PSE Circular for Brokers No. 1186-98

May 27, 1998 PSE CIRCULAR FOR BROKERS NO. 1186-98 Philippine Stock Exchange, Inc. Phil. Stock Exchange Centre, Exchange Road Ortigas Center, Pasig City Attention: Mr . Ruben L . Almadro - Fax No . 636-08-09 VP-Compliance & Surveillance Dept . Gentlemen : In compliance with PSE rules and regulations on disclosure, our Company hereby informs the PSE that during the annual meeting of the stockholders of the Company held yesterday, May 26, 1998, the stockholders approved and ratified the extension of the termination date for granting of stock options from May 31, 1998 to May 31, 2003. Attached is the resolution passed by the Board of Directors during its regular meeting held on May 22, 1998 approving said extension for granting of stock options. Also attached is the Company's Amended Stock Option Plan incorporating the termination date for granting of stock options to May 31, 2003. We hope that this constitutes compliance with disclosure requirements of the PSE. Thank you for your kind attention. Very truly yours, BENGUET CORPORATION By: (SGD.) SOLEDAD CAGAMPANG-DE CASTRO Corporate Secretary BENGUET CORPORATION STOCK OPTION PLAN (Amended) 1. PURPOSE OF THE PLAN THE PURPOSE OF THE STOCK OPTION PLAN (HEREINAFTER REFERRED TO AS THE "PLAN") IS TO ENCOURAGE STOCK OWNERSHIP IN BENGUET CORPORATION. (HEREINAFTER REFERRED TO AS THE "COMPANY") BY GRANTING OPTIONS TO SELECTED STAFF EMPLOYEES, DIRECTORS AND CONSULTANTS OF THE COMPANY AND ITS SUBSIDIARIES IN ORDER TO PROVIDE THEM WITH GREATER INCENTIVE NOT ONLY TO PROMOTE THE COMPANY'S AND ITS SUBSIDIARIES INTEREST BUT ALSO TO REMAIN IN THEIR EMPLOY. 2. ADMINISTRATION OF THE PLAN THE PLAN SHALL BE ADMINISTERED BY A STOCK OPTION COMMITTEE (HEREINAFTER REFERRED TO AS THE "COMMITTEE") TO BE APPOINTED BY THE BOARD OF DIRECTORS OF THE COMPANY. THE COMMITTEE SHALL BE COMPOSED OF THREE DIRECTORS, ONE OF WHOM SHALL BE ITS CHAIRMAN, AND SHALL HOLD MEETINGS AT SUCH TIME AND PLACE AS IT SHALL DEEM ADVISABLE. THIS COMMITTEE SHALL HAVE THE POWER TO GRANT STOCK OPTIONS UNDER THIS PLAN. MEMBERS OF THE STOCK OPTION COMMITTEE ARE NOT ELIGIBLE TO RECEIVE ANY OPTIONS GRANTED UNDER THIS PLAN. A MAJORITY OF THE COMMITTEE SHALL CONSTITUTE A QUORUM AT ALL MEETINGS, AND ALL ACTIONS OF THE COMMITTEE SHALL BE MADE BY A MAJORITY OF ITS MEMBERS. A DECISION OR DETERMINATION REDUCED TO WRITING AND SIGNED BY THE MAJORITY OF THE COMMITTEE SHALL BE AS FULLY EFFECTIVE AS IT MADE BY A MAJORITY VOTE AT A MEETING DULY CALLED AND HELD. THE INTERPRETATION AND CONSTRUCTION BY THE COMMITTEE OF ANY PROVISION OF THE PLAN AND OF THE OPTIONS GRANTED THEREUNDER SHALL UNLESS OTHERWISE DETERMINED BY THE BOARD OF DIRECTORS, BE FINAL AND CONCLUSIVE. 3. ELIGIBILITY OPTIONS SHALL BE GRANTED ONLY TO STAFF EMPLOYEES, DIRECTORS OR CONSULTANTS OF THE COMPANY OR ITS SUBSIDIARIES, WHO, IN THE JUDGMENT OF THE STOCK OPTION COMMITTEE, ARE RESPONSIBLE FOR THE MANAGEMENT OF THE ENTERPRISE OR CONTRIBUTE IN AN IMPORTANT MEASURE TO THE SUCCESS OF THE COMPANY OR ITS SUBSIDIARIES. THE TERM "STAFF EMPLOYEES" SHALL MEAN THE OFFICERS AND OTHER "KEY" EMPLOYEES OF THE COMPANY OR ITS SUBSIDIARIES, INCLUDING THOSE WHO ARE CONCURRENTLY DIRECTORS OF THE COMPANY OR ITS SUBSIDIARIES. NO EMPLOYEE, DIRECTOR OF CONSULTANT SHALL BE GRANTED AN OPTION TO PURCHASE MORE THAN 200,000 * SHARES. 