STIPULATION OF SETTLEMENT
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SCHNEIDER WALLACE COTTRELL KONECKY WOTKYNS LLP MICHAEL C. MCKAY 8501 North Scottsdale Road, Suite 270 Scottsdale, AZ 85253 Telephone: (480) 428-0141 Facsimile: (866) 505-8036 [email protected] ROBBINS ARROYO LLP BRIAN J. ROBBINS FELIPE J. ARROYO JENNY L. DIXON 600 B Street, Suite 1900 San Diego, CA 92101 Telephone: (619) 525-3990 Facsimile: (619) 525-3991 [email protected] [email protected] [email protected] Attorneys for Plaintiff
IN THE SUPERIOR COURT OF THE STATE OF ARIZONA IN AND FOR THE COUNTY OF MARICOPA
JEFFREY HARRIS, Derivatively on Behalf of FREEPORT-MCMORAN INC.,
Plaintiff,
v.
ROBERT J. ALLISON, JR., ALAN R. BUCKWALTER, III, ROBERT A. DAY, GERALD J. FORD, THOMAS A. FRY, III, H. DEVON GRAHAM, JR., LYDIA H. KENNARD, CHARLES C. KRULAK, BOBBY LEE LACKEY, JON C. MADONNA, DUSTAN E. MCCOY, STEPHEN H. SIEGELE, and FRANCES FRAGOS TOWNSEND,
Defendants, -and-
FREEPORT-MCMORAN INC., a Delaware corporation,
Nominal Defendant.
Case No. CV2015-052393
STIPULATION OF SETTLEMENT (Assigned to the Honorable Aimee Anderson)
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This Stipulation of Settlement, dated July 8, 2016 (the "Stipulation"), is made and entered into
by and among the following Settling Parties,1 by and through their respective counsel of record: (i)
plaintiff Jeffrey Harris ("Plaintiff"), individually and derivatively on behalf of nominal defendant
Freeport-McMoRan, Inc. ("Freeport" or the "Company"); (ii) Robert J. Allison, Jr., Alan R.
Buckwalter, III, Robert A. Day, Gerald J. Ford, Thomas A. Fry, III, H. Devon Graham, Jr., Lydia H.
Kennard, Charles C. Krulak, Bobby Lee Lackey, Jon C. Madonna, Dustan E. McCoy, Stephen H.
Siegele, and Frances Fragos Townsend (collectively, the "Individual Defendants"); and (iii) nominal
defendant Freeport. This Stipulation is intended by the Settling Parties to fully, finally, and forever
resolve, discharge, and settle the Released Claims, subject to the terms and conditions set forth herein.
I. FACTUAL BACKGROUND
A. Procedural History
Freeport is a natural resource company, headquartered in Phoenix, Arizona, with an industry
leading global portfolio of mineral assets, significant oil and gas resources and a growing production
profile. Freeport operates large, long-lived, geographically diverse assets with significant proven and
probable reserves of copper, gold, molybdenum, cobalt, oil, and natural gas. Its portfolio includes the
Grasberg minerals district in Indonesia, one of the world's largest copper and gold deposits; significant
mining operations in North and South America; the Tenke Fungurume minerals district in the
Democratic Republic of Congo (DRC) in Africa; and significant oil and natural gas assets in North
America. As of December 2015, Freeport had approximately 34,500 employees across North
America, South America, Africa, Asia, and Europe.
On June 9, 2010, the Company's stockholders approved the Amended and Restated 2006 Stock
Incentive Plan (the "2006 Plan"). The stated purpose of the 2006 Plan was to "increase stockholder
value and advance the interests of the Company and its subsidiaries by furnishing a variety of equity
incentives designed to (i) attract, retain, and motivate key employees, officers, and directors of the
Company and consultants and advisers to the Company and (ii) strengthen the mutuality of interests
1 All capitalized terms not otherwise defined are defined in Section IV.A.
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among such persons and the Company's stockholders." The 2006 Plan provides that the Nominating
and Corporate Governance Committee of the Board, rather than the Compensation Committee,
administers the plan for grants to non-employee or outside directors. It affords the Nominating and
Corporate Governance Committee discretion over which outside directors receive equity awards under
the 2006 Plan as part of their annual compensation, how much in awards they receive, and on what
terms, subject to: (i) a limit on the total amount of stock available to be issued under the 2006 Plan
(seventy-four million shares); and (ii) a restriction that no individual can receive more than 7.5 million
shares of stock.
On June 5, 2015, Plaintiff filed the Action derivatively on behalf of Freeport and against the
Individual Defendants. The complaint alleges that the Individual Defendants breached their fiduciary
duties of loyalty by awarding and/or receiving excessive and improper compensation in 2013 and 2014
at the expense of the Company. Plaintiff further alleges that the Individual Defendants were unjustly
enriched as a result of their purportedly excessive compensation.
In July 2015, the Settling Parties agreed to defer the filing of a response to the complaint in
order to allow Freeport and its Board time to evaluate Plaintiff's claims. The Settling Parties have
engaged in informal discovery, with documents provided to Plaintiff, subject to a confidentiality
agreement. The Settling Parties have entered into a series of stipulations extending the time for
Defendants to respond to the complaint.
B. Settlement Efforts
The Settling Parties commenced settlement discussions in August 2015. In support of these
settlement discussions, Plaintiff expended significant efforts reviewing the Company's corporate
governance structures and policies, researching corporate governance issues and best practices, and
formulating proposed corporate governance reforms. During September 2015, the Settling Parties
discussed an appropriate settlement framework and, on October 8, 2015, Plaintiff's Counsel served a
settlement demand on Defendants' Counsel that proposed a comprehensive set of corporate
governance reforms designed to strengthen and reform the Company's director compensation practices
and prevent the alleged wrongdoing from recurring. Thereafter, counsel for the Settling Parties
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engaged in numerous telephonic discussions over the proposed corporate governance reforms in an
effort to reach a resolution of the derivative claims in the best interests of the Company.
On November 18, 2015, Defendants provided a formal response to the October 8 settlement
demand. Thereafter, the Settling Parties continued to engage in telephonic negotiations regarding the
terms of the proposed settlement, including the discovery that Plaintiff needed to ensure that any
settlement was in the best interests of the Company and its shareholders.
In response to Plaintiff's request, on December 1, 2015, Defendants produced certain
information that formed the basis for Defendants' proposals, which was the subject of a telephonic
conference among counsel for the Settling Parties on December 4, 2015.
On January 12, 2016, counsel for the Settling Parties held another telephone conference, during
which Plaintiff's Counsel identified additional discovery to be obtained from Defendants.
Negotiations continued throughout January and February, with the Settling Parties circulating
additional written comments. Defendants produced the requested documents on April 11, 2016.
After engaging in months of telephonic and written settlement negotiations, and after Plaintiff's
Counsel completed reviewing the requested documents, the Settling Parties reached an agreement-in-
principle to resolve the Action (except as to payment of Plaintiff's attorneys' fees and expenses), and
continued thereafter to document their agreement. On June 17, 2016, the Settling Parties reached an
agreement-in-principle as to the amount of Plaintiff's attorneys' fees and expenses.
As a result of the Action and the settlement reflected in this Stipulation (the "Settlement"),
Freeport will implement significant corporate governance reforms designed to enhance and improve
the Company's disclosures concerning outside director compensation and impose a meaningful cap on
equity compensation for said directors. The reforms and enhancements are detailed in paragraph 2.1
and are collectively referred to as the "Corporate Governance Reforms" or the "Reforms." These
Reforms include measures that: enhance the Compensation Committee's duties to include an annual
review and assessment of all non-employee director compensation; require the engagement of a
compensation consultant at least once every two years to advise the Compensation Committee with
regard to the cash and equity-based compensation of non-employee directors; require Board approval
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of any annual determinations of the amount of compensation to be paid to non-employee directors;
require enhanced disclosures in the Company's proxy as to the process for and considerations that
factored into determining equity compensation for non-employee directors; provide for an annual cap
of $500,000 on the value of annual equity compensation awards to non-employee directors that will
be submitted for shareholder vote through an amendment to the 2006 Plan or the adoption of a new
stock incentive plan; provide for a minimum one-year vesting for equity grants of restricted stock units
("RSUs") for non-employee directors; and mandate a commitment to continue these reforms through
2020 and that any affiliate spun off from Freeport will adopt the same Reforms.
The Settling Parties believe that a settlement at this juncture on the terms and on the conditions
set forth in this Stipulation is fair, reasonable, and adequate. In addition, the Freeport Board has, in
the exercise of its business judgment, formally approved the Settlement and each of its terms, as fair,
just, and adequate, and in the best interest of Freeport and its shareholders. The Settling Parties also
agree that the Settlement confers substantial benefits to the Company and its shareholders.
II. PLAINTIFF'S CLAIMS AND THE BENEFITS OF SETTLEMENT
Plaintiff believes that the Action has substantial merit, and Plaintiff's entry into this Stipulation
and Settlement is not intended to be and shall not be construed as an admission or concession
concerning the relative strength or merit of the claims alleged in the Action. Plaintiff and his counsel
also acknowledge the significant risk, expense, and length of continued proceedings necessary to
prosecute the Action against the Defendants through trial and through possible appeals. Plaintiff's
Counsel have also taken into account the substantial risks, costs, and delays involved in complex
shareholder derivative litigation, generally, as well as the unique challenges presented by this Action,
including the inherent problems of proof for the claims at issue and possible defenses thereto.
Plaintiff's Counsel have conducted an extensive investigation over the past year, including: (i)
reviewing Freeport's press releases, public statements, U.S. Securities and Exchange Commission
("SEC") filings, and securities analysts' reports and advisories about the Company; (ii) reviewing press
releases, public statements, and SEC filings of other companies within Freeport's peer group; (iii)
reviewing media reports about the Company; (iv) researching the applicable law with respect to the
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claims alleged in the Action and the potential defenses thereto; (v) preparing and filing a derivative
complaint; (vi) conducting damages analyses; (vii) participating in informal conferences with
Defendants' Counsel regarding the specific facts of the case, the perceived strengths and weaknesses
of the case, and other issues in an effort to facilitate negotiations and fact gathering; (viii) consulting
with co-counsel on the course of the litigation; (ix) analyzing internal documents produced by the
Company, including Board minutes and other Board materials; (x) drafting settlement demands; and
(xi) negotiating this Settlement with Defendants.
