Document:

ex10-2.htm

    
      
         

      

      
         

        
          

        

      

      
        Exhibit
10.2

      

    

    ALASKA
AIR GROUP, INC.

    2008
PERFORMANCE INCENTIVE PLAN

    NONQUALIFIED
STOCK OPTION AGREEMENT

     

    THIS NONQUALIFIED STOCK OPTION
AGREEMENT (this “Option
Agreement”) dated _______________, by and between ALASKA AIR GROUP, INC., a
Delaware corporation (the “Corporation”), and ____________
(the “Grantee”)
evidences the nonqualified stock option (the “Option”) granted by the
Corporation to the Grantee as to the number of shares of the Corporation’s
Common Stock first set forth below.

     

    
      	
              Number
      of Shares of Common Stock1:

            	 
      	
              Award
      Date:

            	 
      
	
              Exercise
      Price per Share1:

            	
              $

            	
              Expiration
      Date1,2:

            	 
      

    

    

    Vesting1,2
[The Option shall
become vested as to 25% of the total number of shares of Common Stock subject to
the Option on each of the first, second, third and fourth anniversaries of the
Award Date.]

     

    The
Option is granted under the Alaska Air Group, Inc. 2008 Performance Incentive
Plan (the “Plan”) and
subject to the Terms and Conditions of Nonqualified Stock Option (the “Terms”) attached to this
Option Agreement (incorporated herein by this reference) and to the
Plan.  The Option has been granted to the Grantee in addition to, and
not in lieu of, any other form of compensation otherwise payable or to be paid
to the Grantee.  Capitalized terms are defined in the Plan if not
defined herein.  The parties agree to the terms of the Option set
forth herein.  The Grantee acknowledges receipt of a copy of the
Terms, the Plan and the Prospectus for the Plan.

     

    

    
      	
              GRANTEE

            	
              ALASKA
      AIR GROUP, INC.

              a
      Delaware Corporation

            
	
              ______________________________________

            	
              By:
      _____________________________________

            
	 
      	
              William
      S. Ayer

              Chairman,
      President and CEO

               

            
	
              ______________________________________

            	 
      
	
              Co-Mail
      Code

            	 
      
	
              ______________________________________

            	 
      
	
              Home
      Address

            	 
      
	
              ______________________________________

            	 
      
	
              City,
      State, Zip

            	 
      

    

    

    1
Subject to adjustment under Section 7.1 of the Plan

    2
Subject to early termination under Section 4 of the Terms and Section 7.2
of the Plan

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

     

    TERMS
AND CONDITIONS OF NONQUALIFIED STOCK OPTION

     

    
      	
              1.  

            	
              1.           Vesting; Limits on
      Exercise; Incentive Stock Option Status; Possible
      Acceleration.

            

    

     

    The
Option shall vest and become exercisable in percentage installments of the
aggregate number of shares subject to the Option as set forth on the cover page
of this Option Agreement.  The Option may be exercised only to the
extent the Option is vested and exercisable.

     

    
      	
               
      

            	
              ·

            	
              Cumulative
      Exercisability.  To the extent that the Option is vested
      and exercisable, the Grantee has the right to exercise the Option (to the
      extent not previously exercised), and such right shall continue, until the
      expiration or earlier termination of the
Option.

            

    

     

    
      	
               
      

            	
              ·

            	
              No Fractional
      Shares.  Fractional share interests shall be disregarded,
      but may be cumulated.

            

    

     

    
      	
               
      

            	
              ·

            	
              Minimum
      Exercise.  No fewer than 100 shares of Common Stock
      (subject to adjustment under Section 7.1 of the Plan) may be purchased at
      any one time, unless the number purchased is the total number at the time
      exercisable under the Option.

            

    

     

    
      	
               
      

            	
              ·

            	
              Nonqualified Stock
      Option.  The Option is a nonqualified stock option and is
      not, and shall not be, an incentive stock option within the meaning of
      Section 422 of the Code.

