Exhibit 10.4
PHELPS DODGE 1993 STOCK OPTION
AND RESTRICTED STOCK PLAN
(as amended through December 1, 1993)
SECTION 1
PURPOSE
The purpose of the Plan is to foster and promote the long-term
financial success of the Corporation and materially increase shareholder
value by (a) motivating superior performance by means of performance-related
incentives, (b) encouraging and providing for the acquisition of an
ownership interest in the Corporation by Employees, and (c) enabling the
Corporation to attract and retain the services of an outstanding team upon
whose judgment, interest and special effort the successful conduct of its
operations is largely dependent.
SECTION 2
DEFINITIONS
2.1 Definitions. Whenever used herein, the following terms shall
have the respective meanings set forth below:
(a) "Act" shall mean the Securities Exchange Act of 1934, as
amended.
(b) "Adjustment Event" shall mean any stock dividend, stock split
or share combination of, or extraordinary cash dividend on, the Common
Shares or recapitalization of the Corporation.
(c) "Board" shall mean the Board of Directors of the Corporation.
(d) "Common Shares" shall mean the Common Shares of the
Corporation.
(e) "Cause" shall mean (i) the willful failure by the Participant
to perform substantially his duties as an Employee (other than due to
physical or mental illness) after reasonable notice to the Participant of
such failure, (ii) serious misconduct on the part of the Participant that is
injurious to the Corporation or any Subsidiary in any way, including,
without limitation, by way of damage to any of their respective reputations
or standings in their respective industries, (iii) the conviction of, or
entrance of a plea of nolo contendere by, the Participant with respect to a
crime that constitutes a felony or (iv) the breach by the Participant of any
written covenant or agreement with the Corporation or any Subsidiary not to
disclose any information pertaining to the Corporation or any Subsidiary or
not to compete or interfere with the Corporation or any Subsidiary.
(f) "Change in Control" shall mean (i) the approval by the vote
of the Corporation's stockholders holding at least 50% (or such greater
percentage as may be required by the Certificate of Incorporation or By-Laws
of the Corporation or by law) of the voting stock of the Corporation of any
merger, consolidation, sale of assets, liquidation or reorganization in
which the Corporation will not survive as a publicly owned corporation or
(ii) the first purchase of Common Shares pursuant to a tender or exchange
offer (other than an offer by the Corporation).
(g) "Code" shall mean the Internal Revenue Code of 1986, as
amended.
(h) "Committee" shall mean a Committee of the Board, which shall
consist of two or more members, all of whom shall be "disinterested persons"
within the meaning of Rule 16b-3, as promulgated under the Act, and serving
at the pleasure of the Board.
(i) "Corporation" shall mean Phelps Dodge Corporation, a New York
corporation, and any successor thereto.
(j) "Disability" means the inability of a Participant to perform
his duties for a period of at least 180 days due to mental or physical
infirmity, as determined pursuant to the Corporation's policies.
(k) "Employee" shall mean any executive or other key employee of
the Corporation or any Subsidiary (as determined by the Committee in its
sole discretion).
(l) "Fair Market Value" shall mean the mean of the high and low
prices of the Common Shares on the Consolidated Trading Tape on the date of
determination or, if no sale of Common Shares is recorded on the Tape on
such date, then on the next preceding day on which there was such a sale.
(m) "Option" shall mean the right to purchase Common Shares at a
stated price for a specified period of time. For purposes of the Plan, an
Option may be either (i) an "Incentive Stock Option" within the meaning of
section 422 of the Code or (ii) an Option which is not an Incentive Stock
Option (a "Nonqualified Stock Option").
(n) "Participant" shall mean any Employee designated by the
Committee to receive an Option or share of Restricted Stock under the Plan.
(o) "Plan" shall mean the 1993 Stock Option and Restricted Stock
Plan, as set forth herein and as the same may be amended from time to time.
(p) "1987 Plan" shall mean the Phelps Dodge 1987 Stock Option and
Restricted Stock Plan.
(q) "Predecessor Plans" shall mean the Phelps Dodge 1979 Stock
Option Plan and the 1987 Plan.
(r) "Restricted Period" shall mean the period during which shares
of Restricted Stock are subject to forfeiture and restrictions on
transferability pursuant to Section 6.2 of the Plan.
(s) "Restricted Stock" shall mean Stock granted to a Participant
pursuant to the Plan which is subject to forfeiture and restrictions on
transferability in accordance with Section 6 of the Plan.
(t) "Retirement" shall mean termination of a Participant's
employment on or after the Participant's normal retirement date.
Notwithstanding the foregoing, on or after November 30, 1993, the Committee
may include in any Option instrument, initially or by amendment at any time,
a provision that expands the meaning of "Retirement" to include a
Participant's early retirement under any pension or retirement plan of the
Corporation or a Subsidiary if the Committee deems such provision to be in
the interests of the Corporation or necessary to realize the reasonable
expectation of the Participant.
(u) "Stock Appreciation Right" shall mean the right to receive a
payment from the Corporation, in cash, in an amount determined under Section
5.6 of the Plan.
(v) "Subsidiary" shall mean any company in which the Corporation
and/or another Subsidiary owns 50% or more of the total combined voting
power of all classes of stock.
2.2 Gender and Number. Except when otherwise indicated by the
context, words in the masculine gender used in the Plan shall include the
feminine gender, the singular shall include the plural and the plural shall
include the singular.
SECTION 3
ADMINISTRATION
3.1 Power to Grant and Establish Terms of Awards. The Committee
shall have authority, subject to the terms of the Plan, to determine the
Employees eligible for Options and awards of Restricted Stock and those to
whom Options or Restricted Stock shall be granted, the number of Common
Shares to be covered by each Option or award of Restricted Stock, the time
or times at which Options or Restricted Stock shall be granted, and the
terms and provisions of the instruments by which Options or Restricted Stock
shall be evidenced; to designate Options as Incentive Stock Options or
Nonqualified Stock Options; and to determine the period of time during which
restrictions on Restricted Stock shall remain in effect. The grant of any
Option to any Employee or an award of Restricted Stock shall neither entitle
such Employee to, nor disqualify him from, participation in any other grant
of Options or award of Restricted Stock.
3.2 Substitute Options. The Committee shall have the right,
subject to the consent of Participants to whom Options have been granted, to
grant, in substitution for outstanding Options, replacement Options which
may contain terms more favorable to the Participant than the Options they
replace, including, without limitation, a lower purchase price, and to
cancel replaced Options.
3.3 Administration. Any Option grant or award of Restricted
Stock made by the Committee may be subject to such conditions, not
inconsistent with the terms of the Plan, as the Committee shall determine.
The Committee, by majority action thereof, is authorized to prescribe, amend
and rescind rules and regulations relating to the Plan, to provide for
conditions deemed necessary or advisable to protect the interests of the
Corporation, to interpret the Plan and to make all other determinations
necessary or advisable for the administration and interpretation of the Plan
to carry out its provisions and purposes. Determinations, interpretations
or other actions made or taken by the Committee pursuant to the provisions
of the Plan shall be final, binding and conclusive for all purposes and upon
all persons. The Committee may consult with legal counsel, who may be
counsel to the Corporation, and shall not incur any liability for any action
taken in good faith in reliance upon the advice of counsel.
SECTION 4
STOCK SUBJECT TO PLAN
4.1 Number. The stock as to which Options and awards of
Restricted Stock may be granted shall be Common Shares. When Options are
exercised or Restricted Stock is awarded, the Corporation may either issue
unissued Common Shares or transfer issued shares held in its treasury.
Subject to adjustment as provided in Section 4.3 below, the total number of
Common Shares (i) which may be sold to Employees under the Plan pursuant to
Options, (ii) with respect to which Participants may relinquish Options in
order to exercise Stock Appreciation Rights described in Section 5.7 below
and (iii) that may be transferred or issued as Restricted Stock pursuant to
Section 6 shall not exceed the sum of (A) 5,000,000 Common Shares (inclusive
of the 200,000 Common Shares authorized for issuance under the 1987 Plan by
action of the Board in December 1992) plus (B) the lesser of (1) 1,000,000
Common Shares or (2) the number of Common Shares received by the Corporation
after February 3, 1993 in payment of the exercise price under any Option,
whether issued under the Plan or a Predecessor Plan. Notwithstanding the
foregoing, the total number of Common Shares that may be transferred or
issued hereunder as awards of Restricted Stock pursuant to Section 6 shall
not exceed 1,000,000 Common Shares. Any Option settled in cash shall reduce
the number of Common Shares under the Plan by the number of shares that
would have been issued had the Option been exercised for Common Shares.
