, or if the Class A Common Stock is not listed or
admitted to trading on such Exchange, as reported in the composite
transactions for the principal national or regional securities
exchange in the United States on which the Class A Common Stock is
listed or admitted to trading, or if the Class A Common Stock is
not listed or admitted to trading on a United States national or
regional securities exchange, as reported by NASDAQ or by the
National Quotation Bureau Incorporated; provided that, in the
absence of such quotations, the corporation shall be entitled to
determine the Weighted Average Price on the basis of such
quotations as it considers appropriate.
5. Voting Rights. (a) Except for the voting rights described
below and except as otherwise required by law, the holders of shares of this
Series shall not be entitled to vote on any matter or to receive notice of, or
to participate in, any meeting of the stockholders of the corporation. Each
share of Preferred Stock of this Series will be entitled to one vote on
matters which holders of such series are entitled to vote.
(b) The shares of this Series shall be entitled to vote with
respect to the election of directors in accordance with Sections I(A)(4) and
II(B)(2) of the Article FOURTH of the certificate of incorporation.
(c) Whenever dividends payable on shares of this Series shall be
in default in an aggregate amount equal to or exceeding six full quarterly
dividends on all shares of this Series at the time outstanding, the number of
directors then constituting the Board of Directors of the corporation shall be
increased by two, and holders of shares of this Series shall, in addition to
any other voting rights, have the right, voting separately as a class together
with holders of all other series of stock of the Company ranking on a parity
with shares of this Series either as to dividends or the distribution of
assets upon liquidation, dissolution or winding up and upon which like voting
rights have been conferred and are exercisable (such other series of stock
being herein referred to as "Other Voting Stock"), to elect such two
additional directors. In such case, the Board of Directors will be increased
by two directors, and the holders of shares of this Series (either alone or
with the holders of Other Voting Stock) will have the exclusive right as
members of such class, as described above, to elect two directors at the next
annual meeting of stockholders. Whenever such right of the holders of shares
of this Series shall have vested, such right may be exercised initially either
at a special meeting of such holders as provided in Section 5(d) hereof or at
any annual meeting of stockholders held for the purpose of electing directors,
and thereafter at such annual meetings. The right of the holders of shares of
this Series to vote together as a class with the holders of shares of any
Other Voting Stock shall continue until such time as all dividends accrued on
outstanding shares of this Series to the Dividend Payment Date next preceding
the date of any such determination shall have been paid in full, or declared
and set apart in trust for payment, at which time the right of the holders of
shares of this Series so to vote shall terminate, except as herein or by law
expressly provided, subject to revesting upon the occurrence of a subsequent
default of the character mentioned above.
(d) At any time when the right of the holders of shares of this
Series to elect directors as provided in Section 5(c) hereof shall have
vested, and if such right shall not already have been initially exercised, a
proper officer of the corporation, upon the written request of the holders of
record of at least 10% of the aggregate number of shares of this Series and
shares of any Other Voting Stock at the time outstanding, addressed to the
Secretary of the corporation, shall call a special meeting of the holders of
shares of this Series and of such Other Voting Stock for the purpose of
electing directors. Such meeting shall be held at the earliest practicable
date upon the same form of notice as is required for annual meetings of
stockholders at the place for the holding of annual meetings of stockholders
of the corporation (or such other suitable place as is designated by such
officer). If such meeting shall not be called by a proper officer of the
corporation within 20 days after personal service of such written request upon
the Secretary of the corporation, or within 20 days after mailing the same
within the United States of America, addressed to the Secretary of the
corporation at its principal office (such mailing to be evidenced by the
registry receipt issued by the postal authorities), then the holders of record
of at least 10% of the aggregate number of shares of this Series and shares of
any Other Voting Stock at the time outstanding may designate in writing one of
their number to call such a meeting at the expense of the corporation, and
such meeting may be called by such person so designated upon the same form of
notice as is required for annual meetings of stockholders and shall be held at
the place for the holding of annual meetings of stockholders of the
corporation (or such other suitable place as is designated by such person).
Any holder of shares of this Series so designated shall have access to the
registry books of the corporation for the purpose of causing a meeting of
stockholders to be called pursuant to this subsection (d). Notwithstanding
anything to the contrary contained in this subsection (d), no such special
meeting shall be called during the period within 90 days immediately preceding
the date fixed for the next annual meeting of stockholders of the corporation.
(e) At any meeting held for the purpose of electing directors at
which holders of shares of this Series shall have the right, voting together
as a class with holders of shares of any Other Voting Stock to elect directors
as provided in Section 5(c) hereof, the presence, in person or by proxy, of
the holders of 33 1/3% of the aggregate number of shares of this Series and
shares of such Other Voting Stock at the time outstanding shall be required
and be sufficient to constitute a quorum of such class for the election of
directors pursuant to such Section 5(c). At any such meeting or adjournment
thereof, (i) the absence of a quorum of the shares of this Series and shares
of such Other Voting Stock shall not prevent the election of the directors to
be elected otherwise than pursuant to Section 5(c) hereof and (ii) in the
absence of a quorum, either of the shares of this Series and shares of such
Other Voting Stock or of any other shares of stock of the corporation, or
both, a majority of the holders, present in person or by proxy, of the class
or classes of stock which lack a quorum shall have the power to adjourn the
meeting for the election of directors whom they are entitled to elect, from
time to time without notice other than announcement at the meeting, until a
quorum shall be present.
(f) During any period when the holders of shares of this Series
shall have the right to vote together as a class with the holders of shares of
any Other Voting Stock for directors as provided in Section 5(c) hereof, (i)
the directors so elected by such holders shall continue in office until their
successors shall have been elected by such holders or until termination of the
rights of such holders to vote as a class for directors and (ii) any vacancies
in the Board of Directors shall be filled only by a majority (even if that be
only a single director) of the remaining directors theretofore elected by the
holders of the class or classes of stock which elected the director whose
office shall have become vacant. Immediately upon termination of the right of
holders of this Series and any Other Voting Stock to vote as a class for
directors, (i) the term of office of the directors so elected shall terminate
and (ii) the number of directors shall be such number as may be provided for
in the by-laws of the corporation irrespective of any increase pursuant to the
provisions of Section 5(c) hereof.
(g) In addition to any other vote required by law, the
corporation shall not (i) amend, alter or repeal, whether by merger,
consolidation or otherwise, the provisions of the certificate of incorporation
(including the terms of this Series) so as to materially and adversely affect
any right, preference, privilege or voting power of this Series or (ii) create,
authorize or issue any series or class of stock ranking prior, either as to
payment of dividends or distributions of assets upon liquidation, dissolution
or winding up, to this Series, without the affirmative vote or consent of the
holders of at least two-thirds of the aggregate number of shares of this
Series at the time outstanding, voting as a separate class; provided, that any
increase in the total number of authorized shares of Common Stock (or any
series thereof) or Preferred Stock (or any series thereof), or the creation,
authorization or issuance of any series of stock ranking, as to dividends or
distribution of assets upon liquidation, dissolution or winding up of the
affairs of the corporation, on a parity with the shares of this Series will
not be deemed to materially and adversely affect such rights, preferences,
privileges or voting powers; provided, further, that no class vote of the
holders of shares of this Series shall be required if, at or prior to the time
when the actions described in clause (i) or (ii) of this subsection (g) shall
become effective, provision is made in accordance with Section 4 hereof for
the redemption of all shares of this Series at the time outstanding.
6. Preference upon Liquidation. (a) In the event of any
voluntary or involuntary liquidation, dissolution or winding up of the affairs
of the corporation, after payment or provision for payment of the debts and
other liabilities of the corporation and of dividends and liquidation
preferences in respect of any other stock of the corporation ranking senior to
the shares of this Series as to such payments, the holders of shares of this
Series shall be entitled to receive, out of the remaining net assets of the
corporation, the amount of $500.00 in cash for each share of this Series, plus
an amount equal to all dividends (whether or not earned or declared) accrued
and unpaid on each such share up to the date fixed for distribution, before
any distribution shall be made to or set apart for the holders of any Junior
Stock. If, after payment or provision for payment of the debts and other
liabilities of the corporation and of dividends and liquidation preferences in
respect of any other stock of the corporation ranking senior to the shares of
this Series as to such payments, the remaining net assets of the corporation
are not sufficient to pay to the holders of shares of this Series the full
amount of their preference set forth above, then the remaining net assets of
the corporation shall be divided among and paid to the holders of shares of
this Series, holders of shares of any other class or series of Preferred Stock
and holders of shares of any other stock of the corporation on a parity with
this Series as to dividends and distribution of assets upon liquidation,
dissolution or winding up of the affairs of the corporation ratably per share
in proportion to the full per share amounts to which they respectively are
entitled. For purposes of this subsection (a) and Section 6(b) hereof, a
consolidation or merger of the corporation with one or more other corporations
or the sale of all or substantially all of the assets of the corporation shall
not be deemed to be a voluntary or involuntary liquidation, dissolution or
winding up of the affairs of the corporation.
(b) Subject to the rights of the holders of shares of any series
or class of stock ranking prior to this Series and of the holders of any stock
of the corporation ranking on a parity as to dividends and distribution of
assets upon liquidation, dissolution or winding up of the affairs of the
corporation, after payment shall have been made in full to the holders of this
Series as provided in Section 6(a) hereof and this subsection (b), the holders
of any Junior Stock shall, subject to the respective terms and provisions (if
any) applying thereto, be entitled to receive any and all assets remaining to
be paid or distributed, and shares of this Series shall not be entitled to
share therein.
7. Conversion Privilege. (a) Subject to and upon compliance
with the provisions of this Section 7, at the option of the holder thereof,
each share of this Series may, at any time (unless shares of this Series shall
be called for redemption, then, with respect to shares of this Series so
called, until and including, but, if the corporation shall not default in
making payment of the amount payable on such redemption, not after, the close
of business on the date fixed for redemption), be converted into a number of
fully paid and nonassessable shares of Class A Common Stock equal to the
quotient obtained by dividing $500.00 by the Conversion Price (as hereinafter
defined) in effect at the Date of Conversion (as hereinafter defined).
(b) In order to exercise the conversion privilege, any holder of
shares of this Series to be converted shall surrender such shares to the
corporation at any time during usual business hours at the place or places
(including a place in the Borough of Manhattan, The City of New York)
maintained for such purpose, accompanied by a fully executed written notice,
in substantially the form set forth on the reverse of the certificate
representing shares of this Series, that the holder elects to convert such
shares. Such notice shall also state the name or names (with address) in
which the certificate or certificates for shares of Class A Common Stock shall
be issued. Shares of this Series surrendered for conversion shall (if so
required by the corporation) be properly endorsed or assigned for transfer by
the holder or his attorney duly authorized in writing. The holders of shares
of this Series at the close of business on any record date for the payment of
dividends on such shares will be entitled to receive the dividend payable on
such shares on the corresponding Dividend Payment Date notwithstanding the
conversion thereof or the corporation's default in the payment of the dividend
due on such Dividend Payment Date. Shares of this Series surrendered for
conversion during the period from the close of business on any record date for
the payment of dividends on such shares to the opening of business on the
corresponding Dividend Payment Date (except shares called for redemption on a
Redemption Date or Call Date during the period from such record date to and
including the Dividend Payment Date) must be accompanied by payment of an
amount equal to the dividend payable on such shares on such Dividend Payment
Date. A holder of shares of this Series on a record date for the payment of
dividends on such shares who converts such shares on a Dividend Payment Date
will receive the dividend payable on such shares by the corporation on such
date, and the converting holder need not include a payment in the amount of
any such dividend upon surrender of such shares for conversion. As promptly
as practicable after the receipt of such notice and the surrender of such
shares of this Series as aforesaid, the corporation shall, subject to the
provisions of Section 9 hereof, issue and deliver at such place or places
referred to in this subsection (b) to such holder, or on his written order, a
certificate or certificates for the number of full shares of Class A Common
Stock issuable on such conversion of shares of this Series in accordance with
the provisions of this Section 7, and cash, as provided in Section 7(c)
hereof, in respect of any fraction of a share of Class A Common Stock
otherwise issuable upon such conversion. Such conversion shall be deemed to
have been effected immediately prior to the close of business on the date
(herein called the "Date of Conversion") on which such notice shall have been
received by the corporation and such shares of this Series shall have been
surrendered as aforesaid, and the person or persons in whose name or names any
certificate or certificates for shares of Class A Common Stock shall be
issuable upon such conversion shall be deemed to have become on the Date of
Conversion the holder or holders of record of the shares of Class A Common
Stock represented thereby; provided, that any such surrender on any date when
the registry books of the corporation shall be closed shall constitute the
person or persons in whose name or names the certificate or certificates for
such shares are to be issued as the record holder or holders thereof for all
purposes at the opening of business on the next succeeding day on which such
registry books are open, but such conversion shall nevertheless be at the
Conversion Price in effect at the close of business on the date when such
shares of this Series shall have been so surrendered with the conversion
notice. In the case of conversion of a portion, but less than all, of the
shares of this Series represented by a certificate surrendered for conversion,
the corporation shall execute, and deliver to the holder thereof, or on his
written order, a certificate or certificates representing the shares of this
Series which the holder has not elected to convert into shares of Class A
Common Stock. No payment or adjustment shall be made for dividends accrued on
the shares of this Series converted as provided in this Section 7 or for
dividends or distributions accrued on any Class A Common Stock.
(c) No fractions of shares or scrip representing fractions of
shares shall be issued upon conversion of shares of this Series. If more than
one share of this Series shall be surrendered for conversion at one time by
the same holder, the number of full shares of Class A Common Stock which shall
be issuable upon conversion of such shares shall be computed on the basis of
the aggregate number of shares of this Series surrendered for conversion. If
any fraction of a share of Class A Common Stock would, except for the
provisions of this subsection (c), be issuable on the conversion of any shares
of this Series, the corporation shall make payment in lieu thereof in an
amount of United States dollars equal to the value of such fraction computed
on the basis of the closing price of the Class A Common Stock as reported on
the Composite Tape for New York Stock Exchange - Listed Stocks (or if the
Class A Common Stock is not listed or admitted to trading on such exchange on
the Date of Conversion, then on the principal national or regional securities
exchange on which the Class A Common Stock is then listed or admitted to
trading, or, if not listed or admitted to trading on any national or regional
securities exchange, then as reported by the National Association of
Securities Dealers, Inc. through NASDAQ or a similar organization if NASDAQ is
no longer reporting information) on the last Trading Day (as hereinafter
defined) prior to the Date of Conversion or if no such sale takes place on such
day, the last sale price for such day shall be the average of the closing bid
and asked prices regular way on the New York Stock Exchange (or if the Class A
Common Stock is not listed or admitted to trading on such exchange, on the
principal national securities exchange on which the Class A Common Stock is
then listed or admitted to trading, or, if not listed or admitted to trading
on any national securities exchange, the average of the highest bid and lowest
asked prices as reported by the National Association of Securities Dealers,
Inc. through NASDAQ or a similar organization if NASDAQ is no longer reporting
information) (any such last sale price being herein referred to as the "Last
Sale Price"). If on such Trading Day the Class A Common Stock is not quoted
by any such organization, the fair value of such Class A Common Stock on such
day, as determined by the Board of Directors, shall be used. For the purpose
of this subsection (c), the term "Trading Day" shall mean each Monday,
Tuesday, Wednesday, Thursday and Friday, other than any day on which
securities are not traded on such exchange or in such market.
(d) The Conversion Price per share of Class A Common Stock
issuable upon conversion of shares of this Series (herein called the
"Conversion Price") initially shall be $[o] as of _________, 1994. The
Conversion Price shall be subject to adjustment from time to time as follows:
(i) In case the corporation shall (1) pay a dividend or
make a distribution in shares of Class A Common Stock, (2)
subdivide its outstanding shares of Class A Common Stock into a
greater number of shares or (3) combine its outstanding shares of
Class A Common Stock into a smaller number of shares, the
Conversion Price in effect immediately prior to such action shall
be adjusted so that the holder of any shares of this Series
thereafter surrendered for conversion shall be entitled to receive
the number of shares of Class A Common Stock which he would have
owned or have been entitled to receive immediately following such
action had such shares been converted immediately prior thereto.
An adjustment made pursuant to this subsection (d)(i) shall become
effective immediately, except as provided in subsection (d)(v)
below, after the record date in the case of a dividend or
distribution and shall become effective immediately after the
effective date in the case of a subdivision or combination.
(ii) In case the corporation shall issue rights, warrants
or options to all holders of Class A Common Stock entitling them
(for a period not exceeding 45 days from the date of such
issuance) to subscribe for or purchase shares of Class A Common
Stock at a price per share less than the Recent Market Price per
share (as determined pursuant to subsection (d)(iv) below) of the
Class A Common Stock on the record date mentioned below, the
Conversion Price shall be adjusted to a price, computed to the
nearest cent, so that the same shall equal the price determined by
multiplying:
(1) the Conversion Price in effect immediately prior
to the date of issuance of such rights or warrants by a
fraction, of which
(2) the numerator shall be (A) the number of shares
of Class A Common Stock outstanding on the date of issuance
of such rights, warrants or options, immediately prior to
such issuance, plus (B) the number of shares which the
aggregate offering price of the total number of shares so
offered for subscription or purchase would purchase at such
Recent Market Price, (determined by multiplying such total
number of shares by the exercise price of such rights,
warrants or options and dividing the product so obtained by
such Recent Market Price), and of which
(3) the denominator shall be (A) the number of shares
of Class A Common Stock outstanding on the date of issuance
of such rights, warrants or options, immediately prior to
such issuance, plus (B) the number of additional shares of
Class A Common Stock which are so offered for subscription
or purchase.
Such adjustment shall become effective immediately, except as
provided in subsection (d)(v) below, after the record date for the
determination of holders entitled to receive such rights, warrants
or options.
(iii) In case the corporation shall distribute to all or
substantially all holders of Class A Common Stock evidences of
indebtedness, equity securities (including equity interests in the
corporation's Subsidiaries (as hereinafter defined)) other than
Class A Common Stock, or other assets (other than cash dividends
paid out of earned surplus of the corporation or, if there shall
be no earned surplus, out of net profits for the fiscal year in
which the dividend is made and/or the preceding fiscal year), or
shall distribute to all or substantially all holders of Class A
Common Stock rights or warrants to subscribe for securities (other
than those referred to in subsection (d)(ii) above), then in each
such case the Conversion Price shall be adjusted so that the same
shall equal the price determined by multiplying:
(1) the Conversion Price in effect immediately prior
to the date of such distribution by a fraction, of which
(2) the numerator shall be the Recent Market Price
per share (as determined pursuant to subsection (d)(iv)
below) of the Class A Common Stock on the record date
mentioned below less the then fair market value (as
determined by the Board of Directors, whose determination
shall be conclusive evidence of such fair market value, and
described in a resolution of the Board of Directors filed
with the transfer agent for the shares of this Series) of
the portion of the assets, evidences of indebtedness and
equity securities so distributed or of such subscription
rights or warrants applicable to one share of Class A Common
Stock, and of which
(3) the denominator shall be such Recent Market Price
per share of the Class A Common Stock.
Such adjustment shall become effective immediately, except as
provided in subsection (d)(v) below, after the record date for the
determination of stockholders entitled to receive such
distribution. As used herein, the term "Subsidiary" means (i) any
corporation or other entity of which securities or other ownership
interests having ordinary voting power to elect a majority of the
Board of Directors or other persons performing similar functions
are at the time directly or indirectly owned by the corporation or
(ii) any partnership of which more than 50% of the partnership
interests are owned by the corporation or any Subsidiary.
(iv) For purposes of any computation under subsections
(d)(ii) and (d)(iii) above, the Recent Market Price per share of
Class A Common Stock on any date shall be deemed to be the average
of the Last Sale Prices of a share of Class A Common Stock for the
five consecutive Trading Days selected by the corporation
commencing not more than 20 Trading Days before and ending not
later than the earliest of the date in question and the date
before the "ex" date with respect to the issuance or distribution
requiring such computation. If on any such Trading Day the Class
A Common Stock is not quoted by any organization referred to in
the definition of Last Sale Price in Section 7(c) hereof, the fair
value of the Class A Common Stock on such day, as determined by
the Board of Directors, shall be used. For purposes of this
paragraph, the term "'ex' date", when used with respect to any
issuance or distribution, means the first date on which the Class
A Common Stock trades regular way on the principal national
securities exchange on which the Class A Common Stock is listed or
admitted to trading (or, if not so listed or admitted, on NASDAQ
or a similar organization if NASDAQ is no longer reporting trading
information) without the right to receive such issuance or
distribution.
(v) In any case in which this subsection (d) shall require
that an adjustment be made immediately following a record date,
the corporation may elect to defer the effectiveness of such
adjustment (but in no event until a date later than the effective
time of the event giving rise to such adjustment), in which case
the corporation shall, with respect to any shares of this Series
converted after such record date and before such adjustment shall
have become effective (1) defer paying any cash payment pursuant
to Section 7(c) hereof or issuing to the holder of shares of this
Series the number of shares of Class A Common Stock issuable upon
conversion in excess of the number of shares of Class A Common
Stock issuable thereupon only on the basis of the Conversion Price
prior to adjustment and (2) not later than five business days
after such adjustment shall have become effective, pay to such
holder the appropriate cash payment pursuant to Section 7(c)
hereof and issue to such holder the additional shares of Class A
Common Stock issuable on such conversion.
(vi) No adjustment in the Conversion Price shall be
required unless such adjustment would require an increase or
decrease of at least 1% in the Conversion Price; provided, that
any adjustments which by reason of this subsection (d)(vi) are not
required to be made shall be carried forward and taken into
account in any subsequent adjustment. All calculations under this
Section 7 shall be made to the nearest cent or to the nearest
one-hundredth of a share, as the case may be.
(vii) Whenever the Conversion Price is adjusted as herein
provided, the corporation shall promptly (1) file with the
transfer agent for the shares of this Series a certificate of an
officer of the corporation (an "Officer's Certificate") setting
forth the Conversion Price after such adjustment and setting forth
in reasonable detail the facts requiring such adjustment and the
calculations on which the adjustment is based, which certificate
shall be conclusive evidence of the correctness of such adjustment
and (2) mail or cause to be mailed a notice of such adjustment to
each holder of shares of this Series at his address as the same
appears on the registry books of the corporation.
Notwithstanding anything in this Section 7 to the contrary, the corporation
shall be entitled to make such reductions in the Conversion Price, in addition
to those required by this Section 7, as it in its discretion shall determine
to be advisable in order that any stock dividend, subdivision or combination
of shares, distribution of rights or warrants to purchase stock or securities,
distribution of securities convertible into or exchangeable for stock, or
distribution of assets (other than cash dividends) hereafter made by the
corporation to its stockholders shall not be taxable.
(e) In case of any reclassification or change of outstanding
shares of Class A Common Stock (other than a change in par value, or from par
value to no par value, or from no par value to par value, or as a result of a
subdivision or combination), or in case of any consolidation of the
corporation with, or merger of the corporation into, any other Person, or any
merger of another Person into the corporation (other than a merger which does
not result in any reclassification, change, conversion, exchange or
cancellation of outstanding shares of Class A Common Stock) or any sale or
transfer of all or substantially all of the assets of the corporation, the
corporation, or the Person formed by such consolidation or resulting from such
merger or which acquires such assets, as the case may be, shall make effective
provision in the articles or certificate of incorporation, providing that the
holder of each share of this Series then outstanding shall have the right
thereafter to convert such share only into the kind and amount of securities,
cash and other property receivable upon such reclassification, change,
consolidation, merger, sale or transfer, by a holder of the number of shares
of Class A Common Stock into which such shares of this Series might have been
converted immediately prior to such reclassification, change, consolidation,
merger, sale or transfer, assuming such holder of Class A Common Stock of the
corporation (i) is not a Person with which the corporation consolidated or
into which the corporation merged or which merged into the corporation or to
which such sale or transfer was made, as the case may be ("constituent
Person"), or an Affiliate (as hereinafter defined) of a constituent Person and
(ii) failed to exercise his rights of election, if any, as to the kind or
amount of securities, cash and other property receivable upon such
reclassification, change, consolidation, merger, sale or transfer (provided
that if the kind or amount of securities, cash and other property receivable
upon such reclassification, change, consolidation, merger, sale or transfer is
not the same for each share of Class A Common Stock of the corporation held
immediately prior to such reclassification, change, consolidation, merger,
sale or transfer by others than a constituent Person or an Affiliate thereof
and in respect of which such rights of election shall not have been exercised
("non-electing share"), then for the purpose of this subsection (e) the kind
and amount of securities, cash and other property receivable upon such
reclassification, change, consolidation, merger, sale or transfer by each
non-electing share shall be deemed to be the kind and amount so receivable per
share by a plurality of the non-electing shares). Such articles or
certificate of incorporation shall provide for adjustments which, for events
subsequent to the effective date of such articles or certificate of
incorporation, shall be as nearly equivalent as may be practicable to the
adjustments provided for herein. The above provisions of this subsection (e)
shall similarly apply to successive reclassifications, changes,
consolidations, mergers, sales or transfers.
For the purpose of this subsection (e), the term "Person" means any
individual, corporation, partnership, joint venture, trust, unincorporated
organization or government or any agency or political subdivision thereof, and
the term "Affiliate" of any specified Person means any other Person directly
or indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of the definition of
"Affiliate", the term "control" when used with respect to any specified Person
means the power to direct the management and policies of such Person, directly
or indirectly, whether through the ownership of voting securities, by contract
or otherwise; and the terms "controlling" and "controlled" have meanings
correlative to the foregoing.
(f) The corporation shall reserve, free from preemptive rights,
out of its authorized but unissued shares, sufficient shares of Class A Common
Stock to provide for the conversion of the shares of this Series from time to
time outstanding as such shares of this Series are presented for conversion.
(g) The corporation covenants that all shares of Class A Common
Stock which may be issued upon conversion of shares of this Series will upon
issue be duly and validly issued, fully paid and nonassessable by the
corporation and except as provided in Section 9 hereof free from all taxes,
liens and charges with respect to the issue thereof.
8. Notice of Certain Events. In case:
(a) the corporation shall declare a dividend (or any other
distribution) payable to the holders of Class A Common Stock (otherwise than
cash dividends paid out of the earned surplus of the corporation or, if there
shall be no earned surplus, out of net profits for the fiscal year in which
the dividend is made and/or the preceding fiscal year, and dividends payable
in Class A Common Stock); or
(b) the corporation shall authorize the granting to the holders
of Class A Common Stock of rights to subscribe for or purchase any shares of
stock of any class or of any other rights or warrants; or
(c) the corporation shall authorize any reclassification or
change of the Class A Common Stock (other than a subdivision or combination of
its outstanding shares of Class A Common Stock or a change in par value, or
from par value to no par value, or from no par value to par value), or any
consolidation, merger or share exchange to which the corporation is a party
and for which approval of any stockholders of the corporation is required, or
the sale or conveyance of all or substantially all the property or business of
the corporation; or
(d) there shall be proposed any voluntary or involuntary
dissolution, liquidation or winding-up of the corporation;
then, the corporation shall cause to be filed at the place or places
maintained for the purpose of conversion of shares of this Series as provided
in Section 7(b) hereof, and shall cause to be mailed to each holder of shares
of this Series, at his address as it shall appear on the registry books of the
corporation, as promptly as possible but in any event at least 20 days before
the date hereinafter specified (or the earlier of the dates hereinafter
specified, in the event that more than one date is specified), a notice
stating the date on which (i) a record is expected to be taken for the purpose
of such dividend, distribution, rights, or warrants, or if a record is not to
be taken, the date as of which the holders of Class A Common Stock of record
to be entitled to such dividend, distribution, rights, or warrants are to be
determined, or (ii) such reclassification, change, consolidation, merger,
share exchange, sale, transfer, conveyance, dissolution, liquidation or
winding-up is expected to become effective and the date, if any is to be
fixed, as of which it is expected that holders of Class A Common Stock of
record shall be entitled to exchange their shares of Class A Common Stock for
securities or other property deliverable upon such reclassification, change,
consolidation, merger, share exchange, sale, transfer, conveyance,
dissolution, liquidation or winding-up.