            

    

     

    Notwithstanding
any other provision herein or in the Plan, the Option, to the extent not then
vested, shall become fully vested if (i) the Grantee’s employment with the
Corporation and its Subsidiaries is terminated by the Corporation or a
Subsidiary without Cause or by the Grantee for Good Reason, and (ii) such
termination occurs at any time within the period commencing six (6) months
before a Change of Control and ending twenty-four (24) months after such Change
of Control.  (For these purposes, the terms “Cause,” “Change of
Control” and “Good Reason” shall have the meanings ascribed to them in Exhibit A
attached hereto.)  In the event that, upon the occurrence of a Change
of Control, the Grantee is entitled to accelerated vesting of the Option
pursuant to this paragraph in connection with a termination of the Grantee’s
employment prior to such Change of Control, the Option, to the extent it had not
vested and was cancelled or otherwise terminated upon or prior to the date of
such Change of Control solely as a result of such termination of employment,
shall be reinstated and shall automatically become fully vested, and the Grantee
shall be given a reasonable opportunity to exercise such accelerated portion of
the Option before it terminates.

     

    
      	
              2.  

            	
              2.           Continuance of
      Employment/Service Required; No Employment/Service
      Commitment.

            

    

     

    The vesting schedule requires continued
employment or service through each applicable vesting date as a condition to the
vesting of the applicable installment of the Option and the rights and benefits
under this Option Agreement.  Employment or service for only a portion
of the vesting period, even if a substantial portion, will not entitle the
Grantee to any proportionate vesting or avoid or mitigate a termination of
rights and benefits upon or following a termination of employment or services as
provided in Section 4 below or under the Plan.

     

    Nothing contained in this Option
Agreement or the Plan constitutes an employment or service commitment by the
Corporation, affects the Grantee’s status as an employee at will who is subject
to termination without cause, confers upon the Grantee any right to remain
employed by or in service to the Corporation or any Subsidiary, interferes in
any way with the right of the Corporation or any Subsidiary at any time to
terminate such employment or services, or affects the right of the Corporation
or any

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    Subsidiary
to increase or decrease the Grantee’s other compensation or
benefits.  Nothing in this paragraph, however, is intended to
adversely affect any independent contractual right of the Grantee without his
consent thereto.

     

    
      	
              3.  

            	
              3.           Method of Exercise of
      Option.

            

    

     

    The
Option shall be exercisable by the delivery to the Secretary of the Corporation
(or such other person as the Administrator may require pursuant to such
administrative exercise procedures as the Administrator may implement from time
to time) of:

     

    
      	
               
      

            	
              ·

            	
              a
      written notice stating the number of shares of Common Stock to be
      purchased pursuant to the Option or by the completion of such other
      administrative exercise procedures as the Administrator may require from
      time to time,

            

    

     

    
      	
               
      

            	
              ·

            	
              payment
      in full for the Exercise Price of the shares to be purchased in cash,
      check or by electronic funds transfer to the Corporation, or (subject to
      compliance with all applicable laws, rules, regulations and listing
      requirements and further subject to such rules as the Administrator may
      adopt as to any non-cash payment) in shares of Common Stock already owned
      by the Grantee, valued at their Fair Market Value on the exercise
      date;

            

    

     

    
      	
               
      

            	
              ·

            	
              if
      required by the Administrator, any written statements or agreements that
      the Administrator may deem necessary or desirable to assure compliance
      with all applicable legal and accounting requirements;
  and

            

    

     

    
      	
               
      

            	
              ·

            	
              satisfaction
      of the tax withholding provisions of Section 8.5 of the
    Plan.

            

    

     

    The
Administrator also may, but is not required to, authorize a non-cash payment
alternative by notice and third party payment in such manner as may be
authorized by the Administrator, or, subject to such procedures as the
Administrator may adopt, authorize a “cashless exercise” with a third party who
provides simultaneous financing for the purposes of (or who otherwise
facilitates) the exercise of the Option.

     

    
      	
              4.  

            	
              4.           Early
      Termination of Option.

            

    

     

    4.1 4.1           Possible Termination of Option upon
Certain Corporate Events.  The Option is subject to termination
in connection with certain corporate events as provided in Section 7.2 of the
Plan.

