Document:

Exhibit 10.22

    
      

    

    Exhibit
      10.22

    

    McMoRan
      EXPLORATION CO.

    2003
      STOCK INCENTIVE PLAN

     

    SECTION
      1  

     

    Purpose.
      The
      purpose of the McMoRan Exploration Co. 2003 Stock Incentive Plan (the “Plan”) is
      to motivate and reward key employees, consultants and advisers by giving them
      a
      proprietary interest in the Company’s 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, Restricted
      Stock
      or Other Stock-Based Award.

     

    “Award
      Agreement” shall mean any written or electronic notice of grant, agreement,
      contract or other instrument or document evidencing any Award, which may, but
      need not, be required to be executed,
      acknowledged or accepted 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, until otherwise determined by the Board, the Corporate Personnel
      Committee of the Board.

     

    “Common
      Stock” shall mean shares of common stock, par value $0.01 per share, of the
      Company.

     

    “Company”
      shall mean McMoRan Exploration Co.

     

    “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.

     

    “Eligible
      Individual” 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,
      (iv) any consultant or adviser to the Company, a Subsidiary or to an entity
      described in clause (iii) hereof who provides services to the Company or a
      Subsidiary through 

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    such
      arrangement and (v) any person who has agreed in writing to become a person
      described in clauses (i), (ii), (iii) or (iv) 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. Notwithstanding
      anything contained herein to the contrary, no Limited Rights shall be granted
      after October 3, 2004.

     

    “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 10 of the
      Plan.

     

    “Participant”
      shall mean any Eligible Individual granted an Award under the Plan.

     

    “Person”
      shall mean any individual, corporation, partnership, limited liability company,
      association, joint-stock company, trust, unincorporated organization, government
      or political subdivision thereof or other entity.

     

    “Restricted
      Stock” shall mean any restricted stock granted under Section 9 of the
      Plan.

     

    “Section
      162(m)” shall mean Section 162(m) of the Code and all regulations promulgated
      thereunder as in effect from time to time.

     

    
      
         

      

      
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    “Shares”
      shall mean the shares of Common Stock 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  

     

    (a)  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 Individual; (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 Eligible
      Individual.

     

    (b)  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 and set the terms of,
      to
      cancel, modify or waive rights with respect to, or to alter, discontinue,
      suspend, or terminate Awards held by Eligible Individuals 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;
      provided, however, that the per share exercise price of any Option granted
      under
      this Section 3(b) shall be equal to the fair market value of the underlying
      Shares on the date of grant.

     

    
      
         

      

      
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    SECTION
      4  

     

    Eligibility. Any
      Eligible Individual 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.

     

    (A)  Subject
      to the other provisions of this Section 5(a), the number of Shares with respect
      to which Awards payable in Shares may be granted under the Plan shall be
      2,000,000. Awards that by their terms may be settled only in cash shall not
      be
      counted against the maximum number of Shares provided herein.

     

    (B)  The
      number of Shares that may be issued pursuant to Incentive Stock Options may
      not
      exceed 2,000,000 Shares.

     

    (C)  Subject
      to the other provisions of this Section 5(a), the maximum number of Shares
      with
      respect to which Awards in the form of Restricted Stock or Other Stock-Based
      Awards payable in Shares for which a per share purchase price that is less
      than
      100% of the fair market value of the securities to which the Award relates
      shall
      be 500,000 Shares.

     

    (D)  To
      the
      extent any Shares covered by an Award are not issued because the Award is
      forfeited or canceled or the Award is settled in cash, such Shares shall again
      be available for grant pursuant to new Awards under the Plan.

     

    (E)  In
      the
      event that Shares are issued as Restricted Stock or Other Stock-Based Awards
      under the Plan and thereafter are forfeited or reacquired by the Company
      pursuant to rights reserved upon issuance thereof, such Shares shall again
      be
      available for grant pursuant to new Awards under the Plan.

     

    (F)  If
      the
      exercise price of any Option is satisfied by tendering Shares to the Company,
      only the number of Shares issued net of the Shares tendered shall be deemed
      issued for purposes of determining the maximum number of Shares available for
      issuance under Section 5(a)(i)(A). However, all of the Shares issued upon
      exercise shall be deemed issued for purposes of determining the maximum number
      of Shares that may be issued pursuant to Incentive Stock Options.

     

    (ii)  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. The issuance of Shares may be effected on a
      non-certificated basis, to the extent not prohibited by applicable law or the
      applicable rules of any stock exchange.

     

    
      
         

      

      
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    (iii)  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 500,000 Shares. 

     

    (iv)  Use
      of
      Shares.
      Subject
      to the terms of the Plan and the overall limitation on the number of Shares
      that
      may be delivered under the Plan, the Committee may use available Shares as
      the
      form of payment for compensation, grants or rights earned or due under any
      other
      compensation plans or arrangements of the Company or a Subsidiary and the plans
      or arrangements of the Company or a Subsidiary assumed in business
      combinations.

     

    (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 shall, 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 11(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 Eligible Individuals to whom Options shall be
      granted, the number of Shares to be covered by each Option, the option price
      thereof, the conditions and limitations applicable to the exercise of the Option
      and the other terms thereof. 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.