9. Taxes. The corporation will pay any and all documentary,
stamp or similar taxes payable to the United States of America or any
political subdivision or taxing authority thereof or therein in respect of the
issue or delivery of (a) certificates for shares of this Series on redemption
of less than all of the shares represented by any certificate for such shares
surrendered for redemption or (b) certificates for shares of Class A Common
Stock on redemption or conversion of shares of this Series pursuant to Section
4 or Section 7 hereof; provided, that the corporation shall not be required to
pay any tax which may be payable in respect of any transfer involved in the
issue or delivery of certificates for shares of this Series or Class A Common
Stock, as the case may be, in a name other than that of the holder of shares
of this Series to be redeemed or converted and no such issue or delivery shall
be made unless and until the person requesting such issue or delivery has paid
to the corporation the amount of any such tax or has established, to the
satisfaction of the corporation, that such tax has been paid. The corporation
extends no protection with respect to any other taxes imposed in connection
with such redemption or conversion of shares of this Series.
10. No Other Rights. The shares of this Series shall not have
any relative, participating, optional or other special rights and powers other
than as set forth herein and other than any which may be provided by law.
11. Miscellaneous. Capitalized terms which are defined in this
Exhibit are defined only for the purposes of this Exhibit, and not for the
purposes of other Exhibits to the certificate of incorporation. Unless
otherwise indicated, section references contained in this Exhibit refer to the
corresponding sections of this Exhibit.
EXHIBIT C
TERMS
OF
GOLD-DENOMINATED PREFERRED STOCK
(Par Value $0.10 Per Share)
OF
FREEPORT-McMoRan COPPER & GOLD INC.
The number, voting powers, designations, preferences, rights,
qualifications, limitations and restrictions of the corporation's
Gold-Denominated Preferred Stock are as set forth below:
1. Designation. (a) 300,000 shares of Preferred Stock of the
corporation are hereby constituted as a series of Preferred Stock designated
as "Gold-Denominated Preferred Stock" (hereinafter called "this Series").
Each share of this Series shall be identical in all respects with the other
shares of this Series. The Board of Directors is authorized to increase or
decrease (but not below the number of shares of this Series then outstanding)
the number of shares of this Series.
(b) Shares of this Series which have been redeemed for cash as
hereinafter provided or purchased by the corporation shall be canceled, and
shall revert to authorized but unissued shares of Preferred Stock undesignated
as to series, and may be reissued as a part of this Series or may be
reclassified and reissued as part of a new or existing series of Preferred
Stock to be created by resolution or resolutions of the Board of Directors,
all subject to the conditions or restrictions on issuance set forth in any
resolution or resolutions adopted by the Board of Directors providing for the
issue of such series of Preferred Stock.
2. Dividends. (a) The holders of shares of this Series shall
be entitled to receive, but only out of funds legally available therefor, cash
dividends as hereinafter provided. Such dividends shall be paid when, as and
if declared by the Board of Directors on the first day of February, May,
August and November in each year until and including August 1, 2003 (each such
date being referred to herein as a "Dividend Payment Date") to holders of
record on the record date determined by the Board of Directors in advance of
the payment of each particular dividend; provided that dividends payable on
August 1, 2003 (the "Mandatory Redemption Date") shall be paid as provided in
Section 4 hereof. Such dividends shall be cumulative from the date of
original issuance of the shares of this Series.
(b) So long as any shares of this Series shall be outstanding,
the corporation shall not, unless full cumulative dividends for all past
dividend periods shall have been paid or declared and set apart for payment
upon all outstanding shares of this Series and the shares of any other class
or series of Preferred Stock (including the Gold-Denominated Preferred Stock,
Series II, the Silver-Denominated Preferred Stock, the Step-Up Convertible
Preferred Stock and the 7% Convertible Exchangeable Preferred Stock) and any
other class or series of stock of the corporation ranking, as to dividends, on
a parity with shares of this Series (the shares of any other class or series
of Preferred Stock and any other class or series of stock of the corporation
ranking, as to dividends, on a parity with shares of this Series being herein
referred to as "Parity Dividend Stock"), (i) declare, pay or set apart any
amounts for dividends on, or make any other distribution in cash or other
property in respect of, the Class A Common Stock of the corporation, the Class
B Common Stock of the corporation or any other stock of the corporation
ranking junior to this Series as to dividends or distribution of assets upon
liquidation, dissolution or winding up of the affairs of the corporation (the
Class A Common Stock, the Class B Common Stock and any such other stock being
herein referred to as "Junior Stock"), other than a dividend payable solely in
Junior Stock, (ii) purchase, redeem or otherwise acquire for value any shares
of Junior Stock, directly or indirectly, other than as a result of a
reclassification, exchange or conversion of one Junior Stock for or into
another Junior Stock, or other than through the use of proceeds of a
substantially contemporaneous sale of other Junior Stock, or (iii) make any
payment on account of, or set aside money for, a sinking or other like fund
for the purchase, redemption or other acquisition for value of any shares of
Junior Stock. For purposes of this Section 2 and of Section 4(f) hereof, if
any depositary shares have been issued with respect to any series of stock,
actions with respect to such depositary shares, including acquisition of and
payments on or with respect to such depositary shares, shall be regarded as
actions with respect to such series of stock.
(c) If the funds available for the payment of dividends are
insufficient to pay in full the dividends payable on all outstanding shares of
this Series and shares of Parity Dividend Stock, the total available funds to
be paid in partial dividends on the shares of this Series and shares of Parity
Dividend Stock shall be divided among this Series and the Parity Dividend
Stock in proportion to the aggregate amounts of dividends accrued and unpaid
with respect to this Series and the Parity Dividend Stock. Accruals of
dividends shall not bear interest.
3. Dividend Rate. (a) The Dividend Rate per quarter on each
share of this Series shall be an amount equal to the Dollar Equivalent Value
(as defined below) of 0.0175 ounces of gold. "Dollar Equivalent Value" means
the applicable Reference Gold Price multiplied by the applicable number of
ounces of gold. "Reference Gold Price" means, when used to calculate the
amount of any dividend payable on any Dividend Payment Date (other than the
Mandatory Redemption Date, as to which the calculation shall be made as
provided in Section 4(k)(iv) hereof) the arithmetic average of the London P.M.
gold fixing price (or A.M. gold fixing price if there is no P.M. gold fixing
price on the applicable trading date) for an ounce of gold in the London
bullion market on each of the five trading days ending on the second trading
day prior to the last day of the calendar quarter immediately preceding such
Dividend Payment Date, as published in The Wall Street Journal (Eastern
Edition) (or, if such prices are not published in The Wall Street Journal, as
published in the Financial Times). If for any reason gold is not traded
during any relevant period in the London bullion market or is not quoted in
U.S. dollars in such market, gold will be valued during such period or portion
thereof, as the case may be, on the basis of trading prices, quoted in U.S.
dollars, in the then principal international trading market for gold as
determined by the corporation's Board of Directors. On or before the fifth
business day preceding each record date for the payment of a dividend in
respect of the shares of this Series, the corporation will cause to be
published in The Wall Street Journal (Eastern Edition) or, if such newspaper
is not then published, in a newspaper or other publication of national
circulation, the amount of (and if the shares of this Series are represented
by depositary shares, the amount so payable per depositary share) the dividend
payable in respect of each share of this Series on the next succeeding
Dividend Payment Date.
(b) Dividends shall be calculated on the basis of a year of
360 days consisting of 12 30-day months. The term "Dividend Period", as used
herein, means, with respect to any Dividend Payment Date, the period
commencing on the day following the immediately preceding Dividend Payment
Date to and including such Dividend Payment Date.
4. Redemption. (a) The shares of this Series shall be
subject to mandatory redemption by the corporation, out of funds legally
available therefor, on the Mandatory Redemption Date at the Dollar Equivalent
Value of 2.0 ounces of gold per share plus accrued and unpaid dividends (as
hereinafter defined) to the Mandatory Redemption Date.
(b) The shares of this Series shall not be subject to
redemption at the option of the corporation except as described in this
subsection (b). If on any Dividend Payment Date the total number of shares of
this Series outstanding shall be less than 15% of the total number of shares
of this Series outstanding on the 40th day following the date of original
issuance of the shares of this Series, the corporation shall have the option
to redeem the outstanding shares of this Series, in whole but not in part, out
of funds legally available therefor, at an amount equal to the Dollar
Equivalent Value of 2.0 ounces of gold per share plus accrued and unpaid
dividends (as hereinafter defined) to the date fixed for redemption. For
purposes of determining the number of shares of this Series outstanding on any
Dividend Payment Date, the shares of this Series acquired by the corporation
on or prior to such Dividend Payment Date and not theretofore canceled (or in
the case of any shares of this Series represented by depositary shares, the
depositary shares representing shares of this Series acquired by the
corporation on or prior to such Dividend Payment Date and not theretofore
delivered to the depositary for the depositary shares for cancellation) shall
be deemed to be outstanding. Notice of any such redemption as described in
this Section 4(b) shall be mailed to holders of the shares of this Series
within 30 days after such Dividend Payment Date in accordance with the
provisions of Section 4(c) hereof.
(c) At least 30 days but no more than 60 days prior to the
date fixed for redemption of the shares of this Series in accordance with
Section 4(a) or (b) hereof (the "Call Date"), a written notice will be mailed
to each holder of record (and each beneficial owner to the extent required by
law) of shares of this Series to be redeemed, notifying such holder of the
corporation's election to redeem such shares if such redemption is pursuant to
Section 4(b) hereof, setting forth the method for determining the amount
payable per share of this Series on the Call Date, stating the Call Date and
calling upon such holder to surrender to the corporation on the Call Date at
the place designated in such notice the certificate or certificates
representing the shares called for redemption.
(d) At any time after a notice of redemption has been given in
the manner prescribed in Section 4(a) or (b) and the amount payable on the
date fixed for redemption can be determined by the corporation, and prior to
the date fixed for redemption, the corporation may deposit in trust, with a
bank or trust company identified in the notice of redemption having capital,
surplus and undistributed profits aggregating at least $50,000,000, an
aggregate amount of funds sufficient for such redemption (including dividends
accrued on the shares of this Series called for redemption to the date fixed
for redemption) for immediate payment in the appropriate amounts upon
surrender of certificates for such shares. Any interest accrued on such funds
shall be paid to the corporation from time to time. Such deposit in trust
shall be irrevocable, except that any funds deposited by the corporation which
are unclaimed at the end of two years from the date fixed for such redemption
shall be paid over to the corporation upon its request, and upon such
repayment the holders of the shares so called for redemption shall look only
to the corporation for payment of the appropriate amount.
(e) From and after the date fixed for redemption (unless the
corporation shall default in making payment of the amount payable upon such
redemption), whether or not certificates for shares so called for redemption
have been surrendered by the holders thereof as described below, dividends on
the shares of this Series so called for redemption shall cease to accrue, and
from and after the date of the deposit of trust funds for the redemption of
shares of this Series in accordance with the provisions of Section 4(d)
hereof, such shares shall be deemed to be no longer outstanding, and all
rights of the holders thereof as stockholders of the corporation (except the
right to receive from the corporation the amount payable upon such redemption)
shall cease and terminate. Upon surrender in accordance with the notice of
redemption of the certificates for any shares of this Series so redeemed
(properly endorsed or assigned for transfer if the corporation shall so
require and the notice shall so state), the holder thereof shall be entitled
to receive payment of the redemption price plus an amount equal to all accrued
and unpaid dividends as aforesaid.
(f) If the corporation shall have failed to redeem all
outstanding shares of this Series on the Mandatory Redemption Date then, until
it shall have redeemed all outstanding Shares of this Series, the corporation
may not (i) declare, pay or set apart any amounts for dividends on, or make
any other distribution in cash or other property in respect of, any Junior
Stock other than a dividend payable solely in Junior Stock, (ii) purchase,
redeem or otherwise acquire for value any shares of Junior Stock, directly or
indirectly, other than as a result of a reclassification, exchange or
conversion of one Junior Stock for or into another Junior Stock, or other than
through the use of proceeds of a substantially contemporaneous sale of other
Junior Stock, (iii) make any payment on account of, or set aside money for, a
sinking or other like fund for the purchase, redemption or other acquisition
for value of any shares of Junior Stock or (iv) purchase, redeem or otherwise
acquire for value any shares of stock of the corporation ranking on a parity
with the shares of this Series as to dividends or distribution of assets upon
liquidation, dissolution or winding up ("Parity Stock").
(g) (i) Within 90 days following each Calculation Date (as
defined below), the corporation shall be required to prepare a certificate (a
"Corporation Certificate") setting forth its determination of the Reserve
Coverage Ratio (as defined below) as of such Calculation Date. If the Reserve
Coverage Ratio, as shown on the Corporation Certificate prepared with respect
to any Calculation Date is less than 5.0, the corporation will be required to
make an offer (a "Reserve Coverage Offer") to purchase, out of funds legally
available therefor, at a price equal to the liquidation preference thereof as
of the Purchase Date (as hereinafter defined), plus accrued and unpaid
dividends (as defined below) to the Purchase Date, the smallest number of
shares of this Series (rounded to the nearest 500 shares) such that, if all
such shares had been repurchased on the relevant Calculation Date, the Reserve
Coverage Ratio on that date would have been greater than or equal to 5.0. If
the Corporation Certificate prepared with respect to any Calculation Date
shows that the Reserve Coverage Ratio is less than 5.0, the corporation shall
include on such Corporation Certificate its calculation of the number of
shares of this Series for which it is required to make an offer (the "Offer
Amount").
(ii) If required to make a Reserve Coverage Offer, the
corporation will commence such offer not more than 60 days after the date of
the Corporation Certificate prepared with respect to the applicable
Calculation Date, by mailing a notice to all holders of record of the shares
of this Series setting forth (A) that such notice is being given pursuant to a
Reserve Coverage Offer, (B) the Offer Amount, (C) the method for determining
the amount payable per share of this Series on the Purchase Date, (D) the last
date ("the Purchase Date"), which shall not be less than 30 nor more 60 days
after the date of such notice, by which a holder must elect whether to accept
the Reserve Coverage Offer, (E) the procedures that such holder must follow to
exercise its rights and (F) the procedures for withdrawing an election. The
corporation shall also cause a copy of such notice to be published in The Wall
Street Journal (Eastern Edition) or another daily newspaper of national
circulation.
(iii) Holders electing to have shares of this Series purchased
by the corporation pursuant to a Reserve Coverage Offer will be required to
surrender the certificates representing such shares, with an appropriate form
duly completed, to the corporation prior to the Purchase Date. Holders will
be entitled to withdraw an election by a written notice of withdrawal
delivered to the corporation prior to the close of business on the Purchase
Date. The notice of withdrawal shall state the number of shares of this
Series and certificate numbers to which the notice of withdrawal relates and
the number of shares and certificate numbers, if any, which remain subject to
the election. If the aggregate number of shares of this Series tendered
exceeds the Offer Amount, the corporation will select the shares of this
Series to be purchased on a pro rata basis as nearly as practicable. The
corporation shall, as promptly as reasonably practicable after the Purchase
Date, cause payment to be mailed or delivered to each tendering holder in the
amount of the purchase price, and any unpurchased shares of this Series to be
returned to the holder thereof.
(h) If, at the time of the mandatory redemption on the
Mandatory Redemption Date or a Reserve Coverage Offer, the funds of the
corporation legally available for redemption or repurchase of the shares of
this Series are insufficient to redeem or repurchase such shares, and all of
the shares of any other series of Parity Stock which the corporation is then
obligated to redeem) or repurchase, (i) the total legally available funds
shall be allocated among the shares of this Series and of such other series in
proportion to the aggregate dollar amount of redemption or other repurchase
obligations with respect to this Series and such other series and (ii) the
portion of such funds allocated to this Series will be used to redeem or
repurchase the maximum possible number of shares, pro rata based upon the
number of shares to be redeemed or delivered for purchase, as the case may be.
At any time thereafter when additional funds of the corporation become legally
available for such purpose, after giving effect to the foregoing allocation
provisions, such funds shall immediately be used to redeem or purchase, as the
case may be, any additional shares of this Series which the corporation is
obligated to redeem or purchase, as the case may be, but which it has not so
redeemed or purchased.
(i) The corporation shall not have the right to redeem shares
of this Series pursuant to Section 4(a) or (b) hereof unless full cumulative
dividends for all past dividend periods shall have been paid or declared and
set aside for payment upon all outstanding shares of this Series and all
outstanding shares of other series of stock of the corporation ranking, as to
dividends, on a parity with the shares of this Series.
(j) The corporation will not consummate or permit any
subsidiary to consummate any transaction involving the corporation which would
cause the Reserve Coverage Ratio to fall below 5.0 unless, immediately
following consummation of such transaction, the corporation will have
sufficient legally available funds immediately following consummation of such
transaction to complete any Reserve Coverage Offer required as a result
thereof.
(k) Definitions. For purposes of this Section 4, the
following terms shall have the meanings indicated:
(i) "accrued and unpaid dividends" per share of this
Series (A) upon redemption on the Mandatory Redemption Date,
(B) in the case of any Reserve Coverage Offer, (C) in the case
of any optional redemption and (D) in the case of a liquidation
event, shall be equal to the sum of (x) the aggregate amount of
any accrued and unpaid dividends on such share through the next
preceding Dividend Payment Date (calculated as provided in
Section 3 hereof) plus (y) a proportionate amount of the
regular quarterly dividend at the Dividend Rate for the period
from the day following the immediately preceding Dividend
Payment Date through the redemption date, Purchase Date or date
of liquidating distribution (calculated on the basis of a year
of 360 days consisting of twelve 30-day months) multiplied by
the Reference Gold Price used to calculate the other amounts
payable to holders of the shares of this Series in connection
with such redemption, purchase or liquidation event. If a
quarterly dividend is not declared and paid as provided in
Section 3 hereof, the unpaid dividend that shall cumulate for
such Dividend Period will be the amount of the dividend that
would have been payable on the Dividend Payment Date if such
dividend had been timely paid.
(ii) "Calculation Date" means (i) December 31 of each
year and (ii) the date of the consummation of each transaction
undertaken by the corporation or any subsidiary of the
corporation which would either (a) cause the Reserve Amount, as
estimated by the corporation, to decrease by 50% or more from
the preceding Calculation Date or (b) cause the Reserve
Coverage Ratio, as estimated by the corporation, to fall below
5.0.
(iii) The "Gold Amount" as of any Calculation Date means
the product of (x) 2.0 ounces of gold and (y) the number of
shares of this Series issued and outstanding as of such
Calculation Date less the number of shares of this Series
acquired by the corporation on or prior to the date of
preparation of a Corporation Certificate with respect to such
Calculation Date.
(iv) The "Reference Gold Price," when used to calculate
any amount payable with respect to the shares of this Series
(other than dividends payable on any Dividend Payment Date
other than the Mandatory Redemption Date) or to purchase any
shares of this Series on any date means the arithmetic average
of the London P.M. gold fixing price (or A.M. gold fixing price
if there is no P.M. gold fixing price on the applicable trading
date) for an ounce of gold in the London bullion market, as
published in The Wall Street Journal (Eastern Edition) (or, if
such prices are not published in The Wall Street Journal
(Eastern Edition), as published in the Financial Times) on each
of the twenty trading days ending on the second trading day
prior to (i) in the case of the mandatory redemption of shares
of this Series, the Mandatory Redemption Date, (ii) in the case
of any offer to purchase shares of this Series due to a failure
to meet the minimum Reserve Coverage Ratio on any Calculation
Date, the date of commencement of such Reserve Coverage Offer,
(iii) in the case of any optional redemption of shares of this
Series, the date fixed for such redemption and (iv) in the case
of a liquidation event, the date 30 days prior to the date
fixed for the liquidating distribution. If for any reason gold
is not traded during any relevant period in the London bullion
market or is not quoted in U.S. dollars in such market, gold
will be valued during such period or portion thereof, as the
case may be, on the basis of trading prices, quoted in U.S.
dollars, in the then principal international trading market for
gold as determined by the corporation's Board of Directors.
(v) The "Reserve Amount" as of any Calculation Date means
the corporation's Proportionate Interest in the estimated
proved and probable gold reserves of the corporation and of any
entity in which the corporation has a direct or indirect
beneficial ownership interest. The estimated proved and
probable gold reserves shall be determined based upon
evaluation methods generally applied by the mining industry.
The corporation's "Proportionate Interest" in any estimated
proved and probable gold reserves shall be the corporation's
direct or indirect beneficial ownership interest in such
reserves, giving effect to reductions required to reflect any
beneficial ownership interest of any person other than the
corporation in such reserves.
(vi) The "Reserve Coverage Ratio" shall be determined as
of each Calculation Date by dividing (i) the Reserve Amount as
of such Calculation Date by (ii) the Gold Amount as of such
date.
5. Voting Rights. (a) Except for the voting rights described
below and except as otherwise provided by law, the holders of shares of this
Series shall not be entitled to vote on any matter or to receive notice of, or
to participate in, any meeting of the stockholders of the corporation. Each
share of Preferred Stock of this Series will be entitled to one vote on
matters which holders of such Series are entitled to vote.
(b) The shares of this Series shall be entitled to vote with
respect to the election of directors in accordance with Sections I(A)(4) and
II(B)(2) of Article FOURTH of the certificate of incorporation.
(c) Whenever dividends payable on shares of this Series shall
be in default in an aggregate amount equal to or exceeding six full quarterly
dividends on all shares of this Series at the time outstanding, the number of
directors then constituting the Board of Directors of the corporation shall be
increased by two, and holders of shares of this Series shall, in addition to
any other voting rights, have the right, voting separately as a class together
with holders of all other series of stock of the Company ranking on a parity
with shares of this Series either as to dividends or the distribution of
assets upon liquidation, dissolution or winding up and upon which like voting
rights have been conferred and are exercisable (such other series of stock
being herein referred to as "Other Voting Stock"), to elect such two additional
directors. In such case, the Board of Directors will be increased by two
directors, and the holders of shares of this Series (either alone or with the
holders of Other Voting Stock) will have the exclusive right as members of
such class, as described above, to elect two directors at the next annual
meeting of stockholders. Whenever such right of the holders of shares of this
Series shall have vested, such right may be exercised initially either at a
special meeting of such holders as provided in Section 5(d) hereof or at any
annual meeting of stockholders held for the purpose of electing directors, and
thereafter at such annual meetings. The right of the holders of shares of
this Series to vote together as a class with the holders of shares of any Other
Voting Stock shall continue until such time as all dividends accrued on
outstanding shares of this Series to the Dividend Payment Date next preceding
the date of any such determination shall have been paid in full, or declared
and set apart in trust for payment, at which time the right of the holders of
shares of this Series so to vote shall terminate, except as herein or by law
expressly provided, subject to revesting upon the occurrence of a subsequent
default of the character mentioned above.
(d) At any time when the right of the holders of shares of
this Series to elect directors as provided in Section 5(c) hereof shall have
vested, and if such right shall not already have been initially exercised, a
proper officer of the corporation, upon the written request of the holders of
record of at least 10% of the aggregate number of shares of this Series and
shares of any Other Voting Stock at the time outstanding, addressed to the
Secretary of the corporation, shall call a special meeting of the holders of
shares of this Series and of such Other Voting Stock for the purpose of
electing directors. Such meeting shall be held at the earliest practicable
date upon the same form of notice as is required for annual meetings of
stockholders at the place for the holding of annual meetings of stockholders
of the corporation (or such other suitable place as is designated by such
officer). If such meeting shall not be called by a proper officer of the
corporation within 20 days after personal service of such written request upon
the Secretary of the corporation, or within 20 days after mailing the same
within the United States of America, addressed to the Secretary of the
corporation at its principal office (such mailing to be evidenced by the
registry receipt issued by the postal authorities), then the holders of record
of at least 10% of the aggregate number of shares of this Series and shares of
any Other Voting Stock at the time outstanding may designate in writing one of
their number to call such a meeting at the expense of the corporation, and
such meeting may be called by such person so designated upon the same form of
notice as is required for annual meetings of stockholders and shall be held at
the place for the holding of annual meetings of stockholders of the
corporation (or such other suitable place as is designated by such person).
Any holder of shares of this Series so designated shall have access to the
registry books of the corporation for the purpose of causing a meeting of
stockholders to be called pursuant to this subsection (c). Notwithstanding
anything to the contrary contained in this subsection (d), no such special
meeting shall be called during the period within 90 days immediately preceding
the date fixed for the next annual meeting of stockholders of the corporation.
(e) At any meeting held for the purpose of electing directors
at which holders of shares of this Series shall have the right, voting
together as a class with holders of shares of any Other Voting Stock to elect
directors as provided in Section 5(c) hereof, the presence, in person or by
proxy, of the holders of 33 1/3% of the aggregate number of shares of this
Series and shares of such Other Voting Stock at the time outstanding shall be
required and be sufficient to constitute a quorum of such class for the
election of directors pursuant to such Section 5(c). At any such meeting or
adjournment thereof, (i) the absence of a quorum of the shares of this Series
and shares of such Other Voting Stock shall not prevent the election of the
directors to be elected otherwise than pursuant to Section 5(c) hereof and
(ii) in the absence of a quorum, either of the shares of this Series and
shares of such Other Voting Stock or of any other shares of stock of the
corporation, or both, a majority of the holders, present in person or by
proxy, of the class or classes of stock which lack a quorum shall have the
power to adjourn the meeting for the election of directors whom they are
entitled to elect, from time to time without notice other than announcement at
the meeting, until a quorum shall be present.
(f) During any period when the holders of shares of this
Series shall have the right to vote together as a class with the holders of
shares of any Other Voting Stock for directors as provided in Section 5(c)
hereof, (i) the directors so elected by such holders shall continue in office
until their successors shall have been elected by such holders or until
termination of the rights of such holders to vote as a class for directors and
(ii) any vacancies in the Board of Directors shall be filled only by a
majority (even if that be only a single director) of the remaining directors
theretofore elected by the holders of the class or classes of stock which
elected the director whose office shall have become vacant. Immediately upon
termination of the right of holders of this Series and any Other Voting Stock
to vote as a class for directors, (i) the term of office of the directors so
elected shall terminate and (ii) the number of directors shall be such number
as may be provided for in the by-laws of the corporation irrespective of any
increase pursuant to the provisions of Section 5(c) hereof.
(g) In addition to any other vote required by law, the
corporation shall not (i) amend, alter or repeal, whether by merger,
consolidation or otherwise, the provisions of its certificate of incorporation
(including the terms of this Series) so as to materially and adversely affect
any right, preference, privilege or voting power of this Series or (ii)
create, authorize or issue any series or class of stock ranking prior, either
as to payment of dividends or distributions of assets upon liquidation,
dissolution or winding up, to this Series, without the affirmative vote or
consent of the holders of at least two-thirds of the aggregate number of
shares of this Series at the time outstanding, voting as a separate class;
provided, that any increase in the total number of authorized shares of Common
Stock (or any series thereof) or Preferred Stock (or any series thereof), or
the creation, authorization or issuance of any series of stock ranking, as to
dividends or distribution of assets upon liquidation, dissolution or winding
up of the affairs of the corporation, on a parity with the shares of this
Series will not be deemed to materially and adversely affect such rights,
preferences, privileges or voting powers; provided, further, that no class
vote of the holders of shares of this Series shall be required if, at or prior
to the time when the actions described in clause (i) or (ii) of this
subsection (g) shall become effective, provision is made in accordance with
Section 4 hereof for the redemption of all shares of this Series at the time
outstanding.