     

    4.2 4.2           Termination of Option upon a
Termination of Grantee’s Employment or Services.  Subject to
earlier termination on the Expiration Date of the Option or pursuant to Section
4.1 above, if the Grantee ceases to be employed by or ceases to provide services
to the Corporation, the following rules shall apply (the last day that the
Grantee is employed by or provides services to the Corporation is referred to as
the Grantee’s “Severance
Date”):

     

    
      	
               
      

            	
              ·

            	
              other
      than as expressly provided below in this Section 4.2, the Option (whether
      vested or not) shall terminate on the Severance
  Date;

            

    

     

    
      	
               
      

            	
              ·

            	
              if
      the termination of the Grantee’s employment or services is the result of
      the Grantee’s Retirement (as defined below), (a) the Option, to the extent
      not vested on the Severance Date and scheduled to vest at any time within
      the three-year period following the Severance Date, shall become fully
      vested as of the Severance Date, (b) the Grantee will have until the
      Expiration Date (as set forth on the cover page of this Option Agreement)
      to exercise the

            

    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    
      	
               
      

            	
              Option,
      provided, however, that any portion of the Option that becomes vested
      pursuant to the foregoing clause (a) shall become exercisable only at such
      times as such portion would have otherwise vested pursuant to the original
      vesting schedule as provided herein had the Grantee’s employment not
      terminated, (c) the Option, to the extent not vested on the Severance Date
      (after giving effect to the foregoing clause (a)), shall terminate on the
      Severance Date, and (d) the Option, to the extent exercisable at any time
      prior to the Expiration Date and not exercised on or prior to such date,
      shall terminate at the close of business on the Expiration
      Date;

            

    

     

    
      	
               
      

            	
              ·

            	
              if
      the termination of the Grantee’s employment or services is the result of
      the Grantee’s death or Total Disability (as defined below), (a) the
      Option, to the extent not vested on the Severance Date, shall become fully
      vested as of the Severance Date, (b) the Grantee (or his beneficiary or
      personal representative, as the case may be) will have until the
      Expiration Date to exercise the Option, and (c) the Option, to the extent
      exercisable prior to the Expiration Date and not exercised prior to such
      date, shall terminate at the close of business on the Expiration
      Date.

            

    

     

    For
purposes of the Option, “Retirement” means that, as of
the Grantee’s Severance Date, the Grantee has either (i) attained age 55 with at least
five (5) full years of service with the Corporation, or (ii) has
attained age 60, or (iii) is a participant in and is entitled to commence a
benefit under a Corporation-sponsored defined benefit plan and has at least 10
years of service with the Corporation.  For purposes of the
Option, “Total
Disability” means a “permanent and total disability” (within the meaning
of Section 22(e)(3) of the Code or as otherwise determined by the
Administrator).

     

    In all
events the Option is subject to earlier termination on the Expiration Date of
the Option or as contemplated by Section 4.1.  The Administrator shall
be the sole judge of whether the Grantee continues to render employment or
services for purposes of this Option Agreement.

     

    
      	
              5.  

            	
              5.           Non-Transferability.

            

    

     

    The
Option and any other rights of the Grantee under this Option Agreement or the
Plan are nontransferable and exercisable only by the Grantee, except as set
forth in Section 5.7 of the Plan.

     

    
      	
              6.  

            	
              6.           Notices.

            

    

     

    Any
notice to be given under the terms of this Option Agreement shall be in writing
and addressed to the Corporation at its principal office to the attention of the
Secretary, and to the Grantee at the address last reflected on the Corporation’s
payroll records, or at such other address as either party may hereafter
designate in writing to the other.  Any such notice shall be delivered
in person or shall be enclosed in a properly sealed envelope addressed as
aforesaid, registered or certified, and deposited (postage and registry or
certification fee prepaid) in a post office or branch post office regularly
maintained by the United States Government.  Any such notice shall be
given only when received, but if the Grantee is no longer employed by the
Corporation, shall be deemed to have been duly given five business days after
the date mailed in accordance with the foregoing provisions of this Section
6.

     

    
      	
              7.  

            	
              7.           Plan.

            

    

     

    The
Option and all rights of the Grantee under this Option Agreement are subject to
the terms and conditions of the Plan, incorporated herein by this
reference.  The Grantee agrees to be bound by the terms of the Plan
and this Option Agreement.  The Grantee acknowledges having read and
understanding the Plan, the Prospectus for the Plan, and this Option
Agreement.  Unless otherwise expressly provided in

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    other
sections of this Option Agreement, provisions of the Plan that confer
discretionary authority on the Board or the Administrator do not and shall not
be deemed to create any rights in the Grantee unless such rights are expressly
set forth herein or are otherwise in the sole discretion of the Board or the
Administrator so conferred by appropriate action of the Board or the
Administrator under the Plan after the date
hereof.

