-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, SD90UzgYNAYeqY/apnk35IcQEHuF4DpNgx23OmK1BLpnD7ZTD6FTNRHBRv1Ig3V6 sXMgpXFa91NGhVj9zILIDw== 0000351116-97-000002.txt : 19970430 0000351116-97-000002.hdr.sgml : 19970430 ACCESSION NUMBER: 0000351116-97-000002 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 7 CONFORMED PERIOD OF REPORT: 19970331 FILED AS OF DATE: 19970429 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: FREEPORT MCMORAN INC CENTRAL INDEX KEY: 0000351116 STANDARD INDUSTRIAL CLASSIFICATION: METAL MINING [1000] IRS NUMBER: 133051048 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-08124 FILM NUMBER: 97589861 BUSINESS ADDRESS: STREET 1: 1615 POYDRAS ST CITY: NEW ORLEANS STATE: LA ZIP: 70112 BUSINESS PHONE: 5045824000 10-Q 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarter Ended March 31, 1997 Commission File Number: 1-8124 Freeport-McMoRan Inc. Incorporated in Delaware 13-3051048 (IRS Employer Identification No.) 1615 Poydras Street, New Orleans, Louisiana 70112 Registrant's telephone number, including area code:(504) 582-4000 Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No On March 31, 1997, there were issued and outstanding 23,677,807 shares of the registrant's Common Stock, par value $0.01 per share. 1 FREEPORT-McMoRan INC. TABLE OF CONTENTS Page Part I. Financial Information Financial Statements: Condensed Balance Sheets 3 Statements of Income 4 Statements of Cash Flow 5 Notes to Financial Statements 6 Remarks 6 Report of Independent Public Accountants 7 Management's Discussion and Analysis of Financial Condition and Results of Operations 8 Part II. Other Information 12 Signature 13 Exhibit Index E-1 2 FREEPORT-McMoRan INC. PART I. FINANCIAL INFORMATION Item 1. Financial Statements. FREEPORT-McMoRan INC. CONDENSED BALANCE SHEETS (Unaudited)
March 31, December 31, 1997 1996 ---------- ---------- (In Thousands) ASSETS Current assets: Cash and cash equivalents $ 5,320 $ 19,977 Accounts receivable 74,704 71,795 Inventories 159,238 141,158 Prepaid expenses and other 3,710 5,065 ---------- ---------- Total current assets 242,972 237,995 Property, plant and equipment, net 946,259 964,787 Other assets 54,543 48,641 ---------- ---------- Total assets $1,243,774 $1,251,423 ========== ========== LIABILITIES AND STOCKHOLDERS' EQUITY Accounts payable and accrued liabilities $ 158,215 $ 168,557 Long-term debt, less current portion 475,873 441,030 Accrued postretirement benefits and pension costs 182,241 182,832 Reclamation and mine shutdown reserves 110,039 106,374 Other liabilities and deferred credits 72,837 84,247 Minority interest 167,421 174,081 Stockholders' equity 77,148 94,302 ---------- ---------- Total liabilities and stockholders' equity $1,243,774 $1,251,423 ========== ==========
The accompanying notes are an integral part of these financial statements. 3 FREEPORT-McMoRan INC. STATEMENTS OF INCOME (Unaudited)
Three Months Ended March 31, ------------------------ 1997 1996 ---------- ---------- (In Thousands, Except Per Share Amounts) Revenues $ 211,872 $ 256,827 Cost of sales: Production and delivery 146,598 169,948 Depreciation and amortization 9,400 11,422 ---------- ---------- Total cost of sales 155,998 181,370 Gain on IMC-Agrico investment - (11,917) Exploration expenses 6,222 - General and administrative expenses 13,858 17,635 ---------- ---------- Total costs and expenses 176,078 187,088 ---------- ---------- Operating income 35,794 69,739 Interest expense, net (9,273) (8,025) Other income (expense), net 24 748 ---------- ---------- Income before minority interest and income taxes 26,545 62,462 Minority interest in net income of consolidated subsidiaries (23,388) (29,102) Income tax provision (1,186) (12,135) ---------- ---------- Net income 1,971 21,225 Preferred dividends (1,096) (1,096) ---------- ---------- Net income applicable to common stock $ 875 $ 20,129 ========== ========== Net income per share: Primary $.04 $.73 ==== ==== Fully diluted $.04 $.72 ==== ==== Average common and common equivalent shares outstanding: Primary 24,094 27,577 ====== ====== Fully diluted 24,094 29,417 ====== ====== Cash dividend per common share $.09 $.09 ==== ====
The accompanying notes are an integral part of these financial statements. 4 FREEPORT-McMoRan INC. STATEMENTS OF CASH FLOW (Unaudited)
Three Months Ended March 31, -------------------------- 1997 1996 ---------- ---------- (In Thousands) Cash flow from operating activities: Net income $ 1,971 $ 21,225 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 9,400 11,497 Gain on IMC-Agrico investment - (11,917) Oil and gas exploration expenses 6,222 - Deferred income taxes 196 9,135 Minority interest's share of net income 23,388 29,102 Cash distributions from IMC-Agrico in excess of interest in capital 12,341 11,777 Reclamation and mine shutdown expenditures (5,042) (2,411) (Increase) decrease in working capital, net of effect of distribution: Accounts receivable (2,729) 21,907 Inventories (18,081) (15,389) Prepaid expenses and other 1,356 1,941 Accounts payable and accrued liabilities (7,186) (22,556) Other (11,628) (1,490) ---------- ---------- Net cash provided by operating activities 10,208 52,821 ---------- ---------- Cash flow from investing activities: Capital expenditures: FRP (10,047) (7,501) Other (488) (1,058) Sale of assets - 4,000 ---------- ---------- Net cash used in investing activities (10,535) (4,559) ---------- ---------- Cash flow from financing activities: Purchase of FTX common shares (16,090) (30,084) Purchase of FRP units - (924) Distributions paid to FRP public unitholders (30,048) (31,337) Proceeds from debt 92,802 25,100 Repayments of debt (57,959) (155,500) Proceeds from sale of FRP 7% Senior Notes - 147,831 Cash dividends paid: Common stock (2,165) (2,400) Preferred stock (1,096) (1,096) Other 226 657 ---------- ---------- Net cash used in financing activities (14,330) (47,753) ---------- ---------- Net increase (decrease) in cash and cash equivalents (14,657) 509 Cash and cash equivalents at beginning of year 19,977 23,496 ---------- ---------- Cash and cash equivalents at end of period $ 5,320 $ 24,005 ========== ==========
The accompanying notes are an integral part of these financial statements. 5 FREEPORT-McMoRan INC. NOTES TO FINANCIAL STATEMENTS 1. PARENT COMPANY BALANCE SHEET The unaudited, unconsolidated condensed balance sheet of Freeport- McMoRan Inc. (FTX) as of March 31, 1997 follows (in thousands): Cash and cash equivalents $ 277 Other current assets 2,920 Property, plant and equipment, net 41,437 Investment in FRP 182,119 Other assets 7,868 ---------- Total assets $ 234,621 ========== Accounts payable and accrued liabilities $ 24,894 Long-term debt 52,900 Other liabilities and deferred credits 79,679 Stockholders' equity 77,148 ---------- Total liabilities and stockholders' equity $ 234,621 ========== 2. SRI LANKA PROJECT In March 1997, FRP was reimbursed $2.9 million for previously incurred expenses as a result of IMC-Agrico's participation in the potential phosphate mine and upgrading project in Sri Lanka. This project would be undertaken through a joint venture involving the Government of Sri Lanka, IMC-Agrico and another party. 3. OIL AND GAS EXPLORATION AGREEMENT In March 1997, Freeport-McMoRan Resource Partners, Limited Partnership (FRP) entered into an agreement with McMoRan Oil & Gas Co. (MOXY), a formerly owned affiliate of FTX, pursuant to which FRP will acquire an interest in any of seven leases awarded on which MOXY was the high bidder at the OCS Lease Sale 166 held in March 1997. The high bids totaled $5.5 million. Awarding of the leases is subject to approval by the Mineral Management Service, which is expected during the second quarter of 1997. FRP will acquire a 50 percent working interest ownership and will bear 60 percent of the associated acquisition and exploration costs. 4. NORTH BAY JUNOP EXPLORATION CHARGE In April 1997, FRP's 25 percent owned oil and gas exploration joint venture with Phillips Petroleum Company and MOXY completed drilling of its exploratory well on the North Bay Junop prospect, the second of two high-risk, high-potential prospects which have been drilled within the joint venture's project area in south Louisiana. The well reached total depth but did not encounter commercial hydrocarbons in the primary objective zones, resulting in a $6.2 million charge to exploration expense. 5. EARNINGS PER SHARE In February 1997, the Financial Accounting Standards Board issued Statement No. 128 (FAS 128), _Earnings Per Share_, which simplifies the computation of earnings per share. FAS 128 is effective for financial statements issued for periods ending after December 15, 1997 and requires restatement for all prior period earnings per share data presented. Basic earnings per share calculated in accordance with FAS 128 would have been $0.04 per share for the first quarter of 1997 and $0.74 per share for the first quarter of 1996. ----------------- Remarks The information furnished herein should be read in conjunction with FTX's financial statements contained in its 1996 Annual Report to stockholders included in its Annual Report on Form 10-K. The information furnished herein reflects all adjustments which are, in the opinion of management, necessary for a fair statement of the results for the periods. All such adjustments are, in the opinion of management, of a normal recurring nature. 6 REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS To the Board of Directors and Stockholders of Freeport-McMoRan Inc.: We have reviewed the accompanying condensed consolidated balance sheet of Freeport-McMoRan Inc. (the Company), a Delaware Corporation, as of March 31, 1997, and the related consolidated statements of operations and cash flow for the three-month periods ended March 31, 1997 and 1996. These financial statements are the responsibility of the Company's management. We did not review the interim financial information of IMC-Agrico Company (the Joint Venture). The Company's share of the Joint Venture constitutes 48 percent of consolidated total assets as of March 31, 1997, and 80 percent and 81 percent of the Company's consolidated total revenues for the periods ended March 31, 1997 and 1996, respectively. Those statements were reviewed by other accountants whose report covering their review has been furnished to us. We conducted our review in accordance with standards established by the American Institute of Certified Public Accountants. A review of interim financial information consists principally of applying analytical procedures to financial data and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with generally accepted auditing standards, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion. Based on our review and the report of other accountants, we are not aware of any material modifications that should be made to the financial statements referred to above for them to be in conformity with generally accepted accounting principles. We have previously audited, in accordance with generally accepted auditing standards, the balance sheet of Freeport-McMoRan Inc. as of December 31, 1996, and the related statements of operations, stockholders' equity and cash flow for the year then ended (not presented herein), and in our report dated January 21, 1997, based on our audit and the report of other auditors, we expressed an unqualified opinion on those financial statements. In our opinion, the information set forth in the accompanying condensed balance sheet as of December 31, 1996, is fairly stated, in all material respects, in relation to the balance sheet from which it has been derived. ARTHUR ANDERSEN LLP New Orleans, Louisiana April 22, 1997 7 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. OVERVIEW The business operations of Freeport-McMoRan Inc. (FTX) primarily consist of its 51.6 percent ownership in Freeport-McMoRan Resource Partners, Limited Partnership (FRP). FRP, through its subsidiaries and joint venture operations, is one of the world's leading integrated phosphate fertilizer producers. FRP is a joint venture partner in IMC- Agrico Company, the world's largest and one of the lowest cost producers, marketers and distributors of phosphate fertilizers. IMC- Agrico's business also includes the mining and sale of phosphate rock and the production, marketing and distribution of animal feed ingredients. FRP's Main Pass sulphur mine, offshore Louisiana in the Gulf of Mexico, and its Culberson mine in Texas also make FRP the largest producer of Frasch sulphur in the world. Main Pass also contains proved oil reserves that FRP produces and sells for the Main Pass joint venture. The combined sulphur, phosphate mining and fertilizer production operations provide FRP with the competitive advantages of vertical integration and operating efficiencies and reduce the sensitivity of FRP's phosphate fertilizer costs to changes in raw material prices. FRP also believes that the strategic location of IMC-Agrico's fertilizer operations, both in Florida and on the Mississippi River, provide it with a competitive advantage over other fertilizer producers. Management has been able to move forward on several growth opportunities as follows: * In March 1997, FRP, a significant consumer of natural gas in its sulphur and fertilizer operations, entered into an agreement with McMoRan Oil & Gas Co. (MOXY) pursuant to which FRP will acquire an interest in any of seven leases awarded on which MOXY was the high bidder at the OCS Lease Sale 166 held in March 1997. The high bids totaled $5.5 million. Awarding of the leases is subject to approval by the Mineral Management Service, which is expected during the second quarter of 1997. FRP will acquire a 50 percent working interest ownership and will bear 60 percent of the associated acquisition and exploration costs. FRP will consider opportunities for further oil and gas investments, including activities involving MOXY. These future investments may be significant. * In March 1997, FRP was reimbursed $2.9 million for previously incurred expenses as a result of IMC-Agrico's participation in the potential phosphate mine and upgrading project in Sri Lanka. This project would be undertaken through a joint venture involving the Government of Sri Lanka, IMC-Agrico and another party. Because of the strategic location of this project in close proximity to Asian customers, it would have potentially favorable economic competitive advantages. Project evaluation continues. RESULTS OF OPERATIONS First Quarter ------------------------ 1997 1996 ---------- ---------- (In Millions) Revenues $ 211.9 $ 256.8 Operating income 35.8 69.7 Net income to common stock .9 20.1 FTX's operating results for the 1997 period were adversely affected by lower average realizations on its phosphate fertilizer, phosphate rock and sulphur sales, as well as reduced production and sales volumes for phosphate fertilizer, phosphate rock and oil. The current quarter also includes a $6.2 million charge for oil and gas exploration costs and a $2.9 million credit for reimbursement of previously incurred expenses as a result of IMC-Agrico's participation in a potential phosphate mine and upgrading project in Sri Lanka. The 1996 period included an $11.9 million gain from the increase in FRP's ownership of IMC-Agrico and charges totaling $3.0 million for asset valuations at IMC-Agrico. Depreciation and amortization for the current quarter decreased $2.0 million from the 1996 period amount. This reduction is attributable primarily to a decline in unit-of-production depreciation of $1.9 million from Main Pass oil operations and $0.4 million from sulphur activities caused by lower volumes. General and administrative expenses for the 1997 period declined $3.8 million from the 1996 period amount. A majority of the decrease related to lower stock appreciation rights costs. 