     

    
      
         

      

      
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    (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. An Option may be exercised, in whole or in part, by
      giving written notice to the Company, specifying the number of Shares to be
      purchased. The exercise notice shall be accompanied by the full purchase price
      for the Shares. 

     

    (c)  Payment.
      The
      Option price shall be payable in United States dollars and may be paid by (i)
      cash or cash equivalent; (ii) delivery of shares of Common Stock, which shares
      shall be valued for this purpose at the fair market value (valued in accordance
      with procedures established by the Committee) as of the effective date of such
      exercise and, unless otherwise determined by the Committee, shall have been
      held
      by the optionee for at least six months; or (iii) in such other manner as may
      be
      authorized from time to time by the Committee. Prior to the issuance of Shares
      upon the exercise of an Option, a Participant shall have no rights as a
      shareholder.

     

    SECTION
      7  

     

    (a)  Stock
      Appreciation Rights.
      Subject
      to the provisions of the Plan, the Committee shall have sole and complete
      authority to determine the Eligible Individuals 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, the conditions and
      limitations applicable to the exercise of the Stock Appreciation Right and
      the
      other terms 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 Stock Appreciation Right 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.

     

    
      
         

      

      
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    SECTION
      8  

     

    (a)  Limited
      Rights.
      Subject
      to the provisions of the Plan, the Committee shall have sole and complete
      authority to determine the Eligible Individuals to whom Limited Rights shall
      be
      granted, the number of Shares to be covered by each Award of Limited Rights,
      the
      grant price thereof, the conditions and limitations applicable to the exercise
      of the Limited Rights and the other terms 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)  Grant
      of Restricted Stock.
      Subject
      to the provisions of the Plan, the Committee shall have sole and complete
      authority to determine the Eligible Individuals to whom Restricted Stock shall
      be granted, the number of Shares to be covered by each Award of Restricted
      Stock
      and the terms, conditions, and limitations applicable thereto. The Committee
      shall also have authority to grant restricted stock units. Restricted stock
      units shall be subject to the requirements applicable to Other Stock-Based
      Awards under Section 10. An Award of Restricted Stock may be subject to the
      attainment of specified performance goals or targets, restrictions on transfer,
      forfeitability provisions and such other terms and conditions as the Committee
      may determine, subject to the provisions of the Plan. An award of Restricted
      Stock may be made in lieu of the payment of cash compensation otherwise due
      to
      an Eligible Individual. To the extent that Restricted Stock is intended to
      qualify as “performance-based compensation” under Section 162(m), it must meet
      the additional requirements imposed thereby.

     

    (b)  The
      Restricted Period.
      At the
      time that an Award of Restricted Stock is made, the Committee shall establish
      a
      period of time during which the transfer of the Shares of Restricted Stock
      shall
      be restricted (the “Restricted Period”). Each Award of Restricted Stock may have
      a different Restricted Period. A Restricted Period of at least three years
      is
      required with incremental vesting of the Award over the three-year period
      permitted. However, if the grant or vesting of the Shares is subject to the
      attainment of specified performance goals, a Restricted Period of at least
      one
      year with incremental vesting is permitted. The expiration of the 

     

    
      
         

      

      
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    Restricted
      Period shall also occur as provided in the Award Agreement in accordance with
      Section 12(a) hereof. 

     

    (c)  Escrow.
      The
      Participant receiving Restricted Stock shall enter into an Award Agreement
      with
      the Company setting forth the conditions of the grant. Certificates representing
      Shares of Restricted Stock shall be registered in the name of the Participant
      and deposited with the Company, together with a stock power endorsed in blank
      by
      the Participant. Each such certificate shall bear a legend in substantially
      the
      following form:

     

    The
      transferability of this certificate and the shares of Common Stock represented
      by it are subject to the terms and conditions (including conditions of
      forfeiture) contained in the McMoRan Exploration Co. 2003 Stock Incentive Plan
      (the “Plan”) and a notice of grant issued thereunder to the registered owner by
      McMoRan Exploration Co. Copies of the Plan and the notice of grant are on file
      at the principal office of McMoRan Exploration Co.

     

    (d)  Dividends
      on Restricted Stock.
      Any and
      all cash and stock dividends paid with respect to the Shares of Restricted
      Stock
      shall be subject to any restrictions on transfer, forfeitability provisions
      or
      reinvestment requirements as the Committee may, in its discretion, prescribe
      in
      the Award Agreement.

     

    (e)  Forfeiture.
      In the
      event of the forfeiture of any Shares of Restricted Stock under the terms
      provided in the Award Agreement (including any additional Shares of Restricted
      Stock that may result from the reinvestment of cash and stock dividends, if
      so
      provided in the Award Agreement), such forfeited shares shall be surrendered
      and
      the certificates canceled. The Participants shall have the same rights and
      privileges, and be subject to the same forfeiture provisions, with respect
      to
      any additional Shares received pursuant to Section 5(b) or Section 11(b) due
      to
      a recapitalization, merger or other change in capitalization.

     

    (f)  Expiration
      of Restricted Period.
      Upon
      the expiration or termination of the Restricted Period and the satisfaction
      of
      any other conditions prescribed by the Committee or at such earlier time as
      provided in the Award Agreement or an amendment thereto, the restrictions
      applicable to the Restricted Stock shall lapse and a stock certificate for
      the
      number of Shares of Restricted Stock with respect to which the restrictions
      have
      lapsed shall be delivered, free of all such restrictions and legends, except
      any
      that may be imposed by law, to the Participant or the Participant’s estate, as
      the case may be.

