exhibit10_4.htm


    
      

    
                                                                                                Exhibit 10.4

    McMoRan
EXPLORATION CO.

    


    NOTICE
OF GRANT OF

    NONQUALIFIED
STOCK OPTIONS AND

    RESTRICTED
STOCK UNITS

    UNDER
THE

    2008
STOCK INCENTIVE PLAN

    [Form
for Non-Management and Advisory Director Grants]

    


    


    Pursuant
to the terms of the McMoRan Exploration Co. 2008 Stock Incentive (the “Plan”),
__________________________ (the “Director”), [a director/an advisory
director] of McMoRan Exploration Co. (the “Company”), was granted
effective June 1, 20__ (the “Grant Date”), an option to purchase shares of the
common stock of the Company (the “Common Stock”) and restricted stock units as
hereinafter set forth.  Defined terms not otherwise defined herein
shall have the meanings set forth in Section 2 of the Plan.

     

    1. Subject
to all the terms and conditions of the Plan, the Director, as a matter of
separate inducement and agreement in connection with [his/her] services as a
director or advisory director of the Company, and not in lieu of any salary or
other compensation for the Director’s services, is granted, on the terms and
conditions set forth in the Plan, the option to purchase from the Company all or
any part of _____ shares of Common Stock (the “Option”) at an exercise price of
$_____________ per share and _____ restricted stock units (“RSUs”).

     

    2. Unless
the exercisability of the Option or vesting of the RSUs is accelerated pursuant
to the terms of the Plan or this Notice, and subject to any other terms of the
Plan, the Option granted hereunder shall become exercisable and the RSUs shall
vest in installments as follows:

     

    
      	
              
                 

                 

                Date

              

            	
              
                Number
      of Shares

                Subject
      to the Option to

                Become
      Exercisable

              

            	
              
                 

                Number
      of RSUs

                To
      Vest

              

            
	
               

              June
      1, 20__

            	
               

              ___

            	
               

              ___

            
	
              June
      1, 20__

            	
              ___

            	
              ___

            
	
              June
      1, 20__

            	
              ___

            	
              ___

            
	
              June
      1, 20__

            	
              ___

            	
              ___

            


    

    


    The
Option granted hereunder shall terminate on June 1, 20__ unless terminated
earlier as provided in the Plan or this Notice, and any portion of the Option
not exercised on or before such date or such earlier termination, whichever
shall first occur, may not thereafter be exercised.

     

    3. Additional
Terms and Conditions of Options.

     

    3.1 In order
to exercise the Option, the holder of the Option shall give notice to the
Company or its designee in the manner determined by the Company, specifying the
number of shares to be purchased and accompanied by payment in full of the
aggregate exercise price thereof, as provided in the Plan.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    3.2 Any
provision of this Plan or this Notice to the contrary notwithstanding, the
Nominating and Corporate Governance Committee (the “Committee”) may cause any
Option granted hereunder to be canceled in consideration of a cash payment or
alternative Option made to the holder of such canceled Option equal in value to
such canceled Option.  Notwithstanding the foregoing, except for
adjustments permitted under the Plan, no action by the Committee shall cause a
reduction in the exercise price of Options granted under the Plan without the
approval of the stockholders of the Company.  The determinations of
value under this subparagraph shall be made by the Committee in its sole
discretion.

     

    3.3          
(a) For
purposes of this Section 3.3, if the Director continues to provide services to
the Company or a subsidiary of the Company pursuant to a consulting or other
arrangement, the Director will not “cease to be an Eligible Individual” until
such time as the Director no longer provides such services.

     

    (b) If the
Director ceases to be an Eligible Individual for any reason other than death,
disability or retirement from the Board, the Options granted hereunder shall
terminate except that any Options, to the extent then exercisable, may be
exercised by the holder thereof within three months after the Director ceases to
be an Eligible Individual, but not later than the termination date of the
Option.

     

    (c) If the
Director ceases to be an Eligible Individual by reason of the Director’s
disability or retirement from the Board, the Options granted hereunder shall
terminate except that any Options, to the extent then exercisable or exercisable
within one year thereafter, may be exercised by the holder thereof within three
years after the Director ceases to be an Eligible Individual, but not later than
the termination date of the Option.

     

    (d) If the
Director dies while serving as an Eligible Individual, the Options granted
hereunder shall terminate, except that any Options, to the extent exercisable by
the holder thereof at the time of such death or exercisable within one year
thereafter, may be exercised until the third anniversary of the date of such
death, but not later than the termination date of the Option, by the holder
thereof, the Director’s estate, or the person designated in the Director’s last
will and testament, as appropriate.

     

    (e) If the
Director dies after ceasing to be an Eligible Individual, the Options granted
hereunder shall terminate, except that any Options, to the extent still
outstanding and exercisable by the holder thereof at the time of such death, may
be exercised until the third anniversary of the date the Director ceased to be
an Eligible Individual, but not later than the termination date of the Option,
by the holder thereof, the Director’s estate, or the person designated in the
Director’s last will and testament, as appropriate.

