Exhibit 10.2

Freeport-McMoRan Copper & Gold Inc.

December 5, 2012

James C. Flores

Plains Exploration & Production Company

700 Milam Street, Suite 3100

Houston, Texas 77002

Dear Jim:

Reference is made to the transactions contemplated by that certain Agreement and
Plan of Merger by and among Freeport McMoRan Copper & Gold Inc. (“Freeport”),
Plains Exploration & Production Company (“Plains”) and IMONC LLC (“Merger Sub”),
to be executed concurrently with this letter agreement (the “Merger Agreement”)
pursuant to which Plains will merge into Merger Sub and become a direct wholly
owned subsidiary of Freeport (the “Merger”). The parties acknowledge that in the
event that the Merger is not consummated, this letter agreement will become null
and void ab initio and of no further force and effect.

Following the Closing Date (as defined in the Merger Agreement), you will be
appointed the Vice-Chairman of Freeport and Chief Executive Officer of the oil
and gas business of Freeport, with sole oversight of the oil and gas businesses
and operations of Freeport, with the duties, authorities and responsibilities
commensurate with such titles and offices and such other duties and
responsibilities as reasonably may be assigned to you by the Chairman of
Freeport commensurate with that position, and you will initially be appointed
(and thereafter be nominated) to serve as a member of the Board of Directors of
Freeport. During your employment with Freeport, you will report directly to the
Chairman of Freeport, you will receive an annual base salary that is no less
than the annual base salary applicable to each of the current Chairman of
Freeport and the current President and Chief Executive Officer of Freeport (the
“peer executives”), as in effect from time to time (currently $2,500,000), you
will be eligible for an annual incentive award based on an annual target
incentive opportunity that is the same as the annual target incentive
opportunity applicable to the peer executives as determined by the Compensation
Committee of Freeport, and you will be eligible to participate in all incentive
compensation, savings, welfare benefit and fringe benefit plans and arrangements
and any retirement plan or arrangement adopted in the future (which in all cases
excludes the current supplemental executive retirement plan in which the peer
executives participate), in each case applicable to the peer executives, as in
effect from time to time.

In consideration for the foregoing and other good and valuable consideration,
including the payment of the Merger Consideration (as defined in the Merger
Agreement) for your wholly owned shares of Plains common stock as of the Closing
Date, you agree to waive your right to resign from Plains (or any successor
entity, including Freeport) for Good Reason (as defined in your amended and
restated employment agreement with Plains, dated as of June 9, 2004, as amended
on October 30, 2007 (the “Employment Agreement”)) or otherwise claim breach of
the Employment Agreement solely (A) as a result of the Merger pursuant to
Section 6(e)(vi) of the Employment Agreement, (B) pursuant to clause (iv) of
Section 6(e) of the Employment Agreement due to the principal executive offices
of Freeport being outside the greater Houston, Texas metropolitan area or your
being located somewhere other than Freeport’s principal executive offices, it
being agreed that your principal office shall be located in Houston, Texas or
(C) pursuant to Section 3 and/or clauses (i) and (v) (with respect to committee
membership) of Section 6(e) of the Employment Agreement due to your not being
the Chief Executive Officer or Chairman of Freeport or serving in any other
position at Plains or its affiliates or on any committee existing at Plains or
its affiliates,

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which waivers shall apply to all arrangements and agreements which contain any
such right or commitments, including, without limitation, any Company Stock
Plans (as defined in the Merger Agreement) (and the related award agreements),
the Amended and Restated Long-Term Retention and Deferral Agreement and the
Plains Executives’ Long-Term Retention & Deferred Compensation Plan (and any
successor or predecessor plans or agreements). For the avoidance of doubt, you
shall retain the Good Reason protections set forth in the Employment Agreement;
provided; however, that none of the changes to your employment arrangements
contemplated by the waivers or other terms or arrangements set forth in this
letter agreement shall contribute to or constitute Good Reason.