     

    
      	
              8.  

            	
              8.           Entire
      Agreement.

            

    

     

    This
Option Agreement and the Plan together constitute the entire agreement and
supersede all prior understandings and agreements, written or oral, of the
parties hereto with respect to the subject matter hereof.  The Plan
and this Option Agreement may be amended pursuant to Section 8.6 of the
Plan.  Such amendment must be in writing and signed by the
Corporation.  The Corporation may, however, unilaterally waive any
provision hereof in writing to the extent such waiver does not adversely affect
the interests of the Grantee hereunder, but no such waiver shall operate as or
be construed to be a subsequent waiver of the same provision or a waiver of any
other provision hereof.

     

    
      	
              9.  

            	
              9.           Governing
      Law.

            

    

     

    This
Option Agreement shall be governed by and construed and enforced in accordance
with the laws of the State of Delaware without regard to conflict of law
principles thereunder.

     

    
      	
              10.  

            	
              10.           Effect of this
      Agreement.

            

    

     

    Subject
to the Corporation’s right to terminate the Option pursuant to Section 7.2 of
the Plan, this Option Agreement shall be assumed by, be binding upon and inure
to the benefit of any successor or successors to the Corporation.

     

    
      	
              11.  

            	
              11.           Counterparts.

            

    

     

    This
Option Agreement may be executed simultaneously in any number of counterparts,
each of which shall be deemed an original but all of which together shall
constitute one and the same instrument.

     

    
      	
              12.  

            	
              12.           Section
      Headings.

            

    

     

    The
section headings of this Option Agreement are for convenience of reference only
and shall not be deemed to alter or affect any provision hereof.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    EXHIBIT
A

     

    DEFINITIONS

     

    For
purposes of the Option, the following terms shall have the meanings set forth is
this Exhibit A.

     

    “Cause” means the occurrence of
any of the following:

     

    
      	
              (i)  

            	
              (i)           the
      Grantee is convicted of, or has pled guilty or nolo contendere to, a
      felony (other than traffic related offenses or as a result of vicarious
      liability); or

            

    

     

    
      	
              (ii)  

            	
              (ii)           the
      Grantee has engaged in acts of fraud, material dishonesty or other acts of
      willful misconduct in the course of his duties to the Corporation or any
      of its Subsidiaries; or

            

    

     

    
      	
              (iii)  

            	
              (iii)           the
      Grantee willfully and repeatedly fails to perform or uphold his duties to
      the Corporation or any of its Subsidiaries;
or

            

    

     

    
      	
              (iv)  

            	
              (iv)           the
      Grantee willfully fails to comply with reasonable directives of the Board
      which are communicated to him or her in
writing;

            

    

     

    provided,
however, that no act or omission by the Grantee shall be deemed to be “willful”
if the Grantee reasonably believed in good faith that such acts or omissions
were in the best interests of the Corporation.

     

     “Change of Control” means the
occurrence of any of the following:

     

    (i)           the
consummation of:

     

    (A)           any
consolidation or merger of the Corporation in which the Corporation is not the
continuing or surviving corporation or pursuant to which shares of common stock
of the Corporation would be converted into cash, securities or other property,
other than a merger of the Corporation in which the holders of common stock of
the Corporation immediately prior to the merger have the same proportionate
ownership of common stock of the surviving corporation immediately after the
merger; or

     

    (B)           any
sale, lease, exchange or other transfer (in one transaction or a series of
related transactions) of all, or substantially all, the assets of the
Corporation.

     

    
      	
               
      

            	
              (ii)

            	
              at
      any time during a period of twenty-four (24) months, fewer than a
      majority of the members of the Board are Incumbent
      Directors.  “Incumbent Directors”
      means (A) individuals who constitute the Board at the beginning of such
      period; and (B) individuals who were nominated or elected by all of, or a
      committee composed entirely of, the individuals described in (A); and (C)
      individuals who were nominated or elected by individuals described in
      (B).