Based on Plaintiff's Counsel's thorough review and analysis of the relevant facts and
circumstances, allegations, defenses, and controlling legal principles, Plaintiff's Counsel believe that
the Settlement set forth in this Stipulation is fair, reasonable, and adequate, and confers substantial
benefits upon Freeport and its shareholders. Based on their evaluation, Plaintiff and his counsel have
determined that the Settlement is in the best interests of Freeport and its shareholders and have agreed
to settle the Action upon the terms and subject to the conditions set forth herein.
III. DEFENDANTS' DENIALS OF WRONGDOING AND LIABILITY
Defendants have denied and continue to deny each and all of the claims, contentions, and
allegations made against them or that could have been made against them in the Action. Defendants
believe that it is desirable and beneficial that the Action be settled in the manner and upon the terms
and conditions set forth in this Stipulation because, among other things, it will allow the Company to
conclude this litigation on terms that are just and reasonable, including the adoption and maintenance
of Corporate Governance Reforms that serve Freeport's and its shareholders' best interests. The Board
has approved the Settlement as being in the best interests of Freeport and its shareholders. Further,
Freeport, through its Board, acknowledges that the Settlement is fair, reasonable, and adequate, and in
the best interests of Freeport and its shareholders.
IV. TERMS OF STIPULATION AND AGREEMENT OF SETTLEMENT
NOW, THEREFORE, IT IS HEREBY STIPULATED AND AGREED by and among the
undersigned counsel for the Settling Parties herein, in consideration of the benefits flowing to the
Settling Parties from the Settlement, and subject to the approval of the Court, that the claims asserted
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in the Action and the Released Claims shall be finally and fully compromised, settled, and released,
and the Action shall be dismissed with prejudice and with full preclusive effect, upon and subject to
the terms and conditions of this Stipulation, as set forth below.
A. Definitions
As used in this Stipulation, the following terms have the meanings specified below:
1.1. "Action" means the derivative actions that were consolidated and styled as Harris v.
Allison, et al., Case No. CV2015-052393 (Ariz. Super. Ct. – Maricopa Cty.).
1.2. "Board" means the Board of Directors of Freeport.
1.3. "Court" means Superior Court of the State of Arizona, County of Maricopa.
1.4. "Current Freeport Shareholders" means any Person who owned Freeport common stock
as of the date of the execution of this Stipulation and who continue to hold their Freeport common
stock as of the date of the Settlement Hearing, excluding the Individual Defendants, the officers and
directors of Freeport, members of their immediate families, and their legal representatives, heirs,
successors, or assigns, and any entity in which Individual Defendants have or had a controlling interest.
1.5. "Defendants" means, collectively, nominal defendant Freeport and the Individual
Defendants.
1.6. "Defendants' Counsel" means Davis Polk & Wardwell LLP and Snell & Wilmer L.L.P.
1.7. "Effective Date" means the date by which all of the events and conditions specified in
paragraph 6.1 of this Stipulation have been met and have occurred.
1.8. "Final" means the date upon which the last of the following shall occur with respect to
the Judgment approving this Stipulation, substantially in the form of Exhibit D attached hereto: (i) the
expiration of the time to file a notice of appeal from the Judgment; or (ii) if an appeal has been filed,
the Court of Appeals issued a final decision on the appeal and the time for any reconsideration or
further appellate review has passed; or (iii) if a higher court has granted further appellate review, that
court has issued a final decision on the matter.
1.9. "Freeport" or the "Company" means nominal defendant Freeport-McMoRan Inc., a
Delaware corporation.
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1.10. "Individual Defendants" means Robert J. Allison, Jr., Alan R. Buckwalter, III, Robert
A. Day, Gerald J. Ford, Thomas A. Fry, III, H. Devon Graham, Jr., Lydia H. Kennard, Charles C.
Krulak, Bobby Lee Lackey, Jon C. Madonna, Dustan E. McCoy, Stephen H. Siegele, and Frances
Fragos Townsend.
1.11. "Judgment" means the Final Judgment and Order of Dismissal to be rendered by the
Court, substantially in the form attached hereto as Exhibit D.
1.12. "Notice" means the Notice of Proposed Settlement and Settlement Hearing,
substantially in the form attached hereto as Exhibit B.
1.13. "Person" means an individual, corporation, limited liability corporation, professional
corporation, partnership, limited partnership, limited liability partnership, association, joint stock
company, estate, legal representative, trust, unincorporated association, government, or any political
subdivision or agency thereof and any business or legal entity and their spouses, heirs, predecessors,
successors, representatives, or assignees.
1.14. "Plaintiff" means Jeffrey Harris.
1.15. "Plaintiff's Counsel" means, collectively, any counsel who has appeared at any time for
Plaintiff in the Action, including Robbins Arroyo LLP and Schneider Wallace Cottrell Konecky
Wotkyns LLP.
1.16. "Related Persons" means the Individual Defendants' spouses, marital communities,
immediate family members, heirs, executors, personal representatives, estates, administrators, trusts,
predecessors, successors, and assigns or other individual or entity in which any Individual Defendant
has a controlling interest or by which he or she is or was employed, and each and all of their respective
past and present officers, directors, employees, agents, affiliates, parents, subsidiaries, divisions,
attorneys, accountants, auditors, advisors, insurers, co-insurers, re-insurers, heirs, executors, personal
representatives, estates, administrators, trusts, predecessors, successors, and assigns.
1.17. "Released Claims" means any and all claims for relief, causes of action, rights, or
liabilities, whether at law or in equity, including both known and Unknown Claims, that: (a) were
asserted or could have been asserted (including as to matters through the date hereof) by any
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shareholder on behalf of Freeport, or by Freeport, against any Released Person; and (b) concern, arise
out of, or relate to: (i) the allegations made in the Action regarding compensation awarded to Freeport's
non-employee directors; or (ii) the Settlement, defense, or resolution of the Action, except for any
claims to enforce the Settlement. Notwithstanding the foregoing, "Released Claims" excludes those
claims of Freeport and the Individual Defendants reserved under paragraph 5.3 below.
1.18. "Released Persons" means each and all of the Individual Defendants and all other
Persons who formerly were or currently are members of the Board as of the date hereof and, for each
of them, their respective Related Persons.
1.19. "Releasing Persons" means Plaintiff (both individually and derivatively on behalf of
Freeport), any other Freeport shareholder on behalf of Freeport, and Freeport.
1.20. "Settlement" means the settlement and compromise of the Action as provided for
herein.
1.21. "Settlement Hearing" means the hearing or hearings at which the Court will review the
adequacy, fairness, and reasonableness of the Settlement.
1.22. "Settling Parties" or "Parties" means, collectively, the Plaintiff (on behalf of himself
and derivatively on behalf of Freeport) and Defendants.
1.23. "Summary Notice" means the Summary Notice of Proposed Settlement and Settlement
Hearing, substantially in the form of the attached hereto as Exhibit C.
1.24. "Unknown Claims" means any Released Claims which any of Plaintiff, Freeport, or
Current Freeport Shareholders do not know of or suspect to exist in his, her, or its favor at the time of
the release of the Released Persons. With respect to any and all Released Claims, the Settling Parties
agree that upon the Effective Date, the Settling Parties expressly waive and each of the Current
Freeport Shareholders shall be deemed to have, and by operation of the Judgment shall have, expressly
waived the provisions, rights, and benefits conferred by or under California Civil Code section 1542,
or any other law of the United States or any state or territory of the United States, or foreign
jurisdiction, or principle of common law, which is similar, comparable, or equivalent to section 1542,
which provides:
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A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM OR HER MUST HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH THE DEBTOR.
The Settling Parties acknowledge, and the Current Freeport Shareholders shall be deemed by operation
of the Judgment to have acknowledged, that they may hereafter discover facts in addition to or
different from those now known or believed to be true by them, with respect to the subject matter of
the Released Claims, but it is the intention of the Settling Parties, and by operation of the Judgment
for Current Freeport Shareholders to be deemed, to completely, fully, finally, and forever compromise,
settle, release, discharge, and extinguish any and all Released Claims, known or unknown, suspected
or unsuspected, contingent or absolute, accrued or unaccrued, apparent or unapparent, hidden or
concealed, which do now exist, or heretofore existed, or may hereafter exist, and without regard to the
subsequent discovery of additional or different facts. The Settling Parties acknowledge, and the
Current Freeport Shareholders shall be deemed by operation of the Judgment to have acknowledged,
that the foregoing waiver was separately bargained for and is a key element of this Stipulation of which
this release is a part.
B. Terms of the Settlement
2.1 As a direct result of the filing, prosecution, and settlement of the Action, Freeport has
agreed to implement and maintain in substance the Corporate Governance Reforms set forth below for
a period of not less than four (4) years from the Effective Date or through calendar year 2020,
whichever occurs later. Freeport, through its Board, acknowledges and agrees that the securing of the
Corporate Governance Reforms confer substantial benefits upon Freeport and its shareholders.
2.1.1 Strengthened Mandate for Compensation Committee
As soon as practicable after the Effective Date, the Board shall amend the charter of the
Compensation Committee to provide that the Compensation Committee shall be responsible for: (A)
conducting an annual review and assessment of all compensation, including cash and equity-based
compensation, paid by Freeport to the non-employee directors; (B) engaging an independent
compensation consultant to advise the Compensation Committee with regard to the cash and equity-
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based compensation of non-employee directors to be awarded in 2016, 2018, and 2020, including with
respect to (x) the amount and type of compensation to be paid, and (y) comparative data deemed
appropriate by such consultant; and (C) recommending to the Board on the basis of its annual review
and assessment, the compensation to be awarded to non-employee directors. (As set forth in paragraph
2.1.3(b) below, the Parties acknowledge that the Compensation Committee has already complied with
clauses (A), (B), and (C) above with respect to the compensation of non-employee directors to be
awarded in 2016.)