     

    (g)  Rights
      as a Shareholder.
      Subject
      to the terms and conditions of the Plan and subject to any restrictions on
      the
      receipt of dividends that may be imposed in the Award Agreement, each
      Participant receiving Restricted Stock shall have all the rights of a
      shareholder with respect to Shares of stock during any period in which such
      Shares are subject to forfeiture and restrictions on transfer, including without
      limitation, the right to vote such Shares.

     

    (h)  Performance-Based
      Restricted Stock under Section 162(m).
      The
      Committee shall determine at the time of grant if a grant of Restricted Stock
      is
      intended to qualify as “performance-based compensation” as that term is used in
      Section 162(m). Any such grant shall 

     

    
      
         

      

      
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    be
      conditioned on the achievement of one or more performance measures. The
      performance measures pursuant to which the Restricted Stock shall vest shall
      be
      any or a combination of the following:
      earnings
      per share, return on assets, an economic value added measure, stockholder
      return, earnings, share price, return on equity, return on investment, return
      on
      fully-employed capital, reduction of expenses, containment of expenses within
      budget, reserve recognition, addition to reserves, cash provided by operating
      activities, increase in cash flow, return on cash flow, cash flow per equivalent
      barrel, finding costs per equivalent barrel, or increase in production, of
      the
      Company, a division of the Company or a Subsidiary. For any performance period,
      such performance objectives may be measured on an absolute basis or relative
      to
      a group of peer companies selected by the Committee, relative to internal goals
      or relative to levels attained in prior years. For grants of Restricted Stock
      intended to qualify as “performance-based compensation,” the grants of
      Restricted Stock and the establishment of performance measures shall be made
      during the period required under Section 162(m).

     

    SECTION
      10  

     

    (a)  Other
      Stock-Based Awards.
      The
      Committee is hereby authorized to grant to Eligible Individuals an “Other
      Stock-Based Award”, which shall consist of an Award that is not an instrument or
      Award specified in Sections 6 through 9 of this Plan, the value of which is
      based in whole or in part on the value of Shares, including a restricted stock
      unit. 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. To the extent that
      an
      Other Stock-Based Award is intended to qualify as “performance-based
      compensation” under Section 162(m), it must be made subject to the attainment of
      one or more of the performance goals specified in Section 10(b) hereof and
      meet
      the additional requirements imposed by Section 162(m).

     

    (b)  Performance-Based
      Other Stock-Based Awards under Section 162(m).
      The
      Committee shall determine at the time of grant if the grant of an Other
      Stock-Based Award is intended to qualify as “performance-based compensation” as
      that term is used in Section 162(m). Any such grant shall be conditioned on
      the
      achievement of one or more performance measures. The performance measures
      pursuant to which the Other Stock-Based Award shall vest shall be any or a
      combination of the following: earnings per share, return on assets, an economic
      value added measure, shareholder return, earnings, share price, return on
      equity, return on investment, return on fully-employed capital, reduction of
      expenses, containment of expenses within budget, reserve recognition, addition
      to reserves, cash provided by operating activities, increase in cash flow,
      return on cash flow, cash flow per equivalent barrel, finding costs per
      equivalent barrel, or increase in production of the Company, a division of
      the
      Company or a Subsidiary. For any performance period, such performance objectives
      may be measured on an absolute basis or relative to a group of peer companies
      selected by the Committee, relative to internal goals or relative to levels
      attained in prior years. For grants of Other Stock-Based Awards intended to
      qualify as “performance-based compensation,” the grants of Other Stock-Based
      Awards and the establishment of performance measures shall be made during the
      period required under Section 162(m).

     

    
      
         

      

      
        9

        
          

        

      

      
         

      

    

     

    (c)  Dividend
      Equivalents.
      In the
      sole and complete discretion of the Committee, an Award, whether made as an
      Other Stock-Based Award under this Section 10 or as an Award granted pursuant
      to
      Sections 6 through 9 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
      11  

     

    (a)  Amendment
      or Discontinuance of the Plan.
      The
      Board may amend or discontinue the Plan at any time; provided, however, that
      no
      such amendment may 

     

    (i)  without
      the approval of the stockholders, (a) increase, subject to adjustments permitted
      herein, the maximum number of shares of Common Stock that may be issued through
      the Plan, (b) materially increase the benefits accruing to Participants under
      the Plan, (c) materially expand the classes of persons eligible to participate
      in the Plan, or (d) amend Section 11(c) to permit a reduction in the exercise
      price of Options; or

     

    (ii)  materially
      impair, without the consent of the recipient, an Award previously
      granted.

     

    (b)  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.

     

    (c)  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. Notwithstanding the
      foregoing, except for adjustments permitted under Sections 5(b) and 11(b) 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.

     

    SECTION
      12  

     

    (a)  Award
      Agreements.
      Each
      Award hereunder shall be evidenced by an agreement or notice delivered to the
      Participant (by paper copy or electronically) 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 or cessation of consulting or advisory services of the Participant
      and the effect thereon, if any, of a change in control of the
      Company.

     

    
      
         

      

      
        10

        
          

        

      

      
         

      

    

     

    (b)  Withholding.
      