            

    

     

    
      	
               
      

            	
              (iii)

            	
              any
      Person (meaning any individual, entity or group within the meaning of
      Section 13(d)(3) or 14(d) of the Exchange Act) shall, as a result of a
      tender or exchange offer, open market purchases, privately-negotiated
      purchases or otherwise, become the beneficial owner (within the meaning of
      Rule 13d-3 under the Exchange Act), directly or indirectly, of the
      then-outstanding securities of the Corporation ordinarily (and apart
      from

            

    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    
      	
               
      

            	
              rights
      accruing under special circumstances) having the right to vote in the
      election of members of the Board (“Voting
      Securities” to be calculated as provided in paragraph (d) of
      Rule 13d-3 in the case of rights to acquire common stock of the
      Corporation) representing 20% or more of the combined voting power of the
      then-outstanding Voting Securities.

            

    

     

    
      	
               
      

            	
              (iv)

            	
              approval
      by the stockholders of the Corporation of any plan or proposal for the
      liquidation or dissolution of the
Corporation.

            

    

     

    Unless
the Board shall determine otherwise, a Change of Control shall not be deemed to
have occurred by reason of any corporate reorganization, merger, consolidation,
transfer of assets, liquidating distribution or other transaction entered into
solely by and between the Corporation and any affiliate thereof, provided such
transaction has been approved by at least two-thirds (2/3) of the Incumbent
Directors (as defined above) then in office and voting.

     

    Notwithstanding
the foregoing, in no event shall a transaction or other event that occurred
prior to the date of grant of the Option constitute a Change of Control, and no
Change of Control after the first Change of Control to occur after the grant
date shall be considered for purposes of the Option.

     

    “Good Reason” means, without
the Grantee’s express written consent, the occurrence of any one or more of the
following:

     

    
      	
              (v)  

            	
              (i)           a
      material reduction in the Grantee’s annual base
  salary;

            

    

     

    
      	
              (vi)  

            	
              (ii)           a
      material diminution or reduction of the Grantee’s authority, duties, or
      responsibilities;

            

    

     

    
      	
              (vii)  

            	
              (iii)           a
      material change in the geographic location at which the Grantee must
      perform services; or

            

    

     

    
      	
              (viii)  

            	
              (iv)           any
      material breach by the Corporation of any other provision of this
      Agreement;

            

    

     

    provided,
however, that any such condition shall not constitute “Good Reason” unless both
(x) the Grantee provides written notice to the Corporation of the condition
claimed to constitute Good Reason within ninety (90) days of the initial
existence of such condition, and (y) the Corporation fails to remedy such
condition within thirty (30) days of receiving such written notice thereof; and
provided, further, that in all events the termination of the Grantee’s
employment with the Corporation shall not be treated as a termination for “Good
Reason” unless such termination occurs not more than two (2) years following the
initial existence of the condition claimed to constitute “Good
Reason.”ex10-1.htm

    
      

    

    EXHIBIT
10.1

    Form for
Straight Grant

    

    FREEPORT-McMoRan
COPPER & GOLD INC.

    

    NOTICE
OF GRANT

    OF

    PERFORMANCE-BASED

    RESTRICTED
STOCK UNITS

    UNDER
THE 20__ STOCK INCENTIVE PLAN

    

    1. (a)           Pursuant
to the Freeport-McMoRan Copper & Gold Inc. 20__ Stock Incentive Plan (the
“Plan”), on ____________, 20__ (the “Grant Date”), Freeport-McMoRan Copper &
Gold Inc., a Delaware corporation (the “Company”) granted
____________  restricted stock units (“Restricted Stock Units” or
“RSUs”) to _________________ (the “Participant”) on the terms and conditions set
forth in this Notice and in the Plan.

     

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

     

    (c) Subject
to the terms, conditions, and restrictions set forth in the Plan and herein,
each RSU granted hereunder represents the right to receive from the Company, on
the respective scheduled vesting date for such RSU set forth in Section 2(a) of
this Notice or on such earlier date as provided in Section 2(b) of this Notice
or Section 5(b) of this Notice (the “Vesting Date”), one share (a “Share”) of
common stock of the Company (“Common Stock”), free of any restrictions, all
amounts notionally credited to the Participant’s Dividend Equivalent Account (as
defined in Section 4 of this Notice) with respect to such RSU, and all
securities and property comprising all Property Distributions (as defined in
Section 4 of this Notice) deposited in such Dividend Equivalent Account with
respect to such RSU.