6. Preference upon Liquidation. (a) In the event of any
voluntary or involuntary liquidation, dissolution or winding up of the affairs
of the corporation, after payment or provision for payment of the debts and
other liabilities of the corporation and of dividends and liquidation
preferences in respect of any other stock of the corporation ranking senior to
the shares of this Series as to such payments, the holders of shares of this
Series shall be entitled to receive, out of the remaining net assets of the
corporation, the Dollar Equivalent Value of 2.0 ounces of gold in cash for
each share of this Series, plus an amount equal to all dividends (whether or
not earned or declared) accrued and unpaid on each such share up to the date
fixed for distribution, before any distribution shall be made to or set apart
for the holders of any Junior Stock. If, after payment or provision for
payment of the debts and other liabilities of the corporation and of dividends
and liquidation preferences in respect of any other stock of the corporation
ranking senior to the shares of this Series as to such payments, the remaining
net assets of the corporation are not sufficient to pay to the holders of
shares of this Series the full amount of their preference set forth above,
then the remaining net assets of the corporation shall be divided among and
paid to the holders of shares of this Series, holders of shares of any other
class or series of Preferred Stock, and holders of shares of any other stock
of the corporation on a parity with this Series as to dividends and
distribution of assets upon liquidation, dissolution or winding up of the
affairs of the corporation ratably per share in proportion to the full per
share amounts to which they respectively are entitled. For purposes of this
subsection (a) and Section 6(b) hereof, a consolidation or merger of the
corporation with one or more other corporations or the sale of all or
substantially all of the assets of the corporation shall not be deemed to be a
voluntary or involuntary liquidation, dissolution or winding up of the affairs
of the corporation.
(b) Subject to the rights of the holders of shares of any
series or class of stock ranking prior to this Series and of the holders of
shares of any stock of the corporation ranking on a parity as to dividends and
distribution of assets upon liquidation, dissolution or winding up of the
affairs of the corporation, after payment shall have been made in full to the
holders of this Series as provided in Section 6(a) hereof and this subsection
(b), the holders of any Junior Stock shall, subject to the respective terms
and provisions (if any) applying thereto, be entitled to receive any and all
assets remaining to be paid or distributed, and shares of this Series shall not
be entitled to share therein.
7. Taxes. The corporation will pay any and all documentary,
stamp or similar taxes payable to the United States of America or any
political subdivision or taxing authority thereof or therein in respect of the
issue or delivery of certificates for shares of this Series on redemption of
less than all of the shares represented by any certificate for such shares
surrendered for redemption or pursuant to a Reserve Coverage Offer; provided,
that the corporation shall not be required to pay any tax which may be payable
in respect of any transfer involved in the issue or delivery of certificates
for shares of this Series in a name other than that of the holder of shares
of this Series to be redeemed or repurchased and no such issue or delivery
shall be made unless and until the person requesting such issue or delivery
has paid to the corporation the amount of any such tax or has established, to
the satisfaction of the corporation, that such tax has been paid. The
corporation extends no protection with respect to any other taxes imposed in
connection with such redemption or repurchase of shares of this Series.
8. No Other Rights. The shares of this Series shall not have
any relative, participating, optional or other special rights and powers other
than as set forth herein and other than any which may be provided by law.
9. Miscellaneous. Capitalized terms which are defined in this
Exhibit are defined only for the purposes of this Exhibit, and not for the
purposes of other Exhibits to the certificate of incorporation. Unless
otherwise indicated, section references contained in this Exhibit refer to the
corresponding sections of this Exhibit.
EXHIBIT D
TERMS
OF
GOLD-DENOMINATED PREFERRED STOCK, SERIES II
(Par Value $0.10 Per Share)
OF
FREEPORT-McMoRan COPPER & GOLD INC.
The number, voting powers, designations, preferences, rights,
qualifications, limitations and restrictions of the corporation's
Gold-Denominated Preferred Stock, Series II are as set forth below:
1. Designation. (a) 215,279 shares of Preferred Stock of the
corporation are hereby constituted as a series of Preferred Stock designated
as "Gold-Denominated Preferred Stock, Series II" (hereinafter called "this
Series"). Each share of this Series shall be identical in all respects with
the other shares of this Series. The Board of Directors is authorized to
increase or decrease (but not below the number of shares of this Series then
outstanding) the number of shares of this Series.
(b) Shares of this Series which have been redeemed for cash as
hereinafter provided or purchased by the corporation shall be canceled, and
shall revert to authorized but unissued shares of Preferred Stock undesignated
as to series, and may be reissued as a part of this Series or may be
reclassified and reissued as part of a new or existing series of Preferred
Stock to be created by resolution or resolutions of the Board of Directors,
all subject to the conditions or restrictions on issuance set forth in any
resolution or resolutions adopted by the Board of Directors providing for the
issue of such series of Preferred Stock.
2. Dividends. (a) The holders of shares of this Series shall
be entitled to receive, but only out of funds legally available therefor, cash
dividends as hereinafter provided. Such dividends shall be paid when, as and
if declared by the Board of Directors on the first day of February, May,
August and November in each year until and including February 1, 2006 (each
such date being referred to herein as a "Dividend Payment Date") to holders of
record on the record date determined by the Board of Directors in advance of
the payment of each particular dividend; provided that dividends payable on
February 1, 2006 (the "Mandatory Redemption Date") shall be paid as provided
in Section 4 hereof. Such dividends shall be cumulative from the date of
original issuance of the shares of this Series.
(b) So long as any shares of this Series shall be outstanding,
the corporation shall not, unless full cumulative dividends for all past
dividend periods shall have been paid or declared and set apart for payment
upon all outstanding shares of this Series and the shares of any other class
or series of Preferred Stock (including the Gold-Denominated Preferred Stock,
the Silver-Denominated Preferred Stock, the Step-Up Convertible Preferred
Stock and the 7% Convertible Exchangeable Preferred Stock) and any other class
or series of stock of the corporation ranking, as to dividends, on a parity
with shares of this Series (the shares of any other class or series of
Preferred Stock and any other class or series of stock of the corporation
ranking, as to dividends, on a parity with shares of this Series being herein
referred to as "Parity Dividend Stock"), (i) declare, pay or set apart any
amounts for dividends on, or make any other distribution in cash or other
property in respect of, the Class A Common Stock of the corporation, the Class
B Common Stock of the corporation or any other stock of the corporation
ranking junior to this Series as to dividends or distribution of assets upon
liquidation, dissolution or winding up of the affairs of the corporation (the
Class A Common Stock, the Class B Common Stock and any such other stock being
herein referred to as "Junior Stock"), other than a dividend payable solely in
Junior Stock, (ii) purchase, redeem or otherwise acquire for value any shares
of Junior Stock, directly or indirectly, other than as a result of a
reclassification, exchange or conversion of one Junior Stock for or into
another Junior Stock, or other than through the use of proceeds of a
substantially contemporaneous sale of other Junior Stock, or (iii) make any
payment on account of, or set aside money for, a sinking or other like fund
for the purchase, redemption or other acquisition for value of any shares of
Junior Stock. For purposes of this Section 2 and of Section 4(f) hereof, if
any depositary shares have been issued with respect to any series of stock,
actions with respect to such depositary shares, including acquisition of and
payments on or with respect to such depositary shares, shall be regarded as
actions with respect to such series of stock.
(c) If the funds available for the payment of dividends are
insufficient to pay in full the dividends payable on all outstanding shares of
this Series and shares of Parity Dividend Stock, the total available funds to
be paid in partial dividends on the shares of this Series and shares of Parity
Dividend Stock shall be divided among this Series and the Parity Dividend
Stock in proportion to the aggregate amounts of dividends accrued and unpaid
with respect to this Series and the Parity Dividend Stock. Accruals of
dividends shall not bear interest.
3. Dividend Rate. (a) The Dividend Rate per quarter on each
share of this Series shall be an amount equal to the Dollar Equivalent Value
(as defined below) of 0.01625 ounces of gold. "Dollar Equivalent Value" means
the applicable Reference Gold Price multiplied by the applicable number of
ounces of gold. "Reference Gold Price" means, when used to calculate the
amount of any dividend payable on any Dividend Payment Date (other than the
Mandatory Redemption Date, as to which the calculation shall be made as
provided in Section 4(k)(v) hereof), the arithmetic average of the London P.M.
gold fixing price (or A.M. gold fixing price if there is no P.M. gold fixing
price on the applicable trading date) for an ounce of gold in the London
bullion market on each of the five trading days ending on the second trading
day prior to the last day of the calendar quarter immediately preceding such
Dividend Payment Date, as published in The Wall Street Journal (Eastern
Edition) (or, if such prices are not published in The Wall Street Journal, as
published in the Financial Times). If for any reason gold is not traded
during any relevant period in the London bullion market or is not quoted in
U.S. dollars in such market, gold will be valued during such period or portion
thereof, as the case may be, on the basis of trading prices, quoted in U.S.
dollars, in the then principal international trading market for gold as
determined by the corporation's Board of Directors. On or before the fifth
business day preceding each record date for the payment of a dividend in
respect of the shares of this Series, the corporation will cause to be
published in The Wall Street Journal (Eastern Edition) or, if such newspaper
is not then published, in a newspaper or other publication of national
circulation, the amount of the dividend payable in respect of each share of
this Series (and if the shares of this Series are represented by depositary
shares, the amount so payable per depositary share) on the next succeeding
Dividend Payment Date.
(b) Dividends shall be calculated on the basis of a year of
360 days consisting of 12 30-day months. The term "Dividend Period", as used
herein, means, with respect to any Dividend Payment Date, the period
commencing on the day following the immediately preceding Dividend Payment
Date to and including such Dividend Payment Date.
4. Redemption. (a) The shares of this Series shall be
subject to mandatory redemption by the corporation, out of funds legally
available therefor, on the Mandatory Redemption Date at the Dollar Equivalent
Value of 2.0 ounces of gold per share plus accrued and unpaid dividends (as
hereinafter defined) to the Mandatory Redemption Date.
(b) The shares of this Series shall not be subject to
redemption at the option of the corporation except as described in this
subsection (b). If on any Dividend Payment Date the total number of shares of
this Series outstanding shall be less than 15% of the total number of shares
of this Series outstanding on the 40th day following the date of original
issuance of the shares of this Series, the corporation shall have the option
to redeem the outstanding shares of this Series, in whole but not in part, out
of funds legally available therefor, at an amount equal to the Dollar
Equivalent Value of 2.0 ounces of gold per share plus accrued and unpaid
dividends (as hereinafter defined) to the date fixed for redemption. For
purposes of determining the number of shares of this Series outstanding on any
Dividend Payment Date, the shares of this Series acquired by the corporation
on or prior to such Dividend Payment Date and not theretofore canceled (or in
the case of any shares of this Series represented by depositary shares, the
depositary shares representing shares of this Series acquired by the
corporation on or prior to such Dividend Payment Date and not theretofore
delivered to the depositary for the depositary shares for cancellation) shall
be deemed to be outstanding. Notice of any such redemption as described in
this Section 4(b) shall be mailed to holders of the shares of this Series
within 30 days after such Dividend Payment Date in accordance with the
provisions of Section 4(c) hereof.
(c) At least 30 days but no more than 60 days prior to the
date fixed for redemption of the shares of this Series in accordance with
Section 4(a) or (b) hereof (the "Call Date"), a written notice will be mailed
to each holder of record (and each beneficial owner to the extent required by
law) of shares of this Series to be redeemed, notifying such holder of the
corporation's election to redeem such shares if such redemption is pursuant to
Section 4(b) hereof, setting forth the method for determining the amount
payable per share of this Series on the Call Date, stating the Call Date and
calling upon such holder to surrender to the corporation on the Call Date at
the place designated in such notice the certificate or certificates
representing the shares called for redemption.
(d) At any time after a notice of redemption has been given in
the manner prescribed in Section 4(a) or (b) hereof and the amount payable on
the date fixed for redemption can be determined by the corporation, and prior
to the date fixed for redemption, the corporation may deposit in trust, with a
bank or trust company identified in the notice of redemption having capital,
surplus and undistributed profits aggregating at least $50,000,000, an
aggregate amount of funds sufficient for such redemption (including dividends
accrued on the shares of this Series called for redemption to the date fixed
for redemption) for immediate payment in the appropriate amounts upon
surrender of certificates for such shares. Any interest accrued on such funds
shall be paid to the corporation from time to time. Such deposit in trust
shall be irrevocable, except that any funds deposited by the corporation which
are unclaimed at the end of two years from the date fixed for such redemption
shall be paid over to the corporation upon its request, and upon such
repayment the holders of the shares so called for redemption shall look only
to the corporation for payment of the appropriate amount.
(e) From and after the date fixed for redemption (unless the
corporation shall default in making payment of the amount payable upon such
redemption), whether or not certificates for shares so called for redemption
have been surrendered by the holders thereof as described below, dividends on
the shares of this Series so called for redemption shall cease to accrue, and
from and after the date of the deposit of trust funds for the redemption of
shares of this Series in accordance with the provisions of Section 4(d)
hereof, such shares shall be deemed to be no longer outstanding, and all
rights of the holders thereof as stockholders of the corporation (except the
right to receive from the corporation the amount payable upon such redemption)
shall cease and terminate. Upon surrender in accordance with the notice of
redemption of the certificates for any shares of this Series so redeemed
(properly endorsed or assigned for transfer if the corporation shall so
require and the notice shall so state), the holder thereof shall be entitled
to receive payment of the redemption price plus an amount equal to all accrued
and unpaid dividends as aforesaid.
(f) If the corporation shall have failed to redeem all
outstanding shares of this Series on the Mandatory Redemption Date then, until
it shall have redeemed all outstanding Shares of this Series, the corporation
may not (i) declare, pay or set apart any amounts for dividends on, or make
any other distribution in cash or other property in respect of, any Junior
Stock other than a dividend payable solely in Junior Stock, (ii) purchase,
redeem or otherwise acquire for value any shares of Junior Stock, directly or
indirectly, other than as a result of a reclassification, exchange or
conversion of one Junior Stock for or into another Junior Stock, or other than
through the use of proceeds of a substantially contemporaneous sale of other
Junior Stock, (iii) make any payment on account of, or set aside money for, a
sinking or other like fund for the purchase, redemption or other acquisition
for value of any shares of Junior Stock or (iv) purchase, redeem or otherwise
acquire for value any shares of stock of the corporation ranking on a parity
with the shares of this Series as to dividends or distribution of assets upon
liquidation, dissolution or winding up ("Parity Stock").
(g) (i) Within 90 days following each Calculation Date (as
defined below), the corporation shall be required to prepare a certificate (a
"Corporation Certificate") setting forth its determination of the Reserve
Amount (as defined below) as of such Calculation Date. If the Reserve Amount,
as shown on the Corporation Certificate prepared with respect to any
Calculation Date is less than the Aggregate Reserve Requirement (as defined
below) as of such Calculation Date, the corporation will be required to make
an offer (a "Reserve Coverage Offer") to purchase, out of funds legally
available therefor, at a price equal to the liquidation preference thereof as
of the Purchase Date (as hereinafter defined), plus accrued and unpaid
dividends (as defined below) thereon to the Purchase Date, a sufficient number
of shares of this Series and of other Gold Parity Stock (as defined below) (or
the depositary shares, if any, issued with respect thereto)
such that, if all such shares had been repurchased on the relevant Calculation
Date, the Reserve Amount on that date would have been greater than or equal to
the Aggregate Reserve Requirement on such date. If the Corporation
Certificate prepared with respect to any Calculation Date shows that the
Reserve Amount is less than the Aggregate Reserve Requirement on such date,
the corporation shall include in such Corporation Certificate its calculation
of the number of shares of this Series (or related depositary shares) and the
number of shares of other Parity Stock (or related depositary shares) it
intends to offer to purchase to satisfy the foregoing requirements (such
number with respect to any series being referred to as the "Offer Amount" with
respect to such series). The corporation, in its sole discretion, may
determine the number of shares, if any, of this Series (or related depositary
shares) and the number of shares, if any, of each other series of Gold Parity
Stock (or related depositary shares) to which a Reserve Coverage Offer will be
made so long as such requirements are satisfied.
(ii) If required to make a Reserve Coverage Offer, the
corporation will commence such offer not more than 60 days after the date of
the Corporation Certificate prepared with respect to the applicable
Calculation Date, by mailing a notice to all holders of record of the shares
of each series included in such Reserve Coverage Offer setting forth (A) that
such notice is being given pursuant to a Reserve Coverage Offer, (B) the Offer
Amount with respect to such series, (C) the method for determining the amount
payable per share of such series on the Purchase Date, (D) the last date (the
"Purchase Date"), which shall not be less than 30 nor more 60 days after the
date of such notice, by which a holder must elect whether to accept the
Reserve Coverage Offer, (E) the procedures that such holder must follow to
exercise its rights and (F) the procedures for withdrawing an election. The
corporation shall also cause a copy of such notice to be published in The Wall
Street Journal (Eastern Edition) or another daily newspaper of national
circulation.
(iii) Holders of shares of any series electing to have shares
of such series purchased by the corporation pursuant to a Reserve Coverage
Offer will be required to surrender the certificates representing such shares,
with an appropriate form duly completed, to the corporation prior to the
Purchase Date. Holders will be entitled to withdraw an election by a written
notice of withdrawal delivered to the corporation prior to the close of
business on the Purchase Date. The notice of withdrawal shall state the
number of shares and certificate numbers to which the notice of withdrawal
relates and the number of shares and certificate numbers, if any, which remain
subject to the election. If the aggregate number of shares of any series
tendered exceeds the Offer Amount with respect to such series, the corporation
will select the shares of such series to be purchased on a pro rata basis as
nearly as practicable. The corporation shall, as promptly as reasonably
practicable after the Purchase Date, cause payment to be mailed or delivered
to each tendering holder in the amount of the purchase price, and any
unpurchased shares to be returned to the holder thereof.
(h) If, at the time of the mandatory redemption on the
Mandatory Redemption Date or of a Reserve Coverage Offer, the funds of the
corporation legally available for redemption or repurchase of the shares of
this Series are insufficient to redeem or repurchase all of such shares and
all of the shares of any other series of Parity Stock which the corporation is
then obligated to redeem or repurchase, (i) the total legally available funds
shall be allocated among the shares of this Series and of such other series in
proportion to the aggregate dollar amount of redemption or other repurchase
obligations with respect to this Series and such other series and (ii) the
portion of such funds allocated to this Series will be used to redeem or
repurchase the maximum possible number of shares of this Series, pro rata
based upon the number of shares to be redeemed or delivered for repurchase, as
the case may be. At any time thereafter when additional funds of the
corporation become legally available for such purpose, after giving effect to
the foregoing allocation provisions, such funds shall immediately be used to
redeem or repurchase, as the case may be, any additional shares of this Series
which the corporation is obligated to redeem or repurchase, as the case may
be, but which it has not so redeemed or repurchased.
(i) The corporation shall not have the right to redeem shares
of this Series pursuant to Section 4(a) or (b) hereof unless full cumulative
dividends for all past dividend periods shall have been paid or declared and
set aside for payment upon all outstanding shares of this Series and all
outstanding shares of other series of stock of the corporation ranking, as to
dividends, on a parity with the shares of this Series.
(j) The corporation will not consummate or permit any
subsidiary to consummate any transaction involving the corporation which would
cause the Reserve Amount to fall below the Aggregate Reserve Requirement
immediately after consummation of such transaction unless the corporation will
have sufficient legally available funds immediately following consummation of
such transaction to complete any Reserve Coverage Offer required as a result
thereof.
(k) Definitions. For purposes of this Section 4, the
following terms shall have the meanings indicated:
(i) "accrued and unpaid dividends" per share of this
Series (A) upon redemption on the Mandatory Redemption Date,
(B) in the case of any Reserve Coverage Offer, (C) in the case
of any optional redemption and (D) in the case of a liquidation
event, shall be equal to the sum of (x) the aggregate amount of
any accrued and unpaid dividends on such share through the next
preceding Dividend Payment Date (calculated as provided in
Section 3 hereof) plus (y) a proportionate amount of the
regular quarterly dividend at the Dividend Rate for the period
from the day following the immediately preceding Dividend
Payment Date through the redemption date, Purchase Date or date
of liquidating distribution (calculated on the basis of a year
of 360 days consisting of twelve 30-day months) multiplied by
the Reference Gold Price used to calculate the other amounts
payable to holders of the shares of this Series in connection
with such redemption, purchase or liquidation event. If a
quarterly dividend is not declared and paid as provided in
Section 3, the unpaid dividend that shall cumulate for such
Dividend Period will be the amount of the dividend that would
have been payable on the Dividend Payment Date if such dividend
had been timely paid.
(ii) "Aggregate Reserve Requirement" as of any
Calculation Date means the sum of the individual Reserve
Coverage Requirements with respect to each series of Gold
Parity Stock, including this Series.
(iii) "Calculation Date" means (i) December 31 of each
year and (ii) the date of the consummation of each transaction
undertaken by the corporation or any subsidiary of the
corporation which would either (a) cause the Reserve Amount, as
estimated by the corporation, to decrease by 50% or more from
the preceding Calculation Date or (b) cause the Reserve Amount,
as estimated by the corporation, to fall below the Aggregate
Reserve Requirement on such date.
(iv) "Gold Parity Stock" means any series of Parity
Stock the liquidation preference of which is based on specified
amounts of gold or the Dollar Equivalent Value thereof.
(v) "Reference Gold Price", when used to calculate any
amount payable with respect to the shares of this Series (other
than dividends payable on any Dividend Payment Date other than
the Mandatory Redemption Date) or to purchase any shares of
this Series on any date means the arithmetic average of the
London P.M. gold fixing price (or A.M. gold fixing price if
there is no P.M. gold fixing price on the applicable trading
date) for an ounce of gold in the London bullion market, as
published in The Wall Street Journal (Eastern Edition) (or, if
such prices are not published in The Wall Street Journal
(Eastern Edition), as published in the Financial Times) on each
of the twenty trading days ending on the second trading day
prior to (i) in the case of the mandatory redemption of shares
of this Series, the Mandatory Redemption Date, (ii) in the case
of any Reserve Coverage Offer, the date of commencement
thereof, (iii) in the case of any optional redemption of shares
of this Series, the date fixed for such redemption and (iv) in
the case of a liquidation event, the date 30 days prior to the
date fixed for the liquidating distribution. If for any reason
gold is not traded during any relevant period in the London
bullion market or is not quoted in U.S. dollars in such market,
gold will be valued during such period or portion thereof, as
the case may be, on the basis of trading prices, quoted in U.S.
dollars, in the then principal international trading market for
gold as determined by the corporation's Board of Directors.
(vi) "Required Coverage Multiplier" means (x) 5.0 with
respect to this Series, (y) with respect to any other series of
Gold Parity Stock having the benefit of a provision requiring
an offer similar to the Reserve Coverage Offer, the multiplier
applicable thereto by the terms of such other series, and (z)
1.0 with respect to any other series of Gold Parity Stock.
(vii) "Reserve Amount" as of any Calculation Date means
the corporation's Proportionate Interest in the estimated
proved and probable gold reserves of the corporation and of any
entity in which the corporation has a direct or indirect
beneficial ownership interest. The estimated proved and
probable gold reserves shall be determined based upon
evaluation methods generally applied by the mining industry.
The corporation's "Proportionate Interest" in any estimated
proved and probable gold reserves shall be the corporation's
direct or indirect beneficial ownership interest in such
reserves, giving effect to reductions required to reflect any
beneficial ownership interest of any person other than the
corporation in such reserves.
(viii) "Reserve Coverage Requirement" with respect to any
series of Gold Parity Stock shall mean the product of (x) the
aggregate liquidation preference of all outstanding shares of
such series (expressed in ounces of gold) times (y) the
Required Coverage Multiplier applicable to such series. With
respect to any series with respect to which depositary shares
have been issued, the aggregate liquidation preference of such
series shall be determined on the basis of the number of such
depositary shares as are issued and outstanding as of the
applicable Calculation Date (excluding any depositary shares
which have been acquired by the corporation on or prior to the
date of the preparation of the corporation Certificate with
respect to such Calculation Date).
5. Voting Rights. (a) Except for the voting rights described
below and except as otherwise required by law, the holders of shares of this
Series shall not be entitled to vote on any matter or to receive notice of, or
to participate in, any meeting of the stockholders of the corporation. Each
share of Preferred Stock of this Series will be entitled to one vote on
matters which holders of such Series are entitled to vote.
(b) The shares of this Series shall be entitled to vote with
respect to the election of directors in accordance with Sections I(A)(4) and
II(B)(2) of Article FOURTH of the certificate of incorporation.
(c) Whenever dividends payable on shares of this Series shall
be in default in an aggregate amount equal to or exceeding six full quarterly
dividends on all shares of this Series at the time outstanding, the number of
directors then constituting the Board of Directors of the corporation shall be
increased by two, and holders of shares of this Series shall, in addition to
any other voting rights, have the right, voting separately as a class together
with holders of all other series of stock of the Company ranking on a parity
with shares of this Series either as to dividends or the distribution of
assets upon liquidation, dissolution or winding up and upon which like voting
rights have been conferred and are exercisable (such other series of stock
being herein referred to as "Other Voting Stock"), to elect such two additional
directors. In such case, the Board of Directors will be increased by two
directors, and the holders of shares of this Series (either alone or with the
holders of Other Voting Stock) will have the exclusive right as members of
such class, as described above, to elect two directors at the next annual
meeting of stockholders. Whenever such right of the holders of shares of this
Series shall have vested, such right may be exercised initially either at a
special meeting of such holders as provided in Section 5(d) hereof or at any
annual meeting of stockholders held for the purpose of electing directors, and
thereafter at such annual meetings. The right of the holders of shares of
this Series to vote together as a class with the holders of shares of any Other
Voting Stock shall continue until such time as all dividends accrued on
outstanding shares of this Series to the Dividend Payment Date next preceding
the date of any such determination shall have been paid in full, or declared
and set apart in trust for payment, at which time the right of the holders of
shares of this Series so to vote shall terminate, except as herein or by law
expressly provided, subject to revesting upon the occurrence of a subsequent
default of the character mentioned above.
(d) At any time when the right of the holders of shares of
this Series to elect directors as provided in Section 5(c) hereof shall have
vested, and if such right shall not already have been initially exercised, a
proper officer of the corporation, upon the written request of the holders of
record of at least 10% of the aggregate number of shares of this Series and
shares of any Other Voting Stock at the time outstanding, addressed to the
Secretary of the corporation, shall call a special meeting of the holders of
shares of this Series and of such Other Voting Stock for the purpose of
electing directors. Such meeting shall be held at the earliest practicable
date upon the same form of notice as is required for annual meetings of
stockholders at the place for the holding of annual meetings of stockholders
of the corporation (or such other suitable place as is designated by such
officer). If such meeting shall not be called by a proper officer of the
corporation within 20 days after personal service of such written request upon
the Secretary of the corporation, or within 20 days after mailing the same
within the United States of America, addressed to the Secretary of the
corporation at its principal office (such mailing to be evidenced by the
registry receipt issued by the postal authorities), then the holders of record
of at least 10% of the aggregate number of shares of this Series and shares of
any Other Voting Stock at the time outstanding may designate in writing one of
their number to call such a meeting at the expense of the corporation, and
such meeting may be called by such person so designated upon the same form of
notice as is required for annual meetings of stockholders and shall be held at
the place for the holding of annual meetings of stockholders of the
corporation (or such other suitable place as is designated by such person).