Furthermore, the parties agree that the Merger will constitute a Change in
Control (as defined in the Company Stock Plans) for purposes of the Company
Stock Plans (and related award agreements), the Amended and Restated Long-Term
Retention and Deferral Agreement, the Plains Executives’ Long-Term Retention &
Deferred Compensation Plan and your Employment Agreement, and pursuant to such
plans and agreements, subject to the occurrence of the Closing Date, the
stock-settled equity-based awards set forth on Exhibit A to this letter
agreement (the “Vesting Equity Awards”) will immediately vest (including the
deferred restricted stock unit awards for which Plains has a contractual
commitment to credit in the future) and for the purposes of the Merger Agreement
such Vesting Equity Awards will be “Company Non-Electing RSUs” and will be paid
in shares of Freeport common stock in accordance with the Merger Agreement. You
agree that, notwithstanding anything to the contrary in any Company Stock Plan,
award agreement or any other agreement or arrangement, the shares of Freeport
common stock delivered to you in settlement of the Vesting Equity Awards will be
subject to a holding requirement from the Closing Date through the third
anniversary of the Closing Date (the “Holding Period”); provided, however, that,
at your election, the number of shares delivered in settlement of your Vesting
Equity Awards will be reduced as necessary in order to satisfy your income and
employment tax liabilities with respect to such delivery at an individual
Federal income tax withholding rate based on a reasonable estimate of the tax
rate applicable to you. Notwithstanding the foregoing, (i) during the Holding
Period you will have the right to transfer shares of Freeport common stock for
estate or charitable planning purposes to any person who would be a permitted
transferee of Freeport equity awards if they were to be registered on Form S-8
promulgated by the Securities and Exchange Commission; provided that the
transfer restrictions on such shares will continue to apply to such permitted
transferees through the end of the Holding Period and (ii) the Holding Period
will immediately terminate upon a “Change of Control” of Freeport as defined in
Freeport’s Amended and Restated Executive Employment Agreement with its Chief
Executive Officer dated as of December 2, 2008 or if your employment with
Freeport is terminated (A) by you for Good Reason (as defined in your Employment
Agreement taking into account the waivers set forth above and other terms and
arrangements of this letter agreement), (B) by Freeport without Cause (as
defined in the Employment Agreement) or (C) due to your death or disability.

You also agree that, following the execution of the Merger Agreement, you will
reasonably cooperate with Freeport and Plains with respect to mitigating
potential liability pursuant to Section 280G of the Internal Revenue Code of
1986, as amended, including with respect to the valuation of non-competition
arrangements, and the acceleration of bonuses and other awards in calendar year
2012, to the extent such cooperation is not detrimental to you or Plains, taking
into account your 280G excise tax gross-up set forth in Section 6(j) of the
Employment Agreement (Full Tax Gross-Up of Payments), which shall remain in
effect in any event. You and Freeport agree that so long as you and each of
Plains’ three current executive vice presidents are employed by Plains or any
affiliate of Freeport, each of them shall report directly and exclusively to
you, except if you determine that any such executive vice president shall cease
reporting to you.

You, Plains and Freeport agree that subject to your continued employment by
Plains as of the Closing Date, from and after the Closing Date, Freeport will
assume the Employment Agreement and the Employment Agreement and all of its
terms will continue to be in full force and effect, subject only to

 

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your waiver of those provisions you have expressly agreed to waive in this
letter agreement and the other terms of this letter agreement.

You acknowledge that you understand that the waivers and other provisions set
forth in this letter agreement amend your Employment Agreement and the other
plans and agreements under which you have rights and obligations. As such, there
will not be strict interpretation against Freeport or Plains in connection with
any review of or dispute with respect to this letter agreement in which
interpretation thereof is an issue. You further acknowledge that: (i) this
letter agreement is executed voluntarily and without any duress or undue
influence on the part or behalf of Freeport, Plains or any of their respective
affiliates; (ii) this entire letter agreement is written in a manner calculated
to be understood by you; and (iii) you are fully aware of the legal and binding
effect of this letter agreement.