     

    (d) Provided
the condition of Section 6 of this Notice, if applicable, has been met, as soon
as practicable after the Vesting Date (but no later than 2 1⁄2 months from such
date) for any RSUs granted hereunder, the Participant shall receive from the
Company the number of Shares to which the vested RSUs relate, free of any
restrictions, a cash payment for all amounts notionally credited to the
Participant’s Dividend Equivalent Account with respect to such vested RSUs, and
all securities and property comprising all Property Distributions deposited in
such Dividend Equivalent Account with respect to such vested RSUs.

     

    2. (a)           Provided
the condition of Section 6 of this Notice has been met, the RSUs granted
hereunder shall vest in installments as follows:

     

    
      	
              Scheduled Vesting
      Date

            	
              Number of
      RSUs

            
	 
      	 
      

    

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    (b) Notwithstanding
Section 2(a) of this Notice, at such time as there shall be a Change in
Control of the Company, all unvested RSUs shall be accelerated and shall
immediately vest.

     

    (c) Until the
respective Vesting Date for an RSU granted hereunder, such RSU, all amounts
notionally credited in any Dividend Equivalent Account related to such RSU, and
all securities or property comprising all Property Distributions deposited in
such Dividend Equivalent Account related to such RSU shall be subject to
forfeiture as provided in Section 5 of this Notice.

     

    3. Except as
provided in Section 4 of this Notice, an RSU shall not entitle the Participant
to any incidents of ownership (including, without limitation, dividend and
voting rights) in any Share until the RSU shall vest and the Participant shall
be issued the Share to which such RSU relates nor in any securities or property
comprising any Property Distribution deposited in a Dividend Equivalent Account
related to such RSU until such RSU vests.

     

    4. From and
after the Grant Date of an RSU until the issuance of the Share payable in
respect of such RSU, the Participant shall be credited, as of the payment date
therefor, with (i) the amount of any cash dividends and (ii) the amount equal to
the Fair Market Value of any Shares, Subsidiary securities, other securities, or
other property distributed or distributable in respect of one share of Common
Stock to which the Participant would have been entitled had the Participant 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 Participant with respect to all RSUs
granted hereunder with the same Vesting Date.  All credits to a
Dividend Equivalent Account for the Participant 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 provisions of
this Notice.  The “Account Rate” shall be the prime commercial lending
rate announced from time to time by JPMorgan Chase Bank, N.A. 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.

     

    5.   (a) Except
as set forth in Section 5(b) of this Notice, all unvested RSUs provided for in
this Notice, all amounts credited to the Participant’s Dividend Equivalent
Accounts with respect to such RSUs, and all securities and property comprising
Property Distributions deposited in such Dividend Equivalent Accounts with
respect to such RSUs shall immediately be forfeited on the date the Participant
ceases to be an Eligible Individual (the “Termination Date”).

     

    (b) Notwithstanding
the foregoing, and provided the condition of Section 6 of this Notice has been
met, if the Participant ceases to be an Eligible Individual (the “Termination”)
by reason of the Participant’s death, Disability, or Retirement, the RSUs
granted hereunder that are scheduled to vest on the first Vesting Date following
the Termination Date, all amounts credited to the Participant’s Dividend
Equivalent Accounts with respect to such RSUs, and all securities and property
comprising Property Distributions deposited in such Dividend 

     

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

     