8 Interest expense for the 1997 period approximated the year-ago amount. Minority interest represents the FRP public unitholders' pro rata share of FRP earnings, with the quarterly period including an additional charge of $9.2 million in 1997 (versus a gain of $1.2 million in 1996) because FTX was not paid its proportionate share of FRP distributions in connection with the final quarterly distribution under the public FRP unitholders' preferential distribution priority. To the extent that cumulative unpaid distributions are reduced in the future, as discussed below, FTX will recognize a disproportionately greater share of FRP's reported earnings. FTX's income tax provision for 1997 decreased from the 1996 period amount, primarily resulting from the decline in pretax, after-minority interest earnings. Agricultural Minerals Operations FTX's agricultural minerals operations, which include FRP's fertilizer and phosphate rock operations (conducted through IMC-Agrico) and its sulphur business, reported first-quarter 1997 operating income of $42.5 million on revenues of $203.2 million compared with operating income of $76.2 million on revenues of $247.2 million for the 1996 period. Significant items impacting operating income follow (in millions): Agricultural minerals operating income -1996 $ 76.2 ---------- Increases (decreases): Sales volumes (18.8) Realizations (24.4) Other (0.8) ---------- Revenue variance (44.0) Cost of sales 21.0 a Gain on IMC-Agrico investment (11.9) General and administrative 1.2 ---------- (33.7) ---------- Agricultural minerals operating income -1997 $ 42.5 ========== a. Includes a reduction to depreciation of $7.1 million for the first quarter of 1997 and 1996 caused by FRP's disproportionate interest in IMC-Agrico cash distributions. The 1996 period also includes $3.0 million of asset valuation charges from IMC-Agrico. FRP's 1997 phosphate fertilizer sales volumes declined 11 percent from the 1996 period. IMC-Agrico's realization for diammonium phosphate (DAP), its principal fertilizer product, averaged 13 percent lower than in the 1996 period (although the 1997 quarter was virtually unchanged from the prior quarter) as the year-ago quarter benefited from a tight supply/demand situation. Domestic shipments during the first quarter of 1997 were hampered by unfavorable planting and shipping conditions caused by the unusually wet conditions in the Midwest. Export shipments fell marginally despite IMC-Agrico's shipping significant tonnage to China under a recently negotiated two- year sales agreement. IMC-Agrico resumed full production at its New Wales, Florida facility in April 1997 in response to strengthening demand associated with the domestic spring season and recently announced new international sales. Expectations for higher corn and soybean acreage this spring, coupled with rising commodity prices, bode well for increased domestic phosphate fertilizer sales in the second quarter. Unit production costs for DAP declined approximately 5 percent from the year-ago quarter as a result of reduced phosphate rock, sulphur and processing costs. Unit costs for the near term will benefit from a decline in ammonia prices which occurred during the first quarter of 1997; ammonia prices show indications of further weakness in the Gulf Coast region. The long-term outlook for the phosphate fertilizer industry remains very positive. Increasing world population and improving diets in developing countries, combined with historically low grain stocks, necessitate greater agricultural output, which will require higher fertilizer use. Strong demand growth projected in Asia and Latin America is expected to require additional supplies beyond the global industry's current production capability. Additionally, FRP believes higher prices and operating margins are required before new major phosphate projects are initiated. However, weather and government policies will continue to cause annual fluctuations in the overall agricultural and fertilizer supply and demand situation, as witnessed over the past year. FRP's 1997 phosphate rock sales volumes declined 16 percent from the 1996 period level, with IMC-Agrico continuing to limit third party sales in order to maximize the long-term value of its reserves through internal use. This strategy is expected to result in lower sales volumes of phosphate rock for 9 1997. Reduced sales volumes and lower realizations contributed to decreased earnings from phosphate rock operations. Sulphur sales volumes in the current quarter were virtually unchanged from the 1996 period. FRP has operated its Main Pass and Culberson mines at reduced rates since March 1996 in response to lower domestic sulphur sales to U.S. phosphate fertilizer producers. Current quarter sulphur market prices were lower than in the year-ago period, although up slightly from the fourth quarter of 1996. Sulphur prices continued to strengthen in the second quarter of 1997. FRP's future sulphur sales volumes and realizations will continue to depend on the level of demand from the domestic phosphate fertilizer industry and the availability of competing supplies from recovered sources Since FRP's sulphur consumption approximates its production, a change in the market price of sulphur does not have a significant effect on earnings. FRP continues to evaluate its sulphur business strategy in light of the current sulphur market, including the possibility of reducing its overall production levels. First Quarter ------------------------ 1997 1996 ---------- ---------- Phosphate fertilizers -primarily DAP Sales (short tons) 699,500 790,000 Average realized price a All phosphate fertilizers $174.30 $197.08 DAP 178.21 205.56 Phosphate rock Sales (short tons) 633,200 751,800 Average realized price a $23.64 $26.28 Sulphur Sales (long tons) b 738,000 738,100 a. Represents average realization f.o.b. plant/mine. b. Includes internal consumption of 197,700 tons and 186,000 tons for the first quarter of 1997 and 1996, respectively. Oil Operations - Main Pass oil operations achieved the following: First Quarter ----------------------- 1997 1996 ---------- ---------- Sales (barrels) 423,800 542,200 Average realized price $20.11 $17.45 Operating income (in millions) 2.7 2.2 Main Pass operating income for the 1997 period benefited from an increase in average realizations caused by higher world oil prices. Net production for 1997 is expected to decline slightly from 1996 levels, as increased drilling activities at Main Pass are expected to generate production sufficient to partially offset declining reservoir production. In April 1997, FRP's 25 percent owned oil and gas exploration joint venture with Phillips Petroleum Company and MOXY completed drilling of an exploratory well on the North Bay Junop prospect, the second of two high-risk, high-potential prospects which have been drilled within the joint venture's project area in south Louisiana. The well reached total depth but did not encounter commercial hydrocarbons in the primary objective zones, resulting in a $6.2 million charge to exploration expense. FRP is currently reviewing several alternatives regarding shallower potentially productive zones encountered by this well, as well as evaluating other leads for drilling additional wells within the project area which have been identified by 3-D seismic survey. CAPITAL RESOURCES AND LIQUIDITY FTX's main source of cash flow is distributions from FRP. On April 22, 1997, FRP declared a distribution of 31 cents per unit. This cash distribution represents the first distribution following the end of the public unitholders' preference period. FRP's distributable cash is now shared ratably by FRP's public unitholders and FTX, except that FTX will be entitled to receive its unpaid cash distributions from previous quarters ($431.3 million unpaid at April 22, 1997) from one- half of the quarterly distributable cash after the payment of 60 cents per unit to all FRP unitholders. 10 FRP's future distributions will depend on the distributions received from IMC-Agrico, on the cash flow generated from FRP's sulphur and Main Pass oil operations, the cash requirements of its expanding oil and gas exploration activities, and on the level of and methods of financing its capital expenditure needs, including reclamation and growth projects. FRP's distributable cash in April 1997 included $43.2 million from IMC-Agrico. Future distributions from IMC-Agrico will depend primarily on the phosphate fertilizer market, discussed earlier, and FRP's share of IMC-Agrico cash distributions (Current Interest). FRP's Current Interest is 54.35 percent until June 30, 1997 and declines to 41.45 percent thereafter. FTX currently has a quarterly cash dividend of 9 cents per common share. This dividend level allows FTX to use additional available funds to purchase FTX stock, purchase FRP units and/or invest in potential new growth opportunities. The timing of FTX stock and FRP unit purchases is dependent upon many factors, including their price, FTX's financial condition and general economic and market factors. FTX anticipates that its cash distributions from FRP and amounts available to it under its credit facility ($236.0 million of additional borrowings available to FRP at April 18, 1997, $99.0 million of which is available to FTX) will be sufficient to meet its obligations. Net cash provided by operating activities during the first three months of 1997 totaled $10.2 million, compared with $52.8 million for the 1996 period, primarily reflecting lower earnings. Capital expenditures for the 1997 period were up slightly from the year-ago level, and are currently estimated to approximate $60 million for 1997. During the first three months of 1997, FTX purchased 554,500 shares of its common stock for an aggregate $16.1 million. CAUTIONARY STATEMENT Management's discussion and analysis contains forward-looking statements regarding sales and production volumes, capital expenditures, product markets, etc. Important factors that might cause future results to differ from these projections are described in more detail under the heading "Cautionary Statement" in FTX's Form 10- K for the year ended December 31, 1996. -------------------------------- The results of operations reported and summarized above are not necessarily indicative of future operating results. 11 FREEPORT-McMoRan INC. PART II. Other Information Item 1. Legal Proceedings. Tom Beanal v. Freeport-McMoRan Inc. and Freeport-McMoRan Copper & Gold Inc., Civ. No. 96-1474 (E.D. La. filed Apr. 29, 1996). The plaintiff alleges environmental, human rights and social/cultural violations in Indonesia. He seeks $6 billion in monetary damages and other equitable relief. The Company and its former subsidiary, Freeport- McMoRan Copper & Gold Inc. ("FCX") deny these allegations, which they believe are inconsistent with the findings of a series of independent examinations of the Indonesian mining operations of FCX's subsidiary. The court recently granted the Company's motion to dismiss but gave the plaintiff leave to amend. The Company believes that the action is baseless and will continue to defend vigorously any amended or additional claims that the plaintiff may file. Yosefa Alomang v. Freeport-McMoRan Inc. and Freeport-McMoRan Copper & Gold Inc., Civ. No. 96-9962 (Orleans Civ. Dist. Ct. La. Filed June 19, 1996). In February 1997 the Civil District Court of the Parish of Orleans, State of Louisiana dismissed this purported class action for lack of subject matter jurisdiction because the alleged conduct and damages occurred in Indonesia. The Court also held that venue was not proper in any Louisiana court. The plaintiff had alleged substantially similar violations as those alleged in the Beanal suit and sought unspecified monetary damages an other equitable relief. In April 1997 the plaintiff filed and appeal. Item 6. Exhibits and Reports on Form 8-K. (a) The exhibits to this report are listed on the Exhibit Index appearing on page E-1 hereof. (b) No reports on Form 8-K were filed by the registrant during the quarter for which this report is filed. 12 FREEPORT-McMoRan INC. SIGNATURE ----------- Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. FREEPORT-McMoRan INC. By: /s/ William J. Blackwell ---------------------- William J. Blackwell Controller - Financial Reporting (authorized signatory and Principal Accounting Officer) Date: April 29, 1997 13 FREEPORT-McMoRan INC. EXHIBIT INDEX Sequentially Number Description Numbered Page - ----- -------------- -------------- 3.1 Composite copy of Certificate of Incorporation of FTX, as amended. Incorporated by reference to Exhibit 3.1 to the Quarterly Report on Form 10-Q of FTX for the quarter ended June 30, 1992 (the "FTX 1992 Second Quarter Form 10-Q"). 3.2 By-Laws of FTX, as amended. Incorporated by reference to Exhibit 3.2 to the Annual Report on Form 10-K for the fiscal year ended December 31, 1996 (the "FTX 1996 Form 10-K"). 4.1 Certificate of Designations of the $4.375 Convertible Exchangeable Preferred Stock of FTX. Incorporated by reference to Exhibit 4.1 to the Current Report on Form 8-K of FTX dated March 23, 1992. 4.2 Amended and Restated Agreement of Limited Partnership of FRP dated as of May 29, 1987 (the "FRP Partnership Agreement") among FTX, Freeport Phosphate Rock Company and Geysers Geothermal Company, as general partners, and Freeport Minerals Company ("FMC"), as general partner and attorney-in-fact for the limited partners, of FRP. Incorporated by reference to Exhibit B to the Prospectus dated May 29, 1987 included in FRP's Registration Statement on Form S-1, as amended, as filed with the Commission on May 29, 1987 (Registration No. 33-13513). 4.3 Amendment to the FRP Partnership Agreement dated as of December 16, 1988 effected by FMC, as Administrative Managing General Partner, and FTX, as General Partner, of FRP. Incorporated by reference to Exhibit 3.2 to the Annual Report on Form 10-K of FRP for the fiscal year ended December 31, 1994. 4.4 Amendment to the FRP Partnership Agreement dated as of March 29, 1990 effected by FMC, as Administrative Managing General Partner, and FTX, as Managing General Partner, of FRP. Incorporated by reference to Exhibit 19.2 to the Quarterly Report on Form 10-Q of FRP for the quarter ended March 31, 1990 (the "FRP 1990 First Quarter Form 10-Q"). 4.5 Amendment to the FRP Partnership Agreement dated as of April 6, 1990 effected by FTX, as Administrative Managing General Partner of FRP. Incorporated by reference to Exhibit 19.3 to the FRP 1990 First Quarter Form 10-Q. 4.6 Amendment to the FRP Partnership Agreement dated as of January 27, 1992 between FTX, as Administrative Managing General Partner, and FMRP Inc., as Managing General Partner of FRP. Incorporated by reference to Exhibit 3.3 to the Annual Report on Form 10-K of FRP for the fiscal year ended December 31, 1991 (the "FRP 1991 Form 10-K"). 4.7 Amendment to the FRP Partnership Agreement dated as of October 14, 1992 between FTX, as Administrative Managing General Partner, and FMRP Inc., as Managing General Partner of FRP. Incorporated by reference to Exhibit 3.4 to the Annual Report on Form 10-K of FRP for the fiscal year ended December 31, 1992 (the "FRP 1992 Form 10-K"). 4.8 Deposit Agreement dated as of June 27, 1986 (the "Deposit Agreement") among FRP, The Chase Manhattan Bank, N.A. ("Chase") and Freeport Minerals Company, as attorney-in-fact of those limited partners and assignees holding depositary receipts for units of limited partnership interests in FRP ("Depositary Receipts"). Incorporated by reference to Exhibit 28.4 to the Current Report on Form 8-K of FTX dated July 11, 1986. 14 EXHIBIT INDEX CONTINUED Sequentially Number Description Numbered Page - ------- --------------- ------------ 4.9 Resignation dated December 26, 1991 of Chase as Depositary under the Deposit Agreement and appointment dated December 27, 1991 of Mellon Bank, N.A. ("Mellon") as successor Depositary, effective January 1, 1992. Incorporated by reference to Exhibit 4.5 to the FRP 1991 Form 10-K. 4.10 Service Agreement dated as of January 1, 1992 between FRP and Mellon pursuant to which Mellon will serve as Depositary under the Deposit Agreement and Custodian under the Custodial Agreement. Incorporated by reference to Exhibit 4.6 to the FRP 1991 Form 10-K. 4.11 Amendment to the Deposit Agreement dated as of November 18, 1992 between FRP and Mellon. Incorporated by reference to Exhibit 4.4 to the FRP 1992 Form 10-K. 4.12 Form of Depositary Receipt. Incorporated by reference to Exhibit 4.5 to the FRP 1992 Form 10-K. 4.13 Custodial Agreement regarding the FRP Depositary Unit Reinvestment Plan among FTX, FRP and Chase, effective as of April 1, 1987 (the "Custodial Agreement"). Incorporated by reference to Exhibit 19.1 to the Quarterly Report on Form 10-Q of FRP for the quarter ended June 30, 1987. 4.14 FRP Depositary Unit Reinvestment Plan. Incorporated by reference to Exhibit 4.4 to the FRP 1991 Form 10-K. 4.15 Second Amended and Restated Credit Agreement dated as of November 14, 1996 (the "FTX/FRP Credit Agreement") among FTX, FRP, the various financial institutions that are parties thereto (the "Banks"), The Chase Manhattan Bank (successor by merger to Chemical Bank) and The Chase Manhattan Bank (National Association), as Administrative Agent, FRP Collateral Agent, FTX Collateral Agent and Documentary Agent. Incorporated by reference to Exhibit 4.15 to the FTX 1996 Form 10-K. 4.16 Subordinated Indenture as of October 26, 1990 (the "Subordinated Indenture") between FRP and Manufacturers Hanover Trust Company ("MHTC") as Trustee. Incorporated by reference to Exhibit 4.11 to the Annual Report on Form 10-K of FRP for the fiscal year ended December 31, 1993. 4.17 First Supplemental Indenture dated as of February 15, 1994 between FRP and Chemical Bank, as Successor to MHTC, as Trustee, to the Subordinated Indenture providing for the issuance of $150,000,000 of aggregate principal amount of 8 3/4% Senior Subordinated Notes due 2004. Incorporated by reference to Exhibit 4.12 to the FRP 1993 Form 10-K. 4.18 Form of Senior Indenture (the "Senior Indenture") from FRP to Chemical Bank, as Trustee. Incorporated by reference to Exhibit 4.1 to the Current Report on Form 8-K of FRP dated February 13, 1996. 4.19 Form of Supplemental Indenture dated February 14, 1996 from FRP to Chemical Bank, as Trustee, to the Senior Indenture providing for the issuance of $150,000,000 aggregate principal amount of 7% Senior Notes due 2008. Incorporated by reference to Exhibit 4.1 to the Current Report on Form 8-K dated February 16, 1996 of FRP. 10.1 FTX 1992 Stock Option Plan, as amended. 10.2 1982 Stock Option Plan of FTX, as amended. 10.3 1988 Stock Option Plan for Non-Employee Directors of FTX, as amended. 10.4 FTX 1996 Stock Option Plan, as amended. 