4. SHARES SUBJECT TO THE PLAN THE BOARD OF DIRECTORS HAS AUTHORIZED 4,000,000 ** SHARES OF THE COMPANY'S CLASS A COMMON STOCK AND/OR CLASS B COMMON STOCK TO BE GRANTED UNDER THE PLAN. ONLY SHARES OF CLASS B COMMON STOCK SHALL BE GRANTED TO OPTIONEES NOT ELIGIBLE TO OWN SHARES OF CLASS A COMMON STOCK, PROVIDED, THAT OPTIONEES WHO HAVE BEEN PREVIOUSLY AWARDED UNDER THIS PLAN OPTION SHARE OF CLASS A COMMON STOCK MAY EXERCISE SUCH OPTIONS AWARDED AS FOLLOWS: TO THE EXTENT OF 25% THEREOF IN THE FORM OF CLASS B SHARES; *** THE REMAINING 75% IN THE FORM OF 60% CLASS A AND 40% CLASS B SHARES, PROVIDED, FURTHER, THAT ANY NEW OPTIONS TO BE GRANTED HEREAFTER TO FILIPINO OPTIONEES MAY BE IN THE FORM OF 60% CLASS A AND 40% CLASS B SHARES, **** PROVIDED HOWEVER, THAT NO OPTION CAN BE EXERCISED IN THE FORM OF CLASS B SHARES UNLESS THE OPTIONEE HAS PREVIOUSLY OR WILL SIMULTANEOUSLY EXERCISE ENOUGH OPTIONS IN THE FORM OF CLASS A SHARES SUCH THAT AT ANY TIME THERE SHALL BE AT LEAST 1.5 CLASS A SHARES EXERCISED FOR EVERY 1 CLASS B SHARES TO BE EXERCISED. ***** THESE SHARES SHALL COME EITHER FROM THE AUTHORIZED BUT UNISSUED SHARES OR FROM ISSUED SHARES REACQUIRED BY THE COMPANY. IF AN OPTION GRANTED UNDER THE PLAN SHALL TERMINATE OR EXPIRE WITHOUT HAVING BEEN EXERCISED IN FULL, NEW OPTIONS MAY BE GRANTED UNDER THE PLAN FOR THE UNPURCHASED SHARES. THE COMPANY SHALL NOT BE REQUIRED, UPON THE EXERCISE OF ANY OPTION, TO ISSUE OR DELIVER ANY SHARES OF STOCK PRIOR TO (A) THE ADMISSION OF SUCH SHARES TO LISTING ON ANY STOCK EXCHANGE ON WHICH THE COMPANY'S COMMON STOCK MAY THEN BE LISTED, AND (B) THE COMPLETION OF SUCH REGISTRATION OR LICENSING OF SUCH SHARES AS MAY BE REQUIRED BY THE U.S. SECURITIES ACT OR UNDERTAKINGS BY THE OPTIONEE WHICH OBVIATE THE NECESSITY FOR SUCH REGISTRATION. 5. PRICE THE OPTION UNDER THE PLAN SHALL BE FOR A PRICE WHICH SHALL NOT BE LESS THAN 100% OF THE FAIR MARKET PRICE OF THE SHARES ON THE DATE OF THE GRANT MADE BY THE COMMITTEE AS QUOTED IN THE NEW YORK STOCK EXCHANGE OR THE MANILA STOCK EXCHANGE. IF THE SHARES ARE QUOTED ON BOTH EXCHANGES AND THERE IS A DIFFERENCE BETWEEN THE PRICES IN THESE STOCK EXCHANGES, THE HIGHER PRICE WILL PREVAIL. IN NO CASE SHALL THE OPTION PRICE BE LESS THAN THE PAR VALUE OF THE STOCK. 6. PERIOD OF OPTION THE OPTIONS AUTHORIZED UNDER THIS PLAN SHALL BE VALID FOR A PERIOD OF TEN (10) YEARS FROM THE DATE OF THE GRANT. AN OPTION MAY BE EXERCISED BY THE OPTIONEE TO THE EXTENT OF 20% AFTER ONE YEAR FROM THE GRANT, 40% AFTER TWO YEARS FROM THE GRANT, 60% AFTER THREE YEARS FROM THE GRANT, AND 100% AFTER FOUR YEARS FROM THE GRANT. SHARES INCLUDED IN EACH INSTALLMENT MAY BE EXERCISED IN WHOLE AT ANY TIME, OR IN PART FROM TIME TO TIME, UNTIL THE EXPIRATION OF THE OPTION. ALL SHARES PURCHASED SHALL BE PAID IN FULL. IN CASH, AT THE TIME OF THE EXERCISE OF THE OPTION. 