4.2 Cancelled, Terminated or Forfeited Awards. To the extent
permitted under Section 16(b) of the Act and any interpretations thereunder,
if an Option granted hereunder or an Option granted under the 1987 Plan
which is outstanding on the date hereof expires, or is terminated or
cancelled prior to its exercise or prior to exercise of any related Stock
Appreciation Right, or if shares of Restricted Stock are returned to the
Corporation pursuant to the terms of the Plan or if shares of Restricted
Stock awarded under the 1987 Plan which are still restricted on the date
hereof are returned to the Corporation prior to the time at which a
Participant's rights become nonforfeitable, the Common Shares covered by
such Option or such Stock Appreciation Right immediately prior to such
expiration or other termination or affected by such return shall be
available for future grants under the Plan.
4.3 Adjustment in Capitalization. The number and price of Common
Shares covered by each Option and the total number of Common Shares that may
be sold, issued or transferred under the Plan shall be proportionately
adjusted to reflect, as deemed equitable and appropriate by the Committee,
an Adjustment Event. To the extent deemed equitable and appropriate by the
Committee, subject to any required action by stockholders, in any merger,
consolidation, reorganization, liquidation, dissolution, or other similar
transaction, any Option granted under the Plan shall pertain to the
securities and other property to which a holder of the number of Common
Shares covered by the Option would have been entitled to receive in
connection with such event.
Any shares of stock (whether Common Shares, shares of stock into
which Common Shares are converted or for which Common Shares are exchanged
or shares of stock distributed with respect to Common Shares) or cash or
other property received with respect to any award of Restricted Stock
granted under the Plan as a result of any Adjustment Event, any distribution
of property or any merger, consolidation, reorganization, liquidation,
dissolution or other similar transaction shall, except as provided in
Section 6.4 or as otherwise provided by the Committee at or after the date
an award of Restricted Stock is made by the Committee, be subject to the
same terms and conditions, including restrictions on transfer, as are
applicable to such shares of Restricted Stock and any stock certificate(s)
representing or evidencing any shares of stock so received shall be legended
in substantially the same manner as provided in Section 6.5 hereof.
SECTION 5
STOCK OPTIONS
5.1 Grant of Options. The date of grant of an Option under the
Plan will be the date on which the Option is awarded by the Committee or, if
so determined by the Committee, the date on which occurs any event the
occurrence of which is an express condition precedent to the grant of the
Option. The Committee may provide, at or after the date of grant of an
Option, that, upon the exercise of such Option and payment of the exercise
price therefor with already owned Common Shares, an additional Option will
be granted for the number of shares so delivered in payment of the exercise
price, having such other terms and conditions not inconsistent with the Plan
as the Committee may determine, including the feature described in this
second sentence of Paragraph 5.1. The aggregate Fair Market Value of the
Common Shares with respect to which Incentive Stock Options are exercisable
for the first time by a Participant during any calendar year under the Plan
and any other stock option plan of the Corporation or any Subsidiary shall
not exceed $100,000 or such other amount as may be subsequently specified by
the Internal Revenue Code of 1986, as amended. Options shall be evidenced
by instruments in such form or forms as the Committee may from time to time
approve.
5.2 Option Price. The Option price per share shall be at or
above the Fair Market Value of the optioned shares on the day the Option is
granted (as determined under Section 5.1).
5.3 Payment. Upon exercise, the Option price shall be paid (i)
in cash, including an assignment of the right to receive cash proceeds of
the sale of Common Shares subject to the Option (ii) in the discretion of
the Committee, in already owned Common Shares of the Corporation having a
Fair Market Value on the date of exercise equal to such Option price or in a
combination of cash and Common Shares or (iii) in accordance with such
procedures or in such other form as the Committee shall from time to time
determine.
5.4 Term and Exercise of Options. Each Incentive Stock Option
shall expire not later than the tenth anniversary of the date of its grant,
and each Nonqualified Stock Option shall expire not later than the day after
the tenth anniversary of the date of its grant. Options shall become
exercisable in three or four substantially equal annual installments
commencing on the first anniversary of the date of grant, as the Committee
in its discretion shall determine. Notwithstanding the foregoing, the
Committee may include in any Option instrument, initially or by amendment at
any time, a provision making any installment or installments exercisable at
such earlier or later date, or upon the occurrence of such earlier or later
event, as may be specified by such provision, if the Committee deems such
provision to be in the interests of the Corporation or necessary to realize
the reasonable expectation of the Participant, but in no event shall any
Option be exercisable sooner than six months from the date on which such
Option is granted, except when the death of the Participant occurs within
such six-month period. Without limiting the generality of the foregoing,
the Committee may approve, pursuant to the foregoing sentence, provisions
making installments exercisable (i) not later than a Participant's early or
normal retirement date, (ii) six months from the date on which an Option is
granted if such Option is granted in conjunction with the Participant's
exercise of another Option (whether such Option is issued under this Plan or
a Predecessor Plan) with Common Shares already owned by the Participant,
(iii) not later than the date the Participant ceases to be employed by the
Corporation if he ceases to be so employed within two years following a
Change of Control of the Corporation, and (iv) at such time and for such
period as the Committee deems appropriate, in the event of a Change of
Control. Except as may be provided in any provision approved by the
Committee pursuant to this Section 5.4, after becoming exercisable each
installment shall remain exercisable until expiration, termination or
cancellation of the Option. An Option may be exercised from time to time,
in whole or in part, up to the total number of Common Shares with respect to
which it is then exercisable.
5.5 Termination of Employment. If the Participant ceases to be
employed by the Corporation or a Subsidiary other than by reason of death,
Disability, Retirement or the Participant's termination for Cause, all
Options granted to him and exercisable on the date of his termination of
employment shall terminate on the earlier of such Options' expiration or one
month after the day his employment ends. If the Participant ceases to be
employed on account of Disability or Retirement, all Options granted to him
and exercisable on the date of his termination of employment due to
Disability or his Retirement shall terminate on the earlier of such Options'
expiration or the fifth anniversary of the day of such termination or
Retirement. If the Participant's employment is terminated for Cause, all
Options granted to such Participant which are then outstanding shall be
forfeited. Any installment which has not become exercisable prior to the
time the Participant ceases to be employed by the Corporation or a
Subsidiary other than by reason of death shall lapse and be thenceforth
unexercisable. Whether authorized leave of absence or absence in military
or governmental service may constitute employment for the purposes of the
Plan shall be conclusively determined by the Committee.
5.6 Exercise upon Death of Participant. If the Participant dies
while he is employed by the Corporation or a Subsidiary, his Options may be
exercised, for the full number of Common Shares covered thereby for which
such Options were not previously exercised, by his estate, personal
representative or beneficiary who acquires the Options by will or by the
laws of descent and distribution, at any time prior to the earlier of the
Options' expiration or the fifth anniversary of the Participant's death.
Such Options shall terminate upon the earlier of such Options' expiration or
the fifth anniversary of such Participant's death. If the Participant dies
while he is no longer employed by the Corporation, his Options may be
exercised, for the number of Common Shares as to which he could have
exercised them on the date of his death, by his estate, personal
representative or beneficiary who acquires the Options by will or by the
laws of descent and distribution, at any time prior to the termination date
provided by Section 5.5.
5.7 Stock Appreciation Rights. The Committee may, in its
discretion, include in any Option a right of the Participant to elect, in
the manner described below, in lieu of purchasing any Common Shares to which
such Option is exercisable at any time, to relinquish his Option with
respect to any or all of such Common Shares and to receive from the
Corporation a payment, in cash, equal to the amount by which (i) the product
of (x) the Fair Market Value of a Common Share on the date of such election
multiplied by (y) the number of Common Shares as to which the Participant
shall have made such election exceeds (ii) the total exercise price for that
number of Common Shares under the terms of such Option.