2.1.2 Board Review and Approval
The Board shall review annually the Compensation Committee's recommendations as to cash
and equity-based compensation payable to non-employee directors and determine whether to approve
such recommendations.
2.1.3 Limits on Equity-Based Compensation for Non-Employee Directors
(a) Freeport shall cap the grant-date value of the annual equity compensation
award to each non-employee director, either through an amendment to the 2006 Plan or the adoption
of a new stock incentive plan, such that any annual equity compensation shall not exceed $500,000.
(b) In December 2015, the Nominating and Corporate Governance Committee
and the Compensation Committee (the "Committees") engaged Pay Governance, an independent
compensation consultant, to advise the Committees with regard to the Company's director
compensation program, including the cash and equity-based compensation of non-employee directors
to be awarded in 2016, and the Committees recommended, and the Board of Directors approved in
accordance with the Committees' recommendations, certain revisions to the Company's director
compensation program in accordance with recommendations from Pay Governance. These revisions
to the Company's director compensation program, effective January 1, 2016, include reduced total
annual compensation amounts for non-employee directors, including both cash and equity
compensation for 2016, and a one-year vesting period for grants of Restricted Stock Units to non-
employee directors.
2.1.4 Shareholder Approval
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The amendment to the 2006 Plan, or the new stock incentive plan, if applicable, containing the
cap on the value of the annual equity compensation award to each non-employee director will be
submitted to shareholders for approval at the 2016 annual meeting. (The Parties acknowledge that
Freeport has complied with this paragraph 2.1.4 by submitting the 2016 Plan containing the equity cap
on the value of the annual equity compensation award to each non-employee director for shareholder
approval at the Company's 2016 annual meeting, as set forth in its Notice of 2016 Annual Meeting of
Stockholders and Proxy Statement.)
2.1.5 Enhanced Disclosures on Director Compensation Practices
Commencing with its preliminary proxy statement filed with the SEC in connection with the
2016 annual meeting of stockholders of Freeport, Freeport shall disclose therein (A) the compensation
philosophy underlying such non-employee director compensation; and (B) the process by which
decisions concerning non-employee director compensation are based, including the considerations
evaluated by the Compensation Committee and the Board, as well as the role of an independent
compensation consultant. (The Parties acknowledge that Freeport has already complied with clauses
(A) and (B) above by disclosing the Company's compensation philosophy underlying non-employee
director compensation and the process by which decisions concerning non-employee director
compensation are based in its Notice of 2016 Annual Meeting of Stockholders and Proxy Statement.)
2.1.6 Applicability to Affiliates
The Reforms set forth in paragraphs 2.1.1 to 2.1.3(a) and 2.1.5 shall be adopted by any affiliate
spun off from Freeport.
C. Approval and Notice
3.1 Promptly after execution of this Stipulation, Plaintiff shall submit this Stipulation
together with its exhibits to the Court and shall apply unopposed for entry of an order (the "Preliminary
Approval Order"), substantially in the form of Exhibit A attached hereto, requesting: (i) preliminary
approval of the Settlement set forth in this Stipulation; (ii) approval of the form and manner of
providing notice of the Settlement to Current Freeport Shareholders; and (iii) a date for the Settlement
Hearing.
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3.2 Notice to Current Freeport Shareholders shall consist of a Notice and Summary Notice,
which includes the general terms of the Settlement set forth in this Stipulation and the date of the
Settlement Hearing, substantially in the forms attached hereto as Exhibits B-C, respectively.
3.3 Freeport shall undertake the administrative responsibility for giving notice to Current
Freeport Shareholders and shall be solely responsible for paying the costs and expenses related to
providing such notice to its shareholders. Within ten (10) business days after the entry of the
Preliminary Approval Order: (i) Freeport shall cause the Summary Notice to be published once in the
Investor's Business Daily; (ii) Robbins Arroyo LLP shall post a copy of the Notice and Stipulation on
its website until the Judgement is entered; and (iii) Freeport shall post a copy of the Notice and
Stipulation on the Company's Investor Relations page of its website until the Judgment is entered.
3.4 If additional notice is required by the Court, then the cost and administration of such
additional notice will be borne by Freeport. The Settling Parties believe the content and manner of
the notice, as set forth herein, constitutes adequate and reasonable notice to Freeport shareholders
pursuant to applicable law and due process. No later than fourteen (14) calendar days prior to the
Settlement Hearing, Defendants' Counsel shall file with the Court an appropriate affidavit or
declaration with respect to the publication and posting the Notice and Summary Notice and Plaintiff's
Counsel shall file with the Court an appropriate affidavit or declaration with respect to the posting of
the Notice and Stipulation.
3.5 Pending the Court's determination as to final approval of the Settlement, Plaintiff and
the Releasing Persons are barred and enjoined from commencing, prosecuting, instigating, or in any
way participating in the commencement or prosecution of: (i) any action asserting any Released Claim
against any of the Released Persons; and/or (ii) all claims arising out of, relating to, or in connection
with the institution, prosecution, assertion, settlement, or resolution of the Action or the Released
Claims.
D. Attorneys' Fees and Reimbursement of Expenses
4.1 After negotiating the Corporate Governance Reforms, Plaintiff's Counsel and Freeport
separately negotiated the attorneys' fees and expenses that the Company would pay to Plaintiff's
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Counsel. As a result of these negotiations, and in light of the substantial benefits conferred upon
Freeport by Plaintiff's Counsel's efforts, the Company has agreed to pay $525,000 for Plaintiff's
attorneys' fees and expenses, subject to Court approval (the "Fee and Expense Amount").
4.2 Within ten (10) calendar days of issuance of an Order by the Court finally approving
the Settlement, notwithstanding the existence of any timely filed objections to the Settlement, or
potential for appeal therefrom, Freeport shall pay or cause its insurer to pay the Fee and Expense
Amount to Robbins Arroyo LLP as receiving agent for Plaintiff's Counsel. The Fee and Expense
Amount, as approved by the Court, shall constitute final and complete payment for Plaintiff's Counsel's
fees and expenses that have been incurred or will be incurred in connection with the Action.
4.3 In the event that the Judgment fails to become Final as defined in paragraph 1.8 herein,
then it shall be the obligation of Plaintiff's Counsel to make appropriate refunds or repayments to
Freeport's and/or Defendants' insurers of any attorneys' fees and expenses previously paid within
fifteen (15) business days of receiving notice from Defendants' Counsel or from a court of appropriate
jurisdiction, whichever is earlier.
E. Releases
5.1 Upon the Effective Date, the Releasing Persons shall be deemed to have fully, finally,
and forever released, relinquished, and discharged the Released Claims (including Unknown Claims)
against the Released Persons. Nothing herein shall in any way impair or restrict the rights of any
Settling Party to enforce the terms of this Stipulation or the Judgment.
5.2 Except as set forth in paragraph 5.3 below, upon the Effective Date, each of the
Released Persons shall be deemed to have fully, finally, and forever released, relinquished, and
discharged Plaintiff, Plaintiff's Counsel, and Freeport from all claims (including Unknown Claims),
arising out of, relating to, or in connection with the institution, prosecution, assertion, settlement, or
resolution of the Action or the Released Claims. Nothing herein shall in any way impair or restrict
the rights of any Settling Party to enforce the terms of this Stipulation or the Judgment.
5.3 Notwithstanding anything in this Stipulation to the contrary: (i) nothing in this
Stipulation or in paragraph 5.2 above constitutes or reflects a waiver or release of any rights or claims
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of Defendants against their insurers, or their insurers' subsidiaries, predecessors, successors, assignee,
affiliates, or representatives, including, but not limited to, any rights or claims of Defendants or
Freeport under any directors' and officers' liability insurance or other applicable insurance coverage;
and (ii) nothing in this Stipulation or in paragraph 5.2 above constitutes or reflects a waiver or release
of any rights or claims of the Individual Defendants relating in any way to indemnification, whether
under any written indemnification or advancement agreement, or under the Company's charter, by-
laws, or under applicable law.
F. Conditions of Settlement; Effect of Disapproval, Cancellation, or Termination
6.1 The Effective Date of this Stipulation shall be conditioned on the occurrence of all of
the following events:
a. approval of the terms of the Settlement by Freeport's Board, which Defendants'
Counsel represents already has been accomplished;
b. entry of the Judgment, in all material respects in the form set forth as Exhibit D
annexed hereto, approving the Settlement, without awarding costs to any party, except as provided
herein; and
c. the passing of the date upon which the Judgment becomes Final.
6.2 If for any reason the Effective Date of this Stipulation does not occur, or if this
Stipulation is in any way canceled, terminated, or fails to become Final in accordance with its terms,
and if counsel for the Settling Parties do not otherwise mutually agree in writing to proceed with this
Stipulation: (i) all Settling Parties and Released Persons shall be restored to their respective positions
prior to execution of this Stipulation; (ii) all releases delivered in connection with this Stipulation shall
be null and void, except as otherwise provided for in this Stipulation; (iii) the Fee and Expense Amount
paid to Plaintiff's Counsel shall be refunded and returned within fifteen (15) business days of said
event; and (iv) all negotiations, proceedings, documents prepared, and statements made in connection
herewith shall be without prejudice to the Settling Parties, shall not be deemed or construed to be an
admission by a Settling Party of any act, matter, or proposition, and shall not be used in any manner
for any purpose in any subsequent proceeding in the Action or in any other action or proceeding. In
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such event, the terms and provisions of this Stipulation shall have no further force and effect with
respect to the Settling Parties and shall not be used in the Action or in any other proceeding for any
purpose.
G. Miscellaneous Provisions
7.1 The Settling Parties: (i) acknowledge that it is their intent to consummate this
Stipulation; and (ii) agree to act in good faith and cooperate to take all reasonable and necessary steps
to expeditiously implement the terms and conditions of this Stipulation.
7.2 In the event that any part of the Settlement is found to be unlawful, void,
unconscionable, or against public policy by a court of competent jurisdiction, the remaining terms and
conditions of the Settlement shall remain intact.
7.3 The Settling Parties intend this Settlement to be a final and complete resolution of all
disputes between them with respect to the Action. The Settlement comprises claims that are contested
and shall not be deemed an admission by any Settling Party as to the merits of any claim, allegation,
or defense. The Settling Parties and their respective counsel agree that at all times during the course
of the litigation, each has complied with the requirements of the applicable laws and rules of the Court.