    Equivalent
Accounts with respect to such RSUs shall vest as of the Participant’s
Termination Date.  In the event that the Participant ceases to be an
Eligible Individual by reason of the Participant’s Termination by his employer
or principal without Cause, and provided the condition of Section 6 of this
Notice has been met, the Committee or any person to whom the Committee has
delegated authority may, in its or his sole discretion, determine that the RSUs
granted hereunder that are scheduled to vest on the first Vesting Date following
the Termination Date, all amounts credited to the Participant’s Dividend
Equivalent Accounts with respect to such RSUs, and all securities and property
comprising Property Distributions deposited in such Dividend Equivalent Accounts
with respect to such RSUs shall vest as of the Participant’s Termination
Date.  In the event vesting is accelerated pursuant to this Section
5(b) and the Participant is a Key Employee, a distribution of Shares issuable to
the Participant, all amounts notionally credited to the Participant’s Dividend
Equivalent Account, and all securities and property comprising all Property
Distributions deposited in such Dividend Equivalent Account due the Participant
upon the vesting of the RSUs shall not occur until six months after the
Participant’s Termination Date, unless the Participant’s Termination is due to
death or Disability.

     

    6. The other
provisions of this Notice notwithstanding, no unvested RSU granted hereunder
shall vest on its scheduled Vesting Date under Section 2(a) of this Notice or
upon the Participant’s Termination pursuant to Section 5(b) of this Notice
unless the average of the Return on Investment for the five calendar years
preceding the year in which such event occurs is at least 6% and, if required or
deemed necessary to satisfy the requirements to qualify such RSU as
“performance-based compensation” under Section 162(m), the appropriate members
of the Committee shall have certified that such condition has been
met.  Any unvested RSUs that do not vest upon the occurrence of any of
such events as a result of the failure to meet the condition of this Section 6,
all amounts credited to the Participant’s Dividend Equivalent Accounts with
respect to such RSUs, and all securities and property comprising Property
Distributions deposited in such Dividend Equivalent Accounts with respect to
such RSUs shall immediately be forfeited.

     

    7. The RSUs
granted hereunder, any amounts notionally credited in the Participant’s Dividend
Equivalent Accounts, and any securities and property comprising Property
Distributions deposited in such Dividend Equivalent Accounts are not
transferable by the Participant otherwise than by will or by the laws of descent
and distribution or pursuant to a domestic relations order, as defined in the
Code.

     

    8. 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 One North Central
Avenue, Phoenix, Arizona 85004, addressed to the attention of the Secretary;
and, if to the Participant, shall be delivered personally or mailed to the
Participant at the address on file with the Company.  Such addresses
may be changed at any time by notice from one party to the other.

     

    9. 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 Participant hereunder may not be made
without the Participant’s consent.  The Committee may amend this
Notice at any time in any manner that is not inconsistent with the terms of the
Plan and that will not result in the application of Section 409A(a)(1) of the
Code.  Notwithstanding the foregoing, no such amendment may materially
impair the rights of the 

     

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

     

    Participant
hereunder without the Participant’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
Participant.

     

    10. The
Participant is required to satisfy any obligation in respect of withholding or
other payroll taxes resulting from the vesting of any RSU granted hereunder or
the payment of any securities, cash, or property hereunder, in accordance with
procedures established by the Committee, as a condition to receiving any
securities, cash payments, or property resulting from the vesting of any RSU or
otherwise.

     

    11. Nothing
in this Notice shall confer upon the Participant 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
Participant’s employment relationship with the Company or any of its
Subsidiaries at any time.

     

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

     

    (b) “Change
in Control” shall mean 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 as provided under Section 409A of the Code,
as amended from time to time, and any related implementing regulations or
guidance.

     

    (c) “Disability”
shall have occurred if the Participant 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
Participant’s employer.

     

    (d) “Fair
Market Value” shall, with respect to a share of Common Stock, a Subsidiary
security, or any other security, have the meaning set forth in the
Freeport-McMoRan Copper & Gold Inc. Policies of the Committee applicable to
the Plan, and, with respect to any other property, mean the value thereof
determined by the board of directors of the Company in connection with declaring
the dividend or distribution thereof.

     

    (e) “Key
Employee” shall mean any employee who meets the definition of “key employee” as
defined in Section 416(i) of the Code.