11.1 Freeport-McMoRan Inc. Computation of Net Income per Common and Common Equivalent Share 27.1 Freeport-McMoRan Inc. Financial Data Schedule EX-10 2 FREEPORT-McMoRan INC. 1992 STOCK OPTION PLAN SECTION 1 Purpose. The purposes of the Freeport-McMoRan Inc. 1992 Stock Option Plan (the "Plan") are to promote the interests of Freeport-McMoRan Inc. and its stockholders by (i) attracting and retaining executive and other key employees, as hereinafter defined, of Freeport-McMoRan Inc. and its affiliates; (ii) motivating such employees by means of performance-related incentives to achieve longer-range performance goals; and (iii) enabling such employees to participate in the long-term growth and financial success of the Company. SECTION 2 Definitions. As used in the Plan, the following terms shall have the meanings set forth below: "Award" shall mean any Option, Stock Appreciation Right, Limited Right or Other Stock-Based Award. "Award Agreement" shall mean any written agreement, contract or other instrument or document evidencing any Award, which may, but need not, be executed or acknowledged by a Participant. "Board" shall mean the Board of Directors of Freeport-McMoRan Inc. "Code" shall mean the Internal Revenue Code of 1986, as amended from time to time. "Committee" shall mean a committee of the Board designated by the Board to administer the Plan and composed of not fewer than two directors, each of whom, to the extent necessary to comply with Rule 16b-3 only, is a "non-employee director" within the meaning of Rule 16b-3 and, to the extent necessary to comply with Section 162(m) only, is an "outside director" under Section 162(m). Until otherwise determined by the Board, the Committee shall be the Corporate Personnel Committee of the Board. "Company" shall mean Freeport-McMoRan Inc. "Designated Beneficiary" shall mean the beneficiary designated by the Participant, in a manner determined by the Committee, to receive the benefits due the Participant under the Plan in the event of the Participant's death. In the absence of an effective designation by the Participant, Designated Beneficiary shall mean the Participant's estate. "Employee" shall mean (i) any person providing services as an officer of the Company or a Subsidiary, whether or not employed by such entity, (ii) any employee of the Company or a Subsidiary, including any director who is also an employee of the Company or a Subsidiary, and (iii) any person who has agreed in writing to become a person described in clauses (i) or (ii) within not more than 30 days following the date of grant of such person's first Award under the Plan. "Exchange Act" shall mean the Securities Exchange Act of 1934, as amended from time to time. "Incentive Stock Option" shall mean an option granted under Section 6 of the Plan that is intended to meet the requirements of Section 422 of the Code or any successor provision thereto. "Limited Right" shall mean any right granted under Section 8 of the Plan. "Nonqualified Stock Option" shall mean an option granted under Section 6 of the Plan that is not intended to be an Incentive Stock Option. "Offer" shall mean any tender offer, exchange offer or series of purchases or other acquisitions, or any combination of those transactions, as a result of which 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 40% of the Shares outstanding (exclusive of Shares held in the Company's treasury or by the Company's Subsidiaries). "Offer Price" shall mean the highest price per Share paid in any Offer that is in effect at any time during the period beginning on the ninetieth day prior to the date on which a Limited Right is exercised and ending on and including the date of exercise of such Limited Right. Any securities or property that comprise all or a portion of the consideration paid for Shares in the Offer shall be valued in determining the Offer Price at the higher of (i) the valuation placed on such securities or property by the person or persons making such Offer, or (ii) the valuation, if any, placed on such securities or property by the Committee or the Board. "Option" shall mean an Incentive Stock Option or a Nonqualified Stock Option. "Other Stock-Based Award" shall mean any right or award granted under Section 9 of the Plan. "Participant" shall mean any Employee granted an Award under the Plan. "Person" shall mean any individual, corporation, partnership, association, joint-stock company, trust, unincorporated organization, government or political subdivision thereof or other entity. "Rule 16b-3" shall mean Rule 16b-3 promulgated by the SEC under the Exchange Act, or any successor rule or regulation thereto as in effect from time to time. "SAR" shall mean any Stock Appreciation Right. "SEC" shall mean the Securities and Exchange Commission, including the staff thereof, or any successor thereto. "Section 162(m)" shall mean Section 162(m) of the Code and all regulations promulgated thereunder as in effect from time to time. "Shares" shall mean the shares of common stock, par value $.01 per share, of Freeport-McMoRan Inc., and such other securities of the Company or a Subsidiary as the Committee may from time to time designate. "Stock Appreciation Right" shall mean any right granted under Section 7 of the Plan. "Subsidiary" shall mean Freeport-McMoRan Copper & Gold Inc., Freeport-McMoRan Resource Partners, Limited Partnership, and any corporation or other entity in which Freeport-McMoRan Inc. possesses directly or indirectly equity interests representing at least 50% of the total ordinary voting power or at least 50% of the total value of all classes of equity interests of such corporation or other entity. SECTION 3 Administration. The Plan shall be administered by the Committee. Subject to the terms of the Plan and applicable law, and in addition to other express powers and authorizations conferred on the Committee by the Plan, the Committee shall have full power and authority to: (i) designate Participants; (ii) determine the type or types of Awards to be granted to an eligible Employee; (iii) determine the number of Shares to be covered by, or with respect to which payments, rights or other matters are to be calculated in connection with, Awards; (iv) determine the terms and conditions of any Award; (v) determine whether, to what extent, and under what circumstances Awards may be settled or exercised in cash, whole Shares, other whole securities, other Awards, other property or other cash amounts payable by the Company upon the exercise of that or other Awards, or canceled, forfeited or suspended and the method or methods by which Awards may be settled, exercised, canceled, forfeited or suspended; (vi) determine whether, to what extent, and under what circumstances cash, Shares, other securities, other Awards, other property, and other amounts payable by the Company with respect to an Award shall be deferred either automatically or at the election of the holder thereof or of the Committee; (vii) interpret and administer the Plan and any instrument or agreement relating to, or Award made under, the Plan; (viii) establish, amend, suspend or waive such rules and regulations and appoint such agents as it shall deem appropriate for the proper administration of the Plan; and (ix) make any other determination and take any other action that the Committee deems necessary or desirable for the administration of the Plan. Unless otherwise expressly provided in the Plan, all designations, determinations, interpretations and other decisions under or with respect to the Plan or any Award shall be within the sole discretion of the Committee, may be made at any time and shall be final, conclusive and binding upon all Persons, including the Company, any Subsidiary, any Participant, any holder or beneficiary of any Award, any stockholder of the Company and any Employee. SECTION 4 Eligibility. Any Employee who is not a member of the Committee shall be eligible to be granted an Award. SECTION 5 (a) Shares Available for Awards. Subject to adjustment as provided in Section 5(b): (i) Calculation of Number of Shares Available. The number of Shares with respect to which Awards may be granted under the Plan shall be 8,000,000. If, after the effective date of the Plan, an Award granted under the Plan expires or is exercised, forfeited, canceled or terminated without the delivery of Shares, then the Shares covered by such Award or to which such Award relates, or the number of Shares otherwise counted against the aggregate number of Shares with respect to which Awards may be granted, to the extent of any such expiration, exercise, forfeiture, cancellation or termination without the delivery of Shares, shall again be, or shall become, Shares with respect to which Awards may be granted. (ii) Substitute Awards. Any Shares delivered by the Company, any Shares with respect to which Awards are made by the Company, or any Shares with respect to which the Company becomes obligated to make Awards, through the assumption of, or in substitution for, outstanding awards previously granted by an acquired company or a company with which the Company combines, shall not be counted against the Shares available for Awards under the Plan. (iii) Sources of Shares Deliverable Under Awards. Any Shares delivered pursuant to an Award may consist of authorized and unissued Shares or of treasury Shares, including Shares held by the Company or a Subsidiary and acquired in the open market or otherwise obtained by the Company or a Subsidiary. (b) Adjustments. In the event that the Committee 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 Committee to be appropriate to prevent dilution or enlargement of the benefits or potential benefits intended to be made available under the Plan, then the Committee 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 Awards may be granted, (ii) the number and type of Shares (or other securities or property) subject to outstanding Awards, and (iii) the grant or exercise price with respect to any Award or, if deemed appropriate, make provision for a cash payment to the holder of an outstanding Award or, if deemed appropriate, adjust outstanding Awards to provide the rights contemplated by Section 9(b) hereof; provided, in each case, that with respect to Awards of Incentive Stock Options no such adjustment shall be authorized to the extent that such authority would cause the Plan to violate Section 422(b)(1) of the Code or any successor provision thereto; and provided further, that the number of Shares subject to any Award denominated in Shares shall always be a whole number. SECTION 6 (a) Stock Options. Subject to the provisions of the Plan, the Committee shall have sole and complete authority to determine the Employees to whom Options shall be granted, the number of Shares to be covered by each Option, the option price therefor and the conditions and limitations applicable to the exercise of the Option. The Committee shall have the authority to grant Incentive Stock Options, Nonqualified Stock Options or both. In the case of Incentive Stock Options, the terms and conditions of such grants shall be subject to and comply with such rules as may be required by Section 422 of the Code, as from time to time amended, and any implementing regulations. Except in the case of an Option granted in assumption of or substitution for an outstanding award of a company acquired by the Company or with which the Company combines, the exercise price of any Option granted under this Plan shall not be less than 100% of the fair market value of the underlying Shares on the date of grant. (b) Exercise. Each Option shall be exercisable at such times and subject to such terms and conditions as the Committee may, in its sole discretion, specify in the applicable Award Agreement or thereafter, provided, however, that in no event may any Option granted hereunder be exercisable after the expiration of 10 years after the date of such grant. The Committee may impose such conditions with respect to the exercise of Options, including without limitation, any condition relating to the application of Federal or state securities laws, as it may deem necessary or advisable. (c) Payment. No Shares shall be delivered pursuant to any exercise of an Option until payment in full of the option price therefor is received by the Company. Such payment may be made in cash, or its equivalent, or, if and to the extent permitted by the Committee, by applying cash amounts payable by the Company upon the exercise of such Option or other Awards by the holder thereof or by exchanging whole Shares owned by such holder (which are not the subject of any pledge or other security interest), or by a combination of the foregoing, provided that the combined value of all cash, cash equivalents, cash amounts so payable by the Company upon exercises of Awards and the fair market value of any such whole Shares so tendered to the Company, valued (in accordance with procedures established by the Committee) as of the effective date of such exercise, is at least equal to such option price. SECTION 7 (a) Stock Appreciation Rights. Subject to the provisions of the Plan, the Committee shall have sole and complete authority to determine the Employees to whom Stock Appreciation Rights shall be granted, the number of Shares to be covered by each Stock Appreciation Right, the grant price thereof and the conditions and limitations applicable to the exercise thereof. Stock Appreciation Rights may be granted in tandem with another Award, in addition to another Award, or freestanding and unrelated to any other Award. Stock Appreciation Rights granted in tandem with or in addition to an Option or other Award may be granted either at the same time as the Option or other Award or at a later time. Stock Appreciation Rights shall not be exercisable after the expiration of 10 years after the date of grant. Except in the case of a Stock Appreciation Right granted in assumption of or substitution for an outstanding award of a company acquired by the Company or with which the Company combines, the grant price of any Stock Appreciation Right granted under this Plan shall not be less than 100% of the fair market value of the Shares covered by such Stock Appreciation Right on the date of grant or, in the case of a Stock Appreciation Right granted in tandem with a then outstanding Option or other Award, on the date of grant of such related Option or Award. (b) A Stock Appreciation Right shall entitle the holder thereof to receive an amount equal to the excess, if any, of the fair market value of a Share on the date of exercise of the Stock Appreciation Right over the grant price. Any Stock Appreciation Right shall be settled in cash, unless the Committee shall determine at the time of grant of a Stock Appreciation Right that it shall or may be settled in cash, Shares or a combination of cash and Shares. SECTION 8 (a) Limited Rights. Subject to the provisions of the Plan, the Committee shall have sole and complete authority to determine the Employees to whom Limited Rights shall be granted, the number of Shares to be covered by each Limited Right, the grant price thereof and the conditions and limitations applicable to the exercise thereof. Limited Rights may be granted in tandem with another Award, in addition to another Award, or freestanding and unrelated to any Award. Limited Rights granted in tandem with or in addition to an Award may be granted either at the same time as the Award or at a later time. Limited Rights shall not be exercisable after the expiration of 10 years after the date of grant and shall only be exercisable during a period determined at the time of grant by the Committee beginning not earlier than one day and ending not more than ninety days after the expiration date of an Offer. Except in the case of a Limited Right granted in assumption of or substitution for an outstanding award of a company acquired by the Company or with which the Company combines, the grant price of any Limited Right granted under this Plan shall not be less than 100% of the fair market value of the Shares covered by such Limited Right on the date of grant or, in the case of a Limited Right granted in tandem with a then outstanding Option or other Award, on the date of grant of such related Option or Award. (b) A Limited Right shall entitle the holder thereof to receive an amount equal to the excess, if any, of the Offer Price on the date of exercise of the Limited Right over the grant price. Any Limited Right shall be settled in cash, unless the Committee shall determine at the time of grant of a Limited Right that it shall or may be settled in cash, Shares or a combination of cash and Shares. SECTION 9 (a) Other Stock-Based Awards. The Committee is hereby authorized to grant to eligible Employees an "Other Stock-Based Award", which shall consist of an Award, the value of which is based in whole or in part on the value of Shares, that is not an instrument or Award specified in Sections 6 through 8 of this Plan. Other Stock-Based Awards may be awards of Shares or may be denominated or payable in, valued in whole or in part by reference to, or otherwise based on or related to, Shares (including, without limitation, securities convertible or exchangeable into or exercisable for Shares), as deemed by the Committee consistent with the purposes of the Plan. The Committee shall determine the terms and conditions of any such Other Stock-Based Award. Except in the case of an Other Stock-Based Award granted in assumption of or in substitution for an outstanding award of a company acquired by the Company or with which the Company combines, the price at which securities may be purchased pursuant to any Other Stock-Based Award granted under this Plan, or the provision, if any, of any such Award that is analogous to the purchase or exercise price, shall not be less than 100% of the fair market value of the securities to which such Award relates on the date of grant. (b) Dividend Equivalents. In the sole and complete discretion of the Committee, an Award, whether made as an Other Stock-Based Award under this Section 9 or as an Award granted pursuant to Sections 6 through 8 hereof, may provide the holder thereof with dividends or dividend equivalents, payable in cash, Shares, Subsidiary securities, other securities or other property on a current or deferred basis. SECTION 10 (a) Amendments to the Plan. The Board may amend, suspend or terminate the Plan or any portion thereof at any time, provided that no amendment shall be made without stockholder approval if such approval is necessary to comply with any tax or regulatory requirement. Notwithstanding anything to the contrary contained herein, the Committee may amend the Plan in such manner as may be necessary for the Plan to conform with local rules and regulations in any jurisdiction outside the United States. (b) Amendments to Awards. The Committee may amend, modify or terminate any outstanding Award with the holder's consent at any time prior to payment or exercise in any manner not inconsistent with the terms of the Plan, including without limitation, (i) to change the date or dates as of which an Award becomes exercisable, or (ii) to cancel an Award and grant a new Award in substitution therefor under such different terms and conditions as it determines in its sole and complete discretion to be appropriate. (c) Adjustment of Awards Upon the Occurrence of Certain Unusual or Nonrecurring Events. The Committee is hereby authorized to make adjustments in the terms and conditions of, and the criteria included in, Awards in recognition of unusual or nonrecurring events (including, without limitation, the events described in Section 5(b) hereof) affecting the Company, or the financial statements of the Company or any Subsidiary, or of changes in applicable