7.4 The Court shall retain jurisdiction with respect to implementation and enforcement of
the terms of this Stipulation, and the Settling Parties and their counsel submit to the jurisdiction of the
Court solely for purposes of implementing and enforcing the Settlement embodied in this Stipulation.
7.5 Neither this Stipulation nor the Settlement shall be deemed to prejudice in any way the
respective positions of the Settling Parties with respect to the Action, shall not be deemed a
presumption, a concession, or admission by any of the Settling Parties of any fault, liability, or
wrongdoing as to any facts, claims, or defenses that have been or might have been alleged or asserted
in the Action or with respect to any of the claims settled in the Action, or any other action or
proceeding, and shall not be interpreted, construed, deemed, invoked, offered, or received in evidence
or otherwise used by any person in the Action, or in any other action or proceeding, whether civil,
criminal, or administrative. The Released Persons may file this Stipulation and/or the Judgment in
any action that may be brought against them in order to support a defense or counterclaim based on
- 16 - STIPULATION OF SETTLEMENT
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principles of res judicata, collateral estoppel, full faith and credit, release, standing, good faith
settlement, judgment bar or reduction, or any other theory of claim preclusion or issue preclusion or
similar defense or counterclaim. The Settling Parties may also file this Stipulation and documents
executed pursuant and in furtherance thereto in any action to enforce the Settlement and/or the
Judgment.
7.6 This Stipulation may be modified or amended only by a writing signed by the
signatories hereto.
7.7 This Stipulation shall be deemed drafted equally by all Settling Parties hereto.
7.8 No representations, warranties, or inducements have been made to any of the Settling
Parties concerning this Stipulation or its exhibits other than the representations, warranties, and
covenants contained and memorialized in such documents.
7.9 This Stipulation and the Settlement shall be binding upon, and inure to the benefit of,
the successors and assignee of the Settling Parties and Released Persons.
7.10 Each counsel or other Person executing this Stipulation or its exhibits on behalf of any
of the Settling Parties hereby warrants that such Person has the full authority to do so.
7.11 The exhibits to this Stipulation are material and integral parts hereof and are fully
incorporated herein by this reference.
7.12 This Stipulation and the exhibits attached hereto constitute the entire agreement among
the Settling Parties with respect to the subject matter hereof and supersede all prior and
contemporaneous oral and written agreements and discussions.
7.13 In the event that there exists a conflict or inconsistency between the terms of this
Stipulation and the terms of any exhibit hereto, the terms of this Stipulation shall prevail.
7.14 This Stipulation may be executed in one or more counterparts, including by signature
transmitted by facsimile or e-mailed PDF files. Each counterpart, when so executed, shall be deemed
to be an original, and all such counterparts together shall constitute the same instrument.
7.15 This Stipulation shall be considered to have been negotiated, executed, and delivered,
and to be wholly performed, in the State of Arizona, and the rights and obligations of the Settling
- 17 - STIPULATION OF SETTLEMENT
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Parties shall be construed and enforced in accordance with, and governed by, the internal, substantive
laws of the State of Arizona without giving effect to that State's choice of law principles.
IN WITNESS WHEREOF, the Settling Parties have caused this Stipulation to be executed by
their duly authorized attorneys.
DATED: July 8, 2016 SCHNEIDER WALLACE COTTRELL DONECKY WOTKYNS LLP
MICHAEL C. MCKAY /s/ Michael C. McKay
MICHAEL C. MCKAY
8501 North Scottsdale Road, Suite 270Scottsdale, AZ 85253 Telephone: (480) 428-0141 Facsimile: (866) 505-8036
ROBBINS ARROYO LLP BRIAN J. ROBBINS FELIPE J. ARROYO JENNY L. DIXON 600 B Street, Suite 1900 San Diego, CA 92101 Telephone: (619) 525-3990 Facsimile: (619) 525-3991
Counsel for Plaintiff Jeffrey Harris
- 18 - STIPULATION OF SETTLEMENT
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DATED: July 8, 2016 SNELL & WILMER L.L.P. JOEL P. HOXIE /s/ Joel P. Hoxie
JOEL P. HOXIE 400 E. Van Buren, Suite 1900 Phoenix, AZ 85004-2202 Telephone: (602) 382-6000 Facsimile: (602) 382-6070
DAVIS POLK & WARDWELL LLP JAMES P. ROUHANDEH CHARLES S. DUGGAN 450 Lexington Avenue New York, NY 10017 Telephone: (212) 450-4000 Facsimile: (212) 701-5800
Counsel for individual defendants Robert J. Allison, Jr., Alan R. Buckwalter, III; Robert A. Day, Gerald J. Ford, Thomas A. Fry, II, H. Devon Graham, Jr., Lydia H. Kennard, Charles C. Krulak, Bobby Lee Lackey, Jon C. Madonna; Dustan E. McCoy, Stephen H. Siegele, Frances Fragos Townsend; and nominal defendant Freeport-McMoRan Inc.
EXHIBIT A
PRELIMINARY APPROVAL ORDER
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SCHNEIDER WALLACE COTTRELL KONECKY WOTKYNS LLP MICHAEL C. MCKAY 8501 North Scottsdale Road, Suite 270 Scottsdale, AZ 85253 Telephone: (480) 428-0141 Facsimile: (866) 505-8036 [email protected] ROBBINS ARROYO LLP BRIAN J. ROBBINS FELIPE J. ARROYO JENNY L. DIXON 600 B Street, Suite 1900 San Diego, CA 92101 Telephone: (619) 525-3990 Facsimile: (619) 525-3991 [email protected] [email protected] [email protected] Attorneys for Plaintiff
IN THE SUPERIOR COURT OF THE STATE OF ARIZONA IN AND FOR THE COUNTY OF MARICOPA
JEFFREY HARRIS, Derivatively on Behalf of FREEPORT-MCMORAN INC.,
Plaintiff,
v.
ROBERT J. ALLISON, JR., ALAN R. BUCKWALTER, III, ROBERT A. DAY, GERALD J. FORD, THOMAS A. FRY, III, H. DEVON GRAHAM, JR., LYDIA H. KENNARD, CHARLES C. KRULAK, BOBBY LEE LACKEY, JON C. MADONNA, DUSTAN E. MCCOY, STEPHEN H. SIEGELE, and FRANCES FRAGOS TOWNSEND,
Defendants, -and-
FREEPORT-MCMORAN INC., a Delaware corporation,
Nominal Defendant.
Case No. CV2015-052393
PRELIMINARY APPROVAL ORDER (Assigned to the Honorable Aimee Anderson)
- 1 - PRELIMINARY APPROVAL ORDER
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This matter came before the Court1 for a hearing on __________, 2016. Plaintiff has made
an unopposed motion for an order: (i) preliminarily approving the proposed settlement
("Settlement") of the above-captioned Action, in accordance with the Stipulation; and (ii) approving
the form and manner of the Notice of the Settlement.
WHEREAS, the Stipulation sets forth the terms and conditions for the Settlement, including,
but not limited to: (i) a proposed Settlement and dismissal of the Action with prejudice as to the
Released Persons; and (ii) the agreed-to Fee and Expense Amount to be paid to Plaintiff's Counsel,
upon the terms and conditions set forth in the Stipulation;
WHEREAS, the Settlement appears to be the product of serious, informed, non-collusive
negotiations and falls within the range of possible approval; and
WHEREAS, this Court, having considered the Stipulation and the exhibits annexed thereto
and having heard the arguments of the Settling Parties at the preliminary approval hearing:
IT IS HEREBY ORDERED, ADJUDGED, AND DECREED AS FOLLOWS:
1. This Court, for purposes of this Preliminary Approval Order, adopts the definitions
set forth in the Stipulation.
2. This Court preliminarily approves the Settlement set forth in the Stipulation as being
fair, reasonable, and adequate.
3. Within ten (10) business days after the entry of this Preliminary Approval Order,
Freeport shall, at its own cost: (i) cause a copy of the Summary Notice, substantially in the form of
Exhibit C to the Stipulation, to be published once in the Investor's Business Daily; and (ii) post a
copy of the Notice and the Stipulation on the Company's Investor Relations page of its website, until
the Judgment is entered.
4. No later than fourteen (14) calendar days prior to the Settlement Hearing, Defendants'
Counsel shall file with the Court an appropriate affidavit or declaration with respect to the
publication and posting the Notice and Summary Notice.
1 Except as otherwise expressly provided below or as the context otherwise requires, all capitalized terms contained herein shall have the same meanings and/or definitions as set forth in the Stipulation of Settlement dated July 8, 2016 (the "Stipulation"), and filed with the Court on July 12, 2016.
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5. Within ten (10) business days after the entry of this Preliminary Approval Order,
Robbins Arroyo LLP shall post copies of the Notice and Stipulation on its website until the
Judgment is entered.
6. No later than fourteen (14) calendar days prior to the Settlement Hearing, Robbins
Arroyo LLP shall file with the Court an appropriate affidavit or declaration with respect to posting
the Notice and Stipulation.
7. The Court finds that the form, substance, and dissemination of information regarding
the proposed Settlement in the manner set out in this Preliminary Approval Order constitutes the best
notice practicable under the circumstances and complies fully with Arizona law and due process.
8. A hearing shall be held on _______________, 2016 at ____ __.m., before the
Honorable Aimee Anderson, Department H/108, in the Superior Court of the State of Arizona,
Maricopa County, located at located at 18380 N. 40th Street, Phoenix, Arizona 85032, (the
"Settlement Hearing"), at which the Court will determine: (i) whether the terms of the Stipulation
should be approved as fair, reasonable, and adequate; (ii) whether the Notice and Summary Notice
fully satisfied the requirements of due process; (iii) whether the Action should be dismissed with
prejudice; (iv) whether all Released Claims against the Released Persons should be fully and finally
released; (v) whether the agreed-to Fee and Expense Amount should be approved; and (vi) to rule
upon such other matters as the Court may deem appropriate.
