EXHIBIT 10.14
FREEPORT-McMoRan COPPER & GOLD INC.
1995 STOCK OPTION PLAN FOR NON-EMPLOYEE DIRECTORS
(As amended effective December 10, 1996)
ARTICLE I
PURPOSE OF THE PLAN
The purpose of the 1995 Stock Option Plan for Non-Employee
Directors (the "Plan") is to align more closely the interests of the
non-employee directors of Freeport-McMoRan Copper & Gold Inc. (the
"Company") with that of the Company's stockholders by providing for the
automatic grant to such directors of stock options ("Options") to
purchase Shares (as hereinafter defined), in accordance with the terms of
the Plan.
ARTICLE II
DEFINITIONS
For the purposes of this Plan, the following terms shall have the
meanings indicated:
Applicable Rate: With respect to the exercise of an Option, the
rate, expressed as a percentage, determined according to the following
formula:
x divided by (1-x)
in which x equals the maximum federal income tax rate applicable to
individuals in effect on the date of such exercise of such Option.
Board: The Board of Directors of the Company.
Change in Control: A Change in Control shall be deemed to have
occurred if either (a) any person, or any two or more persons acting as a
group, and all affiliates of such person or persons, shall, otherwise
than as a result of the Distribution, beneficially own more than 20% of
all classes and series of the Company's stock outstanding, taken as a
whole, that has voting rights with respect to the election of directors
of the Company (not including any series of preferred stock of the
Company that has the right to elect directors only upon the failure of
the Company to pay dividends) pursuant to a tender offer, exchange offer
or series of purchases or other acquisitions, or any combination of those
transactions, or (b) there shall be a change in the composition of the
Board at any time within two years after any tender offer, exchange
offer, merger, consolidation, sale of assets or contested election, or
any combination of those transactions (a "Transaction"), so that (i) the
persons who were directors of the Company immediately before the first
such Transaction cease to constitute a majority of the Board of Directors
of the corporation which shall thereafter be in control of the companies
that were parties to or otherwise involved in such Transaction, or (ii)
the number of persons who shall thereafter be directors of such
corporation shall be fewer than two-thirds of the number of directors of
the Company immediately prior to such first Transaction. A Change in
Control shall be deemed to take place upon the first to occur of the
events specified in the foregoing clauses (a) and (b).
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Code: The Internal Revenue Code of 1986, as amended from time to
time.
Committee: A committee of the Board designated by the Board to
administer the Plan and composed of not fewer than two directors, each of
whom, to the extent necessary to comply with Rule 16b-3 only, is a "non-
employee director" within the meaning of Rule 16b-3 and, to the extent
necessary to comply with Section 162(m) only, is an "outside director"
under Section 162(m). Until otherwise determined by the Board, the
Committee shall be the Corporate Personnel Committee of the Board.
Distribution: The distribution by Freeport-McMoRan Inc. ("FTX")
of all the then outstanding Shares owned by FTX to the holders of FTX
common stock.
Election Period: The period beginning on the third business day
following a date on which the Company releases for publication its
quarterly or annual summary statements of sales and earnings, and ending
on the twelfth business day following such date.
Eligible Director: A director of the Company who is not, and
within the preceding one year has not been, an officer or an employee of
the Company or a Subsidiary, an officer or an employee of an entity with
which the Company has contracted to receive executive or management
services, or otherwise eligible for selection to participate in any plan
of the Company or any Subsidiary that entitles the participants therein
to acquire stock, stock options or stock appreciation rights of the
Company or its Subsidiaries.
Exchange Act: The Securities Exchange Act of 1934, as amended
from time to time.
Fair Market Value: The average of the per Share high and low
quoted sale prices on the date in question (or, if there is no reported
sale on such date, on the last preceding date on which any reported sale
occurred) on the principal exchange or market where such Shares are
quoted.
Grant Date: The first day of the first month following the month
in which the Distribution occurs.
