DRAFT OF 10-29-97
FREEPORT-MCMORAN SULPHUR INC.
1997 STOCK OPTION PLAN FOR NON-EMPLOYEE DIRECTORS
ARTICLE I
PURPOSE OF THE PLAN
The purpose of the 1997 Stock Option Plan for Non-Employee Directors
(the "Plan") is to align more closely the interests of the non-employee
directors of Freeport-McMoRan Sulphur 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:
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 own beneficially more than
20% of the Common Stock outstanding (exclusive of shares held in the Company's
treasury or by the Company's Subsidiaries) pursuant to a tender offer, exchange
offer or series of purchases or other acquisitions, or any combination of those
transactions, or (b) there shall be a change in the composition of the Board at
any time within two years after any tender offer, exchange offer, merger,
consolidation, sale of assets or contested election, or any combination of those
transactions (a "Transaction"), so that (i) the persons who were directors of
the Company immediately before the first such Transaction cease to constitute a
majority of the Board of Directors of the corporation which shall thereafter be
in control of the companies that were parties to or otherwise involved in such
Transaction, or (ii) the number of persons who shall thereafter be directors of
such corporation shall be fewer than two-thirds of the number of directors of
the Company immediately prior to such first Transaction. A Change in Control
shall be deemed to take place upon the first to occur of the events specified in
the foregoing clauses (a) and (b).
CODE: The Internal Revenue Code of 1986, as amended from time to
time.
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).
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Until otherwise determined by the Board, the Committee shall be the Corporate
Personnel Committee of the Board.
ELIGIBLE DIRECTOR: A director of the Company who is not an officer or
an employee of the Company or a Subsidiary.
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 on which such Shares are quoted.
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.
RULE 16B-3: Rule 16b-3 under the Exchange Act, or any successor rule
or regulation thereto as in effect from time to time.
SECTION 162(M): Section 162(m) of the Code and all regulations
promulgated thereunder as in effect from time to time.
SHARES: Shares of common stock, par value $0.01 per share, of the
Company (including any attached Preferred Stock Purchase Rights).
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.
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
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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.
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.
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 75,000. To the extent an Option is forfeited or cancelled prior to
exercise, the Shares subject to such forfeited or cancelled Option shall again
be available for grant under the Plan. To the extent that Shares are delivered
to pay the exercise price of an Option, the number of Shares so delivered shall
again be available for grant under the Plan.
SECTION 3. In the event that the Board determines that any dividend
or other distribution (whether in the form of cash, Shares, Subsidiary
securities, other securities or other property), recapitalization, stock split,
reverse stock split, reorganization, merger, consolidation, split-up, spin-off,
combination, repurchase or exchange of Shares or other securities of the
Company, issuance of warrants or other rights to purchase Shares or other
securities of the Company, or other similar corporate transaction or event
affects the Shares such that an adjustment is determined by the Board to be
appropriate to prevent dilution or enlargement of the benefits or potential
benefits intended to be made available under the Plan, then the Board may, in
its sole discretion and in such manner as it may deem equitable, adjust any or
all of (i) the number and type of Shares (or other securities or property) with
respect to which Options may be granted, (ii) the number and type of Shares (or
other securities or property) subject to outstanding Options, and (iii) the
grant or exercise price with respect to any Option and, if deemed appropriate,
make provision for a cash payment to the holder of an outstanding Option,
PROVIDED that the number of Shares subject to any Option shall always be a whole
number.
SECTION 4. 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
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of the Option for the optionee) on the effective date of any
such transaction (the "Option Cancellation Date"), in cancellation of such
Option, an amount in cash equal to the Option Cancellation Gain relating
thereto, determined as of the Option Cancellation Date.
ARTICLE V
PURCHASE PRICE OF OPTIONED SHARES
The purchase price per Share under each Option shall be 100% of the
Fair Market Value of a Share at the time such Option is granted, but in no case
shall such price be less than the par value of the Shares subject to such
Option.
ARTICLE VI
ELIGIBILITY OF RECIPIENTS
Options will be granted only to individuals who are Eligible Directors
at the time of such grant.
ARTICLE VII
GRANT OF OPTIONS
SECTION 1. Each Option shall constitute a nonqualified stock option
which is not intended to qualify under Section 422 of the Code.
SECTION 2. Effective upon the distribution of shares to shareholders
of Freeport-McMoRan Inc. ("FTX") under the Contribution and Distribution
Agreement dated August 26, 1997 among FTX, Freeport-McMoRan Resource Partners
and the Company, each Eligible Director shall be granted an Option to purchase
5,000 Shares. On May 1, 1998 and May 1 of each subsequent year that the Plan
remains in effect, each Eligible Director, as of each such date, shall be
granted an Option to purchase 1,000 Shares.
SECTION 3. Each Option shall become exercisable with respect to
one-fourth of the Shares subject thereto 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 4. The purchase price of Shares subject to any Option shall
be the Fair Market Value thereof on the respective date of grant.
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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
(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 owners, members or beneficiaries, as appropriate, are the
partners, (iv) to a limited liability company in which Immediate Family
Members, or entities in which Immediate Family Members are the owners,
members or beneficiaries, as appropriate, are the members, or (v) to a
trust for the benefit of Immediate Family Members; provided, however, that
no more than a DE MINIMUS beneficial interest in a partnership, limited
liability company or trust described in (iii), (iv) or (v) above may be
owned by a person who is not an Immediate Family Member or by an entity
that is not beneficially owned solely by 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. 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
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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.
SECTION 4. 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 5. 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.
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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.
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
shall be made without stockholder approval if such approval is deemed necessary
to comply with any regulatory requirements.
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