laws, regulations, or accounting principles, whenever the Committee determines that such adjustments are appropriate to prevent dilution or enlargement of the benefits or potential benefits intended to be made available under the Plan. (d) Cancellation. Any provision of this Plan or any Award Agreement to the contrary notwithstanding, the Committee may cause any Award granted hereunder to be canceled in consideration of a cash payment or alternative Award made to the holder of such canceled Award equal in value to such canceled Award. The determinations of value under this subparagraph shall be made by the Committee in its sole discretion. SECTION 11 (a) Delegation. Subject to the terms of the Plan and applicable law, the Committee may delegate to one or more officers of the Company the authority, subject to such terms and limitations as the Committee shall determine, to grant Awards to, or to cancel, modify or waive rights with respect to, or to alter, discontinue, suspend, or terminate Awards held by, Employees who are not officers or directors of the Company for purposes of Section 16 of the Exchange Act, or any successor section thereto, or who are otherwise not subject to such Section. (b) Award Agreements. Each Award hereunder shall be evidenced by a writing delivered to the Participant that shall specify the terms and conditions thereof and any rules applicable thereto, including but not limited to the effect on such Award of the death, retirement or other termination of employment of the Participant and the effect thereon, if any, of a change in control of the Company. (c) Withholding. A Participant may be required to pay to the Company, and the Company shall have the right to deduct from all amounts paid to a Participant (whether under the Plan or otherwise), any taxes required by law to be paid or withheld in respect of Awards hereunder to such Participant. The Committee may provide for additional cash payments to holders of Awards to defray or offset any tax arising from the grant, vesting, exercise or payment of any Award. (d) Transferability. No Awards granted hereunder may be transferred, pledged, assigned or otherwise encumbered by a Participant except: (i) by will; (ii) by the laws of descent and distribution; (iii) pursuant to a domestic relations order, as defined in the Code, if permitted by the Committee and so provided in the Award Agreement or an amendment thereto; or (iv) as to Options only, if permitted by the Committee and so provided in the Award Agreement or an amendment thereto, (a) to Immediate Family Members, (b) 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, (c) 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 (d) 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 (b), (c) or (d) 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 Participant and their spouses. To the extent that an Incentive Stock Option is permitted to be transferred during the lifetime of the Participant, it shall be treated thereafter as a Nonqualified Stock Option. Any attempted assignment, transfer, pledge, hypothecation or other disposition of Awards, or levy of attachment or similar process upon Awards not specifically permitted herein, shall be null and void and without effect. The designation of a Designated Beneficiary shall not be a violation of this Section 11(d). (e) Share Certificates. All certificates for Shares or other securities delivered under the Plan pursuant to any Award or the exercise thereof shall be subject to such stop transfer orders and other restrictions as the Committee may deem advisable under the Plan or the rules, regulations, and other requirements of the SEC, any stock exchange upon which such Shares or other securities are then listed, and any applicable federal or state laws, and the Committee may cause a legend or legends to be put on any such certificates to make appropriate reference to such restrictions. (f) No Limit on Other Compensation Arrangements. Nothing contained in the Plan shall prevent the Company from adopting or continuing in effect other compensation arrangements, which may, but need not, provide for the grant of options, stock appreciation rights and other types of Awards provided for hereunder (subject to stockholder approval of any such arrangement if approval is required), and such arrangements may be either generally applicable or applicable only in specific cases. (g) No Right to Employment. The grant of an Award shall not be construed as giving a Participant the right to be retained in the employ of the Company or any Subsidiary. The Company or any Subsidiary may at any time dismiss a Participant from employment, free from any liability or any claim under the Plan, unless otherwise expressly provided in the Plan or in any Award Agreement. No Employee, Participant or other person shall have any claim to be granted any Award, and there is no obligation for uniformity of treatment of Employees, Participants or holders or beneficiaries of Awards. (h) Governing Law. The validity, construction, and effect of the Plan, any rules and regulations relating to the Plan and any Award Agreement shall be determined in accordance with the laws of the State of Delaware. (i) Severability. If any provision of the Plan or any Award is or becomes or is deemed to be invalid, illegal, or unenforceable in any jurisdiction or as to any Person or Award, or would disqualify the Plan or any Award under any law deemed applicable by the Committee, such provision shall be construed or deemed amended to conform to applicable laws, or if it cannot be construed or deemed amended without, in the determination of the Committee, materially altering the intent of the Plan or the Award, such provision shall be stricken as to such jurisdiction, Person or Award and the remainder of the Plan and any such Award shall remain in full force and effect. (j) No Trust or Fund Created. Neither the Plan nor any Award shall create or be construed to create a trust or separate fund of any kind or a fiduciary relationship between the Company and a Participant or any other Person. To the extent that any Person acquires a right to receive payments from the Company pursuant to an Award, such right shall be no greater than the right of any unsecured general creditor of the Company. (k) No Fractional Shares. No fractional Shares shall be issued or delivered pursuant to the Plan or any Award, and the Committee shall determine whether cash, other securities or other property shall be paid or transferred in lieu of any fractional Shares or whether such fractional Shares or any rights thereto shall be canceled, terminated, or otherwise eliminated. (l) Headings. Headings are given to the subsections of the Plan solely as a convenience to facilitate reference. Such headings shall not be deemed in any way material or relevant to the construction or interpretation of the Plan or any provision thereof. SECTION 12 Effective Date of the Plan. The Plan shall be effective as of the date of its approval by the stockholders of the Company. SECTION 13 Term of the Plan. No Award shall be granted under the Plan after the fifth anniversary of the effective date of the Plan; however, unless otherwise expressly provided in the Plan or in an applicable Award Agreement, any Award theretofore granted may, and the authority of the Committee to amend, alter, adjust, suspend, discontinue, or terminate any such Award or to waive any conditions or rights under any such Award shall, extend beyond such date. EX-10 3 1982 STOCK OPTION PLAN ARTICLE I PURPOSE OF THE PLAN This 1982 Stock Option Plan (this "Plan") is intended to provide a method whereby Employees (as hereinafter defined) of Freeport-McMoRan Inc. (the "Company") and its Subsidiaries (as hereinafter defined) who are largely responsible for their management and growth, and who are making and continue to make substantial contributions to their success, may be encouraged to acquire a proprietary interest in the Company and whereby needed new Employees may be persuaded to accept employment by the Company and its Subsidiaries, and to provide both present and new Employees with greater incentive, encourage their entrance or continuance in the Company's service and promote the interests of the Company and all its stockholders. Accordingly, the Company may from time to time on or before April 18, 1992, in its discretion, grant to such persons as may be selected in the manner hereinafter provided options to purchase shares of Common Stock of the Company ("Common Stock"), and Stock Appreciation Rights or SARs (as hereinafter defined), on the terms and subject to the conditions hereinafter set forth. ARTICLE II ADMINISTRATION OF THE PLAN SECTION 1. Subject to the authority as described herein of the Board of Directors of the Company (the "Board"), this Plan shall be administered by a committee (the "Committee") designated by the Board, which shall be composed of not fewer than two directors, each of whom, to the extent necessary to comply with Rule 16b-3 (as hereinafter defined) only, is a "non-employee director" within the meaning of Rule 16b-3 and, to the extent necessary to comply with Section 162(m) (as hereinafter defined) only, is an "outside director" under Section 162(m). Until otherwise determined by the Board, the Corporate Personnel Committee designated by the Board shall be the Committee under this Plan. The Committee is authorized to interpret this Plan and may from time to time adopt such rules and regulations for carrying out this Plan as it may deem best. All determinations by the Committee shall be made by the affirmative vote of a majority of its members, but any determination reduced to writing and signed by a majority of its members shall be fully as effective as if it had been made by a majority vote at a meeting duly called and held. Subject to any applicable provisions of the Company's By-Laws or of this Plan, all determinations by the Committee or by the Board pursuant to the provisions of this Plan, and all related orders or resolutions of the Committee or the Board, shall be final, conclusive and binding on all persons, including the Company and its stockholders, Employees and optionees. SECTION 2. All authority delegated to the Committee pursuant to this Plan, including that referred to in Section 1 of this Article II, may also be exercised by the Board. 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 actions of the Board shall control. ARTICLE III STOCK SUBJECT TO THE PLAN SECTION 1. The shares to be issued or delivered upon exercise of options or rights granted under this Plan shall be made available, at the discretion of the Board, either from the authorized but unissued shares of Common Stock of the Company or from shares of Common Stock reacquired by the Company, including shares purchased by the Company in the open market or otherwise obtained; provided, however, that the Company, at the discretion of the Committee or the Board, may, upon exercise of options or rights granted under this Plan, cause a Subsidiary to deliver shares of Common Stock held by such Subsidiary. Any Subsidiary Equity Securities (as hereinafter defined) distributed pursuant to Section 7 of Article VI of this Plan shall be made available, at the discretion of the Board or the Committee, either directly from the issuer thereof or from the Company's holdings of such Subsidiary Equity Securities purchased by the Company or a Subsidiary in the open market or otherwise obtained. SECTION 2. Subject to the provisions of Section 3 of this Article III, the aggregate number of shares of Common Stock which may be subject to options or SARs granted at any time under this Plan shall not exceed 7,500,000. If any option or SAR or portion thereof lapses or terminates without the issuance of shares of Common Stock or other consideration in lieu of such shares, the shares of Common Stock subject to such option or SAR shall again be available for grant under the Plan, to the extent of such lapse or termination. SECTION 3. In the event of the payment of any dividends payable in Common Stock or in the event of any subdivision or combination of the Common Stock, the number of shares which may be subject to options and SARs under this Plan shall be increased or decreased proportionately, as the case may be, and the number of shares or other amount deliverable upon the exercise thereafter of any option or SAR theretofore granted (whether or not then exercisable) shall be increased or decreased proportionately, as the case may be, without change in the aggregate purchase or exercise price. In the event of any other recapitalization or reorganization affecting the Common Stock or in the event of any significant distribution in kind (including, without limitation, a distribution of units representing beneficial interests in any royalty trust with respect to oil and gas or other mineral properties and distributions of equity securities representing interests in Subsidiaries or affiliates of the Company), the number of shares which may be subject to options and SARs under this Plan, and, with the consent of the holder thereof, the terms of any option or SAR theretofore granted hereunder (whether or not then exercisable), including without limitation the number of shares or other equity securities or any other amounts deliverable upon the exercise of such option or SAR or of any right attached thereto or provided for therein and the exercise price therefor, shall be subject to such adjustment as the Committee or the Board may deem appropriate. In the event the Company is merged or consolidated into or with another corporation, or substantially all of its assets are sold to another corporation, appropriate provisions shall be made for the protection and continuation of any outstanding options and SARs by the substitution, on an equitable basis, of such stock, other securities, cash or combination thereof as shall be appropriate. In the event of (i) a dividend or distribution (other than cash dividends or distributions) with respect to any Subsidiary Equity Securities distributable or payable in the form of cash pursuant to Section 7 of Article VI hereof, (ii) a subdivision or combination of any such Subsidiary Equity Securities, (iii) any recapitalization, reorganization, merger, consolidation, liquidation, or other extraordinary event affecting any such Subsidiary Equity Securities, or (iv) the disposition by the Company and its Subsidiaries of all or substantially all of their holdings of any such Subsidiary Equity Securities, the terms of any option or SAR theretofore granted hereunder (whether or not then exercisable) shall be subject to such adjustment as the Committee or the Board may deem appropriate, including, without limitation, a proportional adjustment in the number of such Subsidiary Equity Securities deliverable upon the exercise of such option or SAR or of any right attached thereto or provided for therein or the substitution, on an equitable basis, of Common Stock, other Subsidiary Equity Securities, or cash or a combination thereof for such Subsidiary Equity Securities. ARTICLE IV PURCHASE PRICE OF OPTIONED SHARES Unless the Committee or the Board shall fix a greater purchase price, the purchase price per share of Common Stock under each option, and the exercise price of any Stock Appreciation Right, shall be 100% of the Fair Market Value (as hereinafter defined) of a share of Common Stock at the time such option or SAR is granted, but in no case shall such price be less than the par value of the Common Stock. ARTICLE V ELIGIBILITY OF RECIPIENTS Options and SARs will be granted only to persons who are Employees of the Company or a Subsidiary or who have agreed in writing to become Employees of the Company or a Subsidiary within not more than 30 days following the date on which the option or SAR is granted. Neither the members of the Committee nor any member of the Board who is not an Employee of the Company or a Subsidiary shall be eligible to receive an option or SAR under this Plan. ARTICLE VI GRANT OF OPTIONS AND SARS SECTION 1. Each option granted under this Plan shall constitute either an incentive stock option, intended to qualify under Section 422A of the Internal Revenue Code of 1986 (the "Code"), or a nonqualified stock option, not intended to qualify under said Section 422A, as determined in each case by the Committee or the Board. The aggregate Fair Market Value (determined as of the time the option is granted) of the stock for which any person may be granted incentive stock options in any calendar year prior to 1987 (under all plans of the Company and its parent and subsidiary corporations) shall not exceed $100,000 plus any "unused limit carryover to such year" within the meaning of said Section 422A. With respect to any incentive stock option granted under this Plan after December 31, 1986 and in accordance with procedures to be established by the Committee, the aggregate Fair Market Value (determined as of the time the option is granted) of the stock for which any person may be granted incentive stock options that become exercisable for the first time during any calendar year (under all plans of the Company and its Subsidiaries) shall not exceed $100,000. The instruments evidencing incentive stock options granted under this Plan shall contain such provisions with respect to sequential exercise as may be required by said Section 422A, as in effect from time to time. The Board of Directors shall have the authority to amend any incentive stock option theretofore granted under this Plan, with the consent of the optionee, in a manner that has the intent or effect of causing such incentive stock option to become a nonqualified stock option. SECTION 2. The Committee or the Board shall from time to time determine the persons to be granted options and SARs, it being understood that options and SARs may be granted at different times to the same person. In addition, the Committee or the Board shall determine (a) the number of shares subject to each option or SAR, (b) the time or times when the options and SARs will be granted, (c) the purchase price of the shares subject