Option Cancellation Gain: With respect to the cancellation of an
Option pursuant to Section 3 of Article IV hereof, the excess of the Fair
Market Value as of the Option Cancellation Date (as that term is defined
in Section 3 of Article IV hereof) of all the outstanding Shares covered
by such Option, whether or not then exercisable, over the purchase price
of such Shares under such Option.
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Option Gain: The excess of the Fair Market Value of the Shares
covered by the exercise of an Option over the purchase price of such
Shares under such Option, as such Fair Market Value is determined on the
date of such exercise.
Rule 16b-3: Rule 16b-3 promulgated by the SEC under the Exchange
Act, or any successor rule or regulation thereto as in effect from time
to time.
SEC: The Securities and Exchange Commission, including the staff
thereof, or any successor thereto.
Section 162(m): Section 162(m) of the Code and all regulations
promulgated thereunder as in effect from time to time.
Shares: Shares of Class B Common Stock, par value $0.10 per
share, of the Company and any shares into which such Shares may be
converted or combined in accordance with the terms of the Company's
Certificate of Incorporation.
Subsidiary: Any corporation of which stock representing at least
50% of the ordinary voting power is owned, directly or indirectly, by the
Company; and any other entity of which equity securities or interests
representing at least 50% of the ordinary voting power or 50% of the
total value of all classes of equity securities or interests of such
entity are owned, directly or indirectly, by the Company.
ARTICLE III
ADMINISTRATION OF THE PLAN
This Plan shall be administered by the Board. The Board will
interpret this Plan and may from time to time adopt such rules and
regulations for carrying out the terms and provisions of this Plan as it
may deem best; however, the Board shall have no discretion with respect
to the selection of directors who receive Options, the timing of the
grant of Options, the number of Shares subject to any Options or the
purchase price thereof. Notwithstanding the foregoing, the Committee
shall have the authority to make all determinations with respect to the
transferability of Options in accordance with Article VIII hereof. All
determinations by the Board or the Committee shall be made by the
affirmative vote of a majority of its respective members, but any
determination reduced to writing and signed by a majority of its
respective members shall be fully as effective as if it had been made by
a majority vote at a meeting duly called and held. Subject to any
applicable provisions of the Company's By-Laws or of this Plan, all
determinations by the Board and the Committee pursuant to the provisions
of this Plan, and all related orders or resolutions of the Board and the
Committee, shall be final, conclusive and binding on all persons,
including the Company and its stockholders, employees, directors and
optionees. In the event of any conflict or inconsistency between
determinations, orders, resolutions, or other actions of the Committee
and the Board taken in connection with this Plan, the action of the Board
shall control.
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ARTICLE IV
STOCK SUBJECT TO THE PLAN
SECTION 1. The Shares to be issued or delivered upon exercise of
Options shall be made available, at the discretion of the Board, either
from the authorized but unissued Shares of the Company or from Shares
reacquired by the Company, including Shares purchased by the Company in
the open market or otherwise obtained; provided, however, that the
Company, at the discretion of the Board, may, upon exercise of Options
granted under this Plan, cause a Subsidiary to deliver Shares held by
such Subsidiary.
SECTION 2. Subject to the provisions of Section 3 of this
Article IV, the aggregate number of Shares which may be purchased
pursuant to Options shall not exceed 2,000,000.
SECTION 3. In the event of the payment of any dividends payable
in Shares, or in the event of any subdivision or combination of the
Shares, the number of Shares which may be purchased under this Plan, and
the number of Shares subject to each Option granted in accordance with
Section 2 of Article VII, shall be increased or decreased
proportionately, as the case may be, and the number of Shares deliverable
upon the exercise thereafter of any Option theretofore granted (whether
or not then exercisable) shall be increased or decreased proportionately,
as the case may be, without change in the aggregate purchase price. In
the event the Company is merged or consolidated into or with another
corporation in a transaction in which the Company is not the survivor, or
in the event that substantially all of the Company's assets are sold to
another entity not affiliated with the Company, any holder of an Option,
whether or not then exercisable, shall be entitled to receive (unless the
Company shall take such alternative action as may be necessary to
preserve the economic benefit of the Option for the optionee) on the
effective date of any such transaction (the "Option Cancellation Date"),
in cancellation of such Option, an amount in cash equal to the Option
Cancellation Gain relating thereto, determined as of the Option
Cancellation Date.