Notwithstanding the foregoing, the Committee may include initially
in any Option instrument evidencing Stock Appreciation Rights, or by
amendment in any Option instrument of any Participant who has theretofore
agreed in writing to such inclusion at any time, a provision to the effect
that the Stock Appreciation Rights evidenced thereby may be exercised during
any period beginning on the date of a Change of Control and ending on the
thirtieth day following such Change of Control for an amount equal to the
amount by which (1) the product of (x) the price payable or paid for a
Common Share in such merger, consolidation, sale of assets, liquidation or
reorganization or tender or exchange offer (in the event such price is
payable or paid in consideration other than cash or in an amount not readily
determinable at such time, such price shall be determined by the Committee)
multiplied by (y) the number of Common Shares as to which the Participant
shall have exercised such rights exceeds (2) the total exercise price for
that number of Common Shares under the terms of such Option.
The Committee may include by amendment in any Option instrument
evidencing Stock Appreciation Rights of any Participant who has theretofore
agreed in writing to such inclusion a provision limiting the extent to which
such Participant may exercise such rights. If the Participant shall
exercise Stock Appreciation Rights appertaining to any Option, such Option
shall thereafter remain exercisable, according to its term, only with
respect to the number of Common Shares as to which it would otherwise be
exercisable less the number of Common Shares with respect to which Stock
Appreciation Rights have been exercised.
SECTION 6
RESTRICTED STOCK
6.1 Grant of Restricted Stock. Any award made hereunder of
Restricted Stock shall be subject to the terms and conditions of the Plan
and to any other terms and conditions not inconsistent with the Plan
(including, but not limited to, requiring the Employee to pay the
Corporation an amount equal to the par value per share for each share of
Restricted Stock awarded) as shall be prescribed by the Committee in its
sole discretion. The Committee may require that, as a condition to any
award of Restricted Stock under the Plan, the Employee shall have entered
into an agreement with the Corporation setting forth the terms and
conditions of such award and such other matters as the Committee, in its
sole discretion, shall have determined. As determined by the Committee, the
Corporation shall either (i) transfer or issue to each Participant to whom
an award of Restricted Stock has been made the number of shares of
Restricted Stock specified by the Committee or (ii) hold such shares of
Restricted Stock for the benefit of the Participant for the Restricted
Period.
6.2 Restrictions on Transferability. Shares of Restricted Stock
may not be sold, assigned, transferred, pledged, hypothecated or otherwise
encumbered by the Participant during the Restricted Period, except as
hereinafter provided.
6.3 Rights as a Shareholder. Except for the restrictions set
forth herein and unless otherwise determined by the Committee, the
Participant shall have all the rights of a shareholder with respect to such
shares of Restricted Stock, including, but not limited to, the right to vote
and the right to receive dividends.
6.4 Lapse of Restricted Period. Unless the Committee shall
otherwise determine at or after the date an award of Restricted Stock is
made to the Participant by the Committee, the Restricted Period shall
commence upon the date of grant and shall lapse with respect to the shares
of Restricted Stock on the earlier of: (a) the third anniversary of the date
of grant or (b) the date of a Change of Control, unless sooner terminated as
otherwise provided herein. Without limiting the generality of the
foregoing, the Committee may provide for termination of the Restricted
Period upon the achievement by the Participant of performance goals
specified by the Committee at the date of grant. The determination of
whether the Participant has achieved such performance goals shall be made by
the Committee in its sole discretion.
6.5 Legend. Each certificate issued to a Participant in respect
of shares of Restricted Stock awarded under the Plan shall be registered in
the name of the Participant and shall bear the following (or similar)
legend:
"The shares of stock represented by this certificate are subject
to the terms and conditions contained in the Phelps Dodge 1993 Stock Option
and Restricted Stock Plan and may not be sold, pledged, transferred,
assigned, hypothecated, or otherwise encumbered in any manner until
__________________."
6.6 Death, Disability or Retirement. Unless the Committee shall
otherwise determine at the date of grant, if a Participant ceases to be
employed by the Corporation or any Subsidiary by reason of death, Disability
or Retirement, the Restricted Period covering all shares of Restricted Stock
transferred or issued to such Participant under the Plan shall immediately
lapse.
6.7 Termination of Employment. Unless the Committee shall
otherwise determine at or after the date of grant, if a Participant ceases
to be employed by the Corporation or any Subsidiary for any reason other
than those specified in Section 6.6 at any time prior to the date when the
Restricted Period lapses, all shares of Restricted Stock owned by such
Participant shall revert back to the Corporation upon the Participant's
termination of employment. Whether authorized leave of absence or absence
in military or government service may constitute employment for the purposes
of the Plan shall be conclusively determined by the Committee.
6.8 Issuance of New Certificates. Upon the lapse of the
Restricted Period with respect to any shares of Restricted Stock, such
shares shall no longer be subject to the restrictions imposed under Section
6.2 and the Corporation shall issue or have issued new share certificates
without the legend described in Section 6.5 in exchange for those previously
issued.
SECTION 7
TERMINATION AND AMENDMENT OF PLAN
The Board may terminate or amend the Plan in any respect at any
time, except that without the approval of the holders of a majority of
Common Shares, the total number of shares that may be sold, issued or
transferred under the Plan may not be increased (except by adjustment
pursuant to Section 4.3), the category of persons eligible to receive
Options and shares of Restricted Stock may not be changed, the purchase
price at which shares may be offered pursuant to Options may not be reduced
(except by adjustment pursuant to Section 4.3) and the expiration date of
the Plan may not be extended. No action of the Board or stockholders,
however, may, without the consent of a Participant alter or impair his
rights under any Option or Stock Appreciation Right or award of Restricted
Stock previously granted.
SECTION 8
APPLICABILITY OF PLAN TO GRANTS UNDER PREDECESSOR PLANS
The provisions of the Plan relating to Options and Restricted
Stock grants shall apply to, and govern, existing Option and Restricted
Stock grants made under the Predecessor Plans as if such awards were granted
hereunder (except that the 200,000 Common Shares authorized for issuance
under the 1987 Plan by action of the Board in December 1992 shall be the
only awards under the Predecessor Plans that shall count against the share
limit set forth in Section 4.1) and such Options and Restricted Stock grants
shall, where appropriate, be deemed to have been amended to provide any
additional rights, subject in the case of Options and Restricted Stock
grants outstanding as of February 3, 1993, to the right of an affected
Participant to consent to the application of such amendments to such grants.
SECTION 9
MISCELLANEOUS PROVISIONS
9.1 Nontransferability of Awards. No awards granted under the
Plan may be sold, transferred, pledged, assigned or otherwise alienated or
hypothecated, other than by will or by the laws of descent and distribution.
All rights with respect to awards granted to a Participant under the Plan
shall be exercisable during his lifetime only by such Participant.
9.2 Securities Law Compliance. Instruments evidencing Options
may contain such other provisions, not inconsistent with the Plan, as the
Committee deems advisable, including (i) a provision limiting the period
during which Stock Appreciation Rights could be exercised to the extent
required in order to avoid the application of Section 16(b) of the Act in
the case of officers and directors of the Corporation, and (ii) a
requirement that the Participant represent to the Corporation in writing,
when an Option is granted or when he receives shares upon its exercise or at
such other time as the Committee deems appropriate, that he is accepting
such Option, or receiving or acquiring such shares (unless they are then
covered by a Securities Act of 1933 registration statement), for his own
account for investment only and with no present intention to transfer, sell
or otherwise dispose of such shares except such disposition by a legal
representative as shall be required by will or the laws of any jurisdiction
in winding up the estate of the Participant. Such shares shall be
transferable only if the proposed transfer shall be permissible pursuant to
the Plan and if, in the opinion of counsel satisfactory to the Corporation,
such transfer at such time will be in compliance with applicable securities
laws.
9.3 Tax Withholding. The Corporation shall have the power to
withhold, or require a Participant to remit to the Corporation promptly upon
notification of the amount due, an amount sufficient to satisfy Federal,
state and local withholding tax requirements on any award under the Plan,
and the Corporation may defer payment of cash or issuance or delivery of
Common Shares until such requirements are satisfied. The Committee may, in
its discretion, permit a Participant to elect, subject to such conditions as
the Committee shall impose, (i) to have Common Shares otherwise issuable or
deliverable under the Plan withheld by the Corporation or (ii) to deliver to
the Corporation previously acquired shares of Stock, in each case, having a
Fair Market Value sufficient to satisfy all or part of the Participant's
estimated total Federal, state and local tax obligation associated with the
transaction.
9.4 Term of Plan. This Plan shall be effective as of February 3,
1993, subject to approval by the holders of the Common Shares at the 1993
Annual Meeting of Shareholders. This Plan shall expire on February 2, 2003
(except as to Options, Stock Appreciation Rights and Restricted Stock
outstanding on that date), unless sooner terminated pursuant to Section 7 of
the Plan.