to each option or the exercise price of each SAR, which price shall be not less than the limit specified in Article IV, and (d) the time or times when each option or SAR may be exercised within the limits stated in this Plan. Notwithstanding the foregoing, all options and SARs granted under this Plan shall become exercisable in their entirety at such time as there shall be a Change in Control (as hereinafter defined) of the Company. SECTION 3. All instruments evidencing options and SARs granted under this Plan shall be in such form, which shall be consistent with this Plan and any applicable determinations, orders, resolutions or other actions of the Committee or the Board, as the officers of the Company shall, in their discretion, deem appropriate. SECTION 4. If the Committee or the Board shall in its discretion so determine, any nonqualified option granted after April 20, 1987 which does not contain a Stock Appreciation Right may provide that promptly following the last Income Recognition Date (as hereinafter defined) with respect to an exercise of all or any portion of such option the Company shall pay to the holder of such option an amount in cash equal to the Option Gain (as hereinafter defined) multiplied by the Applicable Rate (as hereinafter defined). SECTION 5. Any option granted under this Plan on or after April 20, 1987 may, if the Committee or the Board shall in its discretion so determine, contain a provision (a "Stock Appreciation Right" or "SAR") that the Company shall, at the election of the holder, purchase all or any part of such option to the extent that such option is exercisable at the date of such election, for an amount (payable in the form of cash, shares of Common Stock or any combination thereof, all as the Committee or the Board shall in its discretion determine) equal to the Stock Appreciation Gain (as hereinafter defined) relating to such option or part thereof so purchased on the date such election shall be made. Such purchase pursuant to the exercise of a Stock Appreciation Right shall not be deemed to be an exercise of such option. The Committee, or the Board, in its discretion may also determine to grant Stock Appreciation Rights not in connection with or in tandem with any option, in which case each such SAR shall represent the right to receive upon exercise, for each share in respect of which the SAR is exercised, an amount in cash equal to the excess of the Fair Market Value of a share of Company Common Stock on the date of exercise over the exercise price of such SAR. SECTION 6. Any option granted under this Plan on or after April 20, 1987 may, if the Committee or the Board shall in its discretion so determine, contain a provision (a "Limited Right") that the Company shall, at the election of the holder (which election may be made only during the period beginning on the first day following the date of expiration of any Offer, as hereinafter defined, and ending on the forty-fifth day following such date), purchase all or any part of such option, for an amount (payable entirely in cash) equal to the sum of (a) the difference between (i) the aggregate Offer Price (as hereinafter defined) of the shares of Common Stock covered by such option or part thereof so purchased on the date such election shall be made and (ii) the aggregate exercise price of such shares so covered plus (b) the Fair Market Value of any Subsidiary Equity Securities including fractions thereof that would have been distributed or paid in the form of cash pursuant to Section 7 of Article VI hereof had there been an exercise, as of the effective date of such Limited Right exercise, of the number of shares of Company Common Stock covered by such Limited Right exercise, as such fair market values are determined in each case on the date of such exercise. Such purchase pursuant to the exercise of a Limited Right shall not be deemed to be an exercise of such option. SECTION 7. Any option granted under this Plan on or after April 20, 1987 may provide that, upon the exercise of such option or part thereof the holder thereof will be entitled to receive from the Company any Subsidiary Equity Securities distributed or distributable in respect of the shares of Common Stock covered by such exercise, to which the holder would have been entitled had such holder been a holder of record of such covered shares at all times from the date of grant of such option to the date immediately preceding the effective date of such exercise. Any such distribution will be in kind, with cash payment for fractional interests of any Subsidiary Equity Security to be valued in proportion to the Fair Market Value of the respective Subsidiary Equity Security on the date of such exercise. Notwithstanding the foregoing, if the holder is on the effective date of any such exercise ineligible to own any Subsidiary Equity Securities that would otherwise be distributable to such holder in accordance with this Section 7, such holder shall not receive such Subsidiary Equity Securities in kind but shall be entitled to receive from the Company in cash the Fair Market Value, as of such date, of any such Subsidiary Equity Securities including fractions thereof. SECTION 8. The authority with respect to the grant of options and SARs and the determination of the provisions thereof contained in Sections 1 and 2 and 4 through 7 of this Article VI may be delegated by the Committee or the Board to one or more officers of the Company, subject to such conditions and limitations as the Committee or the Board may prescribe; provided, however, that no such authority shall be delegated with respect to the grant of options or SARs to any officer or director of the Company or with respect to the determination of any of the provisions thereof. ARTICLE VII TRANSFERABILITY OF OPTIONS AND SARS No options or SARs granted hereunder may be transferred, pledged, assigned or otherwise encumbered by a person granted such options or SARs except: (a) by will; (b) by the laws of descent and distribution; (c) pursuant to a domestic relations order, as defined in the Code, if permitted by the Committee and so provided in the instrument evidencing such options or SARs or an amendment thereto; or (d) as to options only, if permitted by the Committee and so provided in the instrument evidencing such options or an amendment thereto, (i) to Immediate Family Members, (ii) 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, (iii) 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 (iv) 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. To the extent that an incentive stock option is permitted to be transferred during the lifetime of the optionee, it shall be treated thereafter as a nonqualified stock option. Any attempted assignment, transfer, pledge, hypothecation or other disposition of options or SARs, or levy of attachment or similar process upon options or SARs not specifically permitted herein, shall be null and void and without effect. ARTICLE VIII EXERCISE OF OPTIONS AND SARS SECTION 1. Each incentive stock option granted under this Plan shall terminate not later than the expiration of 10 years from the date on which it was granted. Each nonqualified stock option and each SAR granted under this Plan shall terminate not later than the expiration of 10 years and two days from the date on which it was granted. SECTION 2. Except in cases provided for in Article IX hereof, each option and SAR granted under this Plan may be exercised by the holder thereof only while the person to whom such option or SAR was granted is an Employee of the Company or a Subsidiary or provides services to any of the Related Entities. SECTION 3. A person electing to exercise an option then exercisable shall give written notice to the Company of such election and of the number of shares of Common Stock such person has elected to purchase, and shall at the time of purchase tender the full purchase price of such shares, which tender shall be made in cash or cash equivalent (which may be such person's personal check) or, if the Committee or the Board so determines either generally or with respect to a specified option or group of options, in shares of Common Stock 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 of Common Stock pursuant to the exercise of any option, or any Subsidiary Equity Securities distributable in connection therewith, in whole or in part, until such payment in full of the purchase price of such shares of Common Stock 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 of Common Stock subject to such option or any Subsidiary Equity Securities distributable in connection therewith, or entitled to any rights of a stockholder of the Company or a Subsidiary in respect of any shares of Common Stock covered by such option or any Subsidiary Equity Securities distributable in connection therewith until such shares of Common Stock have been paid for in full and such shares of Common Stock and such Subsidiary Equity Securities have been issued or delivered by the Company. A person electing to exercise a Stock Appreciation Right or Limited Right then exercisable shall give written notice to the Company of such election and of the number of shares of Common Stock covered by the option or SAR or part thereof which is to be purchased by the Company or otherwise exercised. SECTION 4. Each option and SAR shall be subject to the requirement that if at any time the Board shall in its discretion determine that the listing, registration or qualification of the shares of Common Stock subject to such option, or the Subsidiary Equity Securities distributable in connection therewith, 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 SAR or the issue or purchase of shares thereunder or the distribution of Subsidiary Equity Securities with respect thereto, such option or SAR 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 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 or rights under this Plan, 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 IX TERMINATION OF EMPLOYMENT SECTION 1. If and when the Termination of Employment of an optionee shall occur for any reason other than death, retirement under the Company's Retirement Plan, or retirement with the consent of the Company outside the Company's Retirement Plan, all of the options and SARs grantee to such optionee shall be terminated except that (a) any option to the extent then exercisable, or (b) any Stock Appreciation Right or Limited Right to the extent then exercisable, may be exercised by the holder thereof within three months after such Termination of Employment, but in either case not later than the termination date of the option or SAR or in the case of a Limited Right not later than the expiration date of such Right. SECTION 2. If and when the Termination of Employment of an optionee shall occur by reason of the optionee's early, normal or deferred retirement under the Company's Retirement Plan or retirement with the consent of the Company outside the Company's Retirement Plan, all of the options granted to such optionee shall be terminated except that (a) any Stock Appreciation Right in tandem with an option or Limited Right to the extent then exercisable or exercisable within one year thereafter may be exercised by the holder thereof within three months after such retirement, but not later than the termination date of the option or in the case of a Limited Right not later than the expiration date of such Right, and (b) any option or any SAR not in tandem with an option to the extent (in either case) then exercisable or exercisable within one year thereafter may, if it so provides, be exercised by the holder thereof within three years after such retirement, but not later than the termination date of the option or SAR, unless after such retirement the Committee or the Board determines, in its discretion, that such option or SAR may be exercised by the holder thereof within a period of greater duration (not greater than five years after such retirement, and in no event later than the termination date of the option or SAR) or unless within 45 days after such retirement the Committee or the Board determines, in its discretion, that such option or SAR may be exercised by the holder thereof only within a period of shorter duration (not less than three months following notice of such determination to the optionee or holder) to be specified by the Committee or the Board, as the case may be. SECTION 3. Any question as to whether and when there has been a retirement under the Company's Retirement Plan or a retirement with the consent of the Company outside the Company's Retirement Plan or whether or when a Termination of Employment has occurred for any other reason shall be determined by the Committee or the Board, and any such reasonable determination shall be final. SECTION 4. Should an optionee die before such optionee's Termination of Employment, 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 by the holder thereof 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. Notwithstanding the foregoing, no Stock Appreciation Right or Limited Right shall be exercisable after the death of the person granted such SAR or Limited Right or the holder thereof, except that an SAR granted not in tandem with an option may be exercised to the extent set forth in the preceding sentence. SECTION 5. Should an optionee die after such optionee's Termination of Employment, 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 by the holder thereof 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. Notwithstanding the foregoing, no Stock Appreciation Right or Limited Right shall be exercisable after the death of the person granted such SAR or Limited Right or the holder thereof, except that an SAR granted not in tandem with an option may be exercised to the extent set forth in the preceding sentence. ARTICLE X AMENDMENTS SECTION 1. The Board may at any time terminate or from time to time amend, modify or suspend this Plan; provided, however, that no such amendment or modification without the approval of the stockholders shall: (a) increase the maximum number (determined as provided in this Plan) of shares of Common Stock which may be subject to options and SARs granted under this Plan; (b) permit the granting of any option or SAR under this Plan at a purchase price less than 100% of the Fair Market Value of the Common Stock at the time such option is granted; (c) permit the exercise of an option or SAR unless the full purchase price of the shares as to which the option is exercised is paid at the time of exercise; or (d) extend beyond April 18, 1992, the period during which options or SARs may be granted. SECTION 2. The Committee and the Board shall have the authority, with the consent of the option holder, to amend or modify any outstanding options or SARs previously granted hereunder in a manner not inconsistent with the provisions relating to options granted after April 20, 1987 contained in this Plan. ARTICLE XI DEFINITIONS For the purposes of this Plan, the following terms shall have the meanings indicated: Applicable Rate: The rate, expressed as a percentage, determined according to the following formula x divided by (1-x) in which x equals the maximum federal income tax rate applicable to individuals in effect on the applicable Income Recognition Date; provided, the Applicable Rate shall never exceed 100%. 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). Employee: Such term shall include any officer of the Company or a Subsidiary whether or not employed by such entity, any employee of the Company or a Subsidiary, and any director who is also an employee of the Company or a Subsidiary. Such term shall also include an employee on approved leave of absence provided such employee's right to continue employment with the Company or a Subsidiary upon expiration of such employee's leave of absence is guaranteed either by statute or by contract with or by a policy of the Company or a Subsidiary. Fair Market Value: The average of the high and low quoted sale prices of a share of Common Stock or a Subsidiary Equity Security 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 Composite Tape for the New York Stock Exchange-Listed Stocks or, if on such date the Common Stock or Subsidiary Equity Security is not quoted on such Composite Tape, on the New York Stock Exchange. Income Recognition Date: With respect to any share of Common Stock purchased upon the exercise of an option or any Subsidiary Equity Security distributed in connection therewith, the later of (a) the date of such exercise, or (b) the date on which the rights of the holder of such option in such security become transferable and not subject to a substantial risk of forfeiture (within the meaning of Section 83 of the Code); provided, however, that if such holder shall make an election pursuant to Section 83(b) of the Code with respect to such security the Income Recognition Date with respect thereto shall be the date of the option exercise. Offer: Any tender offer, exchange offer or series of purchases or other acquisitions, or any combination of those transactions, as a result of which 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 40% of the Common Stock outstanding (exclusive of shares held in the Company's treasury or by the Company's Subsidiaries). Offer Price: The highest price per share of Common Stock paid in any Offer which is in effect at any time beginning on the ninetieth day prior to the date on which a Limited Right is exercised. Any securities or property which are part or all of the consideration paid for shares of Common Stock in the Offer shall be valued in determining the Offer Price at the higher of (a) the valuation placed on such securities or property by the person or persons making such Offer, or (b) the valuation, if any, placed on such securities or property by the Committee or the Board. Option Gain: The sum of (a) the difference between (i) the Fair Market Value of the shares of Common Stock covered by the exercise of an option granted under the Plan and (ii) the purchase price of such shares under such option plus (b) the Fair Market Value of any Subsidiary Equity Securities including fractions thereof distributed or paid in the form of cash pursuant to Section 7 of Article VI hereof, as such fair market values are determined in each case on (x) the Income Recognition Date with respect to each such security or (y) the date of such exercise, whichever is less. Related Entities: The Company; any subsidiary of the Company; Freeport-McMoRan Copper & Gold Inc.; any subsidiary of Freeport-McMoRan Copper & Gold Inc.; McMoRan Oil & Gas Co.; any subsidiary of McMoRan Oil & Gas Co.; any law firm rendering services to any of the foregoing entities provided such law firm consists of at least two or more members or associates who are or were officers of the Company or any subsidiary of the Company; and, for purposes of any stock option or stock appreciation right granted under this Plan, IMC-Agrico Company, if so provided expressly in an amendment to the agreement evidencing such stock option or stock appreciation right. Rule 16b-3: Rule 16b-3 promulgated by the Securities and Exchange Commission under the Securities Exchange Act of 1934, 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. Stock Appreciation Gain: The sum of (a) the difference between (i) the Fair Market Value of the shares of Common Stock covered by the exercise of a Stock Appreciation Right granted under the Plan and (ii) the purchase price of such shares under the option relating to such Stock Appreciation Right plus (b) the Fair Market Value of any Subsidiary Equity Securities including fractions thereof that would have been distributed or paid in the form of cash pursuant to Section 7 of Article VI hereof had there been an option exercise, as of the effective date of such Stock Appreciation Right exercise, of the number of shares of Company Common Stock covered by such Stock Appreciation Right exercise, as such fair market values are determined in each case on the date of such exercise. Stock Appreciation Right or SAR: A right granted under the Plan pursuant to Section 5 of Article VI. 