Any holder of shares of this Series so designated shall have access to the
registry books of the corporation for the purpose of causing a meeting of
stockholders to be called pursuant to this subsection (d). Notwithstanding
anything to the contrary contained in this subsection (d), no such special
meeting shall be called during the period within 90 days immediately preceding
the date fixed for the next annual meeting of stockholders of the corporation.
(e) At any meeting held for the purpose of electing directors
at which holders of shares of this Series shall have the right, voting
together as a class with holders of shares of any Other Voting Stock to elect
directors as provided in Section 5(c) hereof, the presence, in person or by
proxy, of the holders of 33 1/3% of the aggregate number of shares of this
Series and shares of such Other Voting Stock at the time outstanding shall be
required and be sufficient to constitute a quorum of such class for the
election of directors pursuant to such Section 5(c). At any such meeting or
adjournment thereof, (i) the absence of a quorum of the shares of this Series
and shares of such Other Voting Stock shall not prevent the election of the
directors to be elected otherwise than pursuant to Section 5(c) hereof and
(ii) in the absence of a quorum, either of the shares of this Series and
shares of such Other Voting Stock or of any other shares of stock of the
corporation, or both, a majority of the holders, present in person or by
proxy, of the class or classes of stock which lack a quorum shall have the
power to adjourn the meeting for the election of directors whom they are
entitled to elect, from time to time without notice other than announcement at
the meeting, until a quorum shall be present.
(f) During any period when the holders of shares of this
Series shall have the right to vote together as a class with the holders of
shares of any Other Voting Stock for directors as provided in Section 5(c)
hereof, (i) the directors so elected by such holders shall continue in office
until their successors shall have been elected by such holders or until
termination of the rights of such holders to vote as a class for directors and
(ii) any vacancies in the Board of Directors shall be filled only by a
majority (even if that be only a single director) of the remaining directors
theretofore elected by the holders of the class or classes of stock which
elected the director whose office shall have become vacant. Immediately upon
termination of the right of holders of this Series and any Other Voting Stock
to vote as a class for directors, (i) the term of office of the directors so
elected shall terminate and (ii) the number of directors shall be such number
as may be provided for in the by-laws of the corporation irrespective of any
increase pursuant to the provisions of Section 5(c) hereof.
(g) In addition to any other vote required by law, the
corporation shall not (i) amend, alter or repeal, whether by merger,
consolidation or otherwise, the provisions of its certificate of incorporation
(including the terms of this Series) so as to materially and adversely affect
any right, preference, privilege or voting power of this Series or (ii)
create, authorize or issue any series or class of stock ranking prior, either
as to payment of dividends or distributions of assets upon liquidation,
dissolution or winding up, to this Series, without the affirmative vote or
consent of the holders of at least two-thirds of the aggregate number of
shares of this Series at the time outstanding, voting as a separate class;
provided, that any increase in the total number of authorized shares of Common
Stock (or any series thereof) or Preferred Stock (or any series thereof), or
the creation, authorization or issuance of any series of stock ranking, as to
dividends or distribution of assets upon liquidation, dissolution or winding
up of the affairs of the corporation, on a parity with the shares of this
Series will not be deemed to materially and adversely affect such rights,
preferences, privileges or voting powers; provided, further, that no class
vote of the holders of shares of this Series shall be required if, at or prior
to the time when the actions described in clause (i) or (ii) of this
subsection 5(g) shall become effective, provision is made in accordance with
Section 4 hereof for the redemption of all shares of this Series at the time
outstanding.
6. Preference upon Liquidation. (a) In the event of any
voluntary or involuntary liquidation, dissolution or winding up of the affairs
of the corporation, after payment or provision for payment of the debts and
other liabilities of the corporation and of dividends and liquidation
preferences in respect of any other stock of the corporation ranking senior to
the shares of this Series as to such payments, the holders of shares of this
Series shall be entitled to receive, out of the remaining net assets of the
corporation, the Dollar Equivalent Value of 2.0 ounces of gold in cash for
each share of this Series, plus an amount equal to all dividends (whether or
not earned or declared) accrued and unpaid on each such share up to the date
fixed for distribution, before any distribution shall be made to or set apart
for the holders of any Junior Stock. If, after payment or provision for
payment of the debts and other liabilities of the corporation and of dividends
and liquidation preferences in respect of any other stock of the corporation
ranking senior to the shares of this Series as to such payments, the remaining
net assets of the corporation are not sufficient to pay to the holders of
shares of this Series the full amount of their preference set forth above,
then the remaining net assets of the corporation shall be divided among and
paid to the holders of shares of this Series, holders of shares of any other
class or series of Preferred Stock and holders of shares of any other stock of
the corporation on a parity with this Series as to dividends and distribution
of assets upon liquidation, dissolution or winding up of the affairs of the
corporation ratably per share in proportion to the full per share amounts to
which they respectively are entitled. For purposes of this subsection (a) and
Section 6(b) hereof, a consolidation or merger of the corporation with one or
more other corporations or the sale of all or substantially all of the assets
of the corporation shall not be deemed to be a voluntary or involuntary
liquidation, dissolution or winding up of the affairs of the corporation.
(b) Subject to the rights of the holders of shares of any
series or class of stock ranking prior to this Series and of the holders of
shares of any stock of the corporation ranking on a parity as to dividends and
distribution of assets upon liquidation, dissolution or winding up of the
affairs of the corporation, after payment shall have been made in full to the
holders of this Series as provided in Section 6(a) hereof and this subsection
(b), the holders of any Junior Stock shall, subject to the respective terms
and provisions (if any) applying thereto, be entitled to receive any and all
assets remaining to be paid or distributed, and shares of this Series shall not
be entitled to share therein.
7. Taxes. The corporation will pay any and all documentary,
stamp or similar taxes payable to the United States of America or any
political subdivision or taxing authority thereof or therein in respect of the
issue or delivery of certificates for shares of this Series on redemption of
less than all of the shares represented by any certificate for such shares
surrendered for redemption or pursuant to a Reserve Coverage Offer; provided,
that the corporation shall not be required to pay any tax which may be payable
in respect of any transfer involved in the issue or delivery of certificates
for shares of this Series in a name other than that of the holder of shares
of this Series to be redeemed or repurchased and no such issue or delivery
shall be made unless and until the person requesting such issue or delivery
has paid to the corporation the amount of any such tax or has established, to
the satisfaction of the corporation, that such tax has been paid. The
corporation extends no protection with respect to any other taxes imposed in
connection with such redemption or repurchase of shares of this Series.
8. No Other Rights. The shares of this Series shall not have
any relative, participating, optional or other special rights and powers other
than as set forth herein and other than any which may be provided by law.
9. Miscellaneous. Capitalized terms which are defined in this
Exhibit are defined only for the purposes of this Exhibit, and not for the
purposes of other Exhibits to the certificate of incorporation. Unless
otherwise indicated, section references contained in this Exhibit refer to the
corresponding sections of this Exhibit.
EXHIBIT E
TERMS
OF
SILVER-DENOMINATED PREFERRED STOCK
(Par Value $0.10 Per Share)
OF
FREEPORT-McMoRan COPPER & GOLD INC.
The number, voting powers, designations, preferences, rights,
qualifications, limitations and restrictions of the corporation's
Silver-Denominated Preferred Stock are as set forth below:
1. Designation. (a) 119,000 shares of Preferred Stock of the
corporation are hereby constituted as a series of Preferred Stock designated as
"Silver-Denominated Preferred Stock" (hereinafter called "this Series"). Each
share of this Series shall be identical in all respects with the other shares
of this Series. The Board of Directors is authorized to increase or decrease
(but not below the number of shares of this Series then outstanding) the
number of shares of this Series.
(b) Shares of this Series which have been redeemed for cash as
hereinafter provided or purchased by the corporation shall be canceled, and
shall revert to authorized but unissued shares of Preferred Stock undesignated
as to series, and may be reissued as a part of this Series or may be
reclassified and reissued as part of a new or existing series of Preferred
Stock to be created by resolution or resolutions of the Board of Directors,
all subject to the conditions or restrictions on issuance set forth in any
resolution or resolutions adopted by the Board of Directors providing for the
issue of such series of Preferred Stock.
2. Dividends. (a) The holders of shares of this Series shall
be entitled to receive, but only out of funds legally available therefor, cash
dividends as hereinafter provided. Such dividends shall be paid when, as and
if declared by the Board of Directors on the first day of February, May,
August and November in each year until and including August 1, 2006 (or, if
any shares of this Series remain outstanding after August 1, 2006, the last
such date thereafter on which any shares of this Series remain outstanding)
(each such date being referred to herein as a "Dividend Payment Date") to
holders of record on the record date determined by the Board of Directors in
advance of the payment of each particular dividend. Such dividends shall be
cumulative from the date of original issuance of the shares of this Series.
(b) So long as any shares of this Series shall be outstanding,
the corporation shall not, unless full cumulative dividends for all past
dividend periods shall have been paid or declared and set apart for payment
upon all outstanding shares of this Series and the shares of any other class
or series of Preferred Stock (including the Gold-Denominated Preferred Stock,
the Gold-Denominated Preferred Stock, Series II, the Step-Up Convertible
Preferred Stock and the 7% Convertible Exchangeable Preferred Stock) and any
other class or series of stock of the corporation ranking, as to dividends, on
a parity with shares of this Series (the shares of any other class or series
of Preferred Stock and any other class or series of stock of the corporation
ranking, as to dividends, on a parity with shares of this Series being herein
referred to as "Parity Dividend Stock"), (i) declare, pay or set apart any
amounts for dividends on, or make any other distribution in cash or other
property in respect of, the Class A Common Stock of the corporation, the Class
B Common Stock of the corporation or any other stock of the corporation
ranking junior to this Series as to dividends or distribution of assets upon
liquidation, dissolution or winding up of the affairs of the corporation (the
Class A Common Stock, the Class B Common Stock and any such other stock being
herein referred to as "Junior Stock"), other than a dividend payable solely in
Junior Stock, (ii) purchase, redeem or otherwise acquire for value any shares
of Junior Stock, directly or indirectly, other than as a result of a
reclassification, exchange or conversion of one Junior Stock for or into
another Junior Stock, or other than through the use of proceeds of a
substantially contemporaneous sale of other Junior Stock, or (iii) make any
payment on account of, or set aside money for, a sinking or other like fund
for the purchase, redemption or other acquisition for value of any shares of
Junior Stock. For purposes of this Section 2 and of Section 4(f) hereof, if
any depositary shares have been issued with respect to any series of stock,
actions with respect to such depositary shares, including acquisition of and
payments on or with respect to such depositary shares, shall be regarded as
actions with respect to such series of stock.
(c) If the funds available for the payment of dividends are
insufficient to pay in full the dividends payable on all outstanding shares of
this Series and shares of Parity Dividend Stock, the total available funds to
be paid in partial dividends on the shares of this Series and shares of Parity
Dividend Stock shall be divided among this Series and the Parity Dividend
Stock in proportion to the aggregate amounts of dividends accrued and unpaid
with respect to this Series and the Parity Dividend Stock. Accruals of
dividends shall not bear interest.
3. Dividend Rate. (a) The Dividend Rate per quarter on each
share of this Series shall be an amount equal to the Dollar Equivalent Value
(as defined below) of 1.65 ounces of silver. "Dollar Equivalent Value" means
the applicable Reference Silver Price multiplied by the applicable number of
ounces of silver. "Reference Silver Price" means, when used to calculate the
amount of any dividend payable on any Dividend Payment Date, the arithmetic
average of the London silver fixing spot price for an ounce of silver in the
London bullion market on each of the twenty trading days ending on the second
trading day prior to the last day of the calendar quarter immediately
preceding such Dividend Payment Date, as published in The Wall Street Journal
(Eastern Edition) (or, if such prices are not published in The Wall Street
Journal, as published in the Financial Times). If for any reason silver is
not traded during any relevant period in the London bullion market or is not
quoted in U.S. dollars in such market, silver will be valued during such
period or portion thereof, as the case may be, on the basis of trading prices,
quoted in U.S. dollars, in the then principal international trading market for
silver as determined by the corporation's Board of Directors. On or before
the fifth business day preceding each record date for the payment of a
dividend in respect of the shares of this Series, the corporation will cause
to be published in The Wall Street Journal (Eastern Edition) or, if such
newspaper is not then published, in a newspaper or other publication of
national circulation, the amount of the dividend payable in respect of each
share of this Series (and, if the shares of this Series are represented by
depositary shares, the amount so payable per depositary share) on the next
succeeding Dividend Payment Date.
(b) Dividends [in respect of the first Dividend Period shall
accrue from the date of original issuance of the shares of this Series and]
shall be calculated on the basis of a year of 360 days consisting of 12 30-day
months. The term "Dividend Period", as used herein, means [(i), with respect
to the November 1, 1994 Dividend Payment Date, the period from the date of
original issuance of the shares of this Series to and including such Dividend
Payment Date, and (ii)], with respect to any [other] Dividend Payment Date,
the period commencing on the day following the immediately preceding Dividend
Payment Date to and including such Dividend Payment Date.
4. Redemption. (a) The Company will redeem annually on
August 1 beginning in 1999, out of funds legally available therefor, a number
of shares of this Series equal to one eighth of the total number of shares of
this Series outstanding immediately after the date of original issuance of the
shares of this Series (including any shares issued pursuant to underwriters'
over-allotment options) (the "Original Shares"), at the Dollar Equivalent
Value per share of 160 ounces of silver.
(b) The shares of this Series shall not be subject to
redemption at the option of the corporation except as described in this
subsection (b). If at any time the total number of outstanding depositary
shares representing shares of this Series (the "Depositary Shares") shall be
less than 15% of the total number of Depositary Shares representing shares of
this Series outstanding immediately after the date of original issuance of the
shares of this Series, the corporation shall have the option to redeem the
outstanding shares of this Series, in whole but not in part, on any subsequent
Dividend Payment Date out of funds legally available therefor, at an amount
equal to the Dollar Equivalent Value of 160 ounces of silver per share plus
accrued and unpaid dividends (as hereinafter defined) to the date fixed for
redemption. For purposes of determining the number of shares of this Series
outstanding on any Dividend Payment Date, the shares of this Series acquired
by the corporation on or prior to such Dividend Payment Date and not
theretofore canceled (or in the case of any shares of this Series represented
by depositary shares, the depositary shares representing shares of this Series
acquired by the corporation on or prior to such Dividend Payment Date and not
theretofore delivered to the depositary for the depositary shares for
cancellation) shall be deemed to be outstanding. Notice of any such
redemption as described in this subsection (b) shall be mailed to holders of
the shares of this Series within 30 days after such Dividend Payment Date in
accordance with the provisions of Section 4(c) hereof. In connection with any
redemption pursuant to this subsection (b), the corporation shall instruct the
depositary in respect of any Depositary Shares representing shares of this
Series to redeem such Depositary Shares on the same date as the redemption of
shares of this Series.
(c) At least 30 days but no more than 60 days prior to the
date fixed for redemption of the shares of this Series in accordance with
Section 4(a) hereof or this subsection (b) (the "Call Date"), a written notice
will be mailed to each holder of record (and each beneficial owner to the
extent required by law) of shares of this Series to be redeemed, notifying
such holder of the corporation's election to redeem such shares if such
redemption is pursuant to Section 4(b) hereof, setting forth the method for
determining the amount payable per share of this Series on the Call Date,
stating the Call Date and calling upon such holder to surrender to the
corporation on the Call Date at the place designated in such notice the
certificate or certificates representing the shares called for redemption.
(d) At any time after a notice of redemption has been given in
the manner prescribed in Section 4(a) or (b) hereof and the amount payable on
the date fixed for redemption can be determined by the corporation, and prior
to the date fixed for redemption, the corporation may deposit in trust, with a
bank or trust company identified in the notice of redemption having capital,
surplus and undistributed profits aggregating at least $50,000,000, an
aggregate amount of funds sufficient for such redemption (including dividends
accrued on the shares of this Series called for redemption to the date fixed
for redemption) for immediate payment in the appropriate amounts upon
surrender of certificates for such shares. Any interest accrued on such funds
shall be paid to the corporation from time to time. Such deposit in trust
shall be irrevocable, except that any funds deposited by the corporation which
are unclaimed at the end of two years from the date fixed for such redemption
shall be paid over to the corporation upon its request, and upon such
repayment the holders of the shares so called for redemption shall look only
to the corporation for payment of the appropriate amount.
(e) From and after the date fixed for redemption (unless the
corporation shall default in making payment of the amount payable upon such
redemption), whether or not certificates for shares so called for redemption
have been surrendered by the holders thereof as described below, dividends on
the shares of this Series so called for redemption shall cease to accrue, and,
from and after the date of the deposit of trust funds for the redemption of
shares of this Series in accordance with the provisions of Section 4(d)
hereof, such shares shall be deemed to be no longer outstanding, and all
rights of the holders thereof as stockholders of the corporation (except the
right to receive from the corporation the amount payable upon such redemption)
shall cease and terminate. Upon surrender in accordance with the notice of
redemption of the certificates for any shares of this Series so redeemed
(properly endorsed or assigned for transfer if the corporation shall so
require and the notice shall so state), the holder thereof shall be entitled
to receive payment of the redemption price plus an amount equal to all accrued
and unpaid dividends as aforesaid.
(f) If the corporation shall have failed to make any required
annual redemption then, until it shall have redeemed all outstanding shares of
this Series then required to be redeemed, the corporation may not (i) declare,
pay or set apart any amounts for dividends on, or make any other distribution
in cash or other property in respect of, any Junior Stock other than a
dividend payable solely in Junior Stock, (ii) purchase, redeem or otherwise
acquire for value any shares of Junior Stock, directly or indirectly, other
than as a result of a reclassification, exchange or conversion of one Junior
Stock for or into another Junior Stock, or other than through the use of
proceeds of a substantially contemporaneous sale of other Junior Stock, (iii)
make any payment on account of, or set aside money for, a sinking or other
like fund for the purchase, redemption or other acquisition for value of any
shares of Junior Stock or (iv) purchase, redeem or otherwise acquire for value
any shares of stock of the corporation ranking on a parity with the shares of
this Series as to dividends or distribution of assets upon liquidation,
dissolution or winding up ("Parity Stock").
(g) (i) Within 90 days following each Calculation Date (as
defined below), the corporation shall be required to prepare a certificate (a
"Corporation Certificate") setting forth its determination of the Reserve
Amount (as defined below) as of such Calculation Date. If the Reserve Amount,
as shown on the Corporation Certificate prepared with respect to any
Calculation Date is less than the Aggregate Reserve Requirement (as defined
below) as of such Calculation Date, the corporation will be required to make
an offer (a "Reserve Coverage Offer") to purchase, out of funds legally
available therefor, at a price equal to the liquidation preference thereof as
of the Purchase Date (as hereinafter defined), plus accrued and unpaid
dividends (as defined below) thereon to the Purchase Date, a sufficient number
of shares of this Series and of other Silver Parity Stock (as defined below)
(or the depositary shares, if any, issued with respect thereto) such that, if
all such shares had been repurchased on the relevant Calculation Date, the
Reserve Amount on that date would have been greater than or equal to the
Aggregate Reserve Requirement on such date. If the Corporation Certificate
prepared with respect to any Calculation Date shows that the Reserve Amount is
less than the Aggregate Reserve Requirement on such date, the corporation
shall include in such Corporation Certificate its calculation of the number
of shares of this Series (or related depositary shares) and the number of
shares of other Parity Stock (or related depositary shares) it intends to
offer to purchase to satisfy the foregoing requirements (such number with
respect to any series being referred to as the "Offer Amount" with respect to
such series). The corporation, in its sole discretion, may determine the
number of shares, if any, of this Series (or related depositary shares) and
the number of shares, if any, of each other series of Silver Parity Stock (or
related depositary shares) to which a Reserve Coverage Offer will be made so
long as such requirements are satisfied.
(ii) If required to make a Reserve Coverage Offer, the
corporation will commence such offer not more than 60 days after the date of
the Corporation Certificate prepared with respect to the applicable
Calculation Date, by mailing a notice to all holders of record of the shares
of each series included in such Reserve Coverage Offer setting forth (A) that
such notice is being given pursuant to a Reserve Coverage Offer, (B) the Offer
Amount with respect to such series, (C) the method for determining the amount
payable per share of such series on the Purchase Date, (D) the last date (the
"Purchase Date"), which shall not be less than 30 nor more 60 days after the
date of such notice, by which a holder must elect whether to accept the
Reserve Coverage Offer, (E) the procedures that such holder must follow to
exercise its rights and (F) the procedures for withdrawing an election. The
corporation shall also cause a copy of such notice to be published in The Wall
Street Journal (Eastern Edition) or another daily newspaper of national
circulation.
(iii) Holders of shares of any series electing to have shares
of such series purchased by the corporation pursuant to a Reserve Coverage
Offer will be required to surrender the certificates representing such shares,
with an appropriate form duly completed, to the corporation prior to the
Purchase Date. Holders will be entitled to withdraw an election by a written
notice of withdrawal delivered to the corporation prior to the close of
business on the Purchase Date. The notice of withdrawal shall state the
number of shares and certificate numbers to which the notice of withdrawal
relates and the number of shares and certificate numbers, if any, which remain
subject to the election. If the aggregate number of shares of any series
tendered exceeds the Offer Amount with respect to such series, the corporation
will select the shares of such series to be purchased on a pro rata basis as
nearly as practicable. The corporation shall, as promptly as reasonably
practicable after the Purchase Date, cause payment to be mailed or delivered
to each tendering holder in the amount of the purchase price, and any
unpurchased shares to be returned to the holder thereof.
(h) If, at the time of any annual redemption or of a Reserve
Coverage Offer, the funds of the corporation legally available for redemption
or repurchase of the shares of this Series are insufficient to redeem or
repurchase all of such shares and all of the shares of any other series of
Parity Stock which the corporation is then obligated to redeem or repurchase,
(i) the total legally available funds shall be allocated among the shares of
this Series and of such other series in proportion to the aggregate dollar
amount of redemption or other repurchase obligations with respect to this
Series and such other series and (ii) the portion of such funds allocated to
this Series will be used to redeem or repurchase the maximum possible number
of shares of this Series, pro rata based upon the number of shares to be
redeemed or delivered for repurchase, as the case may be. At any time
thereafter when additional funds of the corporation become legally available
for such purpose, after giving effect to the foregoing allocation provisions,
such funds shall immediately be used to redeem or repurchase, as the case may
be, any additional shares of this Series which the corporation is obligated to
redeem or repurchase, as the case may be, but which it has not so redeemed or
repurchased.
(i) The corporation shall not have the right to redeem shares
of this Series pursuant to Section 4(a) or (b) hereof unless full cumulative
dividends for all past dividend periods shall have been paid or declared and
set aside for payment upon all outstanding shares of this Series and all
outstanding shares of other series of stock of the corporation ranking, as to
dividends, on a parity with the shares of this Series.
(j) The corporation will not consummate or permit any
subsidiary to consummate any transaction involving the corporation which would
cause the Reserve Amount to fall below the Aggregate Reserve Requirement
immediately after consummation of such transaction unless the corporation will
have sufficient legally available funds immediately following consummation of
such transaction to complete any Reserve Coverage Offer required as a result
thereof.
(k) Definitions. For purposes of this Section 4, the
following terms shall have the meanings indicated:
(i) "accrued and unpaid dividends" per share of this
Series (A) in the case of any Reserve Coverage Offer, (B) in
the case of any annual or optional redemption and (C) in the
case of a liquidation event, shall be equal to the sum of (x)
the aggregate amount of any accrued and unpaid dividends on
such share through the next preceding Dividend Payment Date
(calculated as provided in Section 3 hereof) plus (y) a
proportionate amount of the regular quarterly dividend at the
Dividend Rate for the period from the day following the
immediately preceding Dividend Payment Date through the
redemption date, Purchase Date or date of liquidating
distribution (calculated on the basis of a year of 360 days
consisting of twelve 30-day months) multiplied by the Reference
Silver Price used to calculate the other amounts payable to
holders of the shares of this Series in connection with such
redemption, purchase or liquidation event. If a quarterly
dividend is not declared and paid as provided in Section 3
hereof, the unpaid dividend that shall cumulate for such
Dividend Period will be the amount of the dividend that would
have been payable on the Dividend Payment Date if such dividend
had been timely paid.
(ii) "Aggregate Reserve Requirement" as of any
Calculation Date means the sum of the individual Reserve
Coverage Requirements with respect to each series of Silver
Parity Stock, including this Series.
(iii) "Calculation Date" means (i) December 31 of each
year and (ii) the date of the consummation of each transaction
undertaken by the corporation or any subsidiary of the
corporation which would either (a) cause the Reserve Amount, as
estimated by the corporation, to decrease by 50% or more from
the preceding Calculation Date or (b) cause the Reserve Amount,
as estimated by the corporation, to fall below the Aggregate
Reserve Requirement on such date.
(iv) "Silver Parity Stock" means this Series and any
other series of Parity Stock the liquidation preference of
which is based on specified amounts of silver or the Dollar
Equivalent Value thereof.
(v) "Reference Silver Price", when used to calculate the
amount of any dividend payable on any Dividend Payment Date or
of any annual or optional redemption payment with respect to
the shares of this Series means the arithmetic average of the
London silver fixing spot price for an ounce of silver in the
London bullion market on each of the twenty trading days ending
on the second trading day prior to the last day of the calendar
quarter immediately preceding such quarterly date, as published
in The Wall Street Journal (Eastern Edition) (or, if such
prices are not published in The Wall Street Journal (Eastern
Edition), as published in the Financial Times). When used to
calculate any other amount payable with respect to the shares
of this Series or to purchase any shares of this Series on any
date, the "Reference Silver Price" means the arithmetic average
of the London silver fixing spot price for an ounce of silver
on the London bullion market on each of the twenty trading days
ending on the second trading day prior to (i) in the case of
any Reserve Coverage Offer, the date of commencement thereof
and (ii) in the case of a liquidation event, the date 30 days
prior to the date fixed for the liquidating distribution. If
for any reason silver is not traded during any relevant period
in the London bullion market or is not quoted in U.S. dollars
in such market, silver will be valued during such period or
portion thereof, as the case may be, on the basis of trading
prices, quoted in U.S. dollars, in the then principal
international trading market for silver as determined by the
corporation's Board of Directors.
(vi) "Required Coverage Multiplier" means (x) 2.0 with
respect to this Series, (y) with respect to any other series of
Silver Parity Stock having the benefit of a provision requiring
an offer similar to the Reserve Coverage Offer, the multiplier
applicable thereto by the terms of such other series, and (z)
1.0 with respect to any other series of Silver Parity Stock.
(vii) "Reserve Amount" as of any Calculation Date means
the corporation's Proportionate Interest in the estimated
proved and probable silver reserves of the corporation and of
any entity in which the corporation has a direct or indirect
beneficial ownership interest. The estimated proved and
probable silver reserves shall be determined based upon
evaluation methods generally applied by the mining industry.