9. The Court reserves: (i) the right to approve the Settlement, with such modifications as
may be agreed to by counsel for the Settling Parties consistent with such Settlement, without further
notice to Current Freeport Shareholders; and (ii) the right to continue or adjourn the Settlement
Hearing from time to time, by oral announcement at the hearing or at any adjournment thereof,
without further notice to Current Freeport Shareholders.
10. Any Current Freeport Shareholders may appear and show cause, at their own
expense, individually or through counsel, if he, she, or it has any reason why the Settlement
embodied in the Stipulation should not be approved as fair, reasonable, and adequate, or why the
Judgment should or should not be entered hereon, or the Fee and Expense Amount should not be
awarded. However, no Current Freeport Shareholders shall be heard or entitled to contest the
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approval of the proposed Settlement, or, if approved, the Judgment to be entered hereon, unless that
Current Freeport Shareholder has caused to be filed, and served on counsel as noted below: (a) a
written notice of objection with the Person's name, address, and telephone number, and if
represented, their counsel, along with a representation as to whether such Person intends to appear at
the Settlement Hearing; (b) competent evidence that such Person held shares of Freeport common
stock as of July 8, 2016, and continues to hold shares of Freeport common stock as of the date of the
Settlement Hearing; (c) a statement of objections to any matters before the Court, the grounds
therefor, or the reasons for such Person desiring to appear and be heard, as well as all documents or
writings such Person desires the Court to consider; and (d) the identities of any witnesses such
Person plans on calling at the Settlement Hearing, along with a summary description of their likely
testimony.
11. At least twenty-one (21) calendar days prior to the Settlement Hearing set for
_____________, 2016, any such person must file the written objection(s), notices of intent to appear,
and corresponding materials with the Clerk of the Court of the Superior Court of the State of
Arizona, Maricopa County, located at 18380 N. 40th Street, Phoenix, Arizona 85032, and serve such
materials by that date, to each of the following Settling Parties' counsel:
Felipe J. Arroyo ROBBINS ARROYO LLP 600 B Street, Suite 1900 San Diego, CA 92101 Telephone: (619) 525-3990 Facsimile: (619) 525-3991
Charles S. Duggan DAVIS POLK & WARDWELL LLP 450 Lexington Avenue New York, NY 10017 Telephone: (212) 450-4000 Facsimile: (212) 701-5800
Michael C. McKay SCHNEIDER WALLACE COTTRELL KONECKY WOTKYNS LLP 8501 North Scottsdale Road, Suite 270 Scottsdale, AZ 85253 Telephone: (480) 428-0141 Facsimile: (866) 505-8036 Counsel for Plaintiff
Joel P. Hoxie SNELL & WILMER L.L.P. 400 E. Van Buren, Suite 1900 Phoenix, AZ 85004-2202 Telephone: (602) 382-6000 Facsimile: (602) 382-6070 Counsel for individual defendants Robert J. Allison, Jr., Alan R. Buckwalter, III, Robert A. Day, Gerald J. Ford, Thomas A. Fry, III, H. Devon Graham, Jr., Lydia H. Kennard, Charles C. Krulak, Bobby Lee Lackey, Jon C. Madonna, Dustan E. McCoy, Stephen H. Siegele, Frances Fragos Townsend, and nominal defendant Freeport-McMoRan Inc.
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Only Current Freeport Shareholders who have filed with the Court and sent to the Settling Parties'
counsel valid and timely written notices of objection will be entitled to be heard at the hearing,
unless the Court orders otherwise.
12. Any Current Freeport Shareholder who does not make an objection in the manner
provided herein shall be deemed to have waived any such objection and shall forever be foreclosed
from making any objection to the fairness, reasonableness, or adequacy of the Settlement, unless
otherwise ordered by the Court, and shall be otherwise bound by the Judgment to be entered and the
releases to be given.
13. Briefs in support of the Settlement or attorneys' fees and expenses shall be filed and
served by Plaintiff's Counsel twenty-eight (28) calendar days prior to the Settlement Hearing and
any reply papers supporting the Settlement or attorneys' fees and expenses, including any responses
to objections, if any, shall be filed and served by the Settling Parties no later than seven (7) calendar
days prior to the Settlement Hearing.
14. All proceedings in the Action are stayed until further order of the Court, except as
may be necessary to implement the Settlement or comply with the terms of the Stipulation.
15. Pending the Court's determination as to final approval of the Settlement, Plaintiff and
the Releasing Persons are barred and enjoined from commencing, prosecuting, instigating, or in any
way participating in the commencement or prosecution of: (i) any action asserting any Released
Claim against any of the Released Persons; and/or (ii) all claims arising out of, relating to, or in
connection with the institution, prosecution, assertion, settlement, or resolution of the Action or the
Released Claims.
16. This Court may, for good cause, extend any of the deadlines set forth in this
Preliminary Approval Order without further notice to Current Freeport Shareholders.
17. Neither the Stipulation nor the Settlement, nor any act performed or document
executed pursuant to or in furtherance of the Stipulation or the Settlement: (i) is or may be deemed to
be or may be offered, attempted to be offered, or used in any way by the Settling Parties or any other
Person as a presumption, a concession, or an admission of, or evidence of, any fault, wrongdoing, or
liability of the Settling Parties or Released Persons, or of the validity of any Released Claims; or
- 5 - PRELIMINARY APPROVAL ORDER
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(ii) is intended by the Settling Parties to be offered or received as evidence or used by any other
person in any other actions or proceedings, whether civil, criminal, or administrative, other than to
enforce the terms therein.
IT IS SO ORDERED.
DATED:
THE HONORABLE AIMEE ANDERSON JUDGE OF THE SUPERIOR COURT
1068226_8
EXHIBIT B
NOTICE OF PROPOSED SETTLEMENT AND SETTLEMENT HEARING
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IN THE SUPERIOR COURT OF THE STATE OF ARIZONA IN AND FOR THE COUNTY OF MARICOPA
JEFFREY HARRIS, Derivatively on Behalf of FREEPORT-MCMORAN INC.,
Plaintiff,
v.
ROBERT J. ALLISON, JR., ALAN R. BUCKWALTER, III, ROBERT A. DAY, GERALD J. FORD, THOMAS A. FRY, III, H. DEVON GRAHAM, JR., LYDIA H. KENNARD, CHARLES C. KRULAK, BOBBY LEE LACKEY, JON C. MADONNA, DUSTAN E. MCCOY, STEPHEN H. SIEGELE, and FRANCES FRAGOS TOWNSEND,
Defendants, -and-
FREEPORT-MCMORAN INC., a Delaware corporation,
Nominal Defendant.
Case No. CV2015-052393
NOTICE OF PROPOSED SETTLEMENT AND SETTLEMENT HEARING (Assigned to the Honorable Aimee Anderson)
- 1 - NOTICE OF PROPOSED SETTLEMENT AND SETTLEMENT HEARING
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TO: ALL CURRENT RECORD HOLDERS AND BENEFICIAL OWNERS OF THE COMMON STOCK OF FREEPORT-MCMORAN INC. ("FREEPORT" OR THE "COMPANY") AS OF JULY 8, 2016 ("CURRENT FREEPORT SHAREHOLDERS").
THIS NOTICE RELATES TO THE PENDENCY AND PROPOSED SETTLEMENT OF SHAREHOLDER DERIVATIVE LITIGATION. PLEASE READ THIS NOTICE CAREFULLY AND IN ITS ENTIRETY. IF YOU ARE A CURRENT FREEPORT SHAREHOLDER, THIS NOTICE CONTAINS IMPORTANT INFORMATION ABOUT YOUR RIGHTS.
YOU ARE HEREBY NOTIFIED, pursuant to an Order of the Superior Court of the State of
Arizona, County of Maricopa (the "Court"), that a proposed Settlement1 has been reached by the
Parties to the shareholder derivative action brought on behalf of Freeport, captioned Harris v. Allison,
et al., Case No. CV2015-052393 (the "Action").
As explained below, the Court will hold a Settlement Hearing on _________ __, 2016 at
__:___ _.m., before the Honorable Aimee Anderson, Department H/108 of the Superior Court of the
State of Arizona, Maricopa County, located at 18380 N. 40th Street, Phoenix, Arizona 85032, to
determine whether to approve the Settlement. You have an opportunity to be heard at this hearing.
The terms of the Settlement are set forth in the Parties' Stipulation and summarized in this
Notice. The Settlement provides for corporate governance reforms that are designed to strengthen the
Company's director compensation practices and protect the Company going forward. If approved by
the Court, the Settlement will fully resolve the Action, including the dismissal of the Action with
prejudice. For a more detailed statement of the matters involved in the Action, the Settlement, and the
terms discussed in this Notice, the Stipulation may be inspected at the Clerk of Court's office, 18380
N. 40th Street, Phoenix, Arizona 85032. The Stipulation is also available for viewing on Freeport's
website at http://investors.fcx.com/investor-center/, and Plaintiff's Counsel's website at
www.robbinsarroyo.com/notices.
1 Except as otherwise expressly provided below or as the context otherwise requires, all capitalized terms contained herein shall have the same meanings and/or definitions as set forth in the Stipulation of Settlement dated July 8, 2016 (the "Stipulation").
- 2 - NOTICE OF PROPOSED SETTLEMENT AND SETTLEMENT HEARING
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This Notice is not intended to be an expression of any opinion by the Court with respect to the
merits of the claims made in the Action, but is merely to advise you of the pendency and Settlement of
the Action.
There Is No Claims Procedure. This case was brought to protect the interests of Freeport and
its shareholders. The Settlement will result in changes to the Company's corporate governance, not in
payment to individuals, and accordingly, there will be no claims procedure.
I. SUMMARY OF THE ACTION
The Action is brought by Plaintiff solely on behalf of and for the benefit of Freeport and against
the Individual Defendants. Plaintiff generally alleges, among other things, that the Individual
Defendants breached their fiduciary duties of loyalty by awarding and/or receiving excessive and
improper compensation in 2013 and 2014 at the expense of the Company. Plaintiff further alleges that
the Individual Defendants were unjustly enriched as a result of their purportedly excessive
compensation.