     

    4. Additional
Terms and Conditions of Restricted Stock Units.

     

    4.1 Subject
to the terms, conditions, and restrictions set forth herein, each RSU represents
the right to automatically receive from the Company, on the respective scheduled
vesting date for such RSU, one share (a “Share”) of Common Stock, free of any
restrictions and all cash, securities and property credited to or deposited in
the Director’s Dividend Equivalent Account (as defined in Section 4.3) with
respect to such RSU.

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    4.2 Except as
provided in Section 4.3, an RSU shall not entitle the Director to any incidents
of ownership (including, without limitation, dividend and voting rights)
(a) in any Share until the RSU shall vest and the Director shall be issued
a Share to which such RSU relates nor (b) in any cash, securities or
property credited to or deposited in a Dividend Equivalent Account related to
such RSU until such RSU vests.

     

    4.3 From and
after the Grant Date of an RSU until the issuance of the Share payable in
respect of such RSU, the Director shall be credited, as of the payment date
therefor, with (a) the amount of any cash dividends and (b) the amount
equal to the Fair Market Value of any Shares, securities, or other property
distributed or distributable in respect of one share of Common Stock to which
the Director would have been entitled had the Director been a record holder of
one share of Common Stock at all times from the Grant Date to such issuance date
(a “Property Distribution”).  All such credits shall be made
notionally to a dividend equivalent account (a “Dividend Equivalent Account”)
established for the Director with respect to all RSUs granted with the same
vesting date.  All credits to a Dividend Equivalent Account for the
Director shall be notionally increased by the Account Rate (as hereinafter
defined), compounded quarterly, from and after the applicable date of credit
until paid in accordance with the terms of the Plan and this
Notice.  The “Account Rate” shall be the prime commercial lending rate
announced from time to time by JPMorgan Chase Bank or by another major national
bank headquartered in New York, New York designated by the
Committee.  The Committee may, in its discretion, deposit in the
Participant’s Dividend Equivalent Account the securities or property comprising
any Property Distribution in lieu of crediting such Dividend Equivalent Account
with the Fair Market Value thereof.  For purposes of this Notice,
“Fair Market Value” of a share of Common Stock or any other security shall be
the closing per share or security sale price on the Composite Tape for New York
Stock Exchange-Listed Stocks on the date in question or, if there are no
reported sales on such date, on the last preceding date on which any reported
sale occurred.  If on the date in question the shares of Common Stock
or other securities in question are not listed on such Composite Tape, the fair
market value shall be the closing sale price on the New York Stock Exchange on
such date or, if no sales occurred on such date, on the last previous day on
which a sale on the New York Stock Exchange is reported.

     

    4.4          (a) Except
as otherwise set forth in Section 4.4(b), all unvested RSUs, all amounts
credited to the Director’s Dividend Equivalent Account with respect to such
RSUs, and all securities and property comprising Property Distributions
deposited in such Dividend Equivalent Account with respect to such RSUs shall
immediately be forfeited on the date the Director ceases to be an Eligible
Individual, unless the Director continues providing services to the Company
pursuant to a consulting or other arrangement.

     

    (b) If the
Director ceases to be an Eligible Individual by reason of the Director’s death,
retirement or disability (as defined in Section 4.4(d)), all unvested RSUs and
all amounts credited to or property deposited in the Director’s Dividend
Equivalent Account with respect to such RSUs shall vest as of the date the
Director ceases to be an Eligible Individual.

     

    (c) For
purposes of this Section 4.4, if the Director continues to provide services to
the Company or a subsidiary of the Company pursuant to a consulting or other
arrangement, the Director will not “cease to be an Eligible Individual” until
such time as the Director no longer provides such services.

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

    (d) For
purposes of this Section 4.4, a “disability” shall have occurred if the Director
is (i) unable to engage in any substantial gainful activity by reason of any
medically determinable physical or mental impairment which can be expected to
result in death or can be expected to last for a continuous period of not less
than 12 months, or (ii) by reason of any medically determinable physical or
mental impairment which can be expected to result in death or can be expected to
last for a continuous period of not less than 12 months, receiving income
replacement benefits for a period of not less than 3 months under an accident
and health plan covering employees of the Director’s employer.

     

    5. Change
of Control.

     

    5.1 For
purposes of this Notice, “Change of Control” means the earliest of the following
events:  (i) any person or any two or more persons acting as a group,
and all affiliates of such person or persons, shall acquire beneficial ownership
of more than 25% of all classes and series of the Company’s outstanding stock
(exclusive of stock held in the Company’s treasury or by the Company’s
Subsidiaries), taken as a whole, that has voting rights with respect to the
election of directors of the Company (not including any series of preferred
stock of the Company that has the right to elect directors only upon the failure
of the Company to pay dividends) pursuant to a tender offer, exchange offer,
purchase or other acquisition or series of purchases or other acquisitions, or
any combination of those transactions (a “25% Stock Acquisition”); provided,
however, that any 25% Stock Acquisition shall not constitute a Change in Control
if all of the acquiring persons enter into a standstill agreement with the
Company in a form approved by the Board and a majority of the members of the
Board at the time of such approval were also members of the Board immediately
prior to the 25% Stock Acquisition, or (ii) 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”), such that (A) 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 that shall thereafter be in control of the companies that were
parties to or otherwise involved in such Transaction or (B) 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.