     

    (i)  (i)
      A
      Participant shall 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 under the Plan, the Participant may, if permitted by the Committee,
      satisfy this obligation in whole or in part by delivering currently owned Shares
      or by electing (the “Election”) to have the Company withhold from the issuance
      Shares, which Shares shall have a value equal to the minimum amount required
      to
      be withheld. The value of the Shares delivered or withheld shall be based on
      the
      fair market value of the Shares on the date as of which the amount of tax to
      be
      withheld shall be determined in accordance with applicable tax laws (the “Tax
      Date”).

     

    (iii)  Each
      Election to have Shares withheld must be made prior to the Tax Date. If a
      Participant wishes to deliver Shares in payment of taxes, the Participant must
      so notify the Company prior to the Tax Date. 

     

    (c)  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) if permitted by the Committee and so provided in
      the
      Award Agreement or an amendment thereto, Options and Limited Rights granted
      in
      tandem therewith may be transferred or assigned (w) to Immediate Family Members,
      (x) 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, (y) 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 (z) 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 (x), (y) or (z) 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 12(c).

     

    (d)  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 Securities and Exchange
      Commission, any stock 

     

    
      
         

      

      
        11

        
          

        

      

      
         

      

    

     

    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.

     

    (e)  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.

     

    (f)  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 or as a consultant or adviser to the Company or any
      Subsidiary or in the employ of or as a consultant or adviser to 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
      or a Subsidiary, free from any liability or any claim under the Plan, unless
      otherwise expressly provided in the Plan or in any Award Agreement. No Eligible
      Individual or other person shall have any claim to be granted any Award, and
      there is no obligation for uniformity of treatment of Eligible Individuals,
      Participants or holders or beneficiaries of Awards.

     

    (g)  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.

     

    (h)  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.

     

    (i)  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.

     

    (j)  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.

     

    
      
         

      

      
        12

        
          

        

      

      
         

      

    

    (k)  Deferral
      Permitted.
      Payment
      of cash or distribution of any Shares to which a Participant is entitled under
      any Award shall be made as provided in the Award Agreement. Payment may be
      deferred at the option of the Participant if provided in the Award
      Agreement.

     

    (l)  Compliance
      with Law.
      The
      Company intends that Awards granted under the Plan, or any deferrals thereof,
      will comply with the requirements of Section 409A of the Code and all
      regulations and guidance promulgated thereunder, to the extent
      applicable.

     

    (m)  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
      13  

     

    Term
      of the Plan.
      Subject
      to Section 11(a), no Awards may be granted under the Plan later than ten years
      after the date the Plan was adopted by the Board; provided, however, that Awards
      granted prior to such date shall remain in effect until such Awards have either
      been satisfied, expired or canceled under the terms of the Plan, and any
      restrictions imposed on Shares in connection with their issuance under the
      Plan
      have lapsed.

     

    
      
         

      

      
        13Exhibit 10.29

    
      

    

    Exhibit
      10.29

    

    MCMORAN
      EXPLORATION CO.

    2004
      DIRECTOR COMPENSATION PLAN

    

    

    1.  Purpose
      of the Plan.

     

    The
      purpose of the McMoRan Exploration Co. 2004 Director Compensation Plan is to
      promote the interests of the Company and its stockholders by strengthening
      the
      Company’s ability to attract, motivate and retain directors of experience and
      ability, and to encourage the highest level of director performance by providing
      directors with (i) a proprietary interest in the Company’s financial success and
      growth through the annual grants of Options to purchase the Company's Common
      Stock and the ability to elect to receive compensation in shares of Common
      Stock
      and (ii) the ability to defer compensation. In recognition of their continued
      service to the Company and the Board, the Plan also provides for the issuance
      of
      Options to each of the Advisory Directors to replace options that have or will
      be terminated as a result of their resignations from the Board. 

     

    2.  Definitions.

     

    For
      purposes of this Plan, the following terms shall have the meanings
      indicated:

     

    2.1  “Advisory
      Director” means a person designated as such by the Board.

     

    2.2  “Board”
      means the Board of Directors of the Company.

     

    2.3  “Cash
      Compensation” means the annual cash retainer paid to an Eligible Director and
      any meeting fees, but does not include any expense reimbursement paid to an
      Eligible Director.

     

    2.4  “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.

     

    2.5  “Committee”
      means the Corporate Personnel Committee of the Board or a subcommittee thereof.
      The Committee shall consist of not fewer than two members of the Board of
      Directors, each of whom shall (a) qualify as a “non-employee director” under
      Rule 16b-3 promulgated under the Securities Exchange Act of 1934 (the “1934
      Act”), or any successor rule, and (b) qualify as an “outside director” under
      Section 162(m) of the Internal Revenue Code of 1986, as amended (the “Code”),
      and the regulations promulgated thereunder.

     

    2.6  “Common
      Stock” means the common stock, $0.01 par value per share, of the
      Company.

     

    2.7  “Company”
      means McMoRan Exploration Co., a Delaware corporation.

     

    2.8  “Director”
      means each member of the Board who is not employed by the Company or any of
      its
      subsidiaries.

     

    2.9  “Disability”
      shall occur if (a) a physical or mental illness renders the Participant
      incapable of satisfactorily discharging his or her duties and responsibilities
      as a Director for a period of 90 consecutive days, and (b) a duly qualified
      physician chosen by the Company and reasonably acceptable to the Participant
      or
      his or her legal representative certifies in writing that the Participant has
      become disabled.