In July 2015, the Settling Parties agreed to defer the filing of a response to the complaint in
order to allow Freeport and its Board time to evaluate Plaintiff's claims. The Settling Parties have
entered into a series of stipulations extending the time for Defendants to respond to the complaint.
The Settling Parties commenced settlement discussions in August 2015. In support of these
settlement discussions, Plaintiff expended significant efforts reviewing the Company's corporate
governance structures and policies, researching corporate governance issues and best practices, and
formulating proposed corporate governance reforms. During September 2015, the Settling Parties
discussed an appropriate settlement framework and, on October 8, 2015, Plaintiff's Counsel served a
settlement demand on Defendants' Counsel that proposed a comprehensive set of corporate
governance reforms designed to strengthen and reform the Company's director compensation practices
and prevent the alleged wrongdoing from recurring. Thereafter, counsel for the Settling Parties
engaged in numerous telephonic discussions over the proposed corporate governance reforms in an
effort to reach a resolution of the derivative claims in the best interests of the Company.
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On November 18, 2015, Defendants provided a formal response to the October 8 settlement
demand. The Settling Parties continued to engage in telephonic negotiations regarding the terms of
the proposed settlement, including the discovery that Plaintiff sought to ensure that any settlement was
in the best interests of the Company and its shareholders.
In response to Plaintiff's request, on December 1, 2015, Defendants produced certain
information that formed the basis for Defendants' proposals, which was the subject of a telephonic
conference among counsel for the Settling Parties on December 4, 2015.
On January 12, 2016, counsel for the Settling Parties held another telephone conference, during
which Plaintiff's Counsel identified discovery to be obtained from Defendants. Negotiations
continued throughout January and February, with the Settling Parties circulating additional written
comments. Defendants produced the requested documents on April 11, 2016.
After engaging in months of telephonic and written settlement negotiations, and after Plaintiff's
Counsel completed reviewing the requested documents, the Settling Parties reached an agreement-in-
principle to resolve the Action (excepts as to payment of Plaintiff's attorneys' fees and expenses), and
continued thereafter to document their agreement. On June 17, 2016, the Settling Parties reached an
agreement-in-principle as to the amount of Plaintiff's attorneys' fees and expenses.
As a result of the Action and the Settlement reflected in the Stipulation, Freeport will
implement significant corporate governance reforms designed to enhance and improve the Company's
disclosures concerning outside director compensation and impose a meaningful cap on equity
compensation for said directors. The reforms and enhancements are detailed below and in paragraph
2.1 of the Stipulation and are collectively referred to as the "Corporate Governance Reforms" or the
"Reforms."
II. TERMS OF THE SETTLEMENT
The terms and conditions of the proposed Settlement are set forth in the Stipulation. The
Stipulation has been filed with the Court and is also available for viewing on Freeport's website at
http://investors.fcx.com/investor-center/, and Plaintiff's Counsel's website at
www.robbinsarroyo.com/notices. The following is only a summary of its terms.
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Corporate Governance Reforms. As a direct result of the filing, prosecution, and settlement
of the Action, Freeport will implement and maintain in substance significant corporate governance
reforms designed to enhance and improve the Company's disclosures concerning outside director
compensation and impose a meaningful cap on equity compensation for said directors. These Reforms
include measures that: enhance the Compensation Committee's duties to include annual review and
assessment of all non-employee director compensation; require the engagement of a compensation
consultant at least once every two years to advise the Compensation Committee with regard to the
cash and equity-based compensation of non-employee directors; require Board approval of any annual
determinations of the amount of compensation to be paid non-employee directors; require enhanced
disclosures in the Company's proxy as to the process for and considerations that factored into
determining equity compensation for non-employee directors; provide for an annual cap of $500,000
on the value of annual equity compensation awards to non-employee directors that will be submitted
for shareholder vote through an amendment to the 2006 Plan or the adoption of a new stock incentive
plan; provide for a minimum one-year vesting for equity grants of restricted stock units ("RSUs") for
non-employee directors; and mandate a commitment to continue these reforms through 2020 and that
any affiliate spun off from Freeport will adopt the same Reforms. These Reforms and enhancements
are detailed in paragraph 2.1 of the Stipulation.
The Settling Parties believe that a settlement at this juncture on the terms and on the conditions
set forth in the Stipulation is fair, reasonable, and adequate. In addition, the Freeport Board has, in
the exercise of its business judgment, formally approved the Settlement and each of its terms, as fair,
just, and adequate, and in the best interest of Freeport and its shareholders.
III. DISMISSAL AND RELEASES
In connection with the Court's approval of the Settlement, the Action and all claims asserted
by Plaintiff on behalf of Freeport and against the Individual Defendants will be dismissed with
prejudice. The full scope of the releases and the persons and entities who are the subject of the releases
are set forth in the Stipulation.
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Upon the Effective Date, the Releasing Persons shall be deemed to have fully, finally, and
forever released, relinquished, and discharged the Released Claims (including Unknown Claims)
against the Released Persons. Nothing herein shall in any way impair or restrict the rights of any
Settling Party to enforce the terms of the Stipulation or the Judgment.
Further, upon the Effective Date, each of the Released Persons shall be deemed to have fully,
finally, and forever released, relinquished, and discharged Plaintiff, Plaintiff's Counsel, and Freeport
from all claims (including Unknown Claims), arising out of, relating to, or in connection with the
institution, prosecution, assertion, settlement, or resolution of the Action or the Released Claims.
Nothing herein shall in any way impair or restrict the rights of any Settling Party to enforce the terms
of the Stipulation or the Judgment.
IV. REASONS FOR THE SETTLEMENT
The Settling Parties believe that the Settlement confers substantial benefits on, and is in the
best interests of, Freeport and its shareholders. In addition, the Freeport Board has, in the exercise of
its business judgment, formally approved the Settlement and each of its terms, as fair, just, and
adequate, and in the best interest of Freeport and its shareholders.
A. Why Plaintiff Agreed to Settle
Plaintiff believes that the Action has substantial merit, and Plaintiff's entry into the Stipulation
and Settlement is not intended to be and shall not be construed as an admission or concession
concerning the relative strength or merit of the claims alleged in the Action. Plaintiff and his counsel
also acknowledge the significant risk, expense, and length of continued proceedings necessary to
prosecute the Action against the Defendants through trial and through possible appeals. Plaintiff's
Counsel have also taken into account the substantial risks, costs, and delays involved in complex
shareholder derivative litigation, generally, as well as the unique challenges presented by this Action,
including the inherent problems of proof for the claims at issue and possible defenses thereto.
Plaintiff's Counsel have conducted an extensive investigation over the past year, including: (i)
reviewing Freeport's press releases, public statements, U.S. Securities and Exchange Commission
("SEC") filings, and securities analysts' reports and advisories about the Company; (ii) reviewing press
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releases, public statements, and SEC filings of other companies within Freeport's peer group; (iii)
reviewing media reports about the Company; (iv) researching the applicable law with respect to the
claims alleged in the Action and the potential defenses thereto; (v) preparing and filing a derivative
complaint; (vi) conducting damages analyses; (vii) participating in informal conferences with
Defendants' Counsel regarding the specific facts of the case, the perceived strengths and weaknesses
of the case, and other issues in an effort to facilitate negotiations and fact gathering; (viii) consulting
with co-counsel on the course of the litigation; (ix) analyzing internal documents produced by the
Company, including Board minutes and other Board materials; (x) drafting settlement demands; and
(xi) negotiating this Settlement with Defendants.
Based on Plaintiff's Counsel's thorough review and analysis of the relevant facts and
circumstances, allegations, defenses, and controlling legal principles, Plaintiff's Counsel believe that
the Settlement set forth in the Stipulation is fair, reasonable, and adequate, and confers substantial
benefits upon Freeport and its shareholders. Based on their evaluation, Plaintiff and his counsel have
determined that the Settlement is in the best interests of Freeport and its shareholders and have agreed
to settle the Action upon the terms and subject to the conditions set forth herein.
B. Why Defendants Agreed to Settle
Defendants have denied and continue to deny each and all of the claims, contentions, and
allegations made against them or that could have been made against them in the Action. Defendants
believe that it is desirable and beneficial that the Action be settled in the manner and upon the terms
and conditions set forth in the Stipulation because, among other things, it will allow the Company to
conclude this litigation on terms that are just and reasonable, including the adoption and maintenance
of Corporate Governance Reforms that serve Freeport's and its shareholders' best interests. The Board
has approved the Settlement as being in the best interests of Freeport and its shareholders. Further,
Freeport, through its Board, acknowledges that the Settlement is fair, reasonable, and adequate, and in
the best interests of Freeport and its shareholders.
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V. PLAINTIFF'S COUNSEL'S FEES AND EXPENSES
After negotiating the Corporate Governance Reforms, Plaintiff's Counsel and Freeport
separately negotiated the attorneys' fees and expenses that the Company would pay to Plaintiff's
Counsel. As a result of these negotiations, and in light of the substantial benefits conferred upon
Freeport by Plaintiff's Counsel's efforts, the Company has agreed to pay, or cause its insurer to pay,
$525,000 for Plaintiff's attorneys' fees and expenses, subject to Court approval (the "Fee and Expense
Amount"). To date, Plaintiff's Counsel have neither received any payment for their services in
connection with the Action, nor have counsel been reimbursed for their out-of-pocket expenses
incurred. Neither the Individual Defendants nor Freeport's shareholders are personally liable for the
payment of the Fee and Expense Amount.
VI. THE SETTLEMENT HEARING AND YOUR RIGHT TO BE HEARD
The Settlement Hearing will be held before the Honorable Aimee Anderson on __________
__, 2016 at __:__ _.m., in Department H/108 of the Superior Court of the State of Arizona, Maricopa
County, located at 18380 N. 40th Street, Phoenix, Arizona 85032, to determine whether: (i) the
Settlement of the Action upon the terms and subject to the conditions set forth in the Stipulation is
fair, reasonable, and adequate and should be approved by the Court; (ii) this Notice and the Summary
Notice fully satisfied the requirements of due process; (iii) this Action should be dismissed with
prejudice; and (iv) to approve the agreed upon Fee and Expense Amount for Plaintiff's Counsel's fees
and expenses as set forth in the Stipulation. The Settlement Hearing may be continued by the Court
at the Settlement Hearing, or at any adjourned session thereof without further notice.