     

    5.2 Upon a
Change of Control, or immediately prior to the closing of a transaction that
will result in a Change of Control if consummated, all outstanding Options
granted pursuant to this Plan shall automatically become fully vested and
exercisable.  If a Change of Control also qualifies as a change in the
ownership of the Company, a change in the effective control of the Company or a
change in the ownership of a substantial portion of the assets of the Company
under Section 409A of the Internal Revenue Code and any related implementing
regulations or guidance, then all outstanding RSUs shall become fully
vested.

     

    5.3 No later
than 30 days after a Change of Control, the Committee, acting in its sole
discretion without the consent or approval of any Participant (and
notwithstanding any removal or attempted removal of some or all of the members
thereof as directors or Committee members), may act to effect one or more of the
alternatives listed below, which may vary among individual Participants and
which may vary among Options and RSUs held by any individual
Participant:

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

    (a) require
that all outstanding Options be exercised on or before a specified date (before
or after such Change of Control) fixed by the Committee, after which specified
date all unexercised Options and all rights of the Director thereunder shall
terminate,

     

    (b) make such
equitable adjustments to Awards then outstanding as the Committee deems
appropriate to reflect such Change of Control (provided, however, that the
Committee may determine in its sole discretion that no adjustment is
necessary),

     

    (c) provide
for mandatory conversion or exchange of some or all of the outstanding Options
held by the Director as of a date, before or after such Change of Control,
specified by the Committee, in which event such Options shall be deemed
automatically cancelled and the Company shall pay, or cause to be paid, to the
Director an amount of cash per share equal to the excess, if any, of the Change
of Control Value of the shares subject to such Option, as defined and calculated
below, over the per share exercise price of such Options or, in lieu of such
cash payment, the issuance of Common Stock or securities of an acquiring entity
having a Fair Market Value equal to such excess, or

     

    (d) provide
that thereafter, upon any exercise of an Option that entitles the holder to
receive Common Stock, the holder shall be entitled to purchase or receive under
such Option, in lieu of the number of shares of Common Stock then covered by
such Option, the number and class of shares of stock or other securities or
property (including, without limitation, cash) to which the holder would have
been entitled pursuant to the terms of the agreement providing for the
reorganization, share exchange, merger, consolidation or asset sale, if,
immediately prior to such Change of Control, the holder had been the record
owner of the number of shares of Common Stock then covered by such
Option.

     

    5.4 For the
purposes of any conversions or exchanges under paragraph (c) of Section 5.3, the
“Change of Control Value” shall equal the amount determined by whichever of the
following items is applicable:

     

    (a) the per
share price to be paid to holders of Common Stock in any such merger,
consolidation or other reorganization,

     

    (b) the price
per share offered to holders of Common Stock in any tender offer or exchange
offer whereby a Change of Control takes place, or

     

    (c) in all
other events, the Fair Market Value of a share of Common Stock, as determined by
the Committee as of the date determined by the Committee to be the date of
conversion or exchange.

     

    5.5 In the
event that the consideration offered to stockholders of the Company in any
transaction described in this Section 5 consists of anything other than cash,
the Committee shall determine the fair cash equivalent of the portion of the
consideration offered that is other than cash.

     

    6. The
Option and the RSUs granted hereunder are not transferable by the Director
otherwise than by will or by the laws of descent and distribution.

     

    
      
        
        

      

      
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    7. All
notices hereunder shall be in writing, and if to the Company, shall be delivered
personally to the Secretary of the Company or mailed to its principal office,
1615 Poydras Street, New Orleans, Louisiana 70112, addressed to the attention of
the Secretary; and if to the Director, shall be delivered personally or mailed
to the Director at the address on file with the Company.  Such
addresses may be changed at any time by notice from one party to the
other.

     

    8. The terms
of this Notice shall bind and inure to the benefit of the Director, the Company
and the successors and assigns of the Company and, to the extent provided in the
Plan and in this Notice, the legal representatives of the Director.

     

    9. This
Notice is subject to the provisions of the Plan.  The Plan may at any
time be amended by the board of directors of the Company (the “Board”), and this
Notice may at any time be amended by the Committee provided that no amendment to
this Notice that materially impairs the benefits provided to the Director
hereunder may be made without the Director’s consent.  Subject to any
applicable provisions of the Company’s by-laws or of the Plan, any applicable
determinations, orders, resolutions or other actions of the Committee shall be
final, conclusive and binding on the Company and the holder of the Option and
the RSUs granted hereunder.

     

    McMoRan EXPLORATION CO.

    


    


    By:  _______________________                                                                    

    



    
      
        
           

        

         


      

      
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