     

    2.10  “Effective
      Date” means the date this Plan is approved by the Company’s
      stockholders.

     

    2.11  “Eligible
      Director” means each Director and Advisory Director, and includes, for purposes
      of Section 6.6 hereof only, former Directors and Advisory Directors who continue
      to provide services to the Company or a subsidiary of the Company pursuant
      to a
      consulting or other arrangement.

     

    2.12  “Fair
      Market Value.” Except as provided below in connection with a cashless exercise
      through a broker, for any purpose relevant under the Plan, the 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. In the context of a cashless exercise through a broker,
      the fair market value shall be the price at which the shares of Common Stock
      are
      actually sold.

     

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

     

    2.13  “Grant
      Date” means June 1st
      of each
      year throughout the term of this Plan, provided shares of Common Stock remain
      available for issuance hereunder.

     

    2.14  “Option”
      means a stock option granted under the terms of the Plan that does not satisfy
      the requirements of Section 422 of the Code.

     

    2.15  “Option
      Notice” means any written or electronic notice of grant, evidencing any
      Option.

     

    2.16  “Participant”
means
      any individual granted an Option under this
      Plan.

     

    2.17  “Plan”
      means the McMoRan Exploration Co. 2004 Director Compensation Plan as set forth
      herein and as amended, restated, supplemented or otherwise modified from time
      to
      time.

     

    3.  Shares
      of Common Stock Subject to the Plan.

     

    3.1  Subject
      to the adjustment provisions of Section 10, the aggregate number of shares
      of
      Common Stock that may be issued pursuant to the terms of the Plan shall be
      175,000. Shares issued or delivered upon the exercise of Options may be either
      authorized but unissued shares or shares issued and thereafter acquired by
      the
      Company.

     

    3.2  To
      the
      extent any shares of Common Stock subject to an Option are not issued because
      the Option is forfeited or cancelled, such shares shall again be available
      for
      grant pursuant to Options granted under the Plan. If the exercise price of
      any
      Option granted under this Plan is satisfied by tendering shares of Common Stock
      to the Company (by either actual delivery or by attestation), only the number
      of
      shares of Common Stock issued net of the shares of Common Stock tendered shall
      be deemed delivered for purposes of determining the maximum number of shares
      of
      Common Stock available for delivery under the Plan.

     

    4.  Administration
      of the Plan.

     

    4.1  The
      Plan
      shall be administered by the Committee, which shall have the power to interpret
      the Plan and, subject to its provisions, to prescribe, amend and rescind Plan
      rules and to make all other determinations necessary for the Plan’s
      administration. 

     

    4.2  All
      action taken by the Committee in the administration and interpretation of the
      Plan shall be final and binding upon all parties. No member of the Committee
      will be liable for any action or determination made in good faith by the
      Committee with respect to the Plan or any Option.

     

    4.3  The
      Committee does not have the authority to make discretionary grants of Options
      under the Plan. Grants may be made only as provided in Section 5
      hereof.

     

    5.  Grant
      of Options.

     

    5.1  Beginning
      at such time as shares of Common Stock are not available for grant under the
      Company’s 1998 Stock Option Plan for Non-Employee Directors (the "1998 Plan"),
      on 

     

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

     

    each
      Grant Date, each Eligible Director who is not granted options under the 1998
      Plan on that date will be automatically granted an Option to acquire 3,500
      shares of Common Stock.

     

    5.2  While
      the
      Plan remains in effect and shares of Common Stock remain available for issuance
      hereunder, upon any person’s initial election or appointment as an Eligible
      Director, otherwise than at an annual meeting of stockholders, such person
      shall
      be granted an Option as follows:

     

    (a)  If
      less
      than six full calendar months have elapsed since the most recent Grant Date,
      then the Eligible Director shall receive an Option to acquire 3,500 shares
      of
      Common Stock; or

     

    (b)  If
      six or
      more full calendar months have elapsed since the most recent Grant Date, then
      the Eligible Director shall receive an Option to acquire 1,750 shares of Common
      Stock.

     

    5.3  On
      February 9, 2004, two Directors resigned from the Board and were named Advisory
      Directors. All outstanding incentive awards previously granted to such directors
      under the Company’s 1998 Stock Option Plan for Non-Employee Directors were or
      will be terminated under the terms of that plan as a result of such individuals’
resignations from the Board. Accordingly, on May 9, 2004, the following Advisory
      Directors will receive a one-time grant of Options, as described below, to
      replace the previously granted awards that have or will terminate.

     

    (a)  Gabrielle
      K. McDonald shall receive Options to acquire 7,592 shares of Common Stock,
      which
      Options shall have the specific terms described on Annex A hereto.

     

    (b)  Morrison
      C. Bethea shall receive Options to acquire 6,500 shares of Common Stock, which
      Options shall have the specific terms described on Annex A hereto.

     

    6.  Terms
      and Conditions of Options.

     

    6.1  Unless
      exercisability is accelerated as provided in Section 11.1 hereof and except
      for
      the grants described in Section 5.3 hereof, the Options shall become exercisable
      in one-quarter increments on the first, second, third and fourth anniversaries
      of the applicable Grant Date.