     

    
      
         

      

      
        4

        
          

        

      

      
         

      

    

     

    (f) “Managed
Net Income” shall mean, the managed net income as reviewed by the Company’s
independent registered public accounting firm, released by the Company to the
public and approved by the Board, the net income (or net loss) of the Company
and its consolidated subsidiaries with respect to any year, plus (or minus) the
following items if included in such net income (or net loss)
amounts:

     

    (i)           the
non-controlling interests’ share in the net income (or net loss) of the
Company’s consolidated subsidiaries for such year;

    

    (ii)           the
cumulative effect of changes in accounting principles of the Company and its
consolidated subsidiaries for such year plus (or minus) the non-controlling
interests’ share in such changes in accounting principles;

    

    (iii)           any
extraordinary, unusual or non-recurring items for such year plus (or minus) the
non-controlling interests’ share in such extraordinary, unusual or non-recurring
items;

    

    (iv)           the
effect of discontinued operations for such year plus (or minus) the
non-controlling interests’ share in such discontinued operations;

    

    (v)           any
non-cash gain or loss attributable to any hedging agreement relating to
commodity prices for such year plus (or minus) the non-controlling interests’
share in such non-cash gain or loss; until such time as it is settled, at which
time the net gain or loss shall be included plus (or minus) the non-controlling
interests’ share in such non-cash gain or loss;

    

    (vi)           any
non-cash gain or loss attributable to any changes in accounting principles or
policies (including adoption of International Financial Reporting Standards) for
such year plus (or minus) the non-controlling interests’ share in such non-cash
gain or loss;

    

    (vii)           any
non-cash asset impairment charges (including any goodwill impairment) and any
amortization of intangible assets or liabilities for such year following
approval of the Plan plus (or minus) the non-controlling interests’ share in
such non-cash charges or amortization;

    

    (viii)           any
change in cost of goods sold attributable to inventories resulting from the
acquisition method of accounting in connection with any acquisition for such
year following approval of the Plan plus (or minus) the non-controlling
interests’ share in such increase or decrease; and

    

    (ix)           any
adjustments specified by the Committee within the first 90 days of each year,
including without limitation, adjustments related to asset write-downs;
acquisition-related charges; litigation or claim judgments or settlements; the
effects of changes in tax law or other laws or provisions affecting reported
results; accruals for reorganization and restructuring programs; and unrealized
gains or losses on investments.

    

    (g) “Net Cash
Provided by Operating Activities” shall mean, with respect to any year, the net
cash provided by operating activities excluding working capital changes of the

     

    
      
         

      

      
        5

        
          

        

      

      
         

      

    

     

    Company
and its consolidated subsidiaries for such year as reviewed by the Company’s
independent registered public accounting firm, released by the Company to the
public and approved by the Board.

     

    (h) “Net
Interest Expense” shall mean, with respect to any year, the net interest expense
of the Company and its consolidated subsidiaries for such year as reviewed by
the Company’s independent registered public accounting firm, released by the
Company to the public and approved by the Board.

     

    (i) “Retirement”
shall mean early, normal or deferred retirement of the Participant 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 Participant that is deemed by
the Committee or its designee to constitute a retirement.

     

    (j) “Return
on Investment” shall mean, with respect to any year, the result (expressed as a
percentage) calculated according to the following formula:

     

    a + (b -
c)

    d

    

    in which
“a” equals Managed Net Income for such year, “b” equals Net Interest Expense for
such year, “c” equals Tax on Net Interest Expense for such year, and “d” equals
Total Investment of Capital for such year.

    

    (k) “Tax on
Net Interest Expense” shall mean, with respect to any year, the tax on the net
interest expense of the Company and its consolidated subsidiaries for such year
calculated at the appropriate income tax rate for such year as reviewed by the
Company’s independent registered public accounting firm.

     

    (l) “Total
Investment of Capital” shall mean, with respect to any year, (i) the sum of (A)
the average of total equity in the Company and its consolidated subsidiaries for
such year, (B) the average of temporary equity of the Company for such year, and
(C) the average of debt of the Company and its consolidated subsidiaries for
such year, all as shown in the quarterly balance sheets of the Company and its
consolidated subsidiaries for such year, (ii) minus the average of cash and cash
equivalents of the Company and its consolidated subsidiaries for such year as
shown in the quarterly balance sheets of the Company and its consolidated
subsidiaries for such year.  If the Company is required to adopt
International Financial Reporting Standards, the foregoing calculation will
exclude any impact resulting from such adoption.

     

    

    FREEPORT-McMoRan COPPER & GOLD
INC.

    

    

    By:                                                                           
       

    

    
      
         

      

      
        6

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