The corporation's "Proportionate Interest" in any estimated
proved and probable silver reserves shall be the corporation's
direct or indirect beneficial ownership interest in such
reserves, giving effect to reductions required to reflect any
beneficial ownership interest of any person other than the
corporation in such reserves.
(viii) "Reserve Coverage Requirement" with respect to any
series of Silver Parity Stock shall mean the product of (x) the
aggregate liquidation preference of all outstanding shares of
such series (expressed in ounces of silver) times (y) the
Required Coverage Multiplier applicable to such series. With
respect to any series with respect to which depositary shares
have been issued, the aggregate liquidation preference of such
series shall be determined on the basis of the number of such
depositary shares as are issued and outstanding as of the
applicable Calculation Date (excluding any depositary shares
which have been acquired by the corporation on or prior to the
date of the preparation of the Corporation Certificate with
respect to such Calculation Date).
5. Voting Rights. (a) Except for the voting rights described
below and except as otherwise required by law, the holders of shares of this
Series shall not be entitled to vote on any matter or to receive notice of, or
to participate in, any meeting of the stockholders of the corporation. Each
share of Preferred Stock of this Series will be entitled to one vote on
matters which holders of such Series are entitled to vote.
(b) The shares of this Series shall be entitled to vote with
respect to the election of directors in accordance with Sections I(A)(4) and
II(B)(2) of Article FOURTH of the certificate of incorporation.
(c) Whenever dividends payable on shares of this Series shall
be in default in an aggregate amount equal to or exceeding six full quarterly
dividends on all shares of this Series at the time outstanding, the number of
directors then constituting the Board of Directors of the corporation shall be
increased by two, and holders of shares of this Series shall, in addition to
any other voting rights, have the right, voting separately as a class together
with holders of all other series of stock of the Company ranking on a parity
with shares of this Series either as to dividends or the distribution of
assets upon liquidation, dissolution or winding up and upon which like voting
rights have been conferred and are exercisable (such other series of stock
being herein referred to as "Other Voting Stock"), to elect such two additional
directors. In such case, the Board of Directors will be increased by two
directors, and the holders of shares of this Series (either alone or with the
holders of Other Voting Stock) will have the exclusive right as members of
such class, as described above, to elect two directors at the next annual
meeting of stockholders. Whenever such right of the holders of shares of this
Series shall have vested, such right may be exercised initially either at a
special meeting of such holders as provided in Section 5(d) hereof or at any
annual meeting of stockholders held for the purpose of electing directors, and
thereafter at such annual meetings. The right of the holders of shares of
this Series to vote together as a class with the holders of shares of any Other
Voting Stock shall continue until such time as all dividends accrued on
outstanding shares of this Series to the Dividend Payment Date next preceding
the date of any such determination shall have been paid in full, or declared
and set apart in trust for payment, at which time the right of the holders of
shares of this Series so to vote shall terminate, except as herein or by law
expressly provided, subject to revesting upon the occurrence of a subsequent
default of the character mentioned above.
(d) At any time when the right of the holders of shares of
this Series to elect directors as provided in Section 5(c) hereof shall have
vested, and if such right shall not already have been initially exercised, a
proper officer of the corporation, upon the written request of the holders of
record of at least 10% of the aggregate number of shares of this Series and
shares of any Other Voting Stock at the time outstanding, addressed to the
Secretary of the corporation, shall call a special meeting of the holders of
shares of this Series and of such Other Voting Stock for the purpose of
electing directors. Such meeting shall be held at the earliest practicable
date upon the same form of notice as is required for annual meetings of
stockholders at the place for the holding of annual meetings of stockholders
of the corporation (or such other suitable place as is designated by such
officer). If such meeting shall not be called by a proper officer of the
corporation within 20 days after personal service of such written request upon
the Secretary of the corporation, or within 20 days after mailing the same
within the United States of America, addressed to the Secretary of the
corporation at its principal office (such mailing to be evidenced by the
registry receipt issued by the postal authorities), then the holders of record
of at least 10% of the aggregate number of shares of this Series and shares of
any Other Voting Stock at the time outstanding may designate in writing one of
their number to call such a meeting at the expense of the corporation, and
such meeting may be called by such person so designated upon the same form of
notice as is required for annual meetings of stockholders and shall be held at
the place for the holding of annual meetings of stockholders of the
corporation (or such other suitable place as is designated by such person).
Any holder of shares of this Series so designated shall have access to the
registry books of the corporation for the purpose of causing a meeting of
stockholders to be called pursuant to this subsection (d). Notwithstanding
anything to the contrary contained in this subsection (d), no such special
meeting shall be called during the period within 90 days immediately preceding
the date fixed for the next annual meeting of stockholders of the corporation.
(e) At any meeting held for the purpose of electing directors
at which holders of shares of this Series shall have the right, voting
together as a class with holders of shares of any Other Voting Stock to elect
directors as provided in Section 5(c) hereof, the presence, in person or by
proxy, of the holders of 33 1/3% of the aggregate number of shares of this
Series and shares of such Other Voting Stock at the time outstanding shall be
required and be sufficient to constitute a quorum of such class for the
election of directors pursuant to such Section 5(c). At any such meeting or
adjournment thereof, (i) the absence of a quorum of the shares of this Series
and shares of such Other Voting Stock shall not prevent the election of the
directors to be elected otherwise than pursuant to Section 5(c) hereof and
(ii) in the absence of a quorum, either of the shares of this Series and
shares of such Other Voting Stock or of any other shares of stock of the
corporation, or both, a majority of the holders, present in person or by
proxy, of the class or classes of stock which lack a quorum shall have the
power to adjourn the meeting for the election of directors whom they are
entitled to elect, from time to time without notice other than announcement at
the meeting, until a quorum shall be present.
(f) During any period when the holders of shares of this
Series shall have the right to vote together as a class with the holders of
shares of any Other Voting Stock for directors as provided in Section 5(c)
hereof, (i) the directors so elected by such holders shall continue in office
until their successors shall have been elected by such holders or until
termination of the rights of such holders to vote as a class for directors and
(ii) any vacancies in the Board of Directors shall be filled only by a
majority (even if that be only a single director) of the remaining directors
theretofore elected by the holders of the class or classes of stock which
elected the director whose office shall have become vacant. Immediately upon
termination of the right of holders of this Series and any Other Voting Stock
to vote as a class for directors, (i) the term of office of the directors so
elected shall terminate and (ii) the number of directors shall be such number
as may be provided for in the by-laws of the corporation irrespective of any
increase pursuant to the provisions of Section 5(c) hereof.
(g) In addition to any other vote required by law, the
corporation shall not (i) amend, alter or repeal, whether by merger,
consolidation or otherwise, the provisions of its certificate of incorporation
(including the terms of this Series) so as to materially and adversely affect
any right, preference, privilege or voting power of this Series or (ii)
create, authorize or issue any series or class of stock ranking prior, either
as to payment of dividends or distributions of assets upon liquidation,
dissolution or winding up, to this Series, without the affirmative vote or
consent of the holders of at least two-thirds of the aggregate number of
shares of this Series at the time outstanding, voting as a separate class;
provided, that any increase in the total number of authorized shares of Common
Stock (or any series thereof) or Preferred Stock (or any series thereof), or
the creation, authorization or issuance of any series of stock ranking, as to
dividends or distribution of assets upon liquidation, dissolution or winding
up of the affairs of the corporation, on a parity with the shares of this
Series will not be deemed to materially and adversely affect such rights,
preferences, privileges or voting powers; provided, further, that no class
vote of the holders of shares of this Series shall be required if, at or prior
to the time when the actions described in clause (i) or (ii) of this Section
5(g) shall become effective, provision is made in accordance with Section 4
hereof for the redemption of all shares of this Series at the time outstanding.
6. Preference upon Liquidation. (a) In the event of any
voluntary or involuntary liquidation, dissolution or winding up of the affairs
of the corporation, after payment or provision for payment of the debts and
other liabilities of the corporation and of dividends and liquidation
preferences in respect of any other stock of the corporation ranking senior to
the shares of this Series as to such payments, the holders of shares of this
Series shall be entitled to receive, out of the remaining net assets of the
corporation, the Dollar Equivalent Value of 160 ounces of silver in cash for
each share of this Series, plus an amount equal to all dividends (whether or
not earned or declared) accrued and unpaid on each such share up to the date
fixed for distribution, before any distribution shall be made to or set apart
for the holders of any Junior Stock. If, after payment or provision for
payment of the debts and other liabilities of the corporation and of dividends
and liquidation preferences in respect of any other stock of the corporation
ranking senior to the shares of this Series as to such payments, the remaining
net assets of the corporation are not sufficient to pay to the holders of
shares of this Series the full amount of their preference set forth above,
then the remaining net assets of the corporation shall be divided among and
paid to the holders of shares of this Series, holders of shares of any other
class or series of Preferred Stock and holders of shares of any other stock of
the corporation on a parity with this Series as to dividends and distribution
of assets upon liquidation, dissolution or winding up of the affairs of the
corporation ratably per share in proportion to the full per share amounts to
which they respectively are entitled. For purposes of this subsection (a) and
Section 6(b) hereof, a consolidation or merger of the corporation with one or
more other corporations or the sale of all or substantially all of the assets
of the corporation shall not be deemed to be a voluntary or involuntary
liquidation, dissolution or winding up of the affairs of the corporation.
(b) Subject to the rights of the holders of shares of any
series or class of stock ranking prior to this Series and of the holders of
shares any stock of the corporation ranking on a parity as to dividends and
distribution of assets upon liquidation, dissolution or winding up of the
affairs of the corporation, after payment shall have been made in full to the
holders of this Series as provided in Section 6(a) hereof and this subsection
(b), the holders of any Junior Stock shall, subject to the respective terms
and provisions (if any) applying thereto, be entitled to receive any and all
assets remaining to be paid or distributed, and shares of this Series shall not
be entitled to share therein.
7. Taxes. The corporation will pay any and all documentary,
stamp or similar taxes payable to the United States of America or any
political subdivision or taxing authority thereof or therein in respect of the
issue or delivery of certificates for shares of this Series on redemption of
less than all of the shares represented by any certificate for such shares
surrendered for redemption or pursuant to a Reserve Coverage Offer; provided,
that the corporation shall not be required to pay any tax which may be payable
in respect of any transfer involved in the issue or delivery of certificates
for shares of this Series in a name other than that of the holder of shares
of this Series to be redeemed or repurchased and no such issue or delivery
shall be made unless and until the person requesting such issue or delivery
has paid to the corporation the amount of any such tax or has established, to
the satisfaction of the corporation, that such tax has been paid. The
corporation extends no protection with respect to any other taxes imposed in
connection with such redemption or repurchase of shares of this Series.
8. No Other Rights. The shares of this Series shall not have
any relative, participating, optional or other special rights and powers other
than as set forth herein and other than any which may be provided by law.
9. Miscellaneous. Capitalized terms which are defined in this
Exhibit are defined only for the purposes of this Exhibit, and not for the
purposes of other Exhibits to the certificate of incorporation. Unless
otherwise indicated, section references contained in this Exhibit refer to the
corresponding sections of this Exhibit.
ANNEX II
FREEPORT-McMoRan COPPER & GOLD INC.
ADJUSTED STOCK AWARD PLAN
SECTION 1
Purpose. The purpose of the Freeport-McMoRan Copper & Gold
Inc. Adjusted Stock Award Plan (the "Plan") is to provide for the issuance and
administration of certain awards relating to common stock of the Company
issued to employees, officers and directors of Freeport-McMoRan Inc. ("FTX"),
the Company's current parent, in connection with FTX's distribution to FTX
stockholders of all of the Class B Common Stock of the Company.
SECTION 2
Definitions. As used in the Plan, the following terms shall
have the meanings set forth below:
"Award" shall mean any Option, Limited Right, Stock
Appreciation Right or Stock Incentive Unit granted under this Plan.
"Award Agreement" shall mean any written agreement, contract or
other instrument or document evidencing any Award, which may, but need not, be
executed or acknowledged by a Participant.
"Board" shall mean the Board of Directors of the Company.
"Code" shall mean the Internal Revenue Code of 1986, as amended
from time to time.
"Committee" shall mean a committee of the Board designated by
the Board to administer the Plan and composed of not fewer than two directors,
each of which directors, to the extent necessary to comply with Rule 16b-3
only, is a "disinterested person" within the meaning of Rule 16b-3. Until
otherwise determined by the Board, the Committee shall be the Corporate
Personnel Committee of the Board.
"Company" shall mean Freeport-McMoRan Copper & Gold Inc.
"Consent Solicitation Statement" shall mean the consent
solicitation statement dated ___________ __, 1995 distributed to Company
stockholders in connection with the transactions relating to the Distribution.
"Designated Beneficiary" shall mean the beneficiary designated
by the Participant, in a manner determined by the Committee, to receive the
benefits due the Participant under the Plan in the event of the Participant's
death. In the absence of an effective designation by the Participant,
Designated Beneficiary shall mean the Participant's estate.
"Distribution" shall mean the distribution by FTX of all the
then outstanding Shares owned by FTX to the holders of FTX common stock, as
described in the Consent Solicitation Statement.
"Distribution Date" shall mean the effective date of the
Distribution.
"Eligible Individual" shall mean any present or former
employee, officer or director of FTX who on the Distribution Date holds an FTX
Award.
"Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended from time to time.
"FTX Award" shall mean any of the FTX Options, FTX Director
Options, FTX SARs and FTX SIUs, and any limited rights appertaining thereto.
"FTX Director Option" shall mean an option to purchase FTX
common stock granted under the FTX 1988 Stock Option Plan for Non-Employee
Directors that is outstanding and unexercised on the Distribution Date.
"FTX Option" shall mean an option to purchase FTX common stock
granted by FTX to a present or former officer or employee of FTX that is
outstanding and unexercised on the Distribution Date.
"FTX SAR" shall mean a stock appreciation right granted to a
present or former officer or employee of FTX that is outstanding and
unexercised on the Distribution Date.
"FTX SIU" shall mean a stock incentive unit granted under the
FTX 1992 Stock Incentive Unit Plan that is outstanding and unexercised on the
Distribution Date.
"Limited Right" shall mean any right granted under Section 8 of
the Plan.
"Offer" shall mean any tender offer, exchange offer or series
of purchases or other acquisitions, or any combination of those transactions,
as a result of which any person, or any two or more persons acting as a group,
and all affiliates of such person or persons, shall beneficially own more
than 40% of all classes and series of the Company's stock outstanding, taken
as a whole, that has voting rights with respect to the election of directors of
the Company (not including any series of preferred stock of the Company that
has the right to elect directors only upon the failure of the Company to pay
dividends).
"Offer Price" shall mean the highest price per Share paid in
any Offer that is in effect at any time during the period beginning on the
ninetieth day prior to the date on which a Limited Right is exercised and
ending on and including the date of exercise of such Limited Right. Any
securities or property that comprise all or a portion of the consideration
paid for Shares in the Offer shall be valued in determining the Offer Price at
the higher of (i) the valuation placed on such securities or property by the
person or persons making such Offer, or (ii) the valuation, if any, placed on
such securities or property by the Committee or the Board.
"Option" shall mean an option granted under Section 6 of the
Plan.
"Participant" shall mean any Eligible Individual granted an
Award under the Plan.
"Person" shall mean any individual, corporation, partnership,
association, joint-stock company, trust, unincorporated organization,
government or political subdivision thereof or other entity.
"Rule 16b-3" shall mean Rule 16b-3 promulgated by the SEC under
the Exchange Act, or any successor rule or regulation thereto as in effect
from time to time.
"SAR" shall mean a Stock Appreciation Right.
"SEC" shall mean the Securities and Exchange Commission,
including the staff thereof, or any successor thereto.
"SIU" shall mean any Stock Incentive Unit.
"Shares" shall mean the shares of Class B Common Stock, par
value $.10 per share, of the Company and such other securities of the Company
or a Subsidiary as the Committee may from time to time designate.
"Stock Appreciation Right" shall mean any award of stock
appreciation rights granted under Section 7 of the Plan.
"Stock Incentive Unit" shall mean any award of stock incentive
units granted under Section 9 of the Plan.
"Subsidiary" shall mean any corporation or other entity in
which the Company possesses directly or indirectly equity interests
representing at least 50% of the total ordinary voting power or at least 50%
of the total value of all classes of equity interests of such corporation or
other entity.
SECTION 3
Administration. The Plan shall be administered by the
Committee. Subject to the terms of the Plan and applicable law, and in
addition to other express powers and authorizations conferred on the Committee
by the Plan, the Committee shall have full power and authority to interpret
and administer the Plan and any instrument or agreement relating to, or Award
made under, the Plan; establish, amend, suspend or waive such rules and
regulations and appoint such agents as it shall deem appropriate for the
proper administration of the Plan; and make any other determination and take
any other action that the Committee deems necessary or desirable for the
administration of the Plan. The Committee shall have no discretion relating to
the timing, price and size of Awards granted under the Plan, which shall be
determined in accordance with the provisions of Sections 6 through 9. Unless
otherwise expressly provided in the Plan, all designations, determinations,
interpretations and other decisions under or with respect to the Plan or any
Award shall be within the sole discretion of the Committee, may be made at any
time and shall be final, conclusive and binding upon all Persons, including the
Company, any Subsidiary, any Participant, any holder or beneficiary of any
Award, any stockholder of the Company and any Eligible Individual.
SECTION 4
Eligibility. Each Eligible Individual shall be granted an
Award in accordance with the provisions of the Plan.
SECTION 5
(a) Shares Available for Awards. Subject to adjustment as
provided in paragraph 5(b):
(i) Calculation of Number of Shares Available.
The number of Shares with respect to which Awards may be granted under the
Plan shall be such number of Shares as results from the application of the
award formulas set forth in Sections 6 through 8. Such number of Shares shall
not be reduced by the number of Shares with respect to which SIUs shall be
granted, which shall be determined in accordance with Section 9. If, after
the effective date of the Plan, an Award granted under the Plan expires or is
exercised, forfeited, canceled or terminated without the delivery of Shares,
then the Shares covered by such Award or to which such Award relates, or the
number of Shares otherwise counted against the aggregate number of Shares with
respect to which Awards may be granted, to the extent of any such expiration,
exercise, forfeiture, cancellation or termination, shall not thereafter be
available for grants or Awards under the Plan.
(ii) Sources of Shares Deliverable Under Awards. Any Shares
delivered pursuant to an Award may consist of authorized and unissued Shares
or of treasury Shares, including Shares held by the Company or a Subsidiary and
Shares acquired in the open market or otherwise obtained by the Company or a
Subsidiary.
(b) Adjustments. In the event that the Committee determines
that any dividend or other distribution (whether in the form of cash, Shares,
Subsidiary securities, other securities or other property), recapitalization,
stock split, reverse stock split, reorganization, merger, consolidation,
split-up, spin-off, combination, repurchase or exchange of Shares or other
securities of the Company, issuance of warrants or other rights to purchase
Shares or other securities of the Company, or other similar corporate
transaction or event affects the Shares such that an adjustment is determined
by the Committee to be appropriate to prevent dilution or enlargement of the
benefits or potential benefits intended to be made available under the Plan,
then the Committee may, in its sole discretion and in such manner as it may
deem equitable, adjust any or all of (i) the number and type of Shares (or
other securities or property) subject to outstanding Awards, and (ii) the grant
or exercise price with respect to any Award and, if deemed appropriate, make
provision for a cash payment to the holder of an outstanding Award; provided,
that the number of Shares subject to any Award denominated in Shares shall
always be a whole number.
SECTION 6
(a) Stock Options. Immediately prior to the Distribution,
each holder of an FTX Option or an FTX Director Option shall receive an Option
to purchase such number of Shares (disregarding any fractional Share) as such
holder would be eligible to receive in the Distribution with respect to the
number of shares of FTX common stock subject to such FTX Award if such holder
were the owner of record of such FTX shares on the record date for the
Distribution. Except as set forth in paragraph 6(b), each such Option shall
have the same remaining term and other terms and conditions (whether such
terms and conditions are contained in the related FTX Award agreement or in
the plan under which such FTX Award was made) and shall be exercisable to the
same extent as the FTX Award from which they were derived, with such changes
and modifications as are necessary to substitute the Company for FTX as the
issuer of the Option; provided, however, if the FTX Award from which an Option
is derived has a term that will expire prior to one hundred and eighty days
after the effective date of the Distribution, the term of such Option shall
expire on the one hundred and eightieth day after the effective date of the
Distribution. Notwithstanding the foregoing, no Option shall be exercisable
prior to the ninetieth day after the effective date of the Distribution.
(b) Exercise Price. The per Share exercise price of each
Option granted pursuant to paragraph 6(a) shall be the per share exercise
price or grant price of the FTX Award from which such Option was derived
multiplied by a fraction, the numerator of which is the per Share fair market
value at the time of the Distribution, determined as set forth below, and the
denominator of which is the per share fair market value of FTX common stock
(trading with due bills) at the time of the Distribution, determined as set
forth below. For purposes of this paragraph 6(b), the per Share fair market
value at the time of the Distribution shall be the weighted average
when-issued per Share price on the New York Stock Exchange on the first day on
which the Shares are traded on a when-issued basis on the New York Stock
Exchange, and the per share fair market value of FTX common stock (trading
with due bills) at the time of the Distribution shall be the weighted average
per share price of FTX common stock (trading with due bills) on the New York
Stock Exchange on such trading day.
(c) Tax-Offset Payment Right. If the FTX Award from which the
Option granted under this Section 6 derives contained 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 Option granted under this
Section 6 shall contain a similar tax-offset payment right feature.
(d) Payment. No Shares shall be delivered pursuant to any
exercise of an Option until payment in full of the option price therefor is
received by the Company. Such payment may be made in cash, or its equivalent,
or, if and to the extent permitted by the Committee, by applying cash amounts
payable by the Company upon the exercise of such Option or other Awards by the
optionee or by exchanging whole Shares owned by the optionee (which are not the
subject of any pledge or other security interest), or by a combination of the
foregoing, provided that the combined value of all cash, cash equivalents,
cash amounts so payable by the Company upon exercises of Awards and the fair
market value of any such whole Shares so tendered to the Company, valued (in
accordance with procedures established by the Committee) as of the effective
date of such exercise, is at least equal to such option price.
SECTION 7
(a) Stock Appreciation Rights. Immediately prior to the
Distribution, each holder of an FTX SAR shall receive a Stock Appreciation
Right relating to such number of Shares (disregarding any fractional Share) as
such holder would be eligible to receive in the Distribution with respect to
the number of shares of FTX common stock to which such FTX SAR relates if such
holder were the owner of record of such FTX shares on the record date for the
Distribution. Except as set forth below, each such SAR shall have the same
remaining term and other terms and conditions (whether such terms and
conditions are contained in the related FTX SAR agreement or in the plan under
which such FTX SAR was awarded) and shall be exercisable to the same extent as
the FTX SAR from which they were derived, with such changes and modifications
as are necessary to substitute the Company for FTX as the issuer of the SAR.
The per Share grant price of each SAR shall be determined in the same manner
as the exercise price of Options granted pursuant to Section 6, as described in
paragraph 6(b).
(b) A Stock Appreciation Right shall entitle the Participant
to receive upon exercise, for each Share to which the SAR relates, an amount
in cash equal to the excess, if any, of the fair market value of a Share on the
date of exercise of the SAR over the grant price.
SECTION 8
(a) Limited Rights. Each holder of an FTX Option shall
receive, at the same time as and in tandem with each Option granted to such
holder under Section 6, Limited Rights equal in number to the number of Shares
subject to such Option with which such Limited Rights are in tandem. Such
Limited Rights shall have a grant price equal to the exercise price of the
Option with which it is in tandem, and shall in all other respects contain the
same terms and conditions as in the agreement pertaining to the FTX Option
from which they derived.
(b) A Limited Right shall entitle the Participant to receive
upon exercise, for each Share to which the Limited Right relates, an amount in
cash equal to the excess, if any, of the Offer Price on the date of exercise
of the Limited Right over the grant price. Any Limited Right shall only be
exercisable during a period beginning not earlier than one day and ending not
more than ninety days after the expiration date of an Offer.
SECTION 9
(a) Stock Incentive Units. Immediately prior to the
Distribution, each holder of an FTX SIU shall receive a Stock Incentive Unit
relating to such number of Shares (disregarding any fractional Share) as such
holder would be eligible to receive in the Distribution with respect to the
number of shares of FTX common stock to which such FTX SIU relates if such
holder were the owner of record of such FTX shares on the record date for the
Distribution. Except as set forth below, each such SIU shall have the same
remaining term and other terms and conditions (whether such terms and
conditions are contained in the related FTX SIU agreement or in the plan under
which such FTX SIU was awarded) and shall be exercisable to the same extent as
the FTX SIU from which they were derived, with such changes and modifications
as are necessary to substitute the Company for FTX as the issuer of the SIU.
The per Share exercise price of each SIU shall be determined in the same
manner as the exercise price of Options granted pursuant to Section 6, as
described in paragraph 6(b).
(b) A Stock Incentive Unit shall entitle the Participant to
receive upon exercise, for each Share to which the SIU relates, an amount in
cash equal to the excess, if any, of the fair market value of a Share on the
date of exercise of the SIU over the exercise price. In the event that the
SIU is exercised during a period beginning not earlier than one day after the
expiration date of an Offer and ending not more than ninety days after the
expiration date of such Offer, an SIU shall entitle the Participant to receive
upon exercise, for each Share to which the SIU relates, the higher of (i) the
amount described in the first sentence of this paragraph 9(b) and (ii) an
amount in cash equal to the excess, if any, of the Offer Price on the date of
exercise of the SIU over the exercise price.
SECTION 10
(a) Amendments to the Plan. The Board may amend, suspend or
terminate the Plan or any portion thereof at any time, provided that no
amendment shall be made without stockholder approval if such approval is
necessary to comply with any tax or regulatory requirement, including for these
purposes any approval requirement that is a prerequisite for exemptive relief
from Section 16(b) of the Exchange Act or any successor provision thereto.
Notwithstanding anything to the contrary contained herein, (i) the Committee
may amend the Plan in such manner as may be necessary for the Plan to conform
with local rules and regulations in any jurisdiction outside the United
States, and (ii) any amendment, suspension or termination made in accordance
with this paragraph 10(a) that would adversely affect a Participant's rights
under an Award made under the Plan may not be made without such Participant's
consent and (iii) no amendment to the provisions of Sections 6 through 9 of the
Plan relating to the amount, price and timing of Awards under the Plan may be
made more often than once every six months, except to comport with the
provisions of the Code or the regulations thereunder.
(b) Amendments to Awards. The Committee may amend, modify or
terminate any outstanding Award with the Participant's consent at any time
prior to payment or exercise in any manner not inconsistent with the terms of
the Plan, including without limitation, (i) to change the date or dates as of
which an Award becomes exercisable, or (ii) to cancel an Award and grant a new
Award in substitution therefor under such different terms and conditions as it
determines in its sole and complete discretion to be appropriate.
(c) Adjustment of Awards Upon the Occurrence of Certain
Unusual or Nonrecurring Events. The Committee is hereby authorized to make
adjustments in the terms and conditions of, and the criteria included in,
Awards in recognition of unusual or nonrecurring events (including, without
limitation, the events described in paragraph 5(b) hereof) affecting the
Company, or the financial statements of the Company or any Subsidiary, or of
changes in applicable laws, regulations, or accounting principles, whenever
the Committee determines that such adjustments are appropriate to prevent
dilution or enlargement of the benefits or potential benefits intended to be
made available under the Plan.