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. Subsidiary Equity Security: Any security or interest in the nature of an equity security or interest, according to generally accepted accounting principles, of a Subsidiary or a former Subsidiary or any security or interest representing such a security or interest; including specifically, but without limiting the generality of the foregoing, shares of common stock of Freeport-McMoRan Gold Company, Freeport-McMoRan Copper & Gold Inc., Freeport-McMoRan Oil & Gas Company, and McMoRan Oil & Gas Co. and depositary units of Freeport-McMoRan Energy Partners, Ltd. and Freeport-McMoRan Resource Partners, Limited Partnership. Termination of Employment: The cessation of the rendering of services, whether or not as an employee, to any and all of the Related Entities. EX-10 4 1988 STOCK OPTION PLAN FOR NON-EMPLOYEE DIRECTORS OF FREEPORT-MCMORAN INC. ARTICLE I PURPOSE OF THE PLAN This 1988 Stock Option Plan for Non-Employee Directors (this "Plan") is intended to provide a method whereby non-employee directors of Freeport-McMoRan Inc. (the "Company"), who are making and will continue to make substantial contributions to the success of the Company and its Subsidiaries (as hereinafter defined), may be compensated for their contributions and encouraged to acquire a proprietary interest in the Company, and whereby prospective new directors may be persuaded to serve the Company as directors, and to promote the interests of the Company and all its stockholders. Accordingly, the Company will, on or before May 1, 1997, grant to such persons as are identified in this Plan, in the manner hereinafter provided, options ("Options") to purchase shares of the Common Stock of the Company ("Common Stock"), on the terms and subject to the conditions hereinafter set forth. ARTICLE II DEFINITIONS For the purposes of this Plan, the following terms shall have the meanings indicated: Applicable Rate: The rate, expressed as a percentage, determined according to the following formula: x divided by (1 - x) in which x equals the maximum federal income tax rate applicable to individuals in effect on the applicable Income Recognition Date; provided, the Applicable Rate shall never exceed 100%. 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). Until otherwise determined by the Board, the Committee shall be the Corporate Personnel Committee of the Board. Election Period: The period beginning on the third business day following a date on which the Company releases for publication its quarterly or annual summary statements of sales and earnings, and ending on the twelfth business day following such date. Eligible Director: A director of the Company who is not, and within the preceding one year has not been, an employee of the Company or a Subsidiary or otherwise eligible for selection to participate in any plan of the Company or any Subsidiary that entitles the participants therein to acquire stock, stock options or stock appreciation rights of the Company or its Subsidiaries. Exchange Act: The Securities Exchange Act of 1934, as amended from time to time. Fair Market Value: The average of the high and low quoted sale prices of a share of Common Stock or a Subsidiary Equity Security 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 Composite Tape for the New York Stock Exchange-Listed Stocks or, if on such date the Common Stock or Subsidiary Equity Security is not quoted on such Composite Tape, on the New York Stock Exchange. Income Recognition Date: With respect to any share of Common Stock purchased upon the exercise of an Option or any Subsidiary Equity Security distributed in connection therewith, the later of (a) the date of such exercise, or (b) the date on which the rights of the holder of such Option in such security become transferable and not subject to a substantial risk of forfeiture (within the meaning of Section 83 of the Code); provided, however, that if such holder shall make an election pursuant to Section 83(b) of the Code with respect to such security the Income Recognition Date with respect thereto shall be the date of the Option exercise. Option Cancellation Gain: With respect to the cancellation of an Option pursuant to Section 3 of Article IV hereof, the sum of (a) 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 of Common Stock covered by such Option, whether or not then exercisable, over the purchase price of such shares under such Option, (b) the Fair Market Value as of the Option Cancellation Date of any Subsidiary Equity Securities that would have been distributed pursuant to Section 5 of Article VII hereof had there been an exercise as of the Option Cancellation Date of all the outstanding shares of Common Stock covered by such Option, whether or not then exercisable, (c) the amount of any cash in lieu of any Subsidiary Equity Securities and any fractional interests therein that would have been distributed pursuant to Section 5 of Article VII hereof had there been an exercise as of the Option Cancellation Date of all the outstanding shares of Common Stock covered by such Option, whether or not then exercisable, plus (d) the amount equal to the Applicable Rate multiplied by the total of the amounts set forth in clauses (a), (b) and (c). Option Gain: The sum of (a) the excess of the Fair Market Value of the shares of Common Stock covered by the exercise of an Option over the purchase price of such shares under such Option, plus (b) the Fair Market Value of any Subsidiary Equity Securities (including fractions thereof) distributed or paid in the form of cash as a result of such exercise pursuant to Section 5 of Article VII hereof; as such Fair Market Values are determined in each case on (i) the Income Recognition Date with respect to each such security or (ii) the date of such exercise, whichever is less. Rule 16b-3: Rule 16b-3 promulgated by the SEC under the Exchange Act, or any successor rule or regulation thereto as in effect from time to time. SEC: The Securities and Exchange Commission, including the staff thereof, or any successor thereto. Section 162(m): Section 162(m) of the Code and all regulations promulgated thereunder as in effect from time to time. 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. Subsidiary Equity Security: Any security or interest in the nature of an equity security or interest, according to generally accepted accounting principles, of a Subsidiary or a former Subsidiary or any security or interest representing such a security or interest; including specifically, but without limiting the generality of the foregoing, shares of common stock of Freeport-McMoRan Gold Company, Freeport-McMoRan Copper Company, Inc., and Freeport-McMoRan Oil & Gas Company and depositary units of Freeport-McMoRan Energy Partners, Ltd. and Freeport-McMoRan Resource Partners, Limited Partnership. ARTICLE III ADMINISTRATION OF THE PLAN The Plan shall be administered by the Board. The Board will interpret this Plan and may from time to time adopt such rules and regulations for carrying out the terms and provisions of this Plan as it may deem best; however, the Board shall have no discretion with respect to the selection of directors who receive Options, the number of shares of Common Stock subject to any Options or the purchase price thereof. Notwithstanding the foregoing, the Committee shall have the authority to make all determinations with respect to the transferability of Options in accordance with Article VIII hereof. All determinations by the Board or the Committee shall be made by the affirmative vote of a majority of its respective members, but any determination reduced to writing and signed by a majority of its respective members shall be fully as effective as if it had been made by a majority vote at a meeting duly called and held. Subject to any applicable provisions of the Company's By-Laws or of this Plan, all determinations by the Board and the Committee pursuant to the provisions of this Plan, and all related orders or resolutions of the Board and the Committee, shall be final, conclusive and binding on all persons, including the Company and its stockholders, employees, directors and optionees. In the event of any conflict or inconsistency between determinations, orders, resolutions, or other actions of the Committee and the Board taken in connection with this Plan, the actions 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 Common Stock of the Company or from shares of Common Stock reacquired by the Company, including shares purchased by the Company in the open market or otherwise obtained; provided, however, that the Company, at the discretion of the Board, may, upon exercise of Options granted under this Plan, cause a Subsidiary to deliver shares of Common Stock held by such Subsidiary. Any Subsidiary Equity Securities distributed pursuant to Section 5 of Article VII of this Plan shall be made available from the Company's holdings of such Subsidiary Equity Securities purchased by the Company or a Subsidiary 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 of Common Stock which may be purchased pursuant to Options shall not exceed 250,000. SECTION 3. In the event of the payment of any dividends payable in Common Stock, or in the event of any subdivision or combination of the Common Stock, the number of shares which may be purchased under this Plan shall be increased or decreased proportionately, as the case may be, and the number of shares of Common Stock deliverable upon the exercise thereafter of any Option theretofore granted (whether or not then exercisable) shall be increased or decreased proportionately, as the case may be, without change in the aggregate purchase price. In the event the Company is merged or consolidated into or with another corporation in a transaction in which the Company is not the survivor, or in the event that substantially all of the Company's assets are sold to another entity not affiliated with the Company, any holder of an Option, whether or not then exercisable, shall be entitled to receive (unless the Company shall take such alternative action as may be necessary to preserve the economic benefit of the Option for the optionee) on the effective date of any such transaction (the "Option Cancellation Date"), in cancellation of such Option, an amount in cash equal to the Option Cancellation Gain relating thereto, determined as of the Option Cancellation Date. In the event of (i) a dividend or distribution (other than cash dividends or distributions) with respect to any Subsidiary Equity Securities distributable or payable in the form of cash pursuant to Section 5 of Article VII hereof, (ii) a subdivision or combination of any such Subsidiary Equity Securities, (iii) any recapitalization, reorganization, merger, consolidation, liquidation, or other extraordinary event affecting any such Subsidiary Equity Securities, or (iv) the disposition by the Company and its Subsidiaries of all or substantially all of their holdings of any such Subsidiary Equity Securities, the terms of any Option theretofore granted hereunder (whether or not then exercisable) shall be subject to such adjustment as the Board may deem appropriate, including, without limitation, a proportional adjustment in the number of such Subsidiary Equity Securities deliverable upon the exercise of such Option or of any right attached thereto or provided for therein or the substitution, on an equitable basis, of Common Stock, other Subsidiary Equity Securities, or a combination thereof for such Subsidiary Equity Securities. ARTICLE V PURCHASE PRICE OF OPTIONED SHARES The purchase price per share of Common Stock under each Option shall be 100% of the Fair Market Value of a share of Common Stock at the time such Option is granted, but in no case shall such price be less than the par value of the Common Stock. ARTICLE VI ELIGIBILITY OF RECIPIENTS Options will be granted only to individuals who are Eligible Directors at the time of such grant. No individual who is an employee of the Company or a Subsidiary at the time of such grant shall be eligible to receive an Option. ARTICLE VII GRANT OF OPTIONS SECTION 1. Each Option shall constitute a non-qualified stock option which is not intended to qualify under Section 422A of the Code. SECTION 2. On May 1, 1988 and May 1 of each subsequent year through and including 1997, each Eligible Director, as of each such date, shall be granted an Option to purchase 1,664 shares of Common Stock. Each Option shall become exercisable with respect to416 shares on each of the first, second, third and fourth anniversaries of the date of grant and may be exercised by the holder thereof with respect to all or any part of the shares comprising each installment as such holder may elect at any time after such installment becomes exercisable but no later than the termination date of such Option; provided that each Option shall become exercisable in full upon a Change in Control. SECTION 3. The purchase price of shares subject to any Option shall be the Fair Market Value thereof on the respective date of grant. SECTION 4. Each Option shall provide that, promptly following the last Income Recognition Date with respect to an exercise of all or any portion of such Option, the Company shall pay to the holder of such Option an amount in cash equal to the Option Gain multiplied by the Applicable Rate. If an Option has been transferred pursuant to clause (c) of Article VIII hereof, the right to any payment under this Article VII, Section 4 remains with the original holder of the Option, except that in the case of a transfer pursuant to a domestic relations order, such payment shall be made to the spouse responsible for the federal income tax related to the Option exercise. SECTION 5. Each Option shall provide that, upon the exercise of such Option or portion thereof, the holder of such Option will be entitled to receive from the Company any Subsidiary Equity Securities distributed or distributable in respect of the shares of Common Stock covered by such exercise, to which the holder would have been entitled had such holder been a holder of record of such covered shares at all times from the date of grant of such Option to the date immediately preceding the effective date of such exercise. Any such distribution will be in kind, with cash payment for fractional interests of any Subsidiary Equity Security to be valued in proportion to the Fair Market Value of the respective Subsidiary Equity Security on the date of such exercise. Notwithstanding the foregoing, if the holder of an Option is, on the date of any such exercise, ineligible to own any Subsidiary Equity Securities that would otherwise be distributable to such holder in accordance with this section, such holder will be entitled to receive from the Company in cash the Fair Market Value, as of such date, of any such Subsidiary Equity Securities (including fractions thereof). 