9.5 Governing Law. The Plan, and all Agreements hereunder, shall
be construed in accordance with and governed by the laws of the State of New
York.
STOCK OPTION AGREEMENT
(1993 Stock Option Plan)
(as amended through December 1, 1993)
STOCK OPTION AGREEMENT, dated _______________, between PHELPS DODGE
CORPORATION, a New York corporation (the "Corporation"), and
__________________ (the "Employee").
The Compensation and Management Development Committee of the
Board of Directors of the Corporation (such Committee, and any successor
committee appointed by the Board of Directors of the Corporation to
administer the Corporation's 1993 Stock Option and Restricted Stock Plan
(the "Plan"), is hereinafter referred to as the "Committee") has granted to
the Employee (a) an option under the Plan to purchase Common Shares of the
Corporation and (b) limited stock appreciation rights on the terms set forth
below.
To evidence the option and limited stock appreciation rights so
granted, and to set forth their terms and conditions as provided in the
Plan, the Corporation and the Employee hereby agree as follows:
1. Confirmation of Grant of Option and Rights; Option Price.
The Corporation hereby evidences and confirms its grant to the
Employee of (i) an option (the "Option") to purchase _____ of the
Corporation's Common Shares at an option price of $_____ per share and (ii)
limited stock appreciation rights (the "Rights") appertaining to the Option
which, if exercisable pursuant to Section 2, shall enable the Employee to
elect, in the manner described in Section 6 hereof, to relinquish the Option
with respect to any or all of the Common Shares as to which the Option is
exercisable at such time for a cash payment from the Corporation. The
amount of cash payable upon the exercise of any Rights shall be equal to the
excess of (x) the product of (A) the price paid or payable for a Common
Share of the Corporation in the transaction described in Section 2(b) below
(a "Transaction") which causes the Rights to become exercisable multiplied
by (B) the number of Common Shares with respect to which the Employee shall
have made such election, over (y) the purchase price for that number of
Common Shares. (In the event that the price paid or payable with respect to
such a Transaction is in a consideration other than cash or in an amount not
readily determinable at such time, such price shall be determined by the
Committee). The Option and the Rights granted hereby shall be subject to
the provisions of the Plan.
2. Term for Exercise.
(a) The Option shall become exercisable, subject to the
provisions of this Section 2 and Sections 3 and 4 hereof, in installments of
__________ Common Shares on the first anniversary of the date of grant of
the Option, _________ Common Shares on the second anniversary and
____________ Common Shares on the third anniversary. Unless an earlier
expiration date is specified by this Agreement (or, if applicable, in
Supplement A), the Option and the Rights shall expire at 5:00 P.M., Arizona
Mountain time (such time shall hereinafter be referred to as the "End of
Business"), on the day after the tenth anniversary of the date on which the
Option was granted (the "Termination Date").
(b) Without limiting the generality of the foregoing, in the
event:
(i) the Corporation's stockholders holding at least 50% (or
such greater percentage as may be required by the Certificate of
Incorporation or By-Laws of the Corporation or by law) of the voting
stock of the Corporation approve any merger, consolidation, sale of
assets, liquidation or reorganization in which the Corporation will not
survive as a publicly owned corporation (such approval hereinafter
referred to as a "Merger Approval"); or
(ii) any of the Corporation's Common Shares are purchased
pursuant to a tender or exchange offer other than an offer by the
Corporation, any Subsidiary of the Corporation (as defined in the Plan
and hereinafter referred to as a "Subsidiary"), or any employee benefit
plan maintained by the Corporation or a Subsidiary (such purchase
hereinafter referred to as a "Tender Purchase");
then the Option and the Rights shall become exercisable during the period
beginning on the date of the Merger Approval or Tender Purchase, as the case
may be, and ending on the thirtieth day following such date (but in no event
shall the Option or the Rights become exercisable under this paragraph
earlier than six months from the date on which the Option was granted (the
"Grant Date")). If any Rights or any portion of the Option shall be
exercised, the Rights or the Option shall thereafter remain exercisable,
according to their terms, only with respect to the number of Common Shares
as to which the Rights or the Option, as the case may be, would otherwise be
exercisable less the number of Common Shares with respect to which the
Rights and the Option have previously been exercised.
3. Who May Exercise.
During the Employee's lifetime the Option and the Rights may be
exercised only by him. If the Employee dies while in the employ of the
Corporation or one of its Subsidiaries, the Option and, if exercisable under
Section 2, the Rights may be exercised for the full number of Common Shares
specified in Section 1 hereof less the number of Common Shares for or
respect to which the Option and the Rights have previously been exercised,
by the Employee's estate, personal representative or beneficiary who
acquired the right to exercise the Option and the Rights by will or by the
laws of descent and distribution, at any time prior to the End of Business
on the earlier of the Termination Date or the fifth anniversary of the
Employee's death. If the Employee dies while he is no longer employed by
the Corporation or a Subsidiary, his Options and, if exercisable under
Section 2, the Rights may be exercised for the full number of Common Shares
as to which he could have exercised them on the date of his death, by his
estate, personal representative or beneficiary who acquired the right to
exercise the Option and the Rights by will or by the laws of descent and
distribution, at any time prior to the termination date provided by Section
4 thereof. Following the End of Business on the earlier of such Termination
Date, the fifth anniversary of the Employee's death or the termination date
provided by Section 4, as the case may be, the Option and Rights shall
expire.
4. Exercise after Termination of Employment.
If the Employee shall cease to be employed by the Corporation or a
Subsidiary other than by reason of death, Disability (as defined below),
retirement at or after the Employee's normal retirement date under any
pension or retirement plan of the Corporation or a Subsidiary (such
termination being hereafter referred to as "Normal Retirement") or the
Employee's termination for Cause (as defined in the Plan), the Option shall
remain exercisable, to the extent exercisable on the date of such
termination, until the End of Business on the earlier of the Termination
Date or the date which is one month after the day his employment ends. If
the Employee's employment shall terminate due to Disability or if the
Employee shall retire at Normal Retirement, the Option shall remain
exercisable, to the extent exercisable on the date of such termination or
retirement, until the End of Business on the earlier of the Termination Date
or the fifth anniversary of the date of his termination of employment or
retirement; provided, however, that, in the event the Employee's employment
with the Corporation terminates not earlier than six months from the Grant
Date as a result of the Employee's retirement at or after the Employee's
Normal Retirement date, immediately prior to the End of Business on the date
of such retirement the Option shall become exercisable for the purchase of
the full number of Common Shares specified in Section 1 of the Agreement
less the number of Common Shares with respect to which the Option and the
Rights have previously been exercised. Disability means the inability of a
Participant to perform his duties for a period of at least 180 days due to
mental or physical infirmity, as determined pursuant to the Corporation's
policies. If the Employee's employment is terminated for Cause, all Options
granted to the Employee which are then outstanding shall be forfeited as of
the effective time of such termination but in no event later than the End of
Business on such termination date. Any portion of the Option or the Rights
which is not exercisable on the date the Employee's employment terminates
for any reason other than death or Normal Retirement shall expire at the End
of Business on such termination date. Any portion of the Option which did
not expire on the date the Employee's employment terminates and which is not
exercised within the period established under this Section 4 shall expire
following the End of Business on the last day on which the Option could have
been exercised. Following termination of the Employee's employment for any
reason (including death), the Rights (i) shall remain outstanding with
respect to that number of Common Shares as to which the Option is
exercisable, (ii) will become exercisable pursuant to Section 2 as to that
number of Common Shares as to which the Option is then exercisable if a
Transaction occurs while the Option remains exercisable and (iii) shall
expire at the same time as the Option expires.
5. Restrictions on Exercise.
The Option and Rights may be exercised only with respect to full
Common Shares. No fractional shares shall be issued. The Option (and, if
applicable, the Rights) may not be exercised in whole or part:
(a) if any requisite approval or consent of any governmental
authority of any kind having jurisdiction over the exercise of options
shall not have been secured; or
(b) unless the Common Shares subject to the Option shall be
effectively listed on the New York Stock Exchange and registered under
the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
which listing and registration may be upon official notice of issuance
of such Common Shares. The Corporation may require that, as a
condition to any exercise of the Option, the Employee represent to the
Corporation in writing that he is acquiring the Common Shares subject
to such exercise for his own account for investment only and not with a
view to the distribution thereof.