7. RIGHTS TO EXERCISE OF OPTION EACH OPTIONEE MUST REMAIN IN THE CONTINUOUS EMPLOY OF, OR RETAIN HIS DIRECTORSHIP OR CONSULTANCY WITH THE COMPANY OR ITS SUBSIDIARIES FROM THE DATE OF THE GRANT OF THE OPTION AND DURING HIS EXERCISE OF ANY PART THEREOF. HOWEVER, AN OPTIONEE WHO LEAVES THE EMPLOY OF, OR TERMINATES HIS DIRECTORSHIP OR CONSULTANCY WITH THE COMPANY OR ITS SUBSIDIARIES, WHETHER VOLUNTARILY OR INVOLUNTARILY, MUST EXERCISE ANY OUTSTANDING OPTION TO WHICH HE WAS ENTITLED ON THE DATE OF THE CESSATION OF HIS EMPLOYMENT, DIRECTORSHIP OR CONSULTANCY WITHIN THREE (3) MONTHS FROM THE DATE OF SUCH CESSATION. IF THE OPTIONEE DIES, HIS HEIRS, EXECUTORS OR ADMINISTRATORS SHALL HAVE THE RIGHT TO EXERCISE THE BALANCE OF THE UNEXERCISED OPTION WITHIN TWELVE (12) MONTHS AFTER HIS DEATH, BUT NEVERTHELESS, WITHIN THE TEN (10) YEAR PERIOD WITHIN WHICH THE OPTION COULD BE EXERCISED. IN NO CASE, CAN AN OPTION BE EXERCISED BY THE OPTIONEE OR BY HIS HEIRS, EXECUTORS OR ADMINISTRATORS AFTER TEN (10) YEARS FROM THE DATE OF THE GRANT OF THE OPTION. 8. NON-TRANSFERABILITY OF OPTION OPTIONS GRANTED UNDER THE PLAN SHALL NOT BE TRANSFERABLE EXCEPT THAT WITHIN TWELVE (12) MONTHS FROM AN OPTIONEE'S DEATH AND WITHIN THE ORIGINAL TERM OF THE OPTION, HIS HEIRS, EXECUTORS OR ADMINISTRATORS MAY EXERCISE THE OPTION TO THE EXTENT OF THE BALANCE OF THE UNEXERCISED OPTION. 9. ADJUSTMENT IN SHARES SUBJECT TO PLAN THE OPTIONS GRANTED UNDER THE PLAN SHALL CONTAIN SUCH PROVISIONS AS THE COMMITTEE MAY DETERMINE WITH RESPECT TO ADJUSTMENTS TO BE MADE IN THE NUMBER AND KIND OF SHARES COVERED BY SUCH OPTIONS AND IN THE OPTION PRICE IN THE EVENT OF A REORGANIZATION, RECAPITALIZATION, STOCK SPLIT, STOCK DIVIDEND, COMBINATION OF SHARES, MERGER, CONSOLIDATION, RIGHTS OFFERING OR ANY OTHER CHANGE IN THE CORPORATE STRUCTURE OF SHARES OF THE COMPANY. IN THE EVENT OF ANY SUCH CHANGE, THE AGGREGATE NUMBER AND KIND OF SHARES AVAILABLE UNDER THE PLAN AND THE MAXIMUM NUMBER OF SHARES AS TO WHICH OPTIONS MAY BE GRANTED TO ANY INDIVIDUAL SHALL BE APPROPRIATELY ADJUSTED. 10. RIGHT TO TERMINATE EMPLOYMENT THE GRANT OF AN OPTION TO AN EMPLOYEE, DIRECTOR OF CONSULTANT SHALL NOT AFFECT THE RIGHT OF THE COMPANY OR ITS SUBSIDIARIES TO TERMINATE HIS EMPLOYMENT OR APPOINTMENT AS PROVIDED BY LAW. 11. TERMINATION OF THE PLAN THIS PLAN SHALL TERMINATE AFTER ALL THE OPTIONS GRANTED HAVE BEEN EXERCISED OR HAVE EXPIRED WITHOUT HAVING BEEN EXERCISED UNLESS THE BOARD OF DIRECTORS OF THE COMPANY SHALL DECIDE OTHERWISE. NO OPTION SHALL BE GRANTED HEREUNDER AFTER MAY 31, 1998 ****** BUT THE TERMINATION OF THIS PLAN SHALL NOT AFFECT ANY PREVIOUSLY GRANTED OPTIONS. 12. AMENDMENT OF THE PLAN THE BOARD OF DIRECTORS OF THE COMPANY MAY MAKE CHANGES IN OR ADDITIONS TO THE PLAN AS IT SHALL DEEM PROPER, OR TO THE BEST INTEREST OF THE COMPANY OR ANY OF ITS SUBSIDIARIES WITHOUT ANY ACTION ON THE PART OF THE STOCKHOLDERS. HOWEVER, NO CHANGE OR ADDITION SHALL (A) IMPAIR AN OPTIONEE'S RIGHTS WITHOUT HIS CONSENT OR DEPRIVE HIM OF ANY SHARES WHICH HE HAS ALREADY ACQUIRED UNDER THE PLAN, (B) INCREASE THE MAXIMUM OF SHARES WHICH MAY BE PURCHASED BY AN OPTIONEE UNDER THE PLAN, (C) CHANGE THE MINIMUM PURCHASE PRICE OF THE SHARES, (D) EXTEND THE PERIOD DURING WHICH THE OPTION MAY BE GRANTED OR EXERCISED, OR (E) WITHDRAW THE ADMINISTRATION OF THE PLAN FROM THE COMMITTEE. 