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 and two days from the date on which it was granted. SECTION 2. Except in cases provided for in Article X hereof, each Option may be exercised by the holder thereof only while the optionee to whom such Option was granted is an Eligible Director. SECTION 3. Each Option shall provide that the Option or any portion thereof may be exercised only during an Election Period. Each Option shall provide, however, that in the event of a Change in Control, the Election Period exercise requirement is waived. SECTION 4. A person electing to exercise an Option or any portion thereof then exercisable shall give written notice to the Company of such election and of the number of shares of Common Stock such person has elected to purchase, and shall at the time of purchase tender the full purchase price of such shares, which tender shall be made in cash or cash equivalent (which may be such person's personal check) or in shares of Common Stock 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 of Common Stock pursuant to the exercise of any Option, or any Subsidiary Equity Securities distributable in connection therewith, in whole or in part, until such payment in full of the purchase price of such shares of Common Stock 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 of Common Stock subject to such Option or any Subsidiary Equity Securities distributable in connection with the exercise thereof, or entitled to any rights of a stockholder of the Company or a Subsidiary in respect of any shares of Common Stock covered by such Option or any Subsidiary Equity Securities distributable in connection therewith until such shares of Common Stock have been paid for in full and certificates for such shares of Common Stock and such Subsidiary Equity Securities have been issued or delivered by the Company. SECTION 5. Each Option shall be subject to the requirement that if at any time the Board shall be advised by counsel that the listing, registration or qualification of the shares of Common Stock subject to such Option, or the Subsidiary Equity Securities distributable in connection with the exercise thereof, 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 or the distribution of Subsidiary Equity Securities with respect thereto, such Option may not be exercised in whole or in part unless such listing, registration, qualification, consent or approval shall have been effected or obtained free from any conditions not reasonably acceptable to such counsel for the Board. SECTION 6. The Company may establish appropriate procedures to provide for payment or withholding of such income or other taxes as may be required by law to be paid or withheld in connection with the exercise of Options, and to ensure that the Company receives prompt advice concerning the occurrence of any event which may create, or affect the timing or amount of, any obligation to pay or withhold any such taxes or which may make available to the Company any tax deduction resulting from the occurrence of such event. ARTICLE X TERMINATION OF SERVICE AS AN ELIGIBLE DIRECTOR SECTION 1. If and when an optionee shall cease to be an Eligible Director for any reason other than death or retirement from the Board, all of the Options granted to such optionee shall be terminated except that any Option, to the extent then exercisable, may be exercised by the holder thereof within three months after such optionee ceases to be an Eligible Director, but not later than the termination date of the Option. SECTION 2. If and when an optionee shall cease to be an Eligible Director by reason of the optionee's retirement from the Board, all of the Options granted to such optionee shall be terminated except that any Option, to the extent then exercisable or exercisable within one year thereafter, may be exercised by the holder thereof within three years after such retirement, but not later than the termination date of the Option. SECTION 3. Should an optionee die while serving as an Eligible Director, all the Options granted to such optionee shall be terminated, except that any Option to the extent exercisable by the holder thereof at the time of such death, together with the unmatured installment (if any) of such Option which at that time is next scheduled to become exercisable, may be exercised within one year after the date of such death, but not later than the termination date of the Option, by the holder thereof, the optionee's estate, or the person designated in the optionee's last will and testament, as appropriate. SECTION 4. Should an optionee die after ceasing to be an Eligible Director, all of the Options granted to such optionee shall be terminated, except that any Option, to the extent exercisable by the holder thereof at the time of such death, may be exercised within one year after the date of such death, but not later than the termination date of the Option, by the holder thereof, the optionee's estate, or the person designated in the optionee's last will and testament, as appropriate. ARTICLE XI AMENDMENTS TO PLAN AND OPTIONS The Board may at any time terminate or from time to time amend, modify or suspend this Plan; provided, however, that no such amendment or modification without the approval of the stockholders shall: (a) except pursuant to Section 3 of Article IV, increase the maximum number (determined as provided in this Plan) of shares of Common Stock which may be purchased pursuant to Options, either individually or in aggregate; (b) permit the granting of any Option at a purchase price other than 100% of the Fair Market Value of the Common Stock at the time such option is granted, subject to adjustment pursuant to Section 3 of Article IV; (c) permit the exercise of an Option unless the full purchase price of the shares as to which the Option is exercised is paid at the time of exercise; (d) extend beyond May 1, 1997, the period during which Options may be granted; (e) modify in any respect the class of individuals who constitute Eligible Directors; or (f) materially increase the benefits accruing to participants hereunder. EX-10 5 FREEPORT-McMoRan INC. 1996 STOCK OPTION PLAN SECTION 1 Purpose. The purpose of the Freeport-McMoRan Inc. 1996 Stock Option Plan (the "Plan") is to motivate and reward key personnel by giving them a proprietary interest in the Company's continued success. SECTION 2 Definitions. As used in the Plan, the following terms shall have the meanings set forth below: "Award" shall mean any Option, Stock Appreciation Right, Limited Right or Other Stock-Based Award. "Award Agreement" shall mean any written agreement, contract or other instrument or document evidencing any Award, which may, but need not, be executed or acknowledged by a Participant. "Board" shall mean the Board of Directors of the Company. "Code" shall mean the Internal Revenue Code of 1986, as amended from time to time. "Committee" shall mean a committee of the Board designated by the Board to administer the Plan and composed of not fewer than two directors, each of whom, to the extent necessary to comply with Rule 16b-3 only, is a "non-employee director" within the meaning of Rule 16b-3 and, to the extent necessary to comply with Section 162(m) only, is an "outside director" under Section 162(m). Until otherwise determined by the Board, the Committee shall be the Corporate Personnel Committee of the Board. "Company" shall mean Freeport-McMoRan Inc. "Designated Beneficiary" shall mean the beneficiary designated by the Participant, in a manner determined by the Committee, to receive the benefits due the Participant under the Plan in the event of the Participant's death. In the absence of an effective designation by the Participant, Designated Beneficiary shall mean the Participant's estate. "Employee" shall mean (i) any person providing services as an officer of the Company or a Subsidiary, whether or not employed by such entity, including any such person who is also a director of the Company, (ii) any employee of the Company or a Subsidiary, including any director who is also an employee of the Company or a Subsidiary, (iii) any officer or employee of an entity with which the Company has contracted to receive executive, management or legal services who provides services to the Company or a Subsidiary through such arrangement and (iv) any person who has agreed in writing to become a person described in clauses (i), (ii) or (iii) within not more than 30 days following the date of grant of such person's first Award under the Plan. "Exchange Act" shall mean the Securities Exchange Act of 1934, as amended from time to time. "Incentive Stock Option" shall mean an option granted under Section 6 of the Plan that is intended to meet the requirements of Section 422 of the Code or any successor provision thereto. "Limited Right" shall mean any right granted under Section 8 of the Plan. "Nonqualified Stock Option" shall mean an option granted under Section 6 of the Plan that is not intended to be an Incentive Stock Option. "Offer" shall mean any tender offer, exchange offer or series of purchases or other acquisitions, or any combination of those transactions, as a result of which any person, or any two or more persons acting as a group, and all affiliates of such person or persons, shall beneficially own more than 40% of all classes and series of the Company's stock outstanding, taken as a whole, that has voting rights with respect to the election of directors of the Company (not including any series of preferred stock of the Company that has the right to elect directors only upon the failure of the Company to pay dividends). "Offer Price" shall mean the highest price per Share paid in any Offer that is in effect at any time during the period beginning on the ninetieth day prior to the date on which a Limited Right is exercised and ending on and including the date of exercise of such Limited Right. Any securities or property that comprise all or a portion of the consideration paid for Shares in the Offer shall be valued in determining the Offer Price at the higher of (i) the valuation placed on such securities or property by the person or persons making such Offer, or (ii) the valuation, if any, placed on such securities or property by the Committee or the Board. "Option" shall mean an Incentive Stock Option or a Nonqualified Stock Option. "Other Stock-Based Award" shall mean any right or award granted under Section 9 of the Plan. "Participant" shall mean any Employee granted an Award under the Plan. "Person" shall mean any individual, corporation, partnership, association, joint-stock company, trust, unincorporated organization, government or political subdivision thereof or other entity. "Rule 16b-3" shall mean Rule 16b-3 promulgated by the SEC under the Exchange Act, or any successor rule or regulation thereto as in effect from time to time. "SAR" shall mean any Stock Appreciation Right. "SEC" shall mean the Securities and Exchange Commission, including the staff thereof, or any successor thereto. "Section 162(m)" shall mean Section 162(m) of the Code and all regulations promulgated thereunder as in effect from time to time. "Shares" shall mean the shares of Common Stock, par value $0.01 per share, of the Company and such other securities of the Company or a Subsidiary as the Committee may from time to time designate. "Stock Appreciation Right" shall mean any right granted under Section 7 of the Plan. "Subsidiary" shall mean (i) any corporation or other entity in which the Company possesses directly or indirectly equity interests representing at least 50% of the total ordinary voting power or at least 50% of the total value of all classes of equity interests of such corporation or other entity and (ii) any other entity in which the Company has a direct or indirect economic interest that is designated as a Subsidiary by the Committee. SECTION 3 Administration. The Plan shall be administered by the Committee. Subject to the terms of the Plan and applicable law, and in addition to other express powers and authorizations conferred on the Committee by the Plan, the Committee shall have full power and authority to: (i) designate Participants; (ii) determine the type or types of Awards to be granted to an eligible Employee; (iii) determine the number of Shares to be covered by, or with respect to which payments, rights or other matters are to be calculated in connection with, Awards; (iv) determine the terms and conditions of any Award; (v) determine whether, to what extent, and under what circumstances Awards may be settled or exercised in cash, whole Shares, other whole securities, other Awards, other property or other cash amounts payable by the Company upon the exercise of that or other Awards, or canceled, forfeited or suspended and the method or methods by which Awards may be settled, exercised, canceled, forfeited or suspended; (vi) determine whether, to what extent, and under what circumstances cash, Shares, other securities, other Awards, other property, and other amounts payable by the Company with respect to an Award shall be deferred either automatically or at the election of the holder thereof or of the Committee; (vii) interpret and administer the Plan and any instrument or agreement relating to, or Award made under, the Plan; (viii) establish, amend, suspend or waive such rules and regulations and appoint such agents as it shall deem appropriate for the proper administration of the Plan; and (ix) make any other determination and take any other action that the Committee deems necessary or desirable for the administration of the Plan. Unless otherwise expressly provided in the Plan, all designations, determinations, interpretations and other decisions under or with respect to the Plan or any Award shall be within the sole discretion of the Committee, may be made at any time and shall be final, conclusive and binding upon all Persons, including the Company, any Subsidiary, any Participant, any holder or beneficiary of any Award, any stockholder of the Company and any Employee. SECTION 4 Eligibility. Any Employee shall be eligible to be granted an Award. SECTION 5 (a) Shares Available for Awards. Subject to adjustment as provided in Section 5(b): (i) Calculation of Number of Shares Available. The number of Shares with respect to which Awards payable in Shares may be granted under the Plan shall be 1,300,000. Awards that by their terms may be settled only in cash shall not be counted against such total. Grants of Stock Appreciation Rights, Limited Rights and Other Stock-Based Awards not granted in tandem with Options and payable only in cash may relate to no more than 1,300,000 Shares. If, after the effective date of the Plan, an Award granted under the Plan expires or is exercised, forfeited, canceled or terminated without the delivery of Shares, then the Shares covered by such Award or to which such Award relates, or the number of Shares otherwise counted against the aggregate number of Shares with respect to which Awards may be granted, to the extent of any such expiration, exercise, forfeiture, cancellation or termination without the delivery of Shares, shall again be, or shall become, Shares with respect to which Awards may be granted. To the extent that Shares are delivered to pay the exercise price of an Option or are delivered or withheld by the Company in payment of the withholding taxes relating to an Award, the number of Shares so delivered or withheld shall become Shares with respect to which Awards may be granted. (ii) Substitute Awards. Any Shares delivered by the Company, any Shares with respect to which Awards are made by the Company, or any Shares with respect to which the Company becomes obligated to make Awards, through the assumption of, or in substitution for, outstanding awards previously granted by an acquired company or a company with which the Company combines, shall not be counted against the Shares available for Awards under the Plan. (iii) Sources of Shares Deliverable Under Awards. Any Shares delivered pursuant to an Award may consist of authorized and unissued Shares or of treasury Shares, including Shares held by the Company or a Subsidiary and Shares acquired in the open market or otherwise obtained by the Company or a Subsidiary. (iv) Individual Limit. Any provision of the Plan to the contrary notwithstanding, no individual may receive in any year Awards under the Plan, whether payable in cash or Shares, that relate to more than 750,000 Shares. (b) Adjustments. In the event that the Committee 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 Committee to be appropriate to prevent dilution or enlargement of the benefits or potential benefits intended to be made available under the Plan, then the Committee 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 Awards may be granted, (ii) the number and type of Shares (or other securities or property) subject to outstanding Awards, and (iii) the grant or exercise price with respect to any Award and, if deemed appropriate, make provision for a cash payment to the holder of an outstanding Award and, if deemed appropriate, adjust outstanding Awards to provide the rights contemplated by Section 9(b) hereof; provided, in each case, that with respect to Awards of Incentive Stock Options no such adjustment shall be authorized to the extent that such authority would cause the Plan to violate Section 422(b)(1) of the Code or any successor provision thereto and, with respect to all Awards under the Plan, no such adjustment shall be authorized to the extent that such authority would be inconsistent with the requirements for full deductibility under Section 162(m); and provided further, that the number of Shares subject to any Award denominated in Shares shall always be a whole number. SECTION 6 (a) Stock Options. Subject to the provisions of the Plan, the Committee shall have sole and complete authority to determine the Employees to whom Options shall be granted, the number of Shares to be covered by each Option, the option price therefor and the conditions and limitations applicable to the exercise of the Option. The Committee shall have the authority to grant Incentive Stock Options, Nonqualified Stock Options or both. In the case of Incentive Stock Options, the terms and conditions of such grants shall be subject to and comply with such rules as may be required by Section 422 of the Code, as from time to time amended, and any implementing regulations. Except in the case of an Option granted in assumption of or substitution for an outstanding award of a company acquired by the Company or with which the Company combines, the exercise price of any Option granted under this Plan shall not be less than 100% of the fair market value of the underlying Shares on the date of grant. (b) Exercise. Each Option shall be exercisable at such times and subject to such terms and conditions as the Committee may, in its sole discretion, specify in the applicable Award Agreement or thereafter, provided, however, that in no event may any Option granted hereunder be exercisable after the expiration of 10 years after the date of such grant. The Committee may impose such conditions with respect to the exercise of Options, including without limitation, any condition relating to the application of Federal or state securities laws, as it may deem