(d) Cancellation. Any provision of this Plan or any Award
Agreement to the contrary notwithstanding, the Committee may cause any Award
granted hereunder to be canceled in consideration of a cash payment or
alternative Award made to the holder of such canceled Award equal in value to
such canceled Award. The determinations of value under this subparagraph
shall be made by the Committee in its sole discretion.
SECTION 11
(a) Award Agreements. Each Award hereunder shall be evidenced
by a writing delivered to the Participant that shall specify the terms and
conditions thereof and any rules applicable thereto and that shall, in
accordance with the provisions of the Plan, replicate as closely as possible
the terms, conditions and other contractual attributes of the FTX Award from
which the Award is derived, as in effect on the Distribution Date.
(b) Nontransferability. No Award shall be transferable by a
Participant other than by will or the laws of descent and distribution or, to
the maximum extent permitted by Rule 16b-3, pursuant to a qualified domestic
relations order ("QDRO"), as determined by the Committee. An Award may be
exercised, during the Participant's lifetime, only by the Participant or the
transferee under the QDRO. The designation of a Designated Beneficiary shall
not be a violation of this paragraph 11(b).
(c) Share Certificates. All certificates for Shares or other
securities delivered under the Plan pursuant to any Award or the exercise
thereof shall be subject to such stop transfer orders and other restrictions
as the Committee may deem advisable under the Plan or the rules, regulations,
and other requirements of the SEC, any stock exchange upon which such Shares
or other securities are then listed, and any applicable federal or state laws,
and the Committee may cause a legend or legends to be put on any such
certificates to make appropriate reference to such restrictions.
(d) No Limit on Other Compensation Arrangements. Nothing
contained in the Plan shall prevent the Company from adopting or continuing in
effect other compensation arrangements, which may, but need not, provide for
the grant of options, stock appreciation rights and other types of Awards
provided for hereunder (subject to stockholder approval of any such
arrangement if approval is required), and such arrangements may be either
generally applicable or applicable only in specific cases.
(e) No Right to Employment. The grant of an Award shall not
be construed as giving a Participant the right to be engaged or employed by or
retained in the employ of FTX, the Company or any Subsidiary. FTX, the
Company or any Subsidiary may at any time dismiss a Participant from
engagement or employment, free from any liability or any claim under the Plan,
unless otherwise expressly provided in the Plan or in any Award Agreement or
any agreement relating to the engagement or employment of the Participant by
FTX, the Company or any Subsidiary.
(f) Governing Law. The validity, construction, and effect of
the Plan, any rules and regulations relating to the Plan and any Award
Agreement shall be determined in accordance with the laws of the State of
Delaware.
(g) Severability. If any provision of the Plan or any Award
is or becomes or is deemed to be invalid, illegal, or unenforceable in any
jurisdiction or as to any Person or Award, or would disqualify the Plan or any
Award under any law deemed applicable by the Committee, such provision shall
be construed or deemed amended to conform to applicable laws, or if it cannot
be construed or deemed amended without, in the determination of the Committee,
materially altering the intent of the Plan or the Award, such provision shall
be stricken as to such jurisdiction, Person or Award and the remainder of the
Plan and any such Award shall remain in full force and effect.
(h) No Trust or Fund Created. Neither the Plan nor any Award
shall create or be construed to create a trust or separate fund of any kind or
a fiduciary relationship between the Company and a Participant or any other
Person. To the extent that any Person acquires a right to receive payments
from the Company pursuant to an Award, such right shall be no greater than the
right of any unsecured general creditor of the Company.
(i) No Fractional Shares. No fractional Shares shall be
issued or delivered pursuant to the Plan or any Award, and the Committee shall
determine, in accordance with the terms of the Plan, as applicable, whether
cash, other securities or other property shall be paid or transferred in lieu
of any fractional Shares or whether such fractional Shares or any rights
thereto shall be canceled, terminated, or otherwise eliminated.
(j) Headings. Headings are given to the subsections of the
Plan solely as a convenience to facilitate reference. Such headings shall not
be deemed in any way material or relevant to the construction or
interpretation of the Plan or any provision thereof.
SECTION 12
Effective Date of the Plan. The Plan shall be effective as of
the date of its approval by the holders of the common stock of the Company.
SECTION 13
Term of the Plan. Subject to paragraph 5(b), no Award shall be
granted under the Plan except the Awards provided for in Sections 6, 7, 8 and
9. Awards granted hereunder shall continue until their respective expiration
dates, and the authority of the Committee to administer, interpret, amend,
alter, adjust, suspend, discontinue, or terminate, in accordance with the
provisions of the Plan, any such Award or to waive any conditions or rights
under any such Award shall extend until the latest such date.
ANNEX III
FREEPORT-McMoRan COPPER & GOLD INC.
1995 STOCK OPTION PLAN
SECTION 1
Purpose. The purpose of the Freeport-McMoRan Copper & Gold
Inc. 1995 Stock Option Plan (the "Plan") is to motivate and reward key
personnel by giving them a proprietary interest in the Company's continued
success.
SECTION 2
Definitions. As used in the Plan, the following terms shall
have the meanings set forth below:
"Award" shall mean any Option, Stock Appreciation Right,
Limited Right or Other Stock-Based Award.
"Award Agreement" shall mean any written agreement, contract or
other instrument or document evidencing any Award, which may, but need not, be
executed or acknowledged by a Participant.
"Board" shall mean the Board of Directors of the Company.
"Code" shall mean the Internal Revenue Code of 1986, as amended
from time to time.
"Committee" shall mean a committee of the Board designated by
the Board to administer the Plan and composed of not fewer than two directors,
each of which directors, to the extent necessary to comply with Rule 16b-3
only, is a "disinterested person" within the meaning of Rule 16b-3. Until
otherwise determined by the Board, the Committee shall be the Corporate
Personnel Committee of the Board.
"Company" shall mean Freeport-McMoRan Copper & Gold Inc.
"Designated Beneficiary" shall mean the beneficiary designated
by the Participant, in a manner determined by the Committee, to receive the
benefits due the Participant under the Plan in the event of the Participant's
death. In the absence of an effective designation by the Participant,
Designated Beneficiary shall mean the Participant's estate.
"Employee" shall mean (i) any person providing services as an
officer of the Company or a Subsidiary, whether or not employed by such
entity, including any such person who is also a director of the Company, (ii)
any employee of the Company or a Subsidiary, including any director who is
also an employee of the Company or a Subsidiary, (iii) any officer or employee
of an entity with which the Company has contracted to receive executive or
management services who provides services to the Company or a Subsidiary
through such arrangement and (iv) any person who has agreed in writing to
become a person described in clauses (i), (ii) or (iii) within not more than
30 days following the date of grant of such person's first Award under the
Plan.
"Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended from time to time.
"Incentive Stock Option" shall mean an option granted under
Section 6 of the Plan that is intended to meet the requirements of Section 422
of the Code or any successor provision thereto.
"Limited Right" shall mean any right granted under Section 8 of
the Plan.
"Nonqualified Stock Option" shall mean an option granted under
Section 6 of the Plan that is not intended to be an Incentive Stock Option.
"Offer" shall mean any tender offer, exchange offer or series
of purchases or other acquisitions, or any combination of those transactions,
as a result of which any person, or any two or more persons acting as a group,
and all affiliates of such person or persons, shall beneficially own more than
40% of all classes and series of the Company's stock outstanding, taken as a
whole, that has voting rights with respect to the election of directors of the
Company (not including any series of preferred stock of the Company that has
the right to elect directors only upon the failure of the Company to pay
dividends).
"Offer Price" shall mean the highest price per Share paid in
any Offer that is in effect at any time during the period beginning on the
ninetieth day prior to the date on which a Limited Right is exercised and
ending on and including the date of exercise of such Limited Right. Any
securities or property that comprise all or a portion of the consideration
paid for Shares in the Offer shall be valued in determining the Offer Price at
the higher of (i) the valuation placed on such securities or property by the
person or persons making such Offer, or (ii) the valuation, if any, placed on
such securities or property by the Committee or the Board.
"Option" shall mean an Incentive Stock Option or a Nonqualified
Stock Option.
"Other Stock-Based Award" shall mean any right or award granted
under Section 9 of the Plan.
"Participant" shall mean any Employee granted an Award under
the Plan.
"Person" shall mean any individual, corporation, partnership,
association, joint-stock company, trust, unincorporated organization,
government or political subdivision thereof or other entity.
"Rule 16b-3" shall mean Rule 16b-3 promulgated by the SEC under
the Exchange Act, or any successor rule or regulation thereto as in effect
from time to time.
"SAR" shall mean any Stock Appreciation Right.
"SEC" shall mean the Securities and Exchange Commission,
including the staff thereof, or any successor thereto.
"Shares" shall mean the shares of Class B Common Stock, par
value $0.10 per share, of the Company and such other securities of the Company
or a Subsidiary as the Committee may from time to time designate.
"Stock Appreciation Right" shall mean any right granted under
Section 7 of the Plan.
"Subsidiary" shall mean (i) any corporation or other entity in
which the Company possesses directly or indirectly equity interests
representing at least 50% of the total ordinary voting power or at least 50%
of the total value of all classes of equity interests of such corporation or
other entity and (ii) any other entity in which the Company has a direct or
indirect economic interest that is designated as a Subsidiary by the Committee.
SECTION 3
Administration. The Plan shall be administered by the
Committee. Subject to the terms of the Plan and applicable law, and in
addition to other express powers and authorizations conferred on the Committee
by the Plan, the Committee shall have full power and authority to: (i)
designate Participants; (ii) determine the type or types of Awards to be
granted to an eligible Employee; (iii) determine the number of Shares to be
covered by, or with respect to which payments, rights or other matters are to
be calculated in connection with, Awards; (iv) determine the terms and
conditions of any Award; (v) determine whether, to what extent, and under what
circumstances Awards may be settled or exercised in cash, whole Shares, other
whole securities, other Awards, other property or other cash amounts payable
by the Company upon the exercise of that or other Awards, or canceled,
forfeited or suspended and the method or methods by which Awards may be
settled, exercised, canceled, forfeited or suspended; (vi) determine whether,
to what extent, and under what circumstances cash, Shares, other securities,
other Awards, other property, and other amounts payable by the Company with
respect to an Award shall be deferred either automatically or at the election
of the holder thereof or of the Committee; (vii) interpret and administer the
Plan and any instrument or agreement relating to, or Award made under, the
Plan; (viii) establish, amend, suspend or waive such rules and regulations and
appoint such agents as it shall deem appropriate for the proper administration
of the Plan; and (ix) make any other determination and take any other action
that the Committee deems necessary or desirable for the administration of the
Plan. Unless otherwise expressly provided in the Plan, all designations,
determinations, interpretations and other decisions under or with respect to
the Plan or any Award shall be within the sole discretion of the Committee,
may be made at any time and shall be final, conclusive and binding upon all
Persons, including the Company, any Subsidiary, any Participant, any holder or
beneficiary of any Award, any stockholder of the Company and any Employee.
SECTION 4
Eligibility. Any Employee who is not a member of the Committee
shall be eligible to be granted an Award.
SECTION 5
(a) Shares Available for Awards. Subject to adjustment as
provided in Section 5(b):
(i) Calculation of Number of Shares Available. The number of
Shares with respect to which Awards may be granted under the Plan shall be
10,000,000. Shares subject to Awards that are not granted in tandem with an
Option and that by their terms may be settled only in cash shall not be
counted against such total, except as may be required to comply with Rule
16b-3. If, after the effective date of the Plan, an Award granted under the
Plan expires or is exercised, forfeited, canceled or terminated without the
delivery of Shares, then the Shares covered by such Award or to which such
Award relates, or the number of Shares otherwise counted against the aggregate
number of Shares with respect to which Awards may be granted, to the extent
of any such expiration, exercise, forfeiture, cancellation or termination
without the delivery of Shares, shall again be, or shall become, Shares with
respect to which Awards may be granted.
(ii) Substitute Awards. Any Shares delivered by the
Company, any Shares with respect to which Awards are made by the Company,
or any Shares with respect to which the Company becomes obligated to make
Awards, through the assumption of, or in substitution for, outstanding
awards previously granted by an acquired company or a company with which
the Company combines, shall not, except in the case of Shares with respect
to which Awards are granted to Employees who are officers or directors of
the Company for purposes of Section 16 of the Exchange Act or any successor
section thereto, be counted against the Shares available for Awards under
the Plan.
(iii) Sources of Shares Deliverable Under Awards. Any Shares
delivered pursuant to an Award may consist of authorized and unissued Shares
or of treasury Shares, including Shares held by the Company or a Subsidiary and
Shares acquired in the open market or otherwise obtained by the Company or a
Subsidiary.
(iv) Individual Limit. Any provision of the Plan to the
contrary notwithstanding, no individual may receive in any year Awards under
the Plan that relate to more than 1,750,000 Shares.
(b) Adjustments. In the event that the Committee determines
that any dividend or other distribution (whether in the form of cash, Shares,
Subsidiary securities, other securities or other property), recapitalization,
stock split, reverse stock split, reorganization, merger, consolidation,
split-up, spin-off, combination, repurchase or exchange of Shares or other
securities of the Company, issuance of warrants or other rights to purchase
Shares or other securities of the Company, or other similar corporate
transaction or event affects the Shares such that an adjustment is determined
by the Committee to be appropriate to prevent dilution or enlargement of the
benefits or potential benefits intended to be made available under the Plan,
then the Committee may, in its sole discretion and in such manner as it may
deem equitable, adjust any or all of (i) the number and type of Shares (or
other securities or property) with respect to which Awards may be granted, (ii)
the number and type of Shares (or other securities or property) subject to
outstanding Awards, and (iii) the grant or exercise price with respect to any
Award and, if deemed appropriate, make provision for a cash payment to the
holder of an outstanding Award and, if deemed appropriate, adjust outstanding
Awards to provide the rights contemplated by Section 9(b) hereof; provided, in
each case, that with respect to Awards of Incentive Stock Options no such
adjustment shall be authorized to the extent that such authority would cause
the Plan to violate Section 422(b)(1) of the Code or any successor provision
thereto and, with respect to all Awards under the Plan, no such adjustment
shall be authorized to the extent that such authority would be inconsistent
with the requirements for full deductibility under Section 162(m) of the Code
and the regulations thereunder; and provided further, that the number of Shares
subject to any Award denominated in Shares shall always be a whole number.
SECTION 6
(a) Stock Options. Subject to the provisions of the Plan, the
Committee shall have sole and complete authority to determine the Employees to
whom Options shall be granted, the number of Shares to be covered by each
Option, the option price therefor and the conditions and limitations
applicable to the exercise of the Option. The Committee shall have the
authority to grant Incentive Stock Options, Nonqualified Stock Options or
both. In the case of Incentive Stock Options, the terms and conditions of such
grants shall be subject to and comply with such rules as may be required by
Section 422 of the Code, as from time to time amended, and any implementing
regulations. Except in the case of an Option granted in assumption of or
substitution for an outstanding award of a company acquired by the Company or
with which the Company combines, the exercise price of any Option granted
under this Plan shall not be less than 100% of the fair market value of the
underlying Shares on the date of grant.
(b) Exercise. Each Option shall be exercisable at such times
and subject to such terms and conditions as the Committee may, in its sole
discretion, specify in the applicable Award Agreement or thereafter, provided,
however, that in no event may any Option granted hereunder be exercisable
after the expiration of 10 years after the date of such grant. The Committee
may impose such conditions with respect to the exercise of Options, including
without limitation, any condition relating to the application of Federal or
state securities laws, as it may deem necessary or advisable. Except in the
case of an Option granted in assumption of or substitution for an outstanding
award of a company acquired by the Company or with which the Company combines,
no Option shall be exercisable earlier than six months after the date of grant.
(c) Payment. No Shares shall be delivered pursuant to any
exercise of an Option until payment in full of the option price therefor is
received by the Company. Such payment may be made in cash, or its equivalent,
or, if and to the extent permitted by the Committee, by applying cash amounts
payable by the Company upon the exercise of such Option or other Awards by the
optionee or by exchanging whole Shares owned by the optionee (which are not the
subject of any pledge or other security interest), or by a combination of the
foregoing, provided that the combined value of all cash, cash equivalents,
cash amounts so payable by the Company upon exercises of Awards and the fair
market value of any such whole Shares so tendered to the Company, valued (in
accordance with procedures established by the Committee) as of the effective
date of such exercise, is at least equal to such option price.
SECTION 7
(a) Stock Appreciation Rights. Subject to the provisions of
the Plan, the Committee shall have sole and complete authority to determine
the Employees to whom Stock Appreciation Rights shall be granted, the number
of Shares to be covered by each Award of Stock Appreciation Rights, the grant
price thereof and the conditions and limitations applicable to the exercise
thereof. Stock Appreciation Rights may be granted in tandem with another
Award, in addition to another Award, or freestanding and unrelated to any
other Award. Stock Appreciation Rights granted in tandem with or in addition
to an Option or other Award may be granted either at the same time as the
Option or other Award or at a later time. Stock Appreciation Rights shall not
be exercisable earlier than six months after the date of grant nor after the
expiration of 10 years after the date of grant. Except in the case of a Stock
Appreciation Right granted in assumption of or substitution for an outstanding
award of a company acquired by the Company or with which the Company combines,
the grant price of any Stock Appreciation Right granted under this Plan shall
not be less than 100% of the fair market value of the Shares covered by such
Stock Appreciation Right on the date of grant or, in the case of a Stock
Appreciation Right granted in tandem with a then outstanding Option or other
Award, on the date of grant of such related Option or Award.
(b) A Stock Appreciation Right shall entitle the Participant
to receive upon exercise, for each Share to which the SAR relates, an amount
equal to the excess, if any, of the fair market value of a Share on the date of
exercise of the Stock Appreciation Right over the grant price. Any Stock
Appreciation Right shall be settled in cash, unless the Committee shall
determine at the time of grant of a Stock Appreciation Right that it shall or
may be settled in cash, Shares or a combination of cash and Shares.
SECTION 8
(a) Limited Rights. Subject to the provisions of the Plan,
the Committee shall have sole and complete authority to determine the
Employees to whom Limited Rights shall be granted, the number of Shares to be
covered by each Award of Limited Rights, the grant price thereof and the
conditions and limitations applicable to the exercise thereof. Limited Rights
may be granted in tandem with another Award, in addition to another Award, or
freestanding and unrelated to any Award. Limited Rights granted in tandem
with or in addition to an Award may be granted either at the same time as the
Award or at a later time. Limited Rights shall not be exercisable earlier
than six months after the date of grant nor after the expiration of 10 years
after the date of grant and shall only be exercisable during a period
determined at the time of grant by the Committee beginning not earlier than
one day and ending not more than ninety days after the expiration date of an
Offer. Except in the case of a Limited Right granted in assumption of or
substitution for an outstanding award of a company acquired by the Company or
with which the Company combines, the grant price of any Limited Right granted
under this Plan shall not be less than 100% of the fair market value of the
Shares covered by such Limited Right on the date of grant or, in the case of a
Limited Right granted in tandem with a then outstanding Option or other Award,
on the date of grant of such related Option or Award.
(b) A Limited Right shall entitle the Participant to receive
upon exercise, for each Share to which the Limited Right relates, an amount
equal to the excess, if any, of the Offer Price on the date of exercise of the
Limited Right over the grant price. Any Limited Right shall be settled in
cash, unless the Committee shall determine at the time of grant of a Limited
Right that it shall or may be settled in cash, Shares or a combination of cash
and Shares.
SECTION 9
(a) Other Stock-Based Awards. The Committee is hereby
authorized to grant to eligible Employees an "Other Stock-Based Award", which
shall consist of an Award, the value of which is based in whole or in part on
the value of Shares, that is not an instrument or Award specified in Sections
6 through 8 of this Plan. Other Stock-Based Awards may be awards of Shares or
may be denominated or payable in, valued in whole or in part by reference to,
or otherwise based on or related to, Shares (including, without limitation,
securities convertible or exchangeable into or exercisable for Shares), as
deemed by the Committee consistent with the purposes of the Plan. The
Committee shall determine the terms and conditions of any such Other
Stock-Based Award. Except in the case of an Other Stock-Based Award granted
in assumption of or in substitution for an outstanding award of a company
acquired by the Company or with which the Company combines, the price at which
securities may be purchased pursuant to any Other Stock-Based Award granted
under this Plan, or the provision, if any, of any such Award that is analogous
to the purchase or exercise price, shall not be less than 100% of the fair
market value of the securities to which such Award relates on the date of
grant.
(b) Dividend Equivalents. In the sole and complete discretion
of the Committee, an Award, whether made as an Other Stock-Based Award under
this Section 9 or as an Award granted pursuant to Sections 6 through 8 hereof,
may provide the Participant with dividends or dividend equivalents, payable in
cash, Shares, Subsidiary securities, other securities or other property on a
current or deferred basis.
SECTION 10
(a) Amendments to the Plan. The Board may amend, suspend or
terminate the Plan or any portion thereof at any time, provided that no
amendment shall be made without stockholder approval if such approval is
necessary to comply with any tax or regulatory requirement, including for these
purposes any approval requirement that is a prerequisite for exemptive relief
from Section 16(b) of the Exchange Act or any successor provision thereto.
Notwithstanding anything to the contrary contained herein, the Committee may
amend the Plan in such manner as may be necessary for the Plan to conform with
local rules and regulations in any jurisdiction outside the United States.
(b) Amendments to Awards. The Committee may amend, modify or
terminate any outstanding Award with the Participant's consent at any time
prior to payment or exercise in any manner not inconsistent with the terms of
the Plan, including without limitation, (i) to change the date or dates as of
which an Award becomes exercisable, or (ii) to cancel an Award and grant a new
Award in substitution therefor under such different terms and conditions as it
determines in its sole and complete discretion to be appropriate.
(c) Adjustment of Awards Upon the Occurrence of Certain
Unusual or Nonrecurring Events. The Committee is hereby authorized to make
adjustments in the terms and conditions of, and the criteria included in,
Awards in recognition of unusual or nonrecurring events (including, without
limitation, the events described in Section 5(b) hereof) affecting the
Company, or the financial statements of the Company or any Subsidiary, or of
changes in applicable laws, regulations, or accounting principles, whenever
the Committee determines that such adjustments are appropriate to prevent
dilution or enlargement of the benefits or potential benefits intended to be
made available under the Plan.
(d) Cancellation. Any provision of this Plan or any Award
Agreement to the contrary notwithstanding, the Committee may cause any Award
granted hereunder to be canceled in consideration of a cash payment or
alternative Award made to the holder of such canceled Award equal in value to
such canceled Award. The determinations of value under this subparagraph
shall be made by the Committee in its sole discretion.
SECTION 11
(a) Delegation. Subject to the terms of the Plan and
applicable law, the Committee may delegate to one or more officers of the
Company the authority, subject to such terms and limitations as the Committee
shall determine, to grant Awards to, or to cancel, modify or waive rights with
respect to, or to alter, discontinue, suspend, or terminate Awards held by,
Employees who are not officers or directors of the Company for purposes of
Section 16 of the Exchange Act, or any successor section thereto, or who are
otherwise not subject to such Section.
(b) Award Agreements. Each Award hereunder shall be evidenced
by a writing delivered to the Participant that shall specify the terms and
conditions thereof and any rules applicable thereto, including but not limited
to the effect on such Award of the death, retirement or other termination of
employment of the Participant and the effect thereon, if any, of a change in
control of the Company.
(c) Withholding. A Participant may be required to pay to the
Company, and the Company shall have the right to deduct from all amounts paid
to a Participant (whether under the Plan or otherwise), any taxes required by
law to be paid or withheld in respect of Awards hereunder to such Participant.
The Committee may provide for additional cash payments to holders of Awards to
defray or offset any tax arising from the grant, vesting, exercise or payment
of any Award.
(d) Nontransferability. No Award shall be transferable by a
Participant other than by will or the laws of descent and distribution or, to
the maximum extent permitted by Rule 16b-3, pursuant to a qualified domestic
relations order ("QDRO"), as determined by the Committee. An Award may be
exercised, during the Participant's lifetime, only by the Participant or the
transferee under the QDRO. The designation of a Designated Beneficiary shall
not be a violation of this paragraph 11(d).
(e) Share Certificates. All certificates for Shares or other
securities delivered under the Plan pursuant to any Award or the exercise
thereof shall be subject to such stop transfer orders and other restrictions
as the Committee may deem advisable under the Plan or the rules, regulations,
and other requirements of the SEC, any stock exchange upon which such Shares
or other securities are then listed, and any applicable federal or state laws,
and the Committee may cause a legend or legends to be put on any such
certificates to make appropriate reference to such restrictions.
(f) No Limit on Other Compensation Arrangements. Nothing
contained in the Plan shall prevent the Company from adopting or continuing in
effect other compensation arrangements, which may, but need not, provide for
the grant of options, stock appreciation rights and other types of Awards
provided for hereunder (subject to stockholder approval of any such
arrangement if approval is required), and such arrangements may be either
generally applicable or applicable only in specific cases.
(g) No Right to Employment. The grant of an Award shall
not be construed as giving a Participant the right to be retained in the
employ of the Company or any Subsidiary or in the employ of any other
entity providing services to the Company. The Company or any Subsidiary or
any such entity may at any time dismiss a Participant from employment, or
terminate any arrangement pursuant to which the Participant provides
services to the Company, free from any liability or any claim under the
Plan, unless otherwise expressly provided in the Plan or in any Award
Agreement. No Employee, Participant or other person shall have any claim
to be granted any Award, and there is no obligation for uniformity of
treatment of Employees, Participants or holders or beneficiaries of Awards.
(h) Governing Law. The validity, construction, and effect of
the Plan, any rules and regulations relating to the Plan and any Award
Agreement shall be determined in accordance with the laws of the State of
Delaware.
(i) Severability. If any provision of the Plan or any Award
is or becomes or is deemed to be invalid, illegal, or unenforceable in any
jurisdiction or as to any Person or Award, or would disqualify the Plan or any
Award under any law deemed applicable by the Committee, such provision shall
be construed or deemed amended to conform to applicable laws, or if it cannot
be construed or deemed amended without, in the determination of the Committee,
materially altering the intent of the Plan or the Award, such provision shall
be stricken as to such jurisdiction, Person or Award and the remainder of the
Plan and any such Award shall remain in full force and effect.
(j) No Trust or Fund Created. Neither the Plan nor any Award
shall create or be construed to create a trust or separate fund of any kind or
a fiduciary relationship between the Company and a Participant or any other
Person. To the extent that any Person acquires a right to receive payments
from the Company pursuant to an Award, such right shall be no greater than the
right of any unsecured general creditor of the Company.
(k) No Fractional Shares. No fractional Shares shall be
issued or delivered pursuant to the Plan or any Award, and the Committee shall
determine whether cash, other securities or other property shall be paid or
transferred in lieu of any fractional Shares or whether such fractional Shares
or any rights thereto shall be canceled, terminated, or otherwise eliminated.
(l) Headings. Headings are given to the subsections of the
Plan solely as a convenience to facilitate reference. Such headings shall not
be deemed in any way material or relevant to the construction or
interpretation of the Plan or any provision thereof.
SECTION 12
Effective Date of the Plan. The Plan shall be effective as of
the date of its approval by the holders of the common stock of the Company.
SECTION 13
Term of the Plan. No Award shall be granted under the Plan
after the fifth anniversary of the effective date of the Plan; however, unless
otherwise expressly provided in the Plan or in an applicable Award Agreement,
any Award theretofore granted may, and the authority of the Committee to
amend, alter, adjust, suspend, discontinue, or terminate any such Award or to
waive any conditions or rights under any such Award shall, extend beyond such
date.