The foregoing represents a legally binding commitment of the parties hereto. The
parties may finalize additional documentation in forms to be mutually agreed to
reflect the above; provided, however, that if no additional documentation with
respect to the matters set forth herein is entered into, this letter agreement
shall continue in full force and effect. This letter agreement may be executed
in separate counterparts, each of which is deemed to be an original and all of
which taken together constitute one and the same.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

 

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Please sign below to indicate your acknowledgment and acceptance of the terms of
this letter agreement.

 

Very truly yours, By:  

/s/    Kathleen L. Quirk

Name:   Kathleen L. Quirk Title:  

Executive Vice President,

Chief Financial Officer & Treasurer

 

 

 

 

 

[Signature Page to Waiver Letter]

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Agreed to and acknowledged

as of the 5th day of December, 2012:

/s/    James C. Flores

James C. Flores

Also agreed to and acknowledged as of the 5th day of December, 2012

 

PLAINS EXPLORATION & PRODUCTION

COMPANY

By:   /s/    Winston M. Talbert Name:   Winston M. Talbert Title:  

Executive Vice President and

Chief Financial Officer

By:   /s/    John F. Wombwell Name:   John F. Wombwell Title:  

Executive Vice President,

General Counsel and Secretary

 

 

 

 

[Signature Page to Waiver Letter]

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EXHIBIT A

OUTSTANDING OR COMMITTED UNVESTED EQUITY-BASED AWARDS

 

Form of

Equity

   Number of
Shares/Units
Outstanding      Grant Date      Regular Vesting
Date
(no CIC)      Form of
Consideration (Company
Non-Electing RSUs)  

RSU

     29,250         2/10/2010         3/31/2014         Parent Common Stock   

RSU

     29,250         2/10/2010         3/31/2015         Parent Common Stock   

RSU

     40,500         2/9/2011         3/31/2014         Parent Common Stock   

RSU

     29,250         2/9/2011         3/31/2015         Parent Common Stock   

RSU

     29,250         2/9/2011         3/31/2016         Parent Common Stock   

RSU

     20,250         2/8/2012         3/31/2014         Parent Common Stock   

RSU

     20,250         2/8/2012         3/31/2015         Parent Common Stock   

RSU

     14,625         2/8/2012         3/31/2016         Parent Common Stock   

RSU

     14,625         2/8/2012         3/31/2017         Parent Common Stock   

RSU*

     200,000         9/30/2008         9/30/2013         Parent Common Stock   

RSU*

     200,000         9/30/2009         9/30/2014         Parent Common Stock   

RSU*

     200,000         9/30/2010         9/30/2015         Parent Common Stock   

RSU*

     200,000         9/30/2011         9/30/2015         Parent Common Stock   

RSU*

     200,000         9/30/2012         9/30/2015         Parent Common Stock   

RSU**

     200,000         9/30/2013         9/30/2015         Parent Common Stock   

RSU**

     200,000         9/30/2014         9/30/2015         Parent Common Stock   

RSU***

     200,000         9/30/2015         9/30/2020         Parent Common Stock   

RSU***

     200,000         9/30/2016         9/30/2020         Parent Common Stock   

RSU***

     200,000         9/30/2017         9/30/2020         Parent Common Stock   

RSU***

     200,000         9/30/2018         9/30/2019, 2020 & 2021         Parent
Common Stock   

RSU***

     200,000         9/30/2019         9/30/2020, 2021 & 2022         Parent
Common Stock      

 

 

          

TOTAL

     2,627,250               

 

 

          

 

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* Each RSU marked with an * was granted pursuant to the Long-Term Retention and
Deferral Arrangement.

** Each RSU marked with an ** is committed to be granted pursuant to the
Long-Term Retention and Deferral Arrangement.

*** Each RSU marked with an *** is committed to be granted pursuant to the
Executive’s Employment Agreement, as amended.

 

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