You have the right, but are not required to appear in person or through counsel at the Settlement
Hearing to object to the terms of the proposed Settlement or otherwise present evidence or argument
that may be proper and relevant. However, unless otherwise ordered by the Court, no Current Freeport
Shareholder shall be heard or entitled to contest the approval of the terms and conditions of the
Settlement, or, if approved, the Judgment to be entered thereon approving the same, or the Fee and
Expense Amount awarded to Plaintiff's Counsel, unless that shareholder has, at least twenty-one (21)
calendar days prior to the Settlement Hearing, filed with the Clerk of the Court and served on counsel
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for the Settling Parties, a written objection to the settlement setting forth: (i) a written notice of
objection with your name, address, and telephone number, and if represented, your counsel, along with
a representation as to whether you intend to appear at the Settlement Hearing; (ii) competent evidence
that you held shares of Freeport common stock as of July 8, 2016, and continue to hold shares of
Freeport common stock as of the date of the Settlement Hearing; (iii) a statement of objections to any
matters before the Court, the grounds therefor, or the reasons for your desiring to appear and be heard,
as well as all documents or writings you desire the Court to consider; and (iv) the identities of any
witnesses you plan on calling at the Settlement Hearing, along with a summary description of their
likely testimony.
The written objections, notices of intent to appear, and copies of any papers and briefs in
support thereof to be filed in Court shall be delivered by hand or sent by First-Class Mail to:
Clerk of the Court Superior Court of the State of Arizona Maricopa County 18380 N. 40th Street Phoenix, AZ 85032
In addition, on or before the date of such filing, you must also serve the same documents on
each of the following counsel (delivered by hand or sent by First-Class Mail):
Felipe J. Arroyo ROBBINS ARROYO LLP 600 B Street, Suite 1900 San Diego, CA 92101 Telephone: (619) 525-3990 Facsimile: (619) 525-3991
Charles S. Duggan DAVIS POLK & WARDWELL LLP 450 Lexington Avenue New York, NY 10017 Telephone: (212) 450-4000 Facsimile: (212) 701-5800
Michael C. McKay SCHNEIDER WALLACE COTTRELL KONECKY WOTKYNS LLP 8501 North Scottsdale Road, Suite 270 Scottsdale, AZ 85253 Telephone: (480) 428-0141 Facsimile: (866) 505-8036 Counsel for Plaintiff
Joel P. Hoxie SNELL & WILMER L.L.P. 400 E. Van Buren, Suite 1900 Phoenix, AZ 85004-2202 Telephone: (602) 382-6000 Facsimile: (602) 382-6070 Counsel for individual defendants Robert J. Allison, Jr., Alan R. Buckwalter, III, Robert A. Day, Gerald J. Ford, Thomas A. Fry, III, H. Devon Graham, Jr., Lydia H. Kennard, Charles C. Krulak, Bobby Lee Lackey, Jon C. Madonna, Dustan E. McCoy,
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Stephen H. Siegele, Frances Fragos Townsend, and nominal defendant Freeport-McMoRan Inc.
Unless otherwise ordered by the Court, any Current Freeport Shareholder who does not make
his, her, or its objection in the manner provided herein shall be deemed to have waived such objection
and shall forever be barred and foreclosed from making any objection to the fairness, reasonableness,
or adequacy of the Settlement, to the agreed upon Fee and Expense Amount, or to otherwise be heard,
and shall otherwise be bound by the Judgment to be entered and the releases to be given.
VII. CONDITIONS FOR SETTLEMENT
The Settlement is conditioned upon the occurrence of certain events described in the
Stipulation, which requires, among other things: (a) approval of the Settlement by Freeport's Board,
which Defendants' Counsel represents already has been accomplished; (b) entry by the Court of the
Judgment approving the Settlement, without awarding costs to any Party, except as provided in the
Stipulation; and (c) the passing of the date upon which the Judgment becomes Final.
If, for any reason, any one of the conditions described in the Stipulation is not met and the
entry of the Judgment does not occur, the Stipulation might be terminated and, if terminated, will
become null and void; and the Settling Parties to the Stipulation will be restored to their respective
positions as of the date of execution of the Stipulation.
VIII. HOW TO OBTAIN ADDITIONAL INFORMATION
This Notice summarizes the Stipulation. It is not a complete statement of the events of the
Action or the Stipulation.
There is additional information concerning the Settlement available in the Stipulation, which
may be viewed on Freeport's website at http://investors.fcx.com/investor-center/, and Plaintiff's
Counsel's website at www.robbinsarroyo.com/notices. You may also inspect the Stipulation during
business hours at the office of the Clerk of the Court, Superior Court of the State of Arizona, Maricopa
County, located at 18380 N. 40th Street, Phoenix, Arizona 85032.
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For more information concerning the Settlement, you may also call or write to: Robbins Arroyo
LLP, c/o Darnell Donahue, Client Relations, 600 B Street, Suite 1900, San Diego, California 92101,
Telephone: (619) 525-3990.
PLEASE DO NOT CALL, WRITE, OR OTHERWISE DIRECT QUESTIONS TO THE COURT OR FREEPORT REGARDING THIS NOTICE.
EXHIBIT C
SUMMARY NOTICE OF PROPOSED SETTLEMENT AND SETTLEMENT HEARING
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IN THE SUPERIOR COURT OF THE STATE OF ARIZONA IN AND FOR THE COUNTY OF MARICOPA
JEFFREY HARRIS, Derivatively on Behalf of FREEPORT-MCMORAN INC.,
Plaintiff,
v.
ROBERT J. ALLISON, JR., ALAN R. BUCKWALTER, III, ROBERT A. DAY, GERALD J. FORD, THOMAS A. FRY, III, H. DEVON GRAHAM, JR., LYDIA H. KENNARD, CHARLES C. KRULAK, BOBBY LEE LACKEY, JON C. MADONNA, DUSTAN E. MCCOY, STEPHEN H. SIEGELE, and FRANCES FRAGOS TOWNSEND,
Defendants, -and-
FREEPORT-MCMORAN INC., a Delaware corporation,
Nominal Defendant.
Case No. CV2015-052393
SUMMARY NOTICE OF PROPOSED SETTLEMENT AND SETTLEMENT HEARING (Assigned to the Honorable Aimee Anderson)
- 1 - SUMMARY NOTICE OF PROPOSED SETTLEMENT AND SETTLEMENT HEARING
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TO: ALL CURRENT RECORD HOLDERS AND BENEFICIAL OWNERS OF THE COMMON STOCK OF FREEPORT-MCMORAN INC. ("FREEPORT" OR THE "COMPANY") AS OF JULY 8, 2016 ("CURRENT FREEPORT SHAREHOLDERS").
THIS NOTICE RELATES TO THE PENDENCY AND PROPOSED SETTLEMENT OF SHAREHOLDER DERIVATIVE LITIGATION. PLEASE READ THIS NOTICE CAREFULLY AND IN ITS ENTIRETY. IF YOU ARE A CURRENT FREEPORT SHAREHOLDER, THIS SUMMARY NOTICE CONTAINS IMPORTANT INFORMATION ABOUT YOUR RIGHTS.
YOU ARE HEREBY NOTIFIED, pursuant to an Order of the Superior Court of the State of
Arizona, County of Maricopa (the "Court"), that a proposed Settlement1 has been reached by the
Parties to the shareholder derivative action brought on behalf of Freeport captioned Harris v. Allison,
et al., Case No. CV2015-052393 (the "Action").
The Court will hold a Settlement Hearing on _________ __, 2016 at __:___ _.m., before the
Honorable Aimee Anderson, Department H/108 of the Superior Court of the State of Arizona,
Maricopa County, located at 18380 N. 40th Street, Phoenix, Arizona 85032, to determine whether: (i)
the Settlement of the Action upon the terms and subject to the conditions set forth in the Stipulation is
fair, reasonable, and adequate and should be approved by the Court; (ii) the Action should be dismissed
with prejudice; and (iii) to approve the agreed upon Fee and Expense Amount for Plaintiff's Counsel's
fees and expenses as set forth in the Stipulation. The Settlement Hearing may be continued by the
Court at the Settlement Hearing, or at any adjourned session thereof without further notice to determine
whether to approve the Settlement.
This is a summary notice only. For additional information about the claims asserted in the
Action, the terms of the proposed Settlement, and the rights of Current Freeport Shareholders with
regard to the Settlement, please refer to the Stipulation and detailed Notice of Pendency and Proposed
Settlement of Shareholder Derivative Action, which have been filed with the Court and are available
for viewing on the "Investors" section of Freeport's website at http://investors.fcx.com/investor-
center/, and Plaintiff's Counsel's website at www.robbinsarroyo.com/notices.
1 Except as otherwise expressly provided below or as the context otherwise requires, all capitalized terms contained herein shall have the same meanings and/or definitions as set forth in the Stipulation of Settlement dated July 8, 2016 (the "Stipulation").
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Any Current Freeport Shareholder may object and/or appear and show cause, at their own
expense, individually or through counsel of their own choice, if he, she, or it has any concern, why the
Settlement should not be approved as fair, reasonable, and adequate, or why the Judgment should not
be entered thereon, or why the Fee and Expense Amount should not be approved. However, unless
otherwise ordered by the Court, no Current Freeport Shareholder shall be heard or entitled to contest
the approval of the terms and conditions of the Settlement, or, if approved, the Judgment to be entered
thereon approving the same, or the Fee and Expense Amount awarded to Plaintiff's Counsel, unless
that shareholder has, at least twenty-one (21) calendar days prior to the Settlement Hearing, filed
with the Clerk of the Court and served on counsel for the Settling Parties, a written objection to the
settlement setting forth: (i) a written notice of objection with your name, address, and telephone
number, and if represented, your counsel, along with a representation as to whether you intend to
appear at the Settlement Hearing; (ii) competent evidence that you held shares of Freeport common
stock as of July 8, 2016, and continue to hold shares of Freeport common stock as of the date of the
Settlement Hearing; (iii) a statement of objections to any matters before the Court, the grounds
therefor, or the reasons for your desiring to appear and be heard, as well as all documents or writings
you desire the Court to consider; and (iv) the identities of any witnesses you plan on calling at the
Settlement Hearing, along with a summary description of their likely testimony.