ARTICLE V
PURCHASE PRICE OF OPTIONED SHARES
The purchase price per Share under each Option shall be 100% of
the Fair Market Value of a Share at the time such Option is granted, but
in no case shall such price be less than the par value of the Shares
subject to such Option.
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ARTICLE VI
ELIGIBILITY OF RECIPIENTS
Options will be granted only to individuals who are Eligible
Directors at the time of such grant.
ARTICLE VII
GRANT OF OPTIONS
SECTION 1. Each Option shall constitute a nonqualified stock
option which is not intended to qualify under Section 422 of the Code.
SECTION 2. On the Grant Date in 1995 and on the anniversary of
such date in each subsequent year through and including 2004, each
Eligible Director, as of each such date, shall be granted an Option to
purchase 10,000 Shares. Each Option shall become exercisable with
respect to 2,500 Shares on each of the first, second, third and fourth
anniversaries of the date of grant and may be exercised by the holder
thereof with respect to all or any part of the Shares comprising each
installment as such holder may elect at any time after such installment
becomes exercisable but no later than the termination date of such
Option; provided that each Option shall become exercisable in full upon a
Change in Control.
SECTION 3. Each Option shall provide that, promptly following
the exercise of all or any portion of such Option, the Company shall pay
to the holder of such Option an amount in cash equal to the Option Gain
multiplied by the Applicable Rate. If an Option has been transferred
pursuant to Section VIII(c) hereof, the right to any payment under this
Article VII, Section 3 remains with the original holder of the Option,
except that in the case of a transfer pursuant to a domestic relations
order, such payment shall be made to the spouse responsible for the
federal income tax related to the Option exercise.
ARTICLE VIII
TRANSFERABILITY OF OPTIONS
No Options granted hereunder may be transferred, pledged,
assigned or otherwise encumbered by an optionee except:
(a) by will;
(b) by the laws of descent and distribution; or
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(c) if permitted by the Committee and so provided in the
Option or an amendment thereto, (i) pursuant to a domestic
relations order, as defined in the Code, (ii) to Immediate Family
Members, (iii) to a partnership in which Immediate Family
Members, or entities in which Immediate Family Members are the
sole owners, members or beneficiaries, as appropriate, are the
only partners, (iv) to a limited liability company in which
Immediate Family Members, or entities in which Immediate Family
Members are the sole owners, members or beneficiaries, as
appropriate, are the only members, or (v) to a trust for the sole
benefit of Immediate Family Members. "Immediate Family Members"
shall be defined as the spouse and natural or adopted children or
grandchildren of the optionee and their spouses.
Any attempted assignment, transfer, pledge, hypothecation or other
disposition of Options, or levy of attachment or similar process upon
Options not specifically permitted herein, shall be null and void and
without effect.
ARTICLE IX
EXERCISE OF OPTIONS
SECTION 1. Each Option shall terminate 10 years after the date
on which it was granted.
SECTION 2. Except in cases provided for in Article X hereof,
each Option may be exercised by the holder thereof only while the
optionee to whom such Option was granted is an Eligible Director.
SECTION 3. Each Option shall provide that the Option or any
portion thereof may be exercised only during an Election Period. Each
Option shall provide, however, that in the event of a Change in Control,
the Election Period exercise requirement is waived.