     

    6.2  Unless
      terminated earlier as provided in Sections 5.3, 6.6 or 11.2, the Options shall
      expire ten years following the applicable Grant Date.

     

    6.3  Except
      for the grants described in Section 5.3, the exercise price of the Options
      granted to Eligible Directors shall be equal to the Fair Market Value, as
      defined herein, of a share of Common Stock on the applicable Grant
      Date.

     

    6.4  Options
      must be exercised by delivering written notice to the Company or any person
      or
      entity designated by the Company on forms approved by the Company and payment
      of
      the purchase price thereof in full. Any such exercise shall be effective upon
      receipt by the Company or its designee of such notice and such payment. Unless
      the Committee shall 

     

    
      
         

      

      
        4

        
          

        

      

      
         

      

    

     

    determine
      otherwise in any particular case, such payment may be made by (a) cash, (b)
      cash
      equivalent (which may be the personal check of the exercising holder of the
      Option), (c) by tendering shares of Common Stock, either by actual delivery
      or
      by attestation, that are owned by such holder and that have been held by the
      Participant or eligible transferee for at least six months, or (d) instructing
      a
      broker approved by the Company to sell shares of Common Stock acquired upon
      the
      exercise of the option and to remit to the Company a sufficient portion of
      the
      cash proceeds to pay the exercise price; or (e) a combination thereof, in each
      case having an aggregate Fair Market Value equal to the aggregate exercise
      price
      of the portion of the Option being exercised.

     

    6.5  Any
      provision of this Plan or any Option Notice to the contrary notwithstanding,
      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 Sections 10 and 11.2 hereof, 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.

     

    6.6  (a)For
      purposes of this Section 6.6, if a Participant continues to provide services
      to
      the Company or a subsidiary of the Company pursuant to a consulting or other
      arrangement, the Participant will not "cease to be an Eligible Director" until
      such time as the Participant no longer provides such services.

     

    (b)  If
      a
      Participant ceases to be an Eligible Director for any reason other than death,
      Disability or retirement from the Board, all of the Options granted to such
      Participant while serving as an Eligible Director shall be terminated except
      that any Options, to the extent then exercisable, may be exercised by the holder
      thereof within three months after such Participant ceases to be an Eligible
      Director, but not later than the termination date of the Option. 

     

    (c)  If
      a
      Participant ceases to be an Eligible Director by reason of the Participant’s
      Disability or retirement from the Board, all of the Options granted to such
      Participant while serving as an Eligible Director shall be terminated 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
      such
      Participant ceases to be an Eligible Director, but not later than the
      termination date of the Option.

     

    (d)  If
      a
      Participant dies while serving as an Eligible Director, all Options granted
      to
      such Participant shall be terminated, 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 Participant’s estate, or the person designated in the
      Participant’s last will and testament, as appropriate.

     

    (e)  If
      a
      Participant dies after ceasing to be an Eligible Director, all of the Options
      granted to such Participant shall be terminated, except that any Options, to
      the
      extent still outstanding and exercisable by the holder thereof at the time
      of
      such death, may be exercised 

     

    
      
         

      

      
        5

        
          

        

      

      
         

      

    

     

    until
      the
      third anniversary of the date the Participant ceased to be an Eligible Director,
      but not later than the termination date of the Option, by the holder thereof,
      the Participant’s estate, or the person designated in the Participant’s last
      will and testament, as appropriate.

     

    7.  Election
      to Have Annual Retainer Paid in Common Stock.

     

    7.1  Each
      Eligible Director may make a stock purchase election on a form approved by
      the
      Committee (the “Stock Purchase Election Form”) directing that up to one hundred
      percent of his or her annual retainer, in twenty-five percent increments, be
      allocated to the purchase of Common Stock on his or her behalf. 

     

    7.2  A
      stock
      purchase election will be effective on the first date that the portion of the
      annual retainer subject to the election is paid that is at least five business
      days after the date the Stock Purchase Election Form is filed with the Company’s
      Human Resources Department in the manner required by the Company. Stock purchase
      elections may be revoked or modified effective on the first date that the
      portion of the annual retainer is paid that is at least five business days
      following the date the revocation or modified election is filed with the Company
      in the manner required by the Company.

     

    7.3  If
      an
      Eligible Director has timely submitted a satisfactory Stock Purchase Election
      Form, the Eligible Director shall be issued that number of whole shares of
      Common Stock, rounded down if necessary, equal to the amount of the Director's
      retainer to be allocated to the purchase of Common Stock on that date divided
      by
      the Fair Market Value of a share of Common Stock as of the trading date
      immediately preceding the issue date.

     

    8.  Deferral
      of Cash Compensation.

     

    8.1  Each
      Eligible Director may elect to defer his or her Cash Compensation that is not
      used to purchase Common Stock pursuant to Section 7 hereof, in twenty-five
      percent increments, to a deferred compensation account (a “Deferred Compensation
      Account”) established for the Eligible Director’s benefit. An election to defer
      Cash Compensation hereunder shall be made by means of a form approved by the
      Company (the “Deferral Election Form”) and shall be effective only with respect
      to Cash Compensation earned on or after January 1st
      of the
      fiscal year following the receipt of the Deferral Election Form by the Company’s
      Human Resources Department. 