The written objections, notices of intent to appear, and copies of any papers and briefs in
support thereof to be filed in Court shall be delivered by hand or sent by First-Class Mail to:
Clerk of the Court Superior Court of the State of Arizona Maricopa County 18380 N. 40th Street Phoenix, AZ 85032
In addition, on or before the date of such filing, you must also serve the same documents on
each of the following counsel (delivered by hand or sent by First-Class Mail):
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Felipe J. Arroyo ROBBINS ARROYO LLP 600 B Street, Suite 1900 San Diego, CA 92101 Telephone: (619) 525-3990 Facsimile: (619) 525-3991
Charles S. Duggan DAVIS POLK & WARDWELL LLP 450 Lexington Avenue New York, NY 10017 Telephone: (212) 450-4000 Facsimile: (212) 701-5800
Michael C. McKay SCHNEIDER WALLACE COTTRELL KONECKY WOTKYNS LLP 8501 North Scottsdale Road, Suite 270 Scottsdale, AZ 85253 Telephone: (480) 428-0141 Facsimile: (866) 505-8036 Counsel for Plaintiff
Joel P. Hoxie SNELL & WILMER L.L.P. 400 E. Van Buren, Suite 1900 Phoenix, AZ 85004-2202 Telephone: (602) 382-6000 Facsimile: (602) 382-6070 Counsel for individual defendants Robert J. Allison, Jr., Alan R. Buckwalter, III, Robert A. Day, Gerald J. Ford, Thomas A. Fry, III, H. Devon Graham, Jr., Lydia H. Kennard, Charles C. Krulak, Bobby Lee Lackey, Jon C. Madonna, Dustan E. McCoy, Stephen H. Siegele, Frances Fragos Townsend, and nominal defendant Freeport-McMoRan Inc.
Unless otherwise ordered by the Court, any Current Freeport Shareholder who does not make
his, her, or its objection in the manner provided herein shall be deemed to have waived such objection
and shall forever be barred and foreclosed from making any objection to the fairness, reasonableness,
or adequacy of the Settlement, to the agreed upon Fee and Expense Amount, or to otherwise be heard,
and shall otherwise be bound by the Judgment to be entered and the releases to be given.
If you have any questions about matters in this Summary Notice, you may contact Darnell R.
Donahue at the offices of Plaintiff's Counsel: Robbins Arroyo LLP, 600 B Street, Suite 1900, San
Diego, California 92101. You may contact Mr. Donahue in writing, or by telephone at (619) 525-
3990.
PLEASE DO NOT CALL, WRITE, OR OTHERWISE DIRECT QUESTIONS TO THE COURT OR FREEPORT REGARDING THIS NOTICE.
EXHIBIT D
ORDER AND FINAL JUDGMENT
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SCHNEIDER WALLACE COTTRELL KONECKY WOTKYNS LLP MICHAEL C. MCKAY 8501 North Scottsdale Road, Suite 270 Scottsdale, AZ 85253 Telephone: (480) 428-0141 Facsimile: (866) 505-8036 [email protected] ROBBINS ARROYO LLP BRIAN J. ROBBINS FELIPE J. ARROYO JENNY L. DIXON 600 B Street, Suite 1900 San Diego, CA 92101 Telephone: (619) 525-3990 Facsimile: (619) 525-3991 [email protected] [email protected] [email protected] Attorneys for Plaintiff
IN THE SUPERIOR COURT OF THE STATE OF ARIZONA IN AND FOR THE COUNTY OF MARICOPA
JEFFREY HARRIS, Derivatively on Behalf of FREEPORT-MCMORAN INC.,
Plaintiff,
v.
ROBERT J. ALLISON, JR., ALAN R. BUCKWALTER, III, ROBERT A. DAY, GERALD J. FORD, THOMAS A. FRY, III, H. DEVON GRAHAM, JR., LYDIA H. KENNARD, CHARLES C. KRULAK, BOBBY LEE LACKEY, JON C. MADONNA, DUSTAN E. MCCOY, STEPHEN H. SIEGELE, and FRANCES FRAGOS TOWNSEND,
Defendants, -and-
FREEPORT-MCMORAN INC., a Delaware corporation,
Nominal Defendant.
Case No. CV2015-052393
FINAL JUDGMENT AND ORDER OF DISMISSAL (Assigned to the Honorable Aimee Anderson)
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This matter came before the Court for hearing on ____________, 2016, to consider approval
of the proposed settlement ("Settlement") set forth in the Stipulation of Settlement dated July 8, 2016,
and the exhibits thereto (the "Stipulation"). The Court has reviewed and considered all documents,
evidence, objections (if any), and arguments presented in support of or against the Settlement. Good
cause appearing therefore, the Court enters this Final Judgment and Order of Dismissal ("Judgment").
IT IS HEREBY ORDERED, ADJUDGED, AND DECREED that:
1. This Judgment incorporates by reference the definitions in the Stipulation, and all
capitalized terms used herein shall have the same meanings as set forth in the Stipulation.
2. This Court has jurisdiction over the subject matter of the Action, including all matters
necessary to effectuate the Settlement, and over all Settling Parties.
3. During the course of the litigation, all Settling Parties and their respective counsel at
all times complied with the requirements of Rule 11 of the Arizona Rules of Civil Procedure, and all
other similar laws or statutes.
4. The Court finds that the Notice and Summary Notice provided to Current Freeport
Shareholders constituted the best notice practicable under the circumstances. The Notice and
Summary Notice fully satisfied the requirements of Arizona law and the requirements of due process.
5. The Court finds that the Settlement as set forth in the Stipulation is fair, reasonable,
adequate, and in the best interests of Freeport and its shareholders, including Current Freeport
Shareholders, and hereby finally approves the Stipulation and Settlement in all respects, and orders
the Settling Parties to perform its terms to the extent the Settling Parties have not already done so.
6. The Action is hereby dismissed with prejudice. The Settling Parties are to bear their
own costs, except as otherwise provided in the Stipulation.
7. Upon the Effective Date, the Releasing Persons shall be deemed to have fully, finally,
and forever released, relinquished, and discharged the Released Claims (including Unknown Claims)
against the Released Persons. Nothing herein shall in any way impair or restrict the rights of any
Settling Party to enforce the terms of the Stipulation or this Judgment.
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8. Upon the Effective Date, each of the Released Persons shall be deemed to have fully,
finally, and forever released, relinquished, and discharged Plaintiff, Plaintiff's Counsel, and Freeport
from all claims (including Unknown Claims), arising out of, relating to, or in connection with the
institution, prosecution, assertion, settlement, or resolution of the Action or the Released Claims.
Nothing herein shall in any way impair or restrict the rights of any Settling Party to enforce the terms
of the Stipulation or this Judgment.
9. Nothing in this Judgment constitutes or reflects a waiver or release of any rights or
claims of Defendants against their insurers, or their insurers' subsidiaries, predecessors, successors,
assigns, affiliates, or representatives, including, but not limited to, any rights or claims of Defendants
or Freeport under any directors' and officers' liability insurance or other applicable insurance coverage
maintained by the Company. Nothing in this Judgment constitutes or reflects a waiver or release of
any rights or claims of the Individual Defendants relating in any way to indemnification, whether
under any written indemnification or advancement agreement, or under the Company's charter, by-
laws, or under applicable law.
10. The Court hereby approves the Fee and Expense Amount of $________ in accordance
with the Stipulation and finds that the Fee and Expense Amount is fair and reasonable.
11. Within ten (10) calendar days of issuance of this Judgment, notwithstanding the
existence of any timely filed objections to the Settlement, or potential for appeal therefrom, Freeport
shall pay or cause its insurer to pay the Fee and Expense Amount to Robbins Arroyo LLP as receiving
agent for Plaintiff's Counsel. The Fee and Expense Amount, as approved by the Court, shall constitute
final and complete payment for Plaintiff's Counsel's fees and expenses that have been incurred or will
be incurred in connection with the Action. In the event this Judgment fails to become Final, then it
shall be the obligation of Plaintiff's Counsel to make appropriate refunds or repayments to Freeport's
and/or Defendants' insurers of any attorneys' fees and expenses previously paid within fifteen (15)
business days of receiving notice from Defendants' Counsel or from a court of appropriate jurisdiction,
whichever is earlier.
12. Neither the Stipulation nor the Settlement shall be deemed to prejudice in any way the
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respective positions of the Settling Parties with respect to the Action, shall not be deemed a
presumption, a concession, or admission by any of the Settling Parties of any fault, liability, or
wrongdoing as to any facts, claims, or defenses that have been or might have been alleged or asserted
in the Action or with respect to any of the claims settled in the Action, or any other action or
proceeding, and shall not be interpreted, construed, deemed, invoked, offered, or received in evidence
or otherwise used by any person in the Action, or in any other action or proceeding, whether civil,
criminal, or administrative. The Released Persons may file the Stipulation and/or this Judgment in
any action that may be brought against them in order to support a defense or counterclaim based on
principles of res judicata, collateral estoppel, full faith and credit, release, standing, good faith
settlement, judgment bar or reduction, or any other theory of claim preclusion or issue preclusion or
similar defense or counterclaim. The Settling Parties may also file the Stipulation and documents
executed pursuant and in furtherance thereto in any action to enforce the Settlement and/or this
Judgment.
13. Without affecting the finality of this Judgment in any way, this Court hereby retains
continuing jurisdiction with respect to implementation and enforcement of the terms of the Stipulation.
14. In the event that the Settlement does not become effective in accordance with the terms
of the Stipulation, this Judgment shall be vacated, and all Orders entered and releases delivered in
connection with the Stipulation and this Judgment shall be null and void, except as otherwise provided
for in the Stipulation.
15. No further matters remain pending and judgment is entered pursuant to Rule 54(c) of
the Arizona Rules of Civil Procedure.
IT IS SO ORDERED.
DATED:
THE HONORABLE AIMEE ANDERSON JUDGE OF THE SUPERIOR COURT
Recommended