13. EFFECTIVE DATE OF THE PLAN OPTIONS MAY BE GRANTED HEREUNDER UPON THE ADOPTION OF THE PLAN BY THE BOARD OF DIRECTORS OF THE COMPANY, BUT NEITHER THE PLAN NOR ANY OPTION GRANTED THEREUNDER SHALL BECOME EFFECTIVE UNLESS THE PLAN IS APPROVED BY THE NEW YORK STOCK EXCHANGE AND BY THE STOCKHOLDERS HOLDING AT LEAST A MAJORITY OF THE OUTSTANDING VOTING SHARES OF THE COMPANY, IN WHICH EVENT, THE EFFECTIVITY OF THE PLAN SHALL BE RETROACTIVE TO THE DATE OF ITS ADOPTION BY THE BOARD OF DIRECTORS. REPUBLIC OF THE PHILIPPINES ) MANDALUYONG, METRO MANILA ) S.S. SECRETARY'S CERTIFICATE I, the undersigned, being the duly elected Corporate Secretary of BENGUET CORPORATION , a corporation duly organized and existing under and by virtue of the laws of the Philippines, with principal office at Benguet Centre, #12 ADB Avenue, Mandaluyong City, Metro Manila, DO HEREBY CERTIFY: That the following resolution appears on record as having been approved and adopted by the Board of Directors during its regular meeting held on May 22, 1998, to wit: RESOLVED, That the Board of Directors approve and authorize, as it hereby approves and authorizes the extension of the termination date of granting stock options from May 31, 1998 to May 31, 2003, subject to the approval and ratification of the stockholders; RESOLVED, FURTHERMORE, That in implementation of the above extension, the Corporation thru management comply with all the requirements prescribed under existing rules and regulations of the Philippine Securities and Exchange Commission and the Philippine Stock Exchange and the New York Stock Exchange and the U.S. SEC; RESOLVED, FINALLY, That the Board of Directors authorize, as it hereby authorizes the Senior Vice President-Finance & Treasurer, MR. SALVADOR P. PABALAN, to sign, execute any and all documents as may be necessary to effect extension of the termination date of granting stock options to be filed with the Securities and Exchange Commission (SEC) and Philippine Stock Exchange (PSE) and the New York Stock Exchange and the U.S. SEC respectively. IN WITNESS WHEREOF, I have hereunto subscribed my name this 28 day of May, 1998 at Mandaluyong City, Metro Manila. (SGD.) SOLEDAD CAGAMPANG-DE CASTRO Corporate Secretary SUBSCRIBED AND SWORN TO BEFORE ME this 28 day of May 1998 at Mandaluyong City, Metro Manila, affiant exhibited to me her Community Tax Certificate No. 07808886 issued on March 18, 1998 at Makati City, Metro Manila. Doc. No. 558; Page No. 76; Book No. 501; Series of 1998. Footnotes * BY AMENDMENT APPROVED BY THE STOCKHOLDERS IN MAY 1983. ** BY AMENDMENT APPROVED BY THE STOCKHOLDERS IN MAY 1980 (FROM 1M TO 2M) AND ON MAY 31, 1988 (FROM 2M TO 4M). *** BY AMENDED APPROVED BY THE BOARD OF DIRECTORS ON JANUARY 15, 1980. **** BY AMENDED APPROVED BY THE BOARD OF DIRECTORS ON OCTOBER 14, 1986. ***** BY AMENDMENT APPROVED BY THE BOARD OF DIRECTORS ON FEBRUARY 15, 1983. ****** BY AMENDMENT APPROVED BY THE STOCKHOLDERS IN MAY 1983 (FROM SEPT. 12, 1984 TO MAY 31, 1990) AND ON MAY 31, 1988 (FROM MAY 31, 1990 TO MAY 31, 1998) ****** BY AMENDMENT APPROVED BY THE STOCKHOLDERS ON MAY 26, 1998 (FROM MAY 31, 1998 TO MAY 31, 2003);