SECTION 4. A person electing to exercise an Option or any
portion thereof then exercisable shall give written notice to the Company
of such election and of the number of Shares such person has elected to
purchase, and shall at the time of purchase tender the full purchase
price of such Shares, which tender shall be made in cash or cash
equivalent (which may be such person's personal check) or in Shares
already owned by such person (which Shares shall be valued for such
purpose on the basis of their Fair Market Value on the date of exercise),
or in any combination thereof. The Company shall have no obligation to
deliver Shares pursuant to the exercise of any Option, in whole or in
part, until such payment in full of the purchase price of such Shares is
received by the Company. No optionee, or legal representative, legatee,
distributee, or assignee of such optionee shall be or be deemed to be a
holder of any Shares subject to such Option or entitled to any rights of
a stockholder of the Company in respect of any Shares covered by such
Option distributable in connection therewith until such Shares have been
paid for in full and certificates for such Shares have been issued or
delivered by the Company.
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SECTION 5. Each Option shall be subject to the requirement that
if at any time the Board shall be advised by counsel that the listing,
registration or qualification of the Shares subject to such Option upon
any securities exchange or under any state or federal law, or the consent
or approval of any governmental regulatory body, is necessary or
desirable as a condition of, or in connection with, the granting of such
Option or the issue or purchase of Shares thereunder, such Option may not
be exercised in whole or in part unless such listing, registration,
qualification, consent or approval shall have been effected or obtained
free from any conditions not reasonably acceptable to such counsel for
the Board.
SECTION 6. The Company may establish appropriate procedures to
provide for payment or withholding of such income or other taxes as may
be required by law to be paid or withheld in connection with the exercise
of Options, and to ensure that the Company receives prompt advice
concerning the occurrence of any event which may create, or affect the
timing or amount of, any obligation to pay or withhold any such taxes or
which may make available to the Company any tax deduction resulting from
the occurrence of such event.
ARTICLE X
TERMINATION OF SERVICE
AS AN ELIGIBLE DIRECTOR
SECTION 1. If and when an optionee shall cease to be an Eligible
Director for any reason other than death or retirement from the Board,
all of the Options granted to such optionee shall be terminated except
that any Option, to the extent then exercisable, may be exercised by the
holder thereof within three months after such optionee ceases to be an
Eligible Director, but not later than the termination date of the Option.
SECTION 2. If and when an optionee shall cease to be an Eligible
Director by reason of the optionee's retirement from the Board, all of
the Options granted to such optionee shall be terminated except that any
Option, to the extent then exercisable or exercisable within one year
thereafter, may be exercised by the holder thereof within three years
after such retirement, but not later than the termination date of the
Option.
SECTION 3. Should an optionee die while serving as an Eligible
Director, all the Options granted to such optionee shall be terminated,
except that any Option to the extent exercisable by the holder thereof at
the time of such death, together with the unmatured installment (if any)
of such Option which at that time is next scheduled to become
exercisable, may be exercised within one year after the date of such
death, but not later than the termination date of the Option, by the
holder thereof, the optionee's estate, or the person designated in the
optionee's last will and testament, as appropriate.
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SECTION 4. Should an optionee die after ceasing to be an
Eligible Director, all of the Options granted to such optionee shall be
terminated, except that any Option, to the extent exercisable by the
holder thereof at the time of such death, may be exercised within one
year after the date of such death, but not later than the termination
date of the Option, by the holder thereof, the optionee's estate, or the
person designated in the optionee's last will and testament, as
appropriate.
ARTICLE XI
AMENDMENTS TO PLAN AND OPTIONS
The Board may at any time terminate or from time to time amend,
modify or suspend this Plan; provided, however, that no such amendment or
modification without the approval of the stockholders shall:
(a) except pursuant to Section 3 of Article IV, increase
the maximum number (determined as provided in this Plan) of
Shares which may be purchased pursuant to Options, either
individually or in aggregate;
(b) permit the granting of any Option at a purchase price
other than 100% of the Fair Market Value of the Shares at the
time such Option is granted, subject to adjustment pursuant to
Section 3 of Article IV;
(c) permit the exercise of an Option unless the full
purchase price of the Shares as to which the Option is exercised
is paid at the time of exercise;
(d) extend beyond May 1, 2004 the period during which
Options may be granted;
(e) modify in any respect the class of individuals who
constitute Eligible Directors; or
(f) materially increase the benefits accruing to
participants hereunder.