ANNEX IV
FREEPORT-McMoRan COPPER & GOLD INC.
1995 STOCK OPTION PLAN FOR NON-EMPLOYEE DIRECTORS
ARTICLE I
PURPOSE OF THE PLAN
The purpose of the 1995 Stock Option Plan for Non-Employee
Directors (the "Plan") is to align more closely the interests of the
non-employee directors of Freeport-McMoRan Copper & Gold Inc. (the "Company")
with that of the Company's stockholders by providing for the automatic grant
to such directors of stock options ("Options") to purchase Shares (as
hereinafter defined), in accordance with the terms of the Plan.
ARTICLE II
DEFINITIONS
For the purposes of this Plan, the following terms shall have
the meanings indicated:
Applicable Rate: With respect to the exercise of an Option,
the rate, expressed as a percentage, determined according to the following
formula:
x divided by (1-x)
in which x equals the maximum federal income tax rate applicable to
individuals in effect on the date of such exercise of such Option.
Board: The Board of Directors of the Company.
Change in Control: A Change in Control shall be deemed to have
occurred if either (a) (i) prior to the Combination Date, as such term is
defined in the Company's Certificate of Incorporation as in effect at the time
of the Distribution, any person, or any two or more persons acting as a group,
and all affiliates of such person or persons, shall, otherwise than as a
result of the Distribution, beneficially own more than 50% of the Class A
Common Stock, par value $0.10 per share of the Company, or more than 20% of
the Shares and (ii) after the Combination Date, any person, or any two or more
persons acting as a group, and all affiliates of such person or persons, shall
beneficially own more than 20% of all classes and series of the Company's
stock outstanding, taken as a whole, that has voting rights with respect to
the election of directors of the Company (not including any series of
preferred stock of the Company that has the right to elect directors only upon
the failure of the Company to pay dividends), in the case of either (i) or
(ii), pursuant to a tender offer, exchange offer or series of purchases or
other acquisitions, or any combination of those transactions, or (b) there
shall be a change in the composition of the Board at any time within two years
after any tender offer, exchange offer, merger, consolidation, sale of assets
or contested election, or any combination of those transactions (a
"Transaction"), so that (i) the persons who were directors of the Company
immediately before the first such Transaction cease to constitute a majority
of the Board of Directors of the corporation which shall thereafter be in
control of the companies that were parties to or otherwise involved in such
Transaction, or (ii) the number of persons who shall thereafter be directors
of such corporation shall be fewer than two-thirds of the number of directors
of the Company immediately prior to such first Transaction. A Change in
Control shall be deemed to take place upon the first to occur of the events
specified in the foregoing clauses (a) and (b).
Code: The Internal Revenue Code of 1986, as amended from time
to time.
Distribution: The distribution by Freeport-McMoRan Inc.
("FTX") of all the then outstanding Shares owned by FTX to the holders of FTX
common stock.
Election Period: The period beginning on the third business
day following a date on which the Company releases for publication its
quarterly or annual summary statements of sales and earnings, and ending on
the twelfth business day following such date.
Eligible Director: A director of the Company who is not, and
within the preceding one year has not been, an officer or an employee of the
Company or a Subsidiary, an officer or an employee of an entity with which the
Company has contracted to receive executive or management services, or
otherwise eligible for selection to participate in any plan of the Company or
any Subsidiary that entitles the participants therein to acquire stock, stock
options or stock appreciation rights of the Company or its Subsidiaries.
Exchange Act: The Securities Exchange Act of 1934, as amended.
Fair Market Value: The average of the per Share high and low
quoted sale prices on the date in question (or, if there is no reported sale
on such date, on the last preceding date on which any reported sale occurred)
on the principal exchange or market where such Shares are quoted.
Grant Date: The first day of the first month following the
month in which the Distribution occurs.
Option Cancellation Gain: With respect to the cancellation of
an Option pursuant to Section 3 of Article IV hereof, the excess of the Fair
Market Value as of the Option Cancellation Date (as that term is defined in
Section 3 of Article IV hereof) of all the outstanding Shares covered by such
Option, whether or not then exercisable, over the purchase price of such
Shares under such Option.
Option Gain: The excess of the Fair Market Value of the Shares
covered by the exercise of an Option over the purchase price of such Shares
under such Option, as such Fair Market Value is determined on the date of such
exercise.
Shares: Shares of Class B Common Stock, par value $0.10 per
share, of the Company and any shares into which such Shares may be converted
or combined in accordance with the terms of the Company's Certificate of
Incorporation.
Subsidiary: Any corporation of which stock representing at
least 50% of the ordinary voting power is owned, directly or indirectly, by
the Company; and any other entity of which equity securities or interests
representing at least 50% of the ordinary voting power or 50% of the total
value of all classes of equity securities or interests of such entity are
owned, directly or indirectly, by the Company.
ARTICLE III
ADMINISTRATION OF THE PLAN
This Plan shall be administered by the Board. The Board will
interpret this Plan and may from time to time adopt such rules and regulations
for carrying out the terms and provisions of this Plan as it may deem best;
however, the Board shall have no discretion with respect to the selection of
directors who receive Options, the timing of the grant of Options, the number
of Shares subject to any Options or the purchase price thereof. All
determinations by the Board shall be made by the affirmative vote of a
majority of its members, but any determination reduced to writing and signed
by a majority of its members shall be fully as effective as if it had been
made by a majority vote at a meeting duly called and held. Subject to any
applicable provisions of the Company's By-Laws or of this Plan, all
determinations by the Board pursuant to the provisions of this Plan, and all
related orders or resolutions of the Board, shall be final, conclusive and
binding on all persons, including the Company and its stockholders, employees,
directors and optionees.
ARTICLE IV
STOCK SUBJECT TO THE PLAN
SECTION 1. The Shares to be issued or delivered upon exercise
of Options shall be made available, at the discretion of the Board, either
from the authorized but unissued Shares of the Company or from Shares
reacquired by the Company, including Shares purchased by the Company in the
open market or otherwise obtained; provided, however, that the Company, at the
discretion of the Board, may, upon exercise of Options granted under this
Plan, cause a Subsidiary to deliver Shares held by such Subsidiary.
SECTION 2. Subject to the provisions of Section 3 of this
Article IV, the aggregate number of Shares which may be purchased pursuant to
Options shall not exceed 2,000,000.
SECTION 3. In the event of the payment of any dividends
payable in Shares, or in the event of any subdivision or combination of the
Shares, the number of Shares which may be purchased under this Plan, and the
number of Shares subject to each Option granted in accordance with Section 2
of Article VII, shall be increased or decreased proportionately, as the case
may be, and the number of Shares deliverable upon the exercise thereafter of
any Option theretofore granted (whether or not then exercisable) shall be
increased or decreased proportionately, as the case may be, without change in
the aggregate purchase price. In the event the Company is merged or
consolidated into or with another corporation in a transaction in which the
Company is not the survivor, or in the event that substantially all of the
Company's assets are sold to another entity not affiliated with the Company,
any holder of an Option, whether or not then exercisable, shall be entitled to
receive (unless the Company shall take such alternative action as may be
necessary to preserve the economic benefit of the Option for the optionee) on
the effective date of any such transaction (the "Option Cancellation Date"),
in cancellation of such Option, an amount in cash equal to the Option
Cancellation Gain relating thereto, determined as of the Option Cancellation
Date.
ARTICLE V
PURCHASE PRICE OF OPTIONED SHARES
The purchase price per Share under each Option shall be 100% of
the Fair Market Value of a Share at the time such Option is granted, but in no
case shall such price be less than the par value of the Shares subject to such
Option.
ARTICLE VI
ELIGIBILITY OF RECIPIENTS
Options will be granted only to individuals who are Eligible
Directors at the time of such grant.
ARTICLE VII
GRANT OF OPTIONS
SECTION 1. Each Option shall constitute a nonqualified stock
option which is not intended to qualify under Section 422 of the Code.
SECTION 2. On the grant date in 1995 and on the anniversary
of such date in each subsequent year through and including 2004, each
Eligible Director, as of each such date, shall be granted an Option to
purchase 10,000 Shares. Each Option shall become exercisable with respect
to 2,500 Shares on each of the first, second, third and fourth
anniversaries of the date of grant and may be exercised by the holder
thereof with respect to all or any part of the Shares comprising each
installment as such holder may elect at any time after such installment
becomes exercisable but no later than the termination date of such Option;
provided that each Option shall become exercisable in full upon a Change in
Control.
SECTION 3. Each Option shall provide that, promptly following
the exercise of all or any portion of such Option, the Company shall pay to
the holder of such Option an amount in cash equal to the Option Gain multiplied
by the Applicable Rate.
ARTICLE VIII
NON-TRANSFERABILITY OF OPTIONS
No Option shall be transferable by the optionee otherwise than
by will or by the laws of descent and distribution, and any such Option shall
be exercisable during the lifetime of the optionee only by the optionee or the
optionee's duly appointed legal representative.
ARTICLE IX
EXERCISE OF OPTIONS
SECTION 1. Each Option shall terminate 10 years after the date
on which it was granted.
SECTION 2. Except in cases provided for in Article X hereof,
each Option may be exercised only while the optionee is an Eligible Director.
SECTION 3. Each Option shall provide that the Option or any
portion thereof may be exercised only during an Election Period. Each Option
shall provide, however, that in the event of a Change in Control, the Election
Period exercise requirement is waived.
SECTION 4. A person electing to exercise an Option or any
portion thereof then exercisable shall give written notice to the Company of
such election and of the number of Shares such person has elected to purchase,
and shall at the time of purchase tender the full purchase price of such
Shares, which tender shall be made in cash or cash equivalent (which may be
such person's personal check) or in Shares already owned by such person (which
Shares shall be valued for such purpose on the basis of their Fair Market
Value on the date of exercise), or in any combination thereof. The Company
shall have no obligation to deliver Shares pursuant to the exercise of any
Option, in whole or in part, until such payment in full of the purchase price
of such Shares is received by the Company. No optionee, or legal
representative, legatee or distributee of such optionee shall be or be deemed
to be a holder of any Shares subject to such Option or entitled to any rights
of a stockholder of the Company in respect of any Shares covered by such
Option distributable in connection therewith until such Shares have been paid
for in full and certificates for such Shares have been issued or delivered by
the Company.
SECTION 5. Each Option shall be subject to the requirement
that if at any time the Board shall be advised by counsel that the listing,
registration or qualification of the Shares subject to such Option upon any
securities exchange or under any state or federal law, or the consent or
approval of any governmental regulatory body, is necessary or desirable as a
condition of, or in connection with, the granting of such Option or the issue
or purchase of Shares thereunder, such Option may not be exercised in whole or
in part unless such listing, registration, qualification, consent or approval
shall have been effected or obtained free from any conditions not reasonably
acceptable to such counsel for the Board.
SECTION 6. The Company may establish appropriate procedures to
provide for payment or withholding of such income or other taxes as may be
required by law to be paid or withheld in connection with the exercise of
Options, and to ensure that the Company receives prompt advice concerning the
occurrence of any event which may create, or affect the timing or amount of,
any obligation to pay or withhold any such taxes or which may make available
to the Company any tax deduction resulting from the occurrence of such event.
ARTICLE X
TERMINATION OF SERVICE
AS AN ELIGIBLE DIRECTOR
SECTION 1. If and when an optionee shall cease to be an
Eligible Director for any reason other than death or retirement from the
Board, all of the optionee's Options shall be terminated except that any
Option, to the extent then exercisable, may be exercised within three months
after such optionee ceases to be an Eligible Director, but not later than the
termination date of the Option.
SECTION 2. If and when an optionee shall cease to be an
Eligible Director by reason of the optionee's retirement from the Board, all
of the optionee's Options shall be terminated except that any Option, to the
extent then exercisable or exercisable within one year thereafter, may be
exercised within three years after such retirement, but not later than the
termination date of the Option.
SECTION 3. Should an optionee die while serving as an Eligible
Director, all the optionee's Options shall be terminated, except that any
Option to the extent exercisable by the optionee at the time of such death,
together with the unmatured installment (if any) of such Option which at that
time is next scheduled to become exercisable, may be exercised within one year
after the date of such death, but not later than the termination date of the
Option, by the optionee's estate or by the person designated in the optionee's
last will and testament.
SECTION 4. Should an optionee die after ceasing to be an
Eligible Director, all of the optionee's Options shall be terminated, except
that any Option, to the extent exercisable by the optionee at the time of such
death, may be exercised within one year after the date of such death, but not
later than the termination date of the Option, by the optionee's estate or by
the person designated in the optionee's last will and testament.
ARTICLE XI
AMENDMENTS TO PLAN AND OPTIONS
SECTION 1. The provisions of this Plan that pertain to any
matter set forth in Rule 16b-3(c)(2)(ii)(A) under the Exchange Act, as such
rule or any successor thereto may be amended from time to time, shall not be
amended more than once every six months, other than to comport with changes in
the Code or the regulations thereunder.
SECTION 2. Subject to the provisions of Section 1 of this
Article XI, the Board may at any time terminate or from time to time amend,
modify or suspend this Plan; provided, however, that no such amendment or
modification without the approval of the stockholders shall:
(a) except pursuant to Section 3 of Article IV, increase the
maximum number (determined as provided in this Plan) of Shares which
may be purchased pursuant to Options, either individually or in
aggregate;
(b) permit the granting of any Option at a purchase price
other than 100% of the Fair Market Value of the Shares at the time
such Option is granted, subject to adjustment pursuant to Section 3 of
Article IV;
(c) permit the exercise of an Option unless the full purchase
price of the Shares as to which the Option is exercised is paid at
the time of exercise;
(d) extend beyond May 1, 2004 the period during which Options
may be granted;
(e) modify in any respect the class of individuals who
constitute Eligible Directors; or
(f) materially increase the benefits accruing to participants
hereunder.
ANNEX V
ANNUAL INCENTIVE PLAN
OF FREEPORT-McMoRan COPPER & GOLD INC.
ARTICLE I
PURPOSE OF PLAN
SECTION 1.1. The purpose of the Annual Incentive Plan of
Freeport-McMoRan Copper & Gold Inc. (the "Plan") is to provide incentives for
senior executives whose performance in fulfilling the responsibilities of
their positions can have a major impact on the profitability and future
growth of Freeport-McMoRan Copper & Gold Inc. (the "Company") and its
subsidiaries.
ARTICLE II
ADMINISTRATION OF THE PLAN
SECTION 2.1. Subject to the authority and powers of the Board
of Directors in relation to the Plan as hereinafter provided, the Plan shall
be administered by a Committee designated by the Board of Directors consisting
of two or more members of the Board each of whom is a "disinterested person"
within the meaning of Rule 16b-3 promulgated by the Securities and Exchange
Commission under the Securities Exchange Act of 1934. The Committee shall
have full authority to interpret the Plan and from time to time to adopt such
rules and regulations for carrying out the Plan as it may deem best; provided,
however, that the Committee may not exercise any authority otherwise granted
to it hereunder if such action would have the effect of increasing the amount
of an Award to any Covered Officer. All determinations by the Committee shall
be made by the affirmative vote of a majority of its members, but any
determination reduced to writing and signed by a majority of the members shall
be fully as effective as if it had been made by a majority vote at a meeting
duly called and held. All decisions by the Committee pursuant to the
provisions of the Plan and all orders or resolutions of the Board of Directors
pursuant thereto shall be final, conclusive and binding on all persons,
including the Participants, the Company and its subsidiaries and their
respective equity holders.
ARTICLE III
ELIGIBILITY FOR AND PAYMENT OF AWARDS
SECTION 3.1. Subject to the provisions of the Plan, in each
calendar year the Committee may select officers or employees (including
officers or employees who are also directors) of the Company or any of its
subsidiaries to receive Awards under the Plan with respect to such year, and
determine the amount of such Awards.
SECTION 3.2. Subject to the provisions of the Plan, Awards
with respect to any year shall be paid to each Participant at such time
established by the Committee following the determination of the amounts of
such Awards, which payment shall in no event be later than February 28 of the
year following such Award Year.
SECTION 3.3. Notwithstanding the provisions of Section 3.2,
if, prior to the date established by the Committee for any Award Year, a
Participant shall so elect, in accordance with procedures established by the
Committee, all or any part of an Award to such Participant with respect to
such Award Year shall be deferred and paid in one or more periodic
installments, not in excess of ten, at such time or times before or after the
date of such Participant's Termination of Employment, but not later than ten
years after such date of Termination of Employment, as shall be specified in
such election. If and only if any Award or portion thereof is so deferred for
payment after December 31 of the year following such Award Year, such Award or
portion thereof, as the case may be, shall, commencing with January 1 of the
year following such Award Year, accrue interest at a rate equal to the prime
commercial lending rate announced from time to time by The Chase Manhattan
Bank, N.A. (compounded quarterly) or at such other rate and in such manner as
shall be determined from time to time by the Committee. If such Participant's
Termination of Employment occurs for any reason other than death, retirement
under the Company's retirement plan, or retirement with the consent of the
Company outside the Company's retirement plan and if, on the date of such
Termination of Employment, there remain unpaid any installments of Awards
which have been deferred as provided in this Section 3.3, the Committee may,
in its sole discretion, authorize payment to the Participant of the aggregate
amount of such unpaid installments in a lump sum, notwithstanding such
election.
SECTION 3.4. (a) Notwithstanding the provisions of Sections
3.1, 3.2, 3.3, 4.2(a), and 4.2(b) hereof, any Award to any Covered Officer
shall be granted in accordance with the provisions of this Section 3.4.
Subject to the discretion of the Committee as set forth in Section 4.2(c)
hereof, the amount of the Award that may be granted with respect to any
calendar year to the Covered Officer who is functioning as the chief executive
officer of the Company at the time of such grant shall be 35% of the Plan
Funding Amount for such year, the amount of the Award that may be granted with
respect to any calendar year to the Covered Officer who is functioning as the
chief operating officer or chief financial officer of the Company at the time
of such grant shall be, as to each such individual, 20% of the Plan Funding
Amount for such year, the amount of the Award that may be granted with respect
to any calendar year to the Covered Officer who is functioning as the chief
investment officer of the Company at the time of such grant shall be 15% of
the Plan Funding Amount for such year, and the amount of the Award that may be
granted with respect to any calendar year to the Covered Officer who is the
Vice Chairman of the Board of the Company at the time of such grant or, if
there is no such individual, any other Covered Officer of the Company at the
time of such grant shall be 10% of the Plan Funding Amount for such year.
(b) All Awards to Covered Officers under the Plan will be
made and administered by two or more members of the Committee who are also
"outside directors" within the meaning of Section 162(m) of the Internal
Revenue Code of 1986, as amended, and rules promulgated by the Internal
Revenue Service of the Department of the Treasury thereunder.
(c) Any provision of the Plan to the contrary notwithstanding,
no Covered Officer shall be entitled to any payment of an Award with respect
to a calendar year unless the members of the Committee referred to in Section
3.4(b) hereof shall have certified the Plan Funding Amount for such year and
that the condition of Section 4.1 hereof has been met for such year.
ARTICLE IV
GENERAL PROVISIONS
SECTION 4.1. Any provision of the Plan to the contrary
notwithstanding, no Award shall be made pursuant to Section 3.1 or 3.4 with
respect to any calendar year if the average of the Return on Investment for
such calendar year and each of the four preceding calendar years, after giving
effect to the aggregate amount (if any) that was awarded or credited with
respect to such prior years and the aggregate amount that would otherwise have
been so awarded or credited with respect to such calendar year, would be less
than 6%.
SECTION 4.2. (a) In determining the aggregate amount awarded
to Participants under the Plan for any calendar year, the Committee shall
consider as a guideline that the aggregate amount of all Awards granted with
respect to any calendar year should not exceed two and one-half percent of Net
Cash Provided by Operating Activities for such year.
(b) If Managed Net Income or Total Investment of Capital for
any year shall have been affected by special factors (including material
changes in accounting policies or practices, material acquisitions or
dispositions of property, or other unusual items) which in the Committee's
judgment should or should not be taken into account, in whole or in part, in
the equitable administration of the Plan, the Committee may, for any purpose
of the Plan, adjust Managed Net Income or Total Investment of Capital and make
payments and reductions accordingly under the Plan; provided that the
Committee shall not take any such adjustment into account in calculating
Awards to Covered Officers if the effect of such adjustment would be to
increase the Plan Funding Amount.
(c) Notwithstanding the provisions of subparagraphs (a) and
(b) above, the amount available for the grant of Awards under the Plan to
Covered Officers with respect to a calendar year shall be equal to the Plan
Funding Amount for such year and any adjustments made in accordance with or
for the purposes of subparagraphs (a) or (b) that would have the effect of
increasing the Plan Funding Amount shall be disregarded for purposes of
calculating Awards to Covered Officers. The Committee may, in the exercise of
its discretion, determine that the aggregate amount of all Awards granted to
Covered Officers with respect to a calendar year shall be less than the Plan
Funding Amount for such year, but the excess of such Plan Funding Amount over
such aggregate amount of Awards granted to Covered Officers shall not be
available for any Awards to Covered Officers with respect to future years. In
addition, the Committee may, in the exercise of its discretion, reduce or
eliminate the amount of an Award to a Covered Officer otherwise calculated in
accordance with the provisions of Section 3.4 prior to payment thereof.
SECTION 4.3. A Participant may designate in writing a
beneficiary (including the trustee or trustees of a trust) who shall upon the
death of such Participant be entitled to receive all amounts which would have
been payable hereunder to such Participant. A Participant may rescind or
change any such designation at any time. Except as provided in this Section
4.3, none of the amounts which may be payable under the Plan may be assigned
or transferred otherwise than by will or by the laws of descent and
distribution.
SECTION 4.4. All payments made pursuant to the Plan shall be
subject to withholding in respect of income and other taxes required by law to
be withheld, in accordance with procedures to be established by the Committee.
SECTION 4.5. The selection of an individual for participation
in the Plan shall not give such Participant any right to be retained in the
employ of the Company or any of its subsidiaries, and the right of the Company
or any such subsidiary to dismiss or discharge any such Participant, or to
terminate any arrangement pursuant to which any such Participant provides
services to the Company, is specifically reserved. The benefits provided for
Participants under the Plan shall be in addition to, and shall in no way
preclude, other forms of compensation to or in respect of such Participants.
SECTION 4.6. The Board of Directors and the Committee shall be
entitled to rely on the advice of counsel and other experts, including the
independent public accountants for the Company. No member of the Board of
Directors or of the Committee or any officers of the Company or its
subsidiaries shall be liable for any act or failure to act under the Plan,
except in circumstances involving bad faith on the part of such member or
officer.
SECTION 4.7. Nothing contained in the Plan shall prevent the
Company or any subsidiary or affiliate of the Company from adopting or
continuing in effect other compensation arrangements, which arrangements may
be either generally applicable or applicable only in specific cases.
ARTICLE V
AMENDMENT OR TERMINATION OF THE PLAN
SECTION 5.1 The Board of Directors may at any time terminate,
in whole or in part, or from time to time amend the Plan, provided that,
except as otherwise provided in the Plan, no such amendment or termination
shall adversely affect any Awards previously made to a Participant and
deferred by such Participant pursuant to Section 3.3. In the event of such
termination, in whole or in part, of the Plan, the Committee may in its sole
discretion direct the payment to Participants of any Awards not theretofore
paid out prior to the respective dates upon which payments would otherwise be
made hereunder to such Participants, and in a lump sum or installments as the
Committee shall prescribe with respect to each such Participant. The Board
may at any time and from time to time delegate to the Committee any or all of
its authority under this Section 5.1.
ARTICLE VI
DEFINITIONS
SECTION 6.1 For the purposes of the Plan, the following terms
shall have the meanings indicated:
(a) Award: The grant of an award of cash by the Committee to
a Participant pursuant to Section 3.1 or 3.4.
(b) Award Year: Any calendar year or portion thereof with
respect to which an Award may be granted.
(c) Board of Directors: The Board of Directors of the
Company.
(d) Committee: The Committee designated pursuant to Section
2.1. Until otherwise determined by the Board of Directors, the
Corporate Personnel Committee designated by such Board shall be the
Committee under the Plan.
(e) Covered Officer: At any date, (i) any individual who,
with respect to the previous taxable year of the Company, was a
"covered employee" of the Company within the meaning of Section
162(m) of the Internal Revenue Code of 1986, as amended, and the
rules promulgated thereunder by the Internal Revenue Service of the
Department of the Treasury, provided, however, the term "Covered
Officer" shall not include any such individual who is designated by
the Committee, in its discretion, at the time of any grant or at any
subsequent time, as reasonably expected not to be such a "covered
employee" with respect to the current taxable year of the Company and
(ii) any individual who is designated by the Committee, in its
discretion, at the time of any grant or at any subsequent time, as
reasonably expected to be such a "covered employee" with respect to
the current taxable year of the Company or with respect to the
taxable year of the Company in which any Award will be paid to such
individual.
(f) Managed Net Income: With respect to any year, the sum of
(i) the net income (or net loss) of the Company and its consolidated
subsidiaries for such year as reviewed by the Company's independent
auditors and released by the Company to the public; plus (or minus)
(ii) the minority interests' share in the net income (or net loss) of
the Company's consolidated subsidiaries for such year as reviewed by
the Company's independent auditors and released by the Company to the
public; plus (or minus) (iii) the effect of changes in accounting
principles of the Company and its consolidated subsidiaries for such
year plus (or minus) the minority interests' share in such changes in
accounting principles as reviewed by the Company's independent
auditors and released by the Company to the public.
(g) Net Cash Provided by Operating Activities: With respect
to any year, the net cash provided by operating activities of the
Company and its consolidated subsidiaries for such year as reviewed by
the Company's independent auditors and released by the Company to the
public.
(h) Net Interest Expense: With respect to any year, the net
interest expense of the Company and its consolidated subsidiaries for
such year as reviewed by the Company's independent auditors and
released by the Company to the public.
(i) Participant: An individual who has been selected by the
Committee to receive an Award.
(j) Plan Funding Amount: With respect to any year, two and
one-half percent of Net Cash Provided by Operating Activities for
such year; provided, however, that the Plan Funding Amount for
1995 shall equal two and one-half percent of the portion of Net
Cash Provided by Operating Activities that was earned during the
portion of 1995 occurring after the distribution by Freeport-
McMoRan Inc. to its common shareholders of all of the shares of
Class B Common Stock of the Company then owned by it.
(k) Return on Investment: With respect to any year, the
result (expressed as a percentage) calculated according to the
following formula:
a + (b - c)
d
in which "a" equals Managed Net Income for such year, "b" equals Net
Interest Expense for such year, "c" equals Tax on Net Interest
Expense for such year, and "d" equals Total Investment of Capital for
such year.
(l) Tax on Net Interest Expense: With respect to any year,
the tax on the net interest expense of the Company and its
consolidated subsidiaries for such year calculated at the appropriate
statutory income tax rate for such year as reviewed by the Company's
independent auditors.
(m) Termination of Employment: Solely for purposes of
Section 3.3 hereof, the cessation of the rendering of services,
whether or not as an employee, to any and all of the following
entities: the Company, any subsidiary of the Company,
Freeport-McMoRan Inc., any subsidiary of Freeport-McMoRan Inc.,
McMoRan Oil & Gas Co., any subsidiary of McMoRan Oil & Gas Co., and
any law firm rendering services to any of the foregoing entities
provided such law firm consists of at least two or more members or
associates who are or were officers of the Company or any subsidiary
of the Company.