     

    8.2  An
      Eligible Director may revoke or modify an election made pursuant to Section
      8.1
      with respect to deferrals of Cash Compensation to be earned in the future and
      such revocation or modification shall take effect on the first day of the fiscal
      quarter that is more than twelve months after receipt of the written revocation
      or modification by the Committee and subject to such other rules as may be
      established by the Committee.

     

    9.  Deferred
      Compensation Accounts.

     

    9.1  A
      Deferred Compensation Account shall be established for each Eligible Director
      who executes a Deferral Election Form.

     

    
      
         

      

      
        6

        
          

        

      

      
         

      

    

     

    9.2  An
      Eligible Director’s Deferred Compensation Account shall be credited with that
      portion of the Eligible Director’s Cash Compensation that the Eligible Director
      has elected to defer to his or her Deferred Compensation Account pursuant to
      Section 8.1 as of the date such Compensation would otherwise have been paid
      to
      the Eligible Director.

     

    9.3  All
      amounts in an Eligible Director’s Deferred Compensation Account shall accrue
      interest at a rate equal to the prime commercial lending rate announced from
      time to time by JPMorgan Chase Bank (compounded quarterly) or by another major
      national bank headquartered in New York, New York and designated by the
      Committee.

     

    9.4  Amounts
      credited to an Eligible Director's Deferred Compensation Account shall be
      distributed in either a single lump sum or annual installments (not to exceed
      ten), as designated by the Eligible Director in his or her applicable Deferral
      Election Form. Distribution of a Deferred Compensation Account shall be made
      (in
      the case of a lump sum payment) or commence (in the case of installment
      payments) as follows: (i) as soon as administratively possible following the
      date the Eligible Director ceases to be an Eligible Director, or (ii) on such
      other date as may be specified by the Eligible Director in his or her Deferral
      Election Form, provided such date is at least two years after the date the
      Deferral Election Form is received by the Committee. Notwithstanding an Eligible
      Director’s election pursuant to his or her applicable Deferral Election Form, a
      distribution of all amounts remaining unpaid in the Deferred Compensation
      Account shall be made as soon as administratively possible after the tenth
      anniversary of the date the Eligible Director ceases to be an Eligible Director.
      If an Eligible Director elects to have his or her Deferred Compensation Account
      distributed in installments, the amount of the first installment shall be a
      fraction of the value of the Eligible Director's Deferred Compensation Account,
      the numerator of which is one and denominator of which is the total number
      of
      installments elected, and the amount of each subsequent installment shall be
      a
      fraction of the value (including income credited pursuant to Section 10.3)
      on
      the date preceding each subsequent payment, the numerator of which is one and
      the denominator of which is the total number of installments elected minus
      the
      number of installments previously paid.

     

    9.5  In
      the
      event of the death of an Eligible Director prior to the distribution of his
      or
      her Deferred Compensation Account in full, the value of such Deferred
      Compensation Account shall be determined as of the date of death and such amount
      shall be distributed in a single lump sum payment to the Eligible Director's
      estate or designated beneficiary as soon as administratively feasible
      thereafter.

     

    9.6  At
      least
      once per year, each Eligible Director who has executed a Deferral Election
      Form
      shall be provided with a statement of his or her Deferred Compensation
      Account.

     

    9.7  The
      right
      of any Eligible Director to receive a distribution under the provisions of
      this
      Section 9 shall constitute an unsecured claim against the general assets of
      the
      Company.

     

    10.  Adjustment
      Provisions.

     

    In
      the
      event of any recapitalization, reclassification, stock dividend, stock split,
      combination of shares or other change in the Common Stock, all limitations
      on
      numbers of shares of Common Stock provided in this Plan, and the number of
      shares subject to outstanding 

     

    
      
         

      

      
        7

        
          

        

      

      
         

      

    

     

    Options
      and stock purchase elections, shall be equitably adjusted in proportion to
      the
      change in outstanding shares of Common Stock. In addition, in the event of
      any
      such change in the Common Stock, the Committee shall make any other adjustment
      that it determines to be equitable, including without limitation adjustments
      to
      the exercise price of any Option in order to provide Participants with the
      same
      relative rights before and after such adjustment. 

     

    11.  Change
      of Control.

     

    11.1  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. 

     

    11.2  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 held by any individual Participant:

     

    (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 Participants thereunder shall
      terminate,

     

    (b)  make
      such
      equitable adjustments to Options 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 some or all Participants 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
      each
      such Participant 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.

     

    11.3  For
      the
      purposes of any conversions or exchanges under paragraph (c) of Section 11.2,
      the “Change of Control Value” shall equal the amount determined by whichever of
      the following items is applicable:

     

    
      
         

      

      
        8

        
          

        

      

      
         

      

    

     

    (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.

     

    11.4  In
      the
      event that the consideration offered to stockholders of the Company in any
      transaction described in this Section 11 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.

     

    12.  General
      Provisions.

     

    12.1  Nothing
      in the Plan or in any instrument executed pursuant to the Plan will confer
      upon
      any Eligible Director any right to continue as an Eligible Director or
      affect
      the right of the Board to remove any Eligible Director.