6. Manner of Exercise.
To the extent the Option and the Rights shall be exercisable in
accordance with the terms hereof, and subject to such administrative
regulations as the Committee may have adopted:
(a) The Option may be exercised in whole or from time to time in
part by written notice to the Committee, (i) identifying the Option by
Grant Date, the option price and whether or not the Agreement includes
Supplement A, (ii) specifying the number of Common Shares with respect
to which the Option is being exercised, and (iii) accompanied by full
payment of the option price for such Common Shares (1) in United States
dollars by personal check or cash, including an assignment of the right
to receive cash proceeds of the sale of Common Shares subject to the
Option, (2) in Common Shares of the Corporation owned by the Employee
for at least three months prior to the day of exercise, represented by
certificates duly endorsed to the Corporation or its nominee with any
requisite transfer tax stamps attached, the market value of which shall
be equal to the option price for the Common Shares with respect to
which the Option is being exercised, or (3) in a combination of (1) and
(2) above. The market value of any Common Shares delivered pursuant to
the immediately preceding sentence shall be the mean of the high and
low prices of such Common Shares on the Consolidated Trading Tape on
the day of exercise or, if there was no such sale on such day, on the
day next preceding the day of exercise on which there was a sale.
(b) Rights may be exercised when exercisable under Section 2 in
whole or in part by written notice to the Committee, (i) identifying
the Rights by Grant Date and option price, and (ii) specifying the
number of Common Shares with respect to which such Rights are being
exercised.
For valuation purposes, the day of exercise of the Option or the
Rights shall be deemed to be the day on which notice, addressed to the
Committee, either to exercise the Option in whole or in part by the payment
of Common Shares (together with duly endorsed certificates as provided above
and any other required payment) or to exercise the Rights is received at the
Corporation's principal office, except that if such notice (together with
certificates and other payment if required) is received on a Saturday or
Sunday or on a holiday observed by the Corporation's principal office, or
after the End of Business on any other day, the day of exercise shall be
deemed to be the next business day. "Written notice" shall include, without
limitation, notice by telegram, telex, cable or telecopy facsimile.
In the event that the Option or the Rights shall be exercised by a
person other than the Employee in accordance with the provisions of Section
3 hereof, such person shall furnish the Corporation with evidence
satisfactory to it of his right to exercise the same and of payment or
provision for payment of any estate, transfer, inheritance or death taxes
payable with respect to the Option or the Rights or with respect to any
related Common Shares or payment. The Corporation may require the Employee
or other person exercising the Option or the Rights to furnish or execute
such documents as the Corporation shall deem necessary to evidence such
exercise, to determine whether registration is then required under the
Securities Act of 1933, as amended, or to comply with or satisfy the
requirements of the Exchange Act, or any other law.
7. Nonassignability.
Neither the Option nor the Rights are assignable or transferable
except by will or by the laws of descent and distribution to the extent
contemplated by Section 3 hereof. At the request of the Employee, Common
Shares purchased on exercise of the Option may be issued or transferred in
the name of the Employee and another person jointly with the right of
survivorship.
8. Rights as Stockholder.
The Employee shall have no rights as a stockholder with respect to
any Common Shares covered by the Option until the issuance of a certificate
or certificates to him for such Common Shares. No adjustment shall be made
for dividends or other rights for which the record date is prior to the
issuance of such certificate or certificates.
9. Capital Adjustments.
The number and price of the Common Shares covered by the Option
shall be proportionately adjusted to reflect, as deemed equitable and
appropriate by the Committee, any stock dividend, stock split or share
combination of, or extraordinary cash dividend on, the Corporation's Common
Shares or any recapitalization of the Corporation. To the extent deemed
equitable and appropriate by the Committee, subject to any required action
by the stockholders of the Corporation, in any merger, consolidation,
reorganization, liquidation, dissolution, or other similar transaction, the
Option shall pertain to the securities and other property, if any, which a
holder of the number of Common Shares covered by the Option would have been
entitled to receive in connection with such event.
10. Withholding.
(a) The Corporation's obligation to deliver Common Shares upon
the exercise of the Option shall be subject to payment by the Employee of
any amount required to be withheld with respect to such exercise pursuant to
any applicable federal, state or local tax withholding requirements. The
Corporation shall withhold from any cash payable in connection with the
exercise of any Rights any amount required to be withheld pursuant to any
applicable federal, state or local tax withholding requirement (including,
without limitation, FICA).
(b) Unless this Agreement includes Supplement A (making it an
incentive stock option), the Employee may elect to satisfy all or any part
of his federal, state and local tax obligations (including, without
limitation, FICA) with respect to such exercise by having the Corporation
withhold from any Common Shares otherwise deliverable to him in connection
with the exercise of the Option a number of Common Shares, or by delivering
Common Shares already owned by the Employee, having a market value equal in
amount to the obligations to be so satisfied, in accordance with procedures
adopted by the Committee from time to time. The market value of Common
Shares withheld or delivered shall be the mean of the high and low prices of
such Common Shares on the Consolidated Trading Tape on the day of exercise
or, if there was no such sale on such day, on the next preceding day on
which there was a sale.
11. Governing Law.
This Agreement shall be construed and enforced in accordance with,
and governed by, the laws of the State of New York.
12. Supplements.
Attached hereto are the following supplements:
Supplement A -- Incentive Stock Option
Supplement B -- Change of Control
Supplement D -- Reload Option
Any such supplements so attached are incorporated herein and constitute a
part of this Agreement as though set forth in full herein. Any such
supplement may be added to this Agreement at a later date by the Committee
if such supplement does not adversely affect the rights of the Employee
under this Agreement. All capitalized terms used in such supplements
without definition are used as defined in this Agreement.
IN WITNESS WHEREOF, the Corporation and the Employee have
duly executed this Agreement as of the date set forth above.
PHELPS DODGE CORPORATION
By__________________________
Vice President
____________________________
Employee
Supplement A
[Incentive Stock Option --
1993 Stock Option Plan]
Supplement A to the Stock Option Agreement (the "Agreement") dated
_________________ between Phelps Dodge Corporation (the "Corporation") and
______________________ (the "Employee").
1. Term of the Option. Each incentive stock option shall expire
on the tenth anniversary of the date of its grant.
2. Disposition of Shares. If the Employee disposes of any Common
Shares received upon exercise of the Option within two years after the
Option was granted to him or within one year after the Common Shares were
transferred to him upon exercise of the Option, whether by sale, gift, or
otherwise, the Employee shall notify the Secretary of the Corporation of the
number of such Common Shares disposed of, the date on which disposed of, the
manner of disposition and the amount, if any, realized upon such
disposition, and shall promptly pay to the Corporation the amount, if any,
that the Corporation specifies in a written notice to the Employee as
required to be withheld with respect to such exercise and disposition
pursuant to any applicable federal, state or local tax withholding
requirements.
3. Interpretation of Agreement. The Option is intended to be an
incentive stock option within the meaning of Section 422 of the Internal
Revenue Code of 1986, as amended.
Supplement B
[Change of Control --
1993 Stock Option Plan]
Supplement B to the Stock Option Agreement (the "Agreement") dated
_________________, between Phelps Dodge Corporation (the "Corporation") and
____________________ (the "Employee").
1. Additional Trigger Event For Exercisability. In addition to
the provisions of Section 2 of the Agreement, in the event the Employee's
employment with the Corporation or any Subsidiary terminates by reason of a
Qualifying Termination (as defined below) not earlier than six months from
the date on which the Option was granted and within two years after a Change
of Control (as defined below) of the Corporation, the Option shall become
exercisable, no later than the date of such termination, for the purchase of
the full number of Common Shares specified in Section 1 of the Agreement (or
such lesser number of Shares for which the Option would have become
exercisable on or prior to the Employee's normal retirement date under the
Phelps Dodge Retirement Plan for Salaried Employees were the Employee to
retire on such date).
