exhibit 10.2


Exhibit 10.2



McMoRan
EXPLORATION CO.




NOTICE
OF GRANT OF

NONQUALIFIED
STOCK OPTIONS

UNDER
THE 2005 STOCK INCENTIVE PLAN







1.  (a)            
Pursuant
to the McMoRan Exploration Co. 2005 Stock Incentive Plan (the “Plan”),
_______________ (the “Optionee”) is hereby granted effective ____________, ____,
in consideration of future services, Options to purchase from the Company, on
the terms and conditions set forth in this Notice and in the Plan, __________
shares of Common Stock of the Company at a purchase price of $________ per
share.

 

(b)  Defined
terms not otherwise defined in Section 11 of this Notice shall have the meanings
set forth in Section 2 of the Plan.

 

(c)  The
Options granted hereunder are intended to constitute nonqualified stock options
and are not intended to constitute incentive stock options within the meaning of
Section 422 of the Internal Revenue Code of 1986, as amended (the
“Code”).

 

2.   (a)       
All
Options granted hereunder shall terminate on ___________, 20____ unless
terminated earlier as provided in Section 4 of this Notice.

 

(b)  The
Options granted hereunder shall become exercisable in installments as
follows:

 

Date
Exercisable  Number
of Shares



















(c)  Options
granted hereunder may be exercised with respect to all or any part of the Shares
comprising each installment as the Optionee may elect at any time after such
Options become exercisable until the termination date set forth in Section 2(a)
or Section 4, as the case may be.

 

(d)  Notwithstanding
the foregoing provisions of this Section 2, the Options granted hereunder shall
immediately become exercisable in their entirety at such time as there shall be
a Change in Control of the Company.

 

3.  Upon each
exercise of the Options granted hereunder, the Optionee shall give written
notice to the Company, which shall specify the number of Shares to be purchased
and shall be accompanied by payment in full of the aggregate purchase price
thereof (which payment may be made in Shares owned by the Optionee for at
least six months), in accordance with procedures established by the Committee.
Such exercise shall be effective upon receipt by the Company of such notice in
good order and payment. 

 

4.   (a)       
Except as
set forth in this Section 4, the Options provided for in this Notice shall
immediately terminate on the date that the Optionee ceases for any reason to be
an Eligible Individual.

 

(b)  If the
Optionee ceases to be an Eligible Individual for any reason other than death,
Disability, Retirement or termination for Cause, any Option granted hereunder
that is then exercisable shall remain exercisable in accordance with the terms
of this Notice within three months after the date of such cessation, but in no
event shall any such Option be exercisable after the termination date specified
in Section 2(a). 

 

(c)  If the
Optionee ceases to be an Eligible Individual by reason of the Optionee’s
Disability or Retirement, any Option granted hereunder that is exercisable on
the date of such cessation, as well as any Option granted hereunder that would
have become exercisable within one year after the date of such cessation had the
Optionee continued to be an Eligible Individual, shall remain exercisable in
accordance with the terms of this Notice within three years after the date of
such cessation, but in no event shall any such Option be exercisable after the
termination date specified in Section 2(a).

 

(d)   (i)     
If the
Optionee ceases to be an Eligible Individual as a result of the Optionee’s
death, any Option granted hereunder that is exercisable on the date of such
death, as well as any Option granted hereunder that would have become
exercisable within one year after the date of such death had the Optionee
continued to be an Eligible Individual, shall remain exercisable by the
Optionee’s Designated Beneficiary in accordance with the terms of this Notice
until the third anniversary of the date
of such death, but in no event shall any such Option be exercisable after the
termination date specified in Section 2(a).

 

(ii)  If the
Optionee dies after having ceased to be an Eligible Individual and any Option
granted hereunder is then exercisable in accordance with the provisions of this
Section 4, such Option will remain exercisable by the Optionee’s Designated
Beneficiary in accordance with the terms of this Notice until the third
anniversary of the date the Optionee ceased to be an Eligible Individual, but in
no event shall any such Option be exercisable after the termination date
specified in Section 2(a).

 

(e)  If the
Optionee ceases to be an Eligible Individual by reason of the Optionee’s
termination for Cause, any Option granted hereunder that is exercisable on the
date of such cessation shall terminate immediately.

 

5.  The
Options granted hereunder are not transferable by the Optionee otherwise than by
will or by the laws of descent and distribution or pursuant to a domestic
relations order, as defined in the Code, and shall be exercised during the
lifetime of the Optionee only by the Optionee or by the Optionee’s duly
appointed legal representative.

 

6.  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 Optionee, shall be delivered personally, mailed or
delivered via e-mail to the Optionee at the address on file with the Company.
Such addresses may be changed at any time by notice from one party to the
other.

 

7.  The terms
of this Notice shall bind and inure to the benefit of the Optionee, the Company
and the successors and assigns of the Company and, to the extent provided in the
Plan and in this Notice, the Designated Beneficiaries and the legal
representatives of the Optionee.

 

8.  This
Notice is subject to the provisions of the Plan. The Plan may at any time be
amended by the Board, except that any such amendment of the Plan that would
materially impair the rights of the Optionee hereunder may not be made without
the Optionee’s consent. The Committee may amend, modify or terminate this Notice
and any of the Options granted hereunder at any time prior to exercise in any
manner not inconsistent with the terms of the Plan, including, without
limitation, to change the date or dates as of which the Options granted
hereunder become exercisable. Notwithstanding the foregoing, no such amendment,
modification or termination may materially impair the rights of the Optionee
hereunder without the Optionee’s consent. Except as set forth above, any
applicable determinations, orders, resolutions or other actions of the Committee
shall be final, conclusive and binding on the Company and the
Optionee.

 

9.  The
Optionee is required to satisfy any obligation in respect of withholding or
other payroll taxes resulting from the exercise of any Option granted hereunder,
in accordance with procedures established by the Committee, as a condition to
receiving any certificates for securities resulting from the exercise of any
such Option.

 

10.  Nothing
in this Notice shall confer upon the Optionee any right to continue in the
employ of the Company or any of its Subsidiaries or to interfere in any way with
the right of the Company or any of its Subsidiaries to terminate the Optionee’s
employment relationship with the Company or any of its Subsidiaries at any
time.

 

11.  As used
in this Notice, the following terms shall have the meanings set forth
below.

 

(a)  “Cause”
shall mean any of the following: (i) the commission by the Optionee of an
illegal act (other than traffic violations or misdemeanors punishable solely by
the payment of a fine), (ii) the engagement of the Optionee in dishonest or
unethical conduct, as determined by the Committee or its designee, (iii) the
commission by the Optionee of any fraud, theft, embezzlement, or
misappropriation of funds, (iv) the failure of the Optionee to carry out a
directive of his superior, employer or principal, or (v) the breach of the
Optionee of the terms of his engagement.

 

(b)  “Change
in Control” shall mean 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.

 

(c)  “Disability”
shall mean long-term disability, as defined in the Company’s long-term
disability plan.

 

(d)  “Retirement”
shall mean early, normal or deferred retirement of the Optionee under a tax
qualified retirement plan of the Company or any other cessation of the provision
of services to the Company or a Subsidiary by the Optionee that is deemed by the
Committee to constitute a retirement.

 




McMoRan
EXPLORATION CO.










By:_____________________