     

    12.2  No
      shares
      of Common Stock will be issued or transferred pursuant to an Option unless
      and
      until all then-applicable requirements imposed by federal and state securities
      and other laws, rules and regulations and by any regulatory agencies having
      jurisdiction, and by any stock exchanges upon which the Common Stock may be
      listed, have been fully met to the Company’s satisfaction. As a condition
      precedent to the issuance of shares pursuant to an Option, the Company may
      require the Participant to take any reasonable action to meet such requirements.
      

     

    12.3  No
      Participant and no beneficiary or other person claiming under or through such
      Participant will have any right, title or interest in or to any shares of Common
      Stock allocated or reserved under the Plan or subject to any Option except
      as to
      such shares of Common Stock, if any, that have been issued or transferred to
      such Participant.

     

    12.4  No
      Options 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 Option Notice or
      an
      amendment thereto; or (iv) if permitted by the Committee and so provided in
      the
      Option Notice or an amendment thereto, Options may be transferred or assigned
      (w) to Immediate Family Members, (x) 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, (y) 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 (z) 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 (x), (y) or (z) 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 

     

    
      
         

      

      
        9

        
          

        

      

      
         

      

    

     

    be
      defined as the spouse and natural or adopted children or grandchildren of the
      Participant 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. The designation of a designated beneficiary shall not be
      a
      violation of this Section 12.4.

     

    12.5  Each
      Option shall be evidenced by an Option Notice.

     

    13.  Amendment,
      Discontinuance or Termination of the Plan.

     

    13.1  The
      Board
      may amend or discontinue the Plan at any time; provided, however, that no such
      amendment may

     

    (a)  without
      the approval of the stockholders, (i)
      increase, subject to adjustments permitted herein, the maximum number of shares
      of Common Stock that may be issued through the Plan, (ii)
      materially increase the benefits accruing to Participants under the Plan,
(iii)
      materially expand the classes of persons eligible to participate in the Plan,
      (iv)
      expand
      the types of awards available under the Plan, (v)
      materially extend the term of the Plan, (vi)
      materially change the method for determining the exercise price of an Option,
      or
(vii)
      amend
      Section 6.5 to permit a reduction in the exercise price of Options;
      or

     

    (b)  materially
      impair, without the consent of the recipient, an Option previously
      granted.

     

    13.2  Term
      of the Plan.
      Subject
      to Section 13.1, no Options may be granted under the Plan later than May 6,
      2014, which is ten years after the Effective Date of the Plan; provided,
      however, that Options granted prior to such date shall remain in effect until
      all such Options have either been satisfied, expired or canceled under the
      terms
      of the Plan.

     

    
      
         

      

      
        10

        
          

        

      

      
         

      

    

    ANNEX
      A to 2004 Director Compensation Plan

     

    Special
      Awards to be Granted May 9, 2004

     

    

     

    Gabrielle
      K. McDonald,
      Advisory Director, shall receive the following Options:

     

    
      	
              Number
                of 

              Options

            	 	
              Exercise
                Price

            	 	
              Vesting
                Schedule

            	 	
              Termination
                

              Date*

            
	
              364
                options

            	 	
              $12.0954

            	 	
              May
                9, 2004

            	 	
              May
                1, 2005

            
	
              364
                options

            	 	
              $22.1411

            	 	
              May
                9, 2004

            	 	
              May
                1, 2006

            
	
              364
                options

            	 	
              $17.6902

            	 	
              May
                9, 2004

            	 	
              May
                1, 2007

            
	
              1,000
                options

            	 	
              $15.7813

            	 	
              75%
                on May 9, 2004, 25% on June 1, 2004

            	 	
              June
                1, 2010

            
	
              1,000
                options

            	 	
              $13.075

            	 	
              50%
                on May 9, 2004, 25% on June 1, 2004, and on the next anniversary
                thereof

            	 	
              June
                1, 2011

            
	
              1,000
                options

            	 	
              $
                4.275

            	 	
              25%
                on May 9, 2004, 25% on June 1, 2004, and on each of the next two
                anniversaries thereof

            	 	
              June
                1, 2012

            
	
              3,500
                options

            	 	
              $12.71

            	 	
              25%
                on June 1, 2004, and on each of the next three anniversaries
                thereof

            	 	
              June
                1, 2013

            

    

    

     

    Morrison
      C. Bethea,
      Advisory Director, shall receive the following Options:

     

    
      	
              Number
                of 

              Options

            	 	
              Exercise
                Price

            	 	
              Vesting
                Schedule

            	 	
              Termination
                

              Date*

            
	
               

              1,000
                options

            	 	
               

              $15.7813

            	 	
               

              75%
                on May 9, 2004, 25% on June 1, 2004

            	 	
               

              June
                1, 2010

            
	
              1,000
                options

            	 	
              $13.075

            	 	
              50%
                on May 9, 2004, 25% on June 1, 2004, and on the next anniversary
                thereof

            	 	
              June
                1, 2011

            
	
              1,000
                options

            	 	
              $
                4.275

            	 	
              25%
                on May 9, 2004, 25% on June 1, 2004, and on each of the next two
                anniversaries thereof

            	 	
              June
                1, 2012

            
	
              3,500
                options

            	 	
              $12.71

            	 	
              25%
                on June 1, 2004, and on each of the next three anniversaries thereof
                

            	 	
              June
                1, 2013

            

    

    _______________

    *Unless
      terminated earlier pursuant to the terms of the Plan.

     

    
      
         

      

      
        11

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