For the purpose of this Supplement:
(a) A "Change of Control" shall be deemed to have taken place at
the time
(i) when any "person" or "group" of persons (as such terms are
used in Section 13 and 14 of the Securities Exchange Act of 1934, as
amended (the "Exchange Act")), other than the Corporation or any
employee benefit plan sponsored by the Corporation, becomes the
"beneficial owner" (as such term is used in Section 13 of the Exchange
Act) of 25% or more of the total number of the Corporation's Common
Shares at the time outstanding;
(ii) of any Merger Approval (as defined in the Agreement); or
(iii) when, as the result of a tender offer, exchange offer,
merger, consolidation, sale of assets or contested election or any
combination of the foregoing transactions, the persons who were
directors of the Corporation immediately before such transaction shall
cease to constitute a majority of the Board of Directors of the
Corporation or of any successor to the Corporation.
(b) A "Qualifying Termination" means a termination of the
Employee's employment with the Corporation or any Subsidiary (under
circumstances where the Employee is no longer employed by the Corporation or
any Subsidiary) for any reason other than
(i) death;
(ii) disability;
(iii) willful misconduct in the performance of the Employee's
duties as an employee which results in a material adverse effect on the
Corporation's business or reputation;
(iv) retirement under the Phelps Dodge Retirement Plan for
Salaried Employees; or
(v) a termination by the Employee unless
(1) such termination occurs more than 180 days following the
time when a Change of Control takes place and such Change of
Control has not been approved by a resolution adopted by the Board
of Directors of the Corporation as constituted immediately prior
to such Change of Control or
(2) the Employee terminates his employment for one or more
of the following reasons (and the Employee has not agreed thereto
in writing):
(x) the assignment to the Employee of any duties
inconsistent, in a way significantly adverse to the Employee,
with his positions, duties, responsibilities and status with
the Corporation and its Subsidiaries immediately prior to
such Change of Control, or a significant reduction in the
duties and responsibilities held by the Employee immediately
prior to such Change of Control; a change in the Employee's
reporting responsibilities, titles or offices as in effect
immediately prior to such Change of Control; or any removal
of the Employee from or any failure to re-elect the Employee
to any position with the Corporation or any Subsidiary that
the Employee held immediately prior to such Change of Control
except in connection with the Employee's promotion or the
termination of his employment for any of the reasons
specified in paragraphs (i) through (iv) above; or
(y) a reduction by the Corporation in the Employee's
base salary as in effect immediately prior to such Change of
Control; the failure by the Corporation to continue in effect
any employee benefit plan or compensation plan in which the
Employee is participating immediately prior to such Change of
Control unless the Employee is permitted to participate in
other plans providing him with substantially comparable
benefits; or the taking of any action by the Corporation
which would adversely affect the Employee's participation in
or materially reduce his benefits under such plan; or
(z) the Corporation's requiring the Employee to be
based anywhere other than his location immediately prior to
such Change of Control; or the Corporation's requiring the
Employee to travel on the Corporation's business to an extent
substantially more burdensome than his travel obligations
immediately prior to such Change of Control.
Supplement D
[Reload Option -- 1993 Plan]
Supplement D to the Stock Option Agreement (the "Agreement") dated
________________ between Phelps Dodge Corporation (the "Corporation") and
_____________________ (the "Employee").
1. Issuance of Reload Option. In the event that the Employee
exercises this Option (a) at least six months prior to the expiration date
of this Option, (b) while still employed by the Corporation or a Subsidiary
and (c) prior to the expiration date of the Plan using, in whole or in part,
Common Shares owned by the Employee for at least three months prior to the
day of exercise (the "Exercise Date"), the Employee shall be granted a new
option (the "Reload Option") under the Plan on the Exercise Date for the
number of Common Shares of the Corporation equal to the number of Common
Shares exchanged by the Employee to exercise this Option. No Reload Option
shall be granted if the Exercise Date is (a) within six months of the
expiration date of the Option, (b) a date when the Employee is not employed
by the Corporation or a Subsidiary or (c) after the expiration date of the
Plan.
2. Terms of Reload Option. The Reload Option shall be
exercisable on the same terms and conditions as apply to the Option as set
forth in this Agreement, except that (a) the Reload Option shall become
exercisable in full on the day six months after the Exercise Date, (b) the
option price per share shall be the fair market value of a Common Share on
the Exercise Date, which shall be the mean of the high and low prices of a
Common Share on the Consolidated Trading Tape on that day, or, if no sale of
Common Shares is recorded on such tape on that day, then on the next
preceding day on which there was such a sale and (c) the expiration date of
the Reload Option shall be the date of expiration of the Option under this
Agreement. The Corporation may issue a new agreement to evidence the Reload
Option and, if it does, that agreement shall supersede this Agreement in all
respects insofar as the Reload Option is concerned.
3. Right of Committee to Disapprove Reload Option.
Notwithstanding the foregoing, the continuance of a Reload Option granted
pursuant to this Supplement shall be subject to the disapproval of the
Committee in its sole discretion exercised at the meeting of the Committee
next following the date such Reload Option is granted. Any Reload Options
so disapproved by the Committee shall terminate upon such disapproval.
RELOAD OPTION AGREEMENT
(1993 Stock Option Plan)
(as amended through December 1, 1993)
RELOAD OPTION AGREEMENT, dated ________________, between PHELPS DODGE
CORPORATION, a New York corporation (the "Corporation"), and _______________
(the "Employee").
The Compensation and Management Development Committee of the Board
of Directors of the Corporation (such Committee, and any successor committee
appointed by the Board of Directors of the Corporation to administer the
Corporation's 1993 Stock Option and Restricted Stock Plan (the "Plan"), is
hereinafter referred to as the "Committee") has granted to the Employee (a)
an option under the Plan to purchase Common Shares of the Corporation and
(b) limited stock appreciation rights on the terms set forth below. Such
grant was made on _______________________ in connection with the exercise on
that date by the Employee of an option (the "Original Option") issued under
the Plan, the Phelps Dodge 1987 Stock Option and Restricted Stock Plan or
the Phelps Dodge 1979 Stock Option Plan evidenced by a Stock Option
Agreement dated _____________. In connection with such exercise, the
Employee delivered to the Corporation in payment of part or all of the
exercise price of the Original Option _____________ Common Shares that he
owned for at least three months prior to the date of exercise.
To evidence the option and limited stock appreciation rights
so granted, and to set forth their terms and conditions as provided in the
Plan, the Corporation and the Employee hereby agree as follows:
1. Confirmation of Grant of Reload Option and Rights;
Reload Option Price.
The Corporation hereby evidences and confirms its grant to
the Employee of (i) an option (the "Reload Option") to purchase ___________
of the Corporation's Common Shares at an option price of $________ per share
and (ii) limited stock appreciation rights (the "Rights") appertaining to
the Reload Option which, if exercisable pursuant to Section 2, shall enable
the Employee to elect, in the manner described in Section 6 hereof, to
relinquish the Reload Option with respect to any or all of the Common Shares
as to which the Reload Option is exercisable at such time for a cash payment
from the Corporation. The amount of cash payable upon the exercise of any
Rights shall be equal to the excess of (x) the product of (A) the price paid
or payable for a Common Share of the Corporation in the transaction
described in Section 2(b) below (a "Transaction") which causes the Rights to
become exercisable multiplied by (B) the number of Common Shares with
respect to which the Employee shall have made such election, over (y) the
purchase price for that number of Common Shares. (In the event that the
price paid or payable with respect to such a Transaction is in a
consideration other than cash or in an amount not readily determinable at
such time, such price shall be determined by the Committee). The Reload
Option and the Rights granted hereby shall be subject to the provisions of
the Plan.
2. Term for Exercise.
(a) The Reload Option shall become exercisable, subject to the
provisions hereof, on ________________, which is the date six months after
the grant date specified in Section 1. Unless an earlier expiration date is
specified by this Agreement, the Reload Option and the Rights shall expire
at 5:00 P.M., Arizona Mountain time (such time shall hereinafter be referred
to as the "End of Business"), on ____________________, which is the
expiration date of the Original Option (the "Termination Date").