necessary or advisable. (c) Payment. No Shares shall be delivered pursuant to any exercise of an Option until payment in full of the option price therefor is received by the Company. Such payment may be made in cash, or its equivalent, or, if and to the extent permitted by the Committee, by applying cash amounts payable by the Company upon the exercise of such Option or other Awards by the holder thereof or by exchanging whole Shares owned by such holder (which are not the subject of any pledge or other security interest), or by a combination of the foregoing, provided that the combined value of all cash, cash equivalents, cash amounts so payable by the Company upon exercises of Awards and the fair market value of any such whole Shares so tendered to the Company, valued (in accordance with procedures established by the Committee) as of the effective date of such exercise, is at least equal to such option price. SECTION 7 (a) Stock Appreciation Rights. Subject to the provisions of the Plan, the Committee shall have sole and complete authority to determine the Employees to whom Stock Appreciation Rights shall be granted, the number of Shares to be covered by each Award of Stock Appreciation Rights, the grant price thereof and the conditions and limitations applicable to the exercise thereof. Stock Appreciation Rights may be granted in tandem with another Award, in addition to another Award, or freestanding and unrelated to any other Award. Stock Appreciation Rights granted in tandem with or in addition to an Option or other Award may be granted either at the same time as the Option or other Award or at a later time. Stock Appreciation Rights shall not be exercisable after the expiration of 10 years after the date of grant. Except in the case of a Stock Appreciation Right granted in assumption of or substitution for an outstanding award of a company acquired by the Company or with which the Company combines, the grant price of any Stock Appreciation Right granted under this Plan shall not be less than 100% of the fair market value of the Shares covered by such Stock Appreciation Right on the date of grant or, in the case of a Stock Appreciation Right granted in tandem with a then outstanding Option or other Award, on the date of grant of such related Option or Award. (b) A Stock Appreciation Right shall entitle the holder thereof to receive upon exercise, for each Share to which the SAR relates, an amount equal to the excess, if any, of the fair market value of a Share on the date of exercise of the Stock Appreciation Right over the grant price. Any Stock Appreciation Right shall be settled in cash, unless the Committee shall determine at the time of grant of a Stock Appreciation Right that it shall or may be settled in cash, Shares or a combination of cash and Shares. SECTION 8 (a) Limited Rights. Subject to the provisions of the Plan, the Committee shall have sole and complete authority to determine the Employees to whom Limited Rights shall be granted, the number of Shares to be covered by each Award of Limited Rights, the grant price thereof and the conditions and limitations applicable to the exercise thereof. Limited Rights may be granted in tandem with another Award, in addition to another Award, or freestanding and unrelated to any Award. Limited Rights granted in tandem with or in addition to an Award may be granted either at the same time as the Award or at a later time. Limited Rights shall not be exercisable after the expiration of 10 years after the date of grant and shall only be exercisable during a period determined at the time of grant by the Committee beginning not earlier than one day and ending not more than ninety days after the expiration date of an Offer. Except in the case of a Limited Right granted in assumption of or substitution for an outstanding award of a company acquired by the Company or with which the Company combines, the grant price of any Limited Right granted under this Plan shall not be less than 100% of the fair market value of the Shares covered by such Limited Right on the date of grant or, in the case of a Limited Right granted in tandem with a then outstanding Option or other Award, on the date of grant of such related Option or Award. (b) A Limited Right shall entitle the holder thereof to receive upon exercise, for each Share to which the Limited Right relates, an amount equal to the excess, if any, of the Offer Price on the date of exercise of the Limited Right over the grant price. Any Limited Right shall be settled in cash, unless the Committee shall determine at the time of grant of a Limited Right that it shall or may be settled in cash, Shares or a combination of cash and Shares. SECTION 9 (a) Other Stock-Based Awards. The Committee is hereby authorized to grant to eligible Employees an "Other Stock-Based Award", which shall consist of an Award, the value of which is based in whole or in part on the value of Shares, that is not an instrument or Award specified in Sections 6 through 8 of this Plan. Other Stock-Based Awards may be awards of Shares or may be denominated or payable in, valued in whole or in part by reference to, or otherwise based on or related to, Shares (including, without limitation, securities convertible or exchangeable into or exercisable for Shares), as deemed by the Committee consistent with the purposes of the Plan. The Committee shall determine the terms and conditions of any such Other Stock-Based Award and may provide that such awards would be payable in whole or in part in cash. Except in the case of an Other Stock-Based Award granted in assumption of or in substitution for an outstanding award of a company acquired by the Company or with which the Company combines, the price at which securities may be purchased pursuant to any Other Stock-Based Award granted under this Plan, or the provision, if any, of any such Award that is analogous to the purchase or exercise price, shall not be less than 100% of the fair market value of the securities to which such Award relates on the date of grant. (b) Dividend Equivalents. In the sole and complete discretion of the Committee, an Award, whether made as an Other Stock-Based Award under this Section 9 or as an Award granted pursuant to Sections 6 through 8 hereof, may provide the holder thereof with dividends or dividend equivalents, payable in cash, Shares, Subsidiary securities, other securities or other property on a current or deferred basis. SECTION 10 (a) Amendments to the Plan. The Board may amend, suspend or terminate the Plan or any portion thereof at any time, provided that no amendment shall be made without stockholder approval if such approval is necessary to comply with any tax or regulatory requirement, including for these purposes any approval necessary to qualify Awards as "performance based" compensation under Section 162(m) or any successor provision if such qualification is deemed necessary or advisable by the Committee. Notwithstanding anything to the contrary contained herein, the Committee may amend the Plan in such manner as may be necessary for the Plan to conform with local rules and regulations in any jurisdiction outside the United States. (b) Amendments to Awards. The Committee may amend, modify or terminate any outstanding Award at any time prior to payment or exercise in any manner not inconsistent with the terms of the Plan, including without limitation, (i) to change the date or dates as of which an Award becomes exercisable, or (ii) to cancel an Award and grant a new Award in substitution therefor under such different terms and conditions as it determines in its sole and complete discretion to be appropriate Notwithstanding the foregoing, no amendment, modification or termination may impair the rights of a holder of an Award under such Award without the consent of the holder. (c) Adjustment of Awards Upon the Occurrence of Certain Unusual or Nonrecurring Events. The Committee is hereby authorized to make adjustments in the terms and conditions of, and the criteria included in, Awards in recognition of unusual or nonrecurring events (including, without limitation, the events described in Section 5(b) hereof) affecting the Company, or the financial statements of the Company or any Subsidiary, or of changes in applicable laws, regulations, or accounting principles, whenever the Committee determines that such adjustments are appropriate to prevent dilution or enlargement of the benefits or potential benefits intended to be made available under the Plan. (d) Cancellation. Any provision of this Plan or any Award Agreement to the contrary notwithstanding, the Committee may cause any Award granted hereunder to be canceled in consideration of a cash payment or alternative Award made to the holder of such canceled Award equal in value to such canceled Award. The determinations of value under this subparagraph shall be made by the Committee in its sole discretion. SECTION 11 (a) Delegation. Subject to the terms of the Plan and applicable law, the Committee may delegate to one or more officers of the Company the authority, subject to such terms and limitations as the Committee shall determine, to grant Awards to, or to cancel, modify or waive rights with respect to, or to alter, discontinue, suspend, or terminate Awards held by, Employees who are not officers or directors of the Company for purposes of Section 16 of the Exchange Act, or any successor section thereto, or who are otherwise not subject to such Section. (b) Award Agreements. Each Award hereunder shall be evidenced by a writing delivered to the Participant that shall specify the terms and conditions thereof and any rules applicable thereto, including but not limited to the effect on such Award of the death, retirement or other termination of employment of the Participant and the effect thereon, if any, of a change in control of the Company. (c) Withholding. (i) A Participant may be required to pay to the Company, and the Company shall have the right to deduct from all amounts paid to a Participant (whether under the Plan or otherwise), any taxes required by law to be paid or withheld in respect of Awards hereunder to such Participant. The Committee may provide for additional cash payments to holders of Awards to defray or offset any tax arising from the grant, vesting, exercise or payment of any Award. (ii) At any time that a Participant is required to pay to the Company an amount required to be withheld under the applicable tax laws in connection with the issuance of shares of Common Stock under the Plan, the participant may, if permitted by the Committee, satisfy this obligation in whole or in part by electing (the "Election") to have the Company withhold from the issuance shares of Common Stock having a value equal to the amount required to be withheld. The value of the shares withheld shall be based on the fair market value of the Common Stock on the date that the amount of tax to be withheld shall be determined in accordance with applicable tax laws (the "Tax Date"). (iii) Each Election must be made prior to the Tax Date. The Committee may suspend or terminate the right to make Elections at any time. (iv) A Participant may also satisfy his or her total tax liability related to the Award by delivering Shares owned by the Participant. The value of the Shares delivered shall be based on the fair market value of the Shares on the Tax Date. (d) Transferability. No Awards granted hereunder may be transferred, pledged, assigned or otherwise encumbered by a Participant except: (i) by will; (ii) by the laws of descent and distribution; (iii) pursuant to a domestic relations order, as defined in the Code, if permitted by the Committee and so provided in the Award Agreement or an amendment thereto; or (iv) as to Options only, if permitted by the Committee and so provided in the Award Agreement or an amendment thereto, (a) to Immediate Family Members, (b) 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, (c) 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 (d) 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 (b), (c) or (d) 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 Participant and their spouses. To the extent that an Incentive Stock Option is permitted to be transferred during the lifetime of the Participant, it shall be treated thereafter as a Nonqualified Stock Option. Any attempted assignment, transfer, pledge, hypothecation or other disposition of Awards, or levy of attachment or similar process upon Awards not specifically permitted herein, shall be null and void and without effect. The designation of a Designated Beneficiary shall not be a violation of this Section 11(d). (e) Share Certificates. All certificates for Shares or other securities delivered under the Plan pursuant to any Award or the exercise thereof shall be subject to such stop transfer orders and other restrictions as the Committee may deem advisable under the Plan or the rules, regulations, and other requirements of the SEC, any stock exchange upon which such Shares or other securities are then listed, and any applicable federal or state laws, and the Committee may cause a legend or legends to be put on any such certificates to make appropriate reference to such restrictions. (f) No Limit on Other Compensation Arrangements. Nothing contained in the Plan shall prevent the Company from adopting or continuing in effect other compensation arrangements, which may, but need not, provide for the grant of options, stock appreciation rights and other types of Awards provided for hereunder (subject to stockholder approval of any such arrangement if approval is required), and such arrangements may be either generally applicable or applicable only in specific cases. (g) No Right to Employment. The grant of an Award shall not be construed as giving a Participant the right to be retained in the employ of the Company or any Subsidiary or in the employ of any other entity providing services to the Company. The Company or any Subsidiary or any such entity may at any time dismiss a Participant from employment, or terminate any arrangement pursuant to which the Participant provides services to the Company, free from any liability or any claim under the Plan, unless otherwise expressly provided in the Plan or in any Award Agreement. No Employee, Participant or other person shall have any claim to be granted any Award, and there is no obligation for uniformity of treatment of Employees, Participants or holders or beneficiaries of Awards. (h) Governing Law. The validity, construction, and effect of the Plan, any rules and regulations relating to the Plan and any Award Agreement shall be determined in accordance with the laws of the State of Delaware. (i) Severability. If any provision of the Plan or any Award is or becomes or is deemed to be invalid, illegal, or unenforceable in any jurisdiction or as to any Person or Award, or would disqualify the Plan or any Award under any law deemed applicable by the Committee, such provision shall be construed or deemed amended to conform to applicable laws, or if it cannot be construed or deemed amended without, in the determination of the Committee, materially altering the intent of the Plan or the Award, such provision shall be stricken as to such jurisdiction, Person or Award and the remainder of the Plan and any such Award shall remain in full force and effect. (j) No Trust or Fund Created. Neither the Plan nor any Award shall create or be construed to create a trust or separate fund of any kind or a fiduciary relationship between the Company and a Participant or any other Person. To the extent that any Person acquires a right to receive payments from the Company pursuant to an Award, such right shall be no greater than the right of any unsecured general creditor of the Company. (k) No Fractional Shares. No fractional Shares shall be issued or delivered pursuant to the Plan or any Award, and the Committee shall determine whether cash, other securities or other property shall be paid or transferred in lieu of any fractional Shares or whether such fractional Shares or any rights thereto shall be canceled, terminated, or otherwise eliminated. (l) Headings. Headings are given to the subsections of the Plan solely as a convenience to facilitate reference. Such headings shall not be deemed in any way material or relevant to the construction or interpretation of the Plan or any provision thereof. SECTION 12 Term of the Plan. Subject to Section 10(a), the Plan shall remain in effect until all Awards permitted to be granted under the Plan have either been satisfied, expired or cancelled under the terms of the Plan and any restrictions imposed on Shares in connection with their issuance under the Plan have lapsed. EX-11 6 EXHIBIT 11.1 FREEPORT-McMoRan INC. COMPUTATION OF NET INCOME PER COMMON AND COMMON EQUIVALENT SHARE Three Months Ended March 31, ------------------------ 1997 1996 ---------- ---------- (In Thousands, Except Per Share Amounts) Primary: Net income applicable to common stock $ 875 $ 20,129 ========== ========== Average common shares outstanding 23,901 27,253 Common stock equivalents: Stock options 193 324 ---------- ---------- Common and common equivalent shares 24,094 27,577 ========== ========== Net income per common and common equivalent share $0.04 $0.73 ===== ===== Fully diluted: Net income applicable to common stock $ 875 $ 20,129 Plus preferred dividends - 1,096 ---------- ---------- Net income applicable to common stock $ 875 $ 21,225 ========== ========== Average common shares outstanding 23,901 27,253 Common stock equivalents: Stock options 193 333 Convertible securities: Preferred stock - 1,831 ---------- ---------- Common and common equivalent shares 24,094 29,417 ========== ========== Net income per common and common equivalent share $0.04 $0.72 ===== ===== EX-27 7
5 0000351116 FREEPORT-MCMORAN INC. 1,000 3-MOS DEC-31-1997 MAR-31-1997 5,320 0 51,815 0 159,238 242,972 1,889,192 942,934 1,243,774 158,215 475,873 0 50,084 340 26,724 1,243,774 211,872 211,872 155,998 155,998 6,222 0 9,273 26,545 1,186 1,971 0 0 0 1,971 .04 .04
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