(n) Total Investment of Capital: With respect to any year,
the sum of (i) the weighted average of the stockholders' equity in
the Company and its consolidated subsidiaries for such year, (ii) the
weighted average of the minority interests in the consolidated
subsidiaries of the Company for such year, (iii) the weighted average
of the redeemable preferred stock of the Company for such year and
(iv) the weighted average of the long-term debt of the Company and
its consolidated subsidiaries for such year, all as shown in the
quarterly balance sheets of the Company and its consolidated
subsidiaries for such year.
ANNEX VI
1995 LONG-TERM PERFORMANCE INCENTIVE PLAN
OF FREEPORT-McMoRan COPPER & GOLD INC.
ARTICLE I
PURPOSE OF PLAN
SECTION 1.1. The purposes of the 1995 Long-Term Performance
Incentive Plan of Freeport-McMoRan Copper & Gold Inc. (the "Plan") are (i)
to provide incentives for senior executives whose performance in fulfilling
the responsibilities of their positions can have a major impact on the
profitability and future growth of Freeport-McMoRan Copper & Gold Inc.
(the "Company") and its subsidiaries and (ii) to provide for the issuance
of awards relating to performance awards issued to employees and officers
of Freeport-McMoRan Inc. (``FTX''), the Company's current parent, in
connection with the Distribution.
ARTICLE II
ADMINISTRATION OF THE PLAN
SECTION 2.1. Subject to the authority and powers of the Board
of Directors in relation to the Plan as hereinafter provided, the Plan shall
be administered by a Committee designated by the Board of Directors consisting
of two or more members of the Board each of whom is a "disinterested person"
within the meaning of Rule 16b-3 promulgated by the Securities and Exchange
Commission under the Securities Exchange Act of 1934. The Committee shall
have full authority to interpret the Plan and from time to time to adopt such
rules and regulations for carrying out the Plan as it may deem best; provided,
however, that the Committee may not exercise any authority otherwise granted
to it hereunder if such action would have the effect of increasing the amount
of any credit to or payment from the Performance Award Account of any Covered
Officer. All determinations by the Committee shall be made by the affirmative
vote of a majority of its members, but any determination reduced to writing
and signed by a majority of the members shall be fully as effective as if it
had been made by a majority vote at a meeting duly called and held. All
decisions by the Committee pursuant to the provisions of the Plan and all
orders or resolutions of the Board of Directors pursuant thereto shall be
final, conclusive and binding on all persons, including but not limited to the
Participants, the Company and its subsidiaries and their respective equity
holders.
ARTICLE III
ELIGIBILITY FOR AND GRANT OF PERFORMANCE AWARDS
SECTION 3.1. Subject to the provisions of the Plan, the
Committee may from time to time select officers or employees (including
officers or employees who are also directors) of the Company or any
Subsidiary to be granted Performance Awards under the Plan, and determine
the number of Performance Units covered by each such Performance Award. In
addition, the Committee will identify Eligible Individuals for the grant of
Transition Awards. Performance Awards may be granted at different times to
the same individual. No Performance Awards shall be granted hereunder
after December 31, 1999.
SECTION 3.2. Upon the grant of a Performance Award to a
Participant, the Company shall establish a Performance Award Account for such
Participant and shall credit to such Performance Award Account the number of
Performance Units covered by such Performance Award.
SECTION 3.3. Subject to adjustment as provided in Section
3.4(d), the number of Performance Units outstanding at any time shall not
exceed 3,000,000. Performance Units that shall have been forfeited or with
respect to which payment has been made pursuant to Section 4.2 or deferred
pursuant to Section 4.4 shall not thereafter be deemed to be credited or
outstanding for any purpose of the Plan and may again be the subject of
Performance Awards.
SECTION 3.4. (a) Notwithstanding the provisions of Section
3.1, 3.2 and 3.3 hereof, with respect to any Performance Awards granted under
the Plan after December 31, 1995 the number of Performance Units covered by an
annual Performance Award that may be granted to the Covered Officer who is
functioning as the chief executive officer of the Company at the time of
such grant shall be 110,000; the number of Performance Units covered by an
annual Performance Award that may be granted to the Covered Officer who is
functioning as the chief operating officer of the Company at the time of
such grant shall be 65,000; the number of Performance Units covered by an
annual Performance Award that may be granted to the Covered Officer who is
the Vice Chairman of the Board of the Company at the time of such grant
shall be 35,000; and the number of Performance Units covered by an annual
Performance Award that may be granted to any other Covered Officer shall
be, as to each such individual, 30,000.
(b) Notwithstanding the provisions of Section 3.1, 3.2 and
3.3 hereof and subject to adjustment as provided in Secti on 3.4(d), with
respect to any Transition Awards granted under the Plan during calendar year
1995, the number of Performance Units covered by any such Transition Award
that may be granted to the Covered Officer who is functioning as the chief
executive officer of the Company at the time of such grant shall be 400,000,
in such series as are designated on Schedule A; the number of Performance
Units covered by any such Transition Award that may be granted to the Covered
Officer who is functioning as the chief operating officer of the Company at
the time of such grant shall be 160,000, in such series as are designated on
Schedule A; the number of Performance Units covered by any such Transition
Award that may be granted to the Vice Chairman of the Board of the Company at
the time of such grant shall be 230,000, in such series as are designated on
Schedule A; and the number of Performance Units covered by any such
Transition Award that may be granted to any other Covered Officer shall be,
as to each such individual, 120,000, in such series as are designated on
Schedule A.
(c) All Performance Awards to Covered Officers under the Plan
will be made and administered by two or more members of the Committee who are
also "outside directors" within the meaning of Section 162(m) of the Internal
Revenue Code of 1986, as amended, and rules promulgated by the Internal
Revenue Service of the Department of the Treasury thereunder.
(d) Upon effectiveness of the Plan, each number of
Performance Units specified in Section 3.3 and in paragraph (b) of this
Section 3.4 shall be multiplied by a fraction, the numerator of which is
the number of shares of all classes of common stock of the Company
outstanding for purposes of calculating the audited earnings per common
share of the Company for calendar year 1995, and the denominator of which
is the number of common shares of FTX outstanding used for purposes of
calculating the audited earnings per share of FTX for calendar year 1994.
ARTICLE IV
CREDITS TO AND PAYMENTS FROM PARTICIPANTS'
PERFORMANCE AWARD ACCOUNTS
SECTION 4.1. (a) Except as provided in paragraph (b),
subject to the provisions of the Plan, each Performance Unit in any
Performance Award Account of each Participant at December 31 of any year
shall be credited, as of such December 31 of each year in the Performance
Period for such Performance Unit, with an amount equal to the Annual
Earnings Per Share (or Net Loss Per Share) for such year; provided that, if
in any year there shall be any outstanding Net Loss Carryforward applicable
to such Performance Unit, such Net Loss Carryforward shall be applied to
reduce any amount which would otherwise be credited to or in respect of
such Performance Unit pursuant to this Section 4.1 in such year until such
Net Loss Carryforward has been fully so applied.
(b) With respect to Performance Units outstanding on
December 31, 1995, the credit in respect of any such Performance Unit shall
equal the portion of Annual Earnings Per Share (or Net Loss Per Share) that
related to the portion of such year occurring after the effective date of
the Distribution.
SECTION 4.2. (a) Subject to the provisions of the Plan,
amounts credited to a Participant's Performance Award Account in respect of
Performance Units shall be paid to such Participant as soon as practicable on
or after the Award Valuation Date with respect to such Performance Units.
(b) Payments pursuant to Section 4.2(a) shall be in cash.
(c) Notwithstanding any other provision of the Plan to the
contrary, no Covered Officer shall be entitled to any payment with respect
to any Performance Units unless the members of the Committee referred to in
Section 3.4(c) hereof shall have certified the amount of the Annual
Earnings Per Share (or Net Loss Per Share) for each year or portion thereof
in the Performance Period applicable to such Performance Units.
SECTION 4.3. In addition to any amounts payable pursuant to
Section 4.2, the Committee may in its sole discretion determine that there
shall be payable to a former Participant a supplemental amount not exceeding
the excess, if any, of (i) the amount determined in accordance with Section
4.1 which would have been payable to such former Participant if the Award
Valuation Date with respect to any Performance Units granted to such
Participant had been December 31 of the first, second or third calendar year
next following the year in which such Participant's Termination of Employment
occurred (the selection of such first, second or third calendar year to be in
the sole discretion of the Committee subject only to the last sentence of this
Section 4.3) over (ii) the amount determined in accordance with said Section
4.1 as of December 31 of the calendar year in which such Termination of
Employment actually occurred. Any such supplemental amount so payable shall
be paid in a lump sum as promptly as practicable on or after December 31 of the
calendar year so selected by the Committee or in one or more installments
ending not later than five years after such December 31, as the Committee may
in its discretion direct. In no event shall any payment under this Section
4.3 be made with respect to any calendar year after the year in which such
former Participant reaches his normal retirement date under the Company's
retirement plan.
SECTION 4.4. (a) Prior to January 1 of any calendar year in
which it is anticipated that an Award Valuation Date with respect to any
Performance Units may occur, a Participant may elect, in accordance with
procedures established by the Committee, to defer, as and to the extent
hereinafter provided, the payment of the amount, if any, which shall be paid
pursuant to Section 4.2.
(b) All payments deferred pursuant to Section 4.4(a) shall be
paid in one or more periodic installments, not in excess of ten, at such time
or times after the applicable Award Valuation Date, but not later than ten
years after such Award Valuation Date, as shall be specified in such
Participant's election pursuant to Section 4.4(a).
(c) In the case of payments deferred as provided in Section
4.4(a), the unpaid amounts shall, commencing with the applicable Award
Valuation Date, accrue interest at a rate equal to the prime commercial
lending rate announced from time to time by The Chase Manhattan Bank, N.A.
(compounded quarterly) or at such other rate and in such manner as shall be
determined from time to time by the Committee. If subsequent to such
Participant's election pursuant to Section 4.4(a) such Participant's
Termination of Employment occurs for any reason other than death, Disability,
retirement under the Company's retirement plan, or retirement with the consent
of the Company outside the Company's retirement plan, the Committee may, in
its sole discretion, pay to such Participant in a lump sum the aggregate
amount of any payments so deferred, notwithstanding such election.
SECTION 4.5. Anything contained in the Plan to the contrary
notwithstanding:
(a) The Committee may, in its sole discretion, suspend,
permanently or for a specified period of time or until further determination
by the Committee, the making of any part or all of the credits which would
otherwise have been made to the Performance Award Accounts of all the
Participants or to such Accounts of one or more Participants as shall be
designated by the Committee.
(b) Each Performance Unit and all other amounts credited to a
Participant's Performance Award Account in respect of such Performance Unit
shall be forfeited in the event of the Discharge for Cause of such Participant
prior to the end of the Performance Period applicable to such Performance Unit.
(c) Each Performance Unit and all other amounts credited to a
Participant's Performance Award Account in respect of such Performance Unit
shall, unless and to the extent that the Committee shall in its absolute
discretion otherwise determine by reason of special mitigating circumstances,
be forfeited in the event that such Participant's Termination of Employment
shall occur for any reason other than death, Disability, retirement under the
Company's retirement plan, or retirement with the consent of the Company
outside the Company's retirement plan, at any time (except within two years
after the date on which a Change in Control shall have occurred) prior to the
end of the Performance Period applicable to such Performance Unit.
(d) If any suspension is in effect pursuant to Section 4.5(a)
on a date when a credit would otherwise have been made pursuant to Section
4.1, the amount which would have been credited but for such suspension shall be
forfeited and no credits shall thereafter be made in lieu thereof. If the
Committee shall so determine in its sole discretion, the amounts theretofore
credited to any Performance Award Account or Accounts shall accrue interest,
during the suspension period, at a rate equal to the prime commercial lending
rate announced from time to time by The Chase Manhattan Bank, N.A. (compounded
quarterly) or at such other rate and in such manner as shall be determined from
time to time by the Committee.
ARTICLE V
GENERAL INFORMATION
SECTION 5.1. If Net Income, Annual Earnings Per Share or Net
Loss Per Share for any year shall have been affected by special factors
(including material changes in accounting policies or practices, material
acquisitions or dispositions of property, or other unusual items) which in the
Committee's judgment should or should not be taken into account, in whole or
in part, in the equitable administration of the Plan, the Committee may, for
any purpose of the Plan, adjust Net Income, Annual Earnings Per Share or Net
Loss Per Share, as the case may be, for such year (and subsequent years as
appropriate), or any combination of them, and make credits, payments and
reductions accordingly under the Plan; provided, however, the Committee shall
not have the authority to make any such adjustments to payments with respect
to the Performance Awards of, or credits to the Performance Award Accounts of,
any Participant who is at such time a Covered Officer if the effect of any
such action would be to increase the amount that would be credited to or paid
from such Performance Award Accounts.
SECTION 5.2. In addition to the adjustment specified in
Section 3.4(d), the Committee shall for purposes of Articles III and IV make
appropriate adjustments in the number of Performance Units which shall remain
subject to Performance Awards and in the number of Performance Units which
shall have been credited to Participants' accounts, in order to reflect any
merger or consolidation to which the Company is a party or any stock dividend,
split-up, combination or reclassification of the outstanding shares of Company
Common Stock or any other relevant change in the capitalization of the
Company.
SECTION 5.3. A Participant may designate in writing a
beneficiary (including the trustee or trustees of a trust) who shall upon the
death of such Participant be entitled to receive all amounts which would have
been payable hereunder to such Participant. A Participant may rescind or
change any such designation at any time. Except as provided in this Section
5.3, none of the amounts which may be payable under the Plan may be assigned
or transferred otherwise than by will or by the laws of descent and
distribution.
SECTION 5.4. All payments made pursuant to the Plan shall be
subject to withholding in respect of income and other taxes required by law to
be withheld, in accordance with procedures to be established by the Committee.
SECTION 5.5. The selection of an individual for participation
in the Plan shall not give such Participant any right to be retained in the
employ of the Company or any Subsidiary, and the right of the Company or any
such Subsidiary to dismiss or discharge any such Participant, or to terminate
any arrangement pursuant to which any such Participant provides services to
the Company, is specifically reserved. The benefits provided for Participants
under the Plan shall be in addition to, and shall in no way preclude, other
forms of compensation to or in respect of such Participants.
SECTION 5.6. The Board of Directors and the Committee shall be
entitled to rely on the advice of counsel and other experts, including the
independent public accountants for the Company. No member of the Board of
Directors or of the Committee or any officers of the Company or any Subsidiary
shall be liable for any act or failure to act under the Plan, except in
circumstances involving bad faith on the part of such member or officer.
SECTION 5.7. Nothing contained in the Plan shall prevent the
Company or any Subsidiary or affiliate of the Company from adopting or
continuing in effect other compensation arrangements, which arrangements may
be either generally applicable or applicable only in specific cases.
ARTICLE VI
AMENDMENT OR TERMINATION OF THE PLAN
SECTION 6.1. The Board of Directors may at any time terminate,
in whole or in part, or from time to time amend the Plan, provided that,
except as otherwise provided in the Plan, no such amendment or termination
shall adversely affect the amounts credited to the Performance Award Account
of a Participant with respect to Performance Awards previously made to such
Participant. In the event of such termination, in whole or in part, of the
Plan, the Committee may in its sole discretion direct the payment to
Participants of any amounts specified in Article IV and not theretofore paid
out, prior to the respective dates upon which payments would otherwise be made
hereunder to such Participants, and in a lump sum or installments as the
Committee shall prescribe with respect to each such Participant. The Board
may at any time and from time to time delegate to the Committee any or all of
its authority under this Article VI.
ARTICLE VII
DEFINITIONS
SECTION 7.1. For the purposes of the Plan, the following terms
shall have the meanings indicated:
(a) Annual Earnings Per Share: With respect to any year, the
result obtained by dividing (i) Net Income for such year by (ii) the average
number of issued and outstanding shares (excluding treasury shares and shares
held by any subsidiaries) of Class A Common Stock, par value $.10 per share,
of the Company and Class B Common Stock, par value $.10 per share, of the
Company during such year as reviewed by the Company's independent auditors.
(b) Award Valuation Date: (I) With respect to any
Performance Units constituting a Performance Award granted after December
31, 1995, (i) December 31 of the year in which the third anniversary of
the grant of such Performance Award to a Participant shall occur or, (ii)
if earlier, December 31 of the year in which such Participant's Termination
of Employment shall occur, if such Termination of Employment occurs (x)
within two years after a Change in Control or (y) as a result of death,
Disability, retirement under the Company's retirement plan or retirement
with the consent of the Company outside the Company's retirement plan and
(II) with respect to any Performance Units comprising all or a portion of
any Transition Award, (i) December 31 of the applicable year corresponding
to such Performance Unit, as set forth in Schedule A hereto in respect of
any Covered Officer, and as determined by the Committee in respect of any
other Participant, provided that in the case of any Participant such date
shall not be later than December 31 of the year in which the third
anniversary of the grant of such Performance Unit to such Participant shall
occur or (ii) if earlier, December 31 of the year in which such
Participant's Termination of Employment shall occur, if such Termination of
Employment occurs (x) within two years after a Change in Control or (y) as
a result of death, Disability, retirement under the Company's retirement
plan or retirement with consent of the Company outside the Company's
retirement plan.
(c) Board of Directors: The Board of Directors of the Company.
(d) Change in Control: A Change in Control shall be deemed to
have occurred if either (i) (A) prior to the Combination Date, as such term is
defined in the Company's Certificate of Incorporation as in effect at the time
of the Distribution, as hereinafter defined, any person, or any two or more
persons acting as a group, and all affiliates of such person or persons,
shall, otherwise than as a result of the Distribution, beneficially own more
than 50% of the Class A Common Stock, par value $0.10 of the Company, or more
than 20% of the Company Common Stock and (B) after the Combination Date, any
person, or any two or more persons acting as a group, and all affiliates of
such person or persons, shall beneficially own more than 20% of all classes
and series of the Company's stock outstanding, taken as a whole, that has
voting rights with respect to the election of directors of the Company (not
including any series of preferred stock of the Company that has the right to
elect directors only upon the failure of the Company to pay dividends), in the
case of either (A) or (B), pursuant to a tender offer, exchange offer or
series of purchases or other acquisitions, or any combination of those
transactions, or (ii) there shall be a change in the composition of the Board
of Directors of the Company at any time within two years after any tender
offer, exchange offer, merger, consolidation, sale of assets or contested
election, or any combination of those transactions (a "Transaction"), so that
(A) the persons who were directors of the Company immediately before the first
such Transaction cease to constitute a majority of the Board of Directors of
the corporation which shall thereafter be in control of the companies that
were parties to or otherwise involved in such first Transaction, or (B) the
number of persons who shall thereafter be directors of such corporation shall
be fewer than two-thirds of the number of directors of the Company immediately
prior to such first Transaction. A Change in Control shall be deemed to take
place upon the first to occur of the events specified in the foregoing clauses
(i) and (ii). For purposes of this paragraph (d), the "Distribution" shall
mean the distribution by Freeport-McMoRan Inc. of all of the Company Common
Stock owned by it to its common stockholders.
(e) Committee: The Committee designated pursuant to Section
2.1. Until otherwise determined by the Board of Directors, the Corporate
Personnel Committee designated by such Board shall be the Committee under the
Plan.
(f) Company Common Stock: Class B Common Stock, par value
$0.10 per share, of the Company and such other Company or subsidiary
securities as may be designated from time to time by the Committee.
(g) Covered Officer: At any date, (i) any individual who,
with respect to the previous taxable year of the Company, was a "covered
employee" of the Company within the meaning of Section 162(m) of the Internal
Revenue Code of 1986, as amended, and the rules promulgated thereunder by the
Internal Revenue Service of the Department of the Treasury, provided, however,
the term "Covered Officer" shall not include any such individual who is
designated by the Committee, in its discretion, at the time of any grant or at
any subsequent time as reasonably expected not to be such a "covered employee"
with respect to the current taxable year of the Company and (ii) any
individual who is designated by the Committee, in its discretion, at the time
of any grant or at any subsequent time as reasonably expected to be such a
"covered employee" with respect to the current taxable year of the Company or
with respect to the taxable year of the Company in which payment from any
Performance Award Account of such individual will be made.
(h) Disability: In the case of any Participant, disability
which after the expiration of more than 26 weeks after its commencement is
determined to be total and permanent by a physician selected by the Company and
acceptable to such Participant or his legal representatives.
(i) Discharge for Cause: Involuntary Termination of
Employment as a result of dishonesty or similar serious misconduct directly
related to the performance of duties for any and all of the Related Entities.
(j) Distribution: The distribution by FTX to its common
stockholders of all of the Company Common Stock then owned by it.
(k) Eligible Individual: Any holder of a performance award
under the 1992 Long-Term Performance Incentive Plan of FTX on the date of the
Distribution.
(l) Net Income: With respect to any year, the sum of (i) the
net income (or net loss) of the Company and its consolidated subsidiaries for
such year as reviewed by the Company's independent auditors and released by the
Company to the public; plus (or minus) (ii) the minority interests' share in
the net income (or net loss) of the Company's consolidated subsidiaries for
such year as reviewed by the Company's independent auditors and released by
the Company to the public; plus (or minus) (iii) the effect of changes in
accounting principles of the Company and its consolidated subsidiaries for
such year plus (or minus) the minority interests' share in such changes in
accounting principles as reviewed by the Company's independent auditors and
released by the Company to the public.
(m) Net Loss Carryforward: With respect to any Performance
Units, (i) an amount equal to the Net Loss Per Share for any year in the
applicable Performance Period times the number of such Performance Units then
outstanding, reduced by (ii) any portion thereof which has been applied in any
prior year as provided in Section 4.1.
(n) Net Loss Per Share: The amount obtained when the
calculation of Annual Earnings Per Share results in a number that is less than
zero.
(o) Participant: An individual who has been selected by the
Committee to receive a Performance Award and in respect of whose Performance
Award Account any amounts remain payable.
(p) Performance Award: The grant of Performance Units by the
Committee to a Participant pursuant to Section 3.1 or 3.4.
(q) Performance Award Account: An account established for a
Participant pursuant to Section 3.2.
(r) Performance Period: With respect to any Performance
Unit, the period beginning on January 1 of the year in which such Performance
Unit was granted and ending on the Award Valuation Date for such Performance
Unit provided that, with respect to Performance Units constituting
Transition Awards, the Performance Period shall begin on the effective date
of the Distribution.
(s) Performance Unit: A unit covered by Performance Awards
granted or subject to grant pursuant to Article III.
(t) Related Entities: The Company, any subsidiary of the
Company, Freeport-McMoRan Inc., any subsidiary of Freeport-McMoRan Inc.,
McMoRan Oil & Gas Co., any subsidiary of McMoRan Oil and Gas Co., and any law
firm rendering services to any of the foregoing entities provided such law
firm consists of at least two or more members or associates who are or were
officers of the Company or any subsidiary of the Company.
(u) Subsidiary: Any corporation or other entity in which the
Company possesses directly or indirectly equity interests representing at
least 50% of the total ordinary voting power or at least 50% of the total
value of all classes of equity interests of such corporation or other entity.
(v) Termination of Employment: The cessation of the
rendering of services, whether or not as an employee, to any and all of the
Related Entities.
(w) Transition Award: A Performance Award granted to an
Eligible Individual during 1995 by way of adjustment to such individual's
FTX 1992 Long-Term Performance Incentive Plan performance award in
connection with the Distribution.
SCHEDULE A
Transition Awards
Schedule of Award Valuation Dates
for Transition Awards Performance Units Granted
to Covered Officers During Calendar Year 1995
Number of Award Valuation
Covered Officer Performance Units* Date
- - - - -------------------------- ----------------------- -------------------
Chief Executive Officer 100,000 (1998 series) December 31, 1998
100,000 (1997 series) December 31, 1997
100,000 (1996 series) December 31, 1996
100,000 (1995 series) December 31, 1995
Chief Operating Officer 40,000 (1998 series) December 31, 1998
40,000 (1997 series) December 31, 1997
40,000 (1996 series) December 31, 1996
40,000 (1995 series) December 31, 1995
Vice Chairman of the 75,000 (1998 series) December 31, 1998
Board 75,000 (1997 series) December 31, 1997
40,000 (1996 series) December 31, 1996
40,000 (1995 series) December 31, 1995
Each Additional Covered 40,000 (1998 series) December 31, 1998
Officer 40,000 (1997 series) December 31, 1997
20,000 (1996 series) December 31, 1996
20,000 (1995 series) December 31, 1995
* To be adjusted in accordance with Section 3.4(d).
FREEPORT-McMoRan COPPER & GOLD INC.
CONSENT TO THE PROPOSALS SOLICITED BY
FREEPORT-McMoRan COPPER & GOLD INC.
The undersigned hereby consents or withholds consent as
specified on the reverse side of the approval to the Proposals made by
Freeport-McMoRan Copper & Gold Inc. (the "Company") as described in the
Consent Solicitation Statement dated , 1995.
Please be certain to indicate on the reverse side whether you
wish to consent or withhold consent.
If this card is executed but no choice is indicated for a
Proposal, you will be deemed to have consented to such Proposal.
The Consent Solicitation Statement contains important
information regarding the Proposals. The Board of Directors of the Company
therefore recommends that you do not execute this consent unless you have
received and read a copy of the Consent Solicitation Statement.
This consent is solicited on behalf of the Board of Directors
of Freeport-McMoRan Copper & Gold Inc.
(Continued and to be signed on the reverse side)
(a) MERGER PROPOSAL
[ ] Please CONSENT to the Merger Proposal
[ ] Please WITHHOLD CONSENT to the Merger Proposal
(b) CORPORATE GOVERNANCE PROPOSAL
[ ] Please CONSENT to the Corporate Governance Proposal
[ ] Please WITHHOLD CONSENT to the Corporate Governance Proposal
(c) PROPOSAL FOR COMPANY ADJUSTED STOCK AWARD PLAN
[ ] Please CONSENT to the Proposal for Company Adjusted Stock Award
Plan
[ ] Please WITHHOLD CONSENT to the Proposal for Company Adjusted
Stock Award Plan
(d) PROPOSAL FOR COMPANY 1995 STOCK OPTION PLAN
[ ] Please CONSENT to the Proposal for Company 1995 Stock Plan
[ ] Please WITHHOLD CONSENT to the Proposal for Company 1995 Stock
Plan
(e) PROPOSAL FOR COMPANY 1995 STOCK OPTION PLAN FOR
NON-EMPLOYEE DIRECTORS
[ ] Please CONSENT to the Proposal for Company 1995 Stock Option
Plan for Non-Employee Directors
[ ] Please WITHHOLD CONSENT to the Proposal for Company 1995 Stock
Option Plan for Non-Employee Directors
(f) PROPOSAL FOR ANNUAL INCENTIVE PLAN
[ ] Please CONSENT to the Proposal for Annual Incentive Plan
[ ] Please WITHHOLD CONSENT to the Proposal for Annual Incentive
Plan
(g) PROPOSAL FOR 1995 LONG-TERM PERFORMANCE INCENTIVE
PLAN
[ ] Please CONSENT to the Proposal for 1995 Long-Term Performance
Incentive Plan
[ ] Please WITHHOLD CONSENT to the Proposal for 1995 Long-Term
Performance Incentive Plan
Date: ______________, 1995
_________________________
_________________________
Signature(s)
_________________________
_________________________
Please print name(s) here
Please sign your name exactly as it appears
hereon. If signing for estates, trusts or
corporations, title or capacity should be
stated. If shares are held jointly, each
holder should sign.
CONSENT CARD
Please sign, date and return this consent
using the enclosed envelope.
</TABLE>