(b) In the event:
(i) the Corporation's stockholders holding at least 50% (or such
greater percentage as may be required by the Certificate of
Incorporation or By-Laws of the Corporation or by law) of the voting
stock of the Corporation approve any merger, consolidation, sale of
assets, liquidation or reorganization in which the Corporation will not
survive as a publicly owned corporation (such approval hereinafter
referred to as a "Merger Approval"); or
(ii) any of the Corporation's Common Shares are purchased
pursuant to a tender or exchange offer other than an offer by the
Corporation, any Subsidiary of the Corporation (as defined in the Plan
and hereinafter referred to as a "Subsidiary"), or any employee benefit
plan maintained by the Corporation or a Subsidiary (such purchase
hereinafter referred to as a "Tender Purchase");
then the Rights shall become exercisable during the period beginning on the
date of the Merger Approval or Tender Purchase, as the case may be, and
ending on the thirtieth day following such date (but in no event shall the
Rights become exercisable under this paragraph earlier than six months from
the date on which the Reload Option was granted (the "Grant Date"). If any
Rights or any portion of the Reload Option shall be exercised, the Rights or
the Reload Option shall thereafter remain exercisable, according to their
terms, only with respect to the number of Common Shares as to which the
Rights or the Reload Option, as the case may be, would otherwise be
exercisable less the number of Common Shares with respect to which the
Rights and the Reload Option have previously been exercised.
3. Who May Exercise.
During the Employee's lifetime the Reload Option and the Rights
may be exercised only by him. If the Employee dies while in the employ of
the Corporation or one of its Subsidiaries, the Reload Option and, if
exercisable under Section 2, the Rights may be exercised for the full number
of Common Shares specified in Section 1 hereof less the number of Common
Shares for or respect to which the Reload Option and the Rights have
previously been exercised, by the Employee's estate, personal representative
or beneficiary who acquired the right to exercise the Reload Option and the
Rights by will or by the laws of descent and distribution, at any time prior
to the End of Business on the earlier of the Termination Date or the fifth
anniversary of the Employee's death. If the Employee dies while he is no
longer employed by the Corporation or a Subsidiary, the Reload Option and,
if exercisable under Section 2, the Rights may be exercised for the full
number of Common Shares as to which he could have exercised them on the date
of his death, by his estate, personal representative or beneficiary who
acquired the right to exercise the Reload Option and the Rights by will or
by the laws of descent and distribution, at any time prior to the
termination date provided by Section 4 thereof. Following the End of
Business on the earlier of such Termination Date, fifth anniversary of the
Employee's death or the termination date provided by Section 4, as the case
may be, the Reload Option and Rights shall expire.
4. Exercise after Termination of Employment.
If the Employee shall cease to be employed by the Corporation or a
Subsidiary other than by reason of death, Disability (as defined below),
retirement at or after the Employee's normal retirement date under any
pension or retirement plan of the Corporation or a Subsidiary (such
termination being hereafter referred to as "Normal Retirement") or the
Employee's termination for Cause (as defined in the Plan), the Reload Option
shall remain exercisable, to the extent exercisable on the date of such
termination, until the End of Business on the earlier of the Termination
Date or the date which is one month after the day his employment ends. If
the Employee's employment shall terminate due to Disability or if the
Employee shall retire at Normal Retirement, the Reload Option shall remain
exercisable, to the extent exercisable on the date of such termination or
retirement, until the End of Business on the earlier of the Termination Date
or the fifth anniversary of the date of his termination of employment or
retirement. Disability means the inability of a Participant to perform his
duties for a period of at least 180 days due to mental or physical
infirmity, as determined pursuant to the Corporation's policies. If the
Employee's employment is terminated for Cause, all Reload Options granted to
the Employee which are then outstanding shall be forfeited as of the
effective time of such termination but in no event later than the End of
Business on such termination date. Any portion of the Reload Option or the
Rights which is not exercisable on the date the Employee's employment
terminates for any reason other than death or Normal Retirement shall expire
at the End of Business on such termination date. Any portion of the Reload
Option which did not expire on the date the Employee's employment terminates
and which is not exercised within the period established under this Section
4 shall expire following the End of Business on the last day on which the
Reload Option could have been exercised. Following termination of the
Employee's employment for any reason (including death), the Rights (i) shall
remain outstanding with respect to that number of Common Shares as to which
the Reload Option is exercisable, (ii) will become exercisable pursuant to
Section 2 as to that number of Common Shares as to which the Reload Option
is then exercisable if a Transaction occurs while the Reload Option remains
exercisable and (iii) shall expire at the same time as the Reload Option
expires.
5. Restrictions on Exercise.
The Reload Option and Rights may be exercised only with respect to full
Common Shares. No fractional shares shall be issued. The Reload Option
(and, if applicable, the Rights) may not be exercised in whole or part:
(a) if any requisite approval or consent of any governmental
authority of any kind having jurisdiction over the exercise of options
shall not have been secured; or
(b) unless the Common Shares subject to the Reload Option shall
be effectively listed on the New York Stock Exchange and registered
under the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), which listing and registration may be upon official notice of
issuance of such Common Shares.
The Corporation may require that, as a condition to any exercise of the
Reload Option, the Employee represent to the Corporation in writing that he
is acquiring the Common Shares subject to such exercise for his own account
for investment only and not with a view to the distribution thereof.
6. Manner of Exercise.
To the extent the Reload Option and the Rights shall be
exercisable in accordance with the terms hereof, and subject to such
administrative regulations as the Committee may have adopted:
(a) The Reload Option may be exercised in whole or from time to
time in part by written notice to the Committee, (i) identifying the
Reload Option by Grant Date, the option price [and whether or not the
Agreement includes Supplement A], (ii) specifying the number of Common
Shares with respect to which the Reload Option is being exercised, and
(iii) accompanied by full payment of the option price for such Common
Shares (1) in United States dollars by personal check or cash,
including an assignment of the right to receive cash proceeds of the
sale of Common Shares subject to the Reload Option, (2) in Common
Shares of the Corporation owned by the Employee for at least three
months prior to the day of exercise, represented by certificates duly
endorsed to the Corporation or its nominee with any requisite transfer
tax stamps attached, the market value of which shall be equal to the
option price for the Common Shares with respect to which the Reload
Option is being exercised, or (3) in a combination of (1) and (2)
above. The market value of any Common Shares delivered pursuant to the
immediately preceding sentence shall be the mean of the high and low
prices of such Common Shares on the Consolidated Trading Tape on the
day of exercise or, if there was no such sale on such day, on the day
next preceding the day of exercise on which there was a sale.
(b) Rights may be exercised when exercisable under Section 2 in
whole or in part by written notice to the Committee, (i) identifying
the Rights by Grant Date and option price, and (ii) specifying the
number of Common Shares with respect to which such Rights are being
exercised.
For valuation purposes, the day of exercise of the Reload Option
or the Rights shall be deemed to be the day on which notice, addressed to
the Committee, either to exercise the Reload Option in whole or in part by
the payment of Common Shares (together with duly endorsed certificates as
provided above and any other required payment) or to exercise the Rights is
received at the Corporation's principal office, except that if such notice
(together with certificates and other payment if required) is received on a
Saturday or Sunday or on a holiday observed by the Corporation's principal
office, or after the End of Business on any other day, the day of exercise
shall be deemed to be the next business day. "Written notice" shall
include, without limitation, notice by telegram, telex, cable or telecopy
facsimile.
In the event that the Reload Option or the Rights shall be
exercised by a person other than the Employee in accordance with the
provisions of Section 3 hereof, such person shall furnish the Corporation
with evidence satisfactory to it of his right to exercise the same and of
payment or provision for payment of any estate, transfer, inheritance or
death taxes payable with respect to the Reload Option or the Rights or with
respect to any related Common Shares or payment. The Corporation may
require the Employee or other person exercising the Reload Option or the
Rights to furnish or execute such documents as the Corporation shall deem
necessary to evidence such exercise, to determine whether registration is
then required under the Securities Act of 1933, as amended, or to comply
with or satisfy the requirements of the Exchange Act, or any other law.
7. Nonassignability.
Neither the Reload Option nor the Rights are assignable or
transferable except by will or by the laws of descent and distribution to
the extent contemplated by Section 3 hereof. At the request of the
Employee, Common Shares purchased on exercise of the Reload Option may be
issued or transferred in the name of the Employee and another person jointly
with the right of survivorship.
8. Rights as Stockholder.
The Employee shall have no rights as a stockholder with respect to
any Common Shares covered by the Reload Option until the issuance of a
certificate or certificates to him for such Common Shares. No adjustment
shall be made for dividends or other rights for which the record date is
prior to the issuance of such certificate or certificates.
9. Capital Adjustments.
The number and price of the Common Shares covered by the Reload
Option shall be proportionately adjusted to reflect, as deemed equitable and
appropriate by the Committee, any stock dividend, stock split or share
combination of, or extraordinary cash dividend on, the Corporation's Common
Shares or any recapitalization of the Corporation. To the extent deemed
equitable and appropriate by the Committee, subject to any required action
by the stockholders of the Corporation, in any merger, consolidation,
reorganization, liquidation, dissolution, or other similar transaction, the
Reload Option shall pertain to the securities and other property, if any,
which a holder of the number of Common Shares covered by the Reload Option
would have been entitled to receive in connection with such event.
10. Withholding.
(a) The Corporation's obligation to deliver Common Shares upon
the exercise of the Reload Option shall be subject to payment by the
Employee of any amount required to be withheld with respect to such exercise
pursuant to any applicable federal, state or local tax withholding
requirements. The Corporation shall withhold from any cash payable in
connection with the exercise of any Rights any amount required to be
withheld pursuant to any applicable federal, state or local tax withholding
requirement (including, without limitation, FICA).
(b) [Unless this Agreement includes Supplement A (making it an
incentive stock option),] the Employee may elect to satisfy all or any part
of his federal, state and local tax obligations (including, without
limitation, FICA) with respect to such exercise by having the Corporation
withhold from any Common Shares otherwise deliverable to him in connection
with the exercise of the Reload Option a number of Common Shares, or by
delivering Common Shares already owned by the Employee, having a market
value equal in amount to the obligations to be so satisfied, in accordance
with procedures adopted by the Committee from time to time. The market
value of Common Shares withheld or delivered shall be the mean of the high
and low prices of such Common Shares on the Consolidated Trading Tape on the
day of exercise or, if there was no such sale on such day, on the next
preceding day on which there was a sale.
11. Governing Law.
This Agreement shall be construed and enforced in accordance with,
and governed by, the laws of the State of New York.
12. Supplements.
Attached hereto is Supplement D -- Reload Option. Any such
supplement so attached is incorporated herein and constitutes a part of this
Agreement as though set forth in full herein. Any such supplement may be
added to this Agreement at a later date by the Committee if such supplement
does not adversely affect the rights of the Employee under this Agreement.
All capitalized terms used in such supplements without definition are used
as defined in this Agreement.
IN WITNESS WHEREOF, the Corporation and the Employee have duly
executed this Agreement as of the date set forth above.
PHELPS DODGE CORPORATION
By__________________________
Vice President
____________________________
Employee
Supplement D
[Reload Option -- 1993 Plan]
Supplement D to the Stock Option Agreement (the "Agreement") dated
_______________ between Phelps Dodge Corporation (the "Corporation") and
_____________________ (the "Employee").
1. Issuance of Reload Option. In the event that the Employee
exercises this Option (a) at least six months prior to the expiration date
of this Option, (b) while still employed by the Corporation or a Subsidiary
and (c) prior to the expiration date of the Plan using, in whole or in part,
Common Shares owned by the Employee for at least three months prior to the
day of exercise (the "Exercise Date"), the Employee shall be granted a new
option (the "Reload Option") under the Plan on the Exercise Date for the
number of Common Shares of the Corporation equal to the number of Common
Shares exchanged by the Employee to exercise this Option. No Reload Option
shall be granted if the Exercise Date is (a) within six months of the
expiration date of the Option, (b) a date when the Employee is not employed
by the Corporation or a Subsidiary or (c) after the expiration date of the
Plan.
2. Terms of Reload Option. The Reload Option shall be
exercisable on the same terms and conditions as apply to the Option as set
forth in this Agreement, except that (a) the Reload Option shall become
exercisable in full on the day six months after the Exercise Date, (b) the
option price per share shall be the fair market value of a common share on
the Exercise Date, which shall be the mean of the high and low prices of a
common share on the Consolidated Trading Tape on that day, or, if no sale of
Common Shares is recorded on such tape on that day, then on the next
preceding day on which there was such a sale and (c) the expiration date of
the Reload Option shall be the date of expiration of the Option under this
Agreement. The Corporation may issue a new agreement to evidence the Reload
Option and, if it does, that agreement shall supersede this Agreement in all
respects insofar as the Reload Option is concerned.
3. Right of Committee to Disapprove Reload Option.
Notwithstanding the foregoing, the continuance of a Reload Option granted
pursuant to this Supplement shall be subject to the disapproval of the
Committee in its sole discretion exercised at the meeting of the Committee
next following the date such Reload Option is granted. Any Reload Options
so disapproved by the Committee shall terminate upon such disapproval.
Award of Restricted Stock
Dear :
We are pleased to confirm to you that at a meeting held on
__________________, the Compensation and Management Development Committee of
the Board of Directors of Phelps Dodge Corporation (the "Company") awarded
you _________ shares of Restricted Stock of the Company pursuant to the 1993
Stock Option and Restricted Stock Plan (the "Plan").
This letter will confirm the following agreement between you and
the Company pursuant to the Plan. Capitalized words used in this letter and
defined in the Plan are used as so defined. This award of Restricted Stock
is subject to the terms and conditions of the Plan, as supplemented by this
letter.
1. Restriction on Transfer. Except as provided in paragraphs 3
and 4 below, the shares of Restricted Stock awarded to you hereunder may not
be sold, assigned, transferred, pledged, hypothecated or otherwise
encumbered until ___________________ (the "Restricted Period").
2. Forfeiture of Restricted Stock. Except as provided in
paragraph 3 below, if your employment with the Company and its Subsidiaries
terminates prior to the end of the Restricted Period for any reason
including without limitation any termination by you or by the Company in its
absolute discretion, your shares of Restricted Stock shall revert back to
the Company without any payment to you and you shall cease to have any
rights with respect to such shares of Restricted Stock. In the case of such
reversion, such shares shall be retransferred to the Company by means of the
stock power referred to in paragraph 5 below.
3. Death, Disability or Normal Retirement. If your employment
with the Company and its Subsidiaries terminates by reason of your death,
your disability (as determined in accordance with the Company's applicable
policies on disability) or your retirement at or after age 65 (except for a
termination occurring within six months of the date of the grant of your
shares of Restricted Stock on account of your disability or retirement), the
Restricted Period shall lapse upon your termination of employment.
4. Change of Control. The Restricted Period shall lapse in the
event that, on or after the date six months after the date of the grant of
your shares of Restricted Stock:
(a) the Company's stockholders holding at least 50% (or such
greater percentage as may be required by the Certificate of
Incorporation or By-Laws of the Corporation or by law) of the
voting stock of the Corporation approve any merger,
consolidation, sale of assets, liquidation or reorganization
in which the Company will not survive as a publicly owned
corporation; or
(b) any of the Company's Common Shares are purchased
pursuant to a tender or exchange offer (other than an offer
by the Company, any Subsidiary of the Company, or any
employee benefit plan maintained by the Company or a
Subsidiary).
5. Rights as a Shareholder. Subject to the provisions of
paragraph 7 below, you shall have all the rights of a holder of Common
Shares with respect to your Restricted Stock, including the right to vote
the shares and to receive dividends. Notwithstanding the foregoing, your
Restricted Stock shall be held by the Company prior to the lapse of the
Restricted Period and you shall deliver to the Company a stock power
executed in blank in such form as the Company shall determine.
6. Administration. The Plan is administered by the Committee and
any interpretation or construction of the Plan or this letter by the
Committee, and any determination made by the Committee pursuant to the Plan
or this letter, shall be conclusive and binding on the Company, you and any
other interested party.
7. Conversions and Property Distributions. In the event your
Restricted Stock is exchanged for or converted into securities other than
Common Shares or in the event that any distribution is made with respect to
such Restricted Stock either in Common Shares or in other property or by way
of an extraordinary cash dividend, the securities or other property or cash
that you receive shall be subject to the same restrictions as apply to your
Restricted Stock, including those provided by the last sentence of paragraph
5 above.
8. Withholding. You shall be required to pay, as a condition of
receiving a share certificate without legend, any applicable federal, state
or local tax withholding requirements, which, if the Committee shall permit,
may be satisfied by the withholding of shares of Restricted Stock with
respect to which the Restricted Period has lapsed, subject to such terms and
conditions as the Committee shall impose.
9. Governing Law. This Agreement shall be construed and enforced
in accordance with, and governed by, the laws of the State of New York.
Please sign one of the two copies of this letter where indicated
below and the attached Stock Power and return them to me at your earliest
convenience. Please retain the other copy of this letter for your records.
PHELPS DODGE CORPORATION
By: ________________________
ACCEPTED AND AGREED TO:
____________________________
Date: _________________