PHELPS DODGE CORP
EX-10.12
<DOCUMENT>
<TYPE>EX-10.12
<SEQUENCE>5
<FILENAME>p68822exv10w12.htm
<DESCRIPTION>EX-10.12
<TEXT>
<HTML>
<HEAD>
<TITLE>exv10w12</TITLE>
</HEAD>
<BODY bgcolor="#FFFFFF">
<!-- PAGEBREAK -->
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>
<DIV style="font-family: Arial, sans-serif">
<DIV align="center">
<TABLE style="font-size: 9pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="100%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><IMG src="p68822p6882202.gif" alt="(PHELPS DODGE CORPORATION)">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;One N. Central Avenue, Phoenix, AZ 85004&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(602)&nbsp;366-8100</DIV></TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<P align="right" style="font-size: 10pt">Exhibit&nbsp;10.12



<P align="center" style="font-size: 10pt"><B>Award of Restricted Stock</B>



<P align="left" style="font-size: 10pt">Dear :



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Phelps Dodge Corporation (the &#147;Company&#148;) is pleased to confirm to you that
at a meeting held on&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(&#147;Grant Date&#148;), the Compensation and Management
Development Committee of the Board of Directors of Phelps Dodge Corporation
(the &#147;Committee&#148;) awarded you&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares of Restricted Stock of the
Company pursuant to the 2003 Stock Option and Restricted Stock Plan (the
&#147;Plan&#148;).


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
This letter will confirm the following agreement between you and the
Company pursuant to the Plan. Capitalized terms used herein that are not
defined in the Award of Restricted Stock letter shall have the meanings
assigned to such terms in the Plan. This award of Restricted Stock is subject
to the terms and conditions of the Plan, as supplemented by this letter.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
1.&nbsp;Restriction on Transfer. Except as provided in paragraphs 3 and 4
below, the shares of Restricted Stock awarded to you hereunder may not be sold,
assigned, transferred, pledged, hypothecated or otherwise encumbered until the
lapse of the applicable Restricted Period for these shares as set forth in
subparagraphs 1. a., 1. b., and 1. c. below.


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR valign="top" style="font-size: 10pt; color: #000000; background: #FFFFFF">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="1%" nowrap align="left">a.</TD>
    <TD width="2%">&nbsp;</TD>
    <TD><DIV style="text-align: left">The Restricted Period for 25% of the shares of
Restricted Stock issued pursuant to this award shall lapse on
the third anniversary date of the Grant Date.</DIV></TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: #FFFFFF">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="1%" nowrap align="left">b.</TD>
    <TD width="2%">&nbsp;</TD>
    <TD><DIV style="text-align: left">The Restricted Period for an additional 25% of
the shares of Restricted Stock issued pursuant to this award
shall lapse on the fourth anniversary date of the Grant Date.</DIV></TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: #FFFFFF">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="1%" nowrap align="left">c.</TD>
    <TD width="2%">&nbsp;</TD>
    <TD><DIV style="text-align: left">The Restricted Period for the remaining 50% of
the shares of Restricted Stock issued pursuant to this award
shall lapse on the fifth anniversary date of the Grant Date.</DIV></TD>
</TR>

</TABLE>
</DIV>

<P align="center" style="font-size: 10pt; font-family: Arial, sans-serif">
&nbsp;
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>


<DIV style="font-family: Arial, sans-serif">
<P align="left" style="font-size: 10pt">Notwithstanding the foregoing, if the Restricted Period for any shares of
Restricted Stock would lapse during any &#147;blackout period&#148; as defined in Section
306(a)(4) of the Sarbanes-Oxley Act of 2002, then, unless otherwise determined
by the Committee, the Restricted Period for such shares shall not lapse until
the first day following the expiration of such blackout period.



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
2.&nbsp;Forfeiture of Restricted Stock. Except as provided in paragraph 3
below, if your employment with the Company and its Subsidiaries terminates
prior to the end of any applicable Restricted Period for any reason including,
without limitation, any termination by you or by the Company in its absolute
discretion, your shares of Restricted Stock, for which the applicable
Restricted Period has not lapsed, shall revert back to the Company without any
payment to you and you shall cease to have any rights with respect to such
shares of Restricted Stock. In the case of such reversion, such shares shall
be retransferred to the Company by means of the stock power referred to in
paragraph 5 below.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
3.&nbsp;Death, Disability or Retirement. If your employment with the Company
and its Subsidiaries terminates by reason of your death, or your Disability
(except for a termination occurring within six months of the Grant Date on
account of your Disability), any Restricted Period still in effect shall lapse
upon your termination of employment. For purposes of this Award of Restricted
Stock, the Committee has determined as of the date of grant that the following
additional terms and conditions shall be applicable:


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR valign="top" style="font-size: 10pt; color: #000000; background: #FFFFFF">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="1%" nowrap align="left">a.</TD>
    <TD width="2%">&nbsp;</TD>
    <TD><DIV style="text-align: left">If your employment with the Company and its
Subsidiaries terminates (except for a termination that occurs
within six months of the Grant Date) by reason of your
Retirement on or after your Normal Retirement Date, as
defined in the Phelps Dodge Retirement Plan (or any successor
plan thereof), any Restricted Period still in effect shall
lapse upon your termination of employment.</DIV></TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: #FFFFFF">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="1%" nowrap align="left">b.</TD>
    <TD width="2%">&nbsp;</TD>
    <TD><DIV style="text-align: left">If your employment with the Company and its
Subsidiaries terminates (except for a termination that occurs
within six months of the Grant Date) by reason of your
Retirement on or after your Early Retirement Date, as defined
in the Phelps Dodge Retirement Plan (or any successor plan
thereof), and before your Normal Retirement Date under
conditions determined by the Committee, in its sole
discretion, not to be adverse to the Company, and you sign a
release of claims in such form as is satisfactory to the
Company (in its sole discretion), any Restricted Period still
in effect shall lapse upon your termination of employment.</DIV></TD>
</TR>

</TABLE>

<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
4.&nbsp;Change of Control. Any Restricted Period still in effect shall lapse
in the event that, on or after the date six months after the Grant Date, a
Change of Control occurs.

</DIV>

<P align="center" style="font-size: 10pt; font-family: Arial, sans-serif">
2
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>


<DIV style="font-family: Arial, sans-serif">

<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
5.&nbsp;Rights as a Shareholder. Subject to the provisions of paragraph 7
below, you shall have all the rights of a holder of Common Shares with respect
to your Restricted Stock, including the right to vote the shares and to receive
dividends. Notwithstanding the foregoing, your Restricted Stock shall be held
by the Company prior to the lapse of the applicable Restricted Period and you
shall deliver to the Company a stock power executed in blank in such form as
the Company shall determine.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
6.&nbsp;Administration. The Plan is administered by the Committee and any
interpretation or construction of the Plan or this letter by the Committee, and
any determination made by the Committee pursuant to the Plan or this letter,
shall be conclusive and binding on the Company, you and any other interested
party.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
7.&nbsp;Conversion and Property Distributions. In the event your Restricted
Stock is exchanged for or converted into securities other than Common Shares or
in the event that any distribution is made with respect to such Restricted
Stock either in Common Shares or in other property or by way of an
extraordinary cash dividend, the securities or other property or cash that you
receive shall be subject to the same restrictions as apply to your Restricted
Stock, including those provided by the last sentence of paragraph 5 above.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
8.&nbsp;Withholding. You shall be required to pay, as a condition of receiving
a share certificate without legend, any applicable federal, state or local tax
withholding requirements, which, if the Committee shall permit, may be
satisfied by the withholding of shares of Restricted Stock with respect to
which the Restricted Period has lapsed, subject to such terms and conditions as
the Committee shall impose.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
9.&nbsp;Governing Law. This Agreement shall be construed and enforced in
accordance with, and governed by, the laws of the State of New York.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Please sign one of the two copies of this letter where indicated below and
the attached Stock Power and return them to Linda Lewis, Manager, Executive
Compensation (Phelps Dodge Corporation, One North Central Avenue, Phoenix, AZ
85004) at your earliest convenience. Please retain the other copy of this
letter for your records.

<DIV align="center">
<TABLE style="font-size: 9pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="30%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="40%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" valign="top" align="left">PHELPS DODGE CORPORATION</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">By:</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>

<TR style="font-size: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Senior Vice President</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">ACCEPTED AND AGREED TO:</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>

<TR style="font-size: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Date:</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>

<TR style="font-size: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>

<!-- End Table Body -->
</TABLE>
</DIV>


</DIV>

<P align="center" style="font-size: 10pt; font-family: Arial, sans-serif">
3
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>


<DIV style="font-family: Arial, sans-serif">


<P align="right" style="font-size: 10pt">Exhibit&nbsp;10.12



<P align="left" style="font-size: 10pt">&#091;PHELPS DODGE CORPORATION LETTERHEAD&#093;



<P align="left" style="font-size: 10pt">(date)



<P align="left" style="font-size: 10pt">Phelps Dodge Corporation



<P align="center" style="font-size: 10pt">Award of Restricted Stock



<P align="left" style="font-size: 10pt">Dear :



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Phelps Dodge Corporation (the &#147;Company&#148;) is pleased to confirm to you that
at a meeting held on&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(&#147;Grant Date&#148;), the Compensation and Management
Development Committee of the Board of Directors of Phelps Dodge Corporation
(the &#147;Committee&#148;) awarded you&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares of Restricted Stock of the
Company pursuant to the 2003 Stock Option and Restricted Stock Plan (the
&#147;Plan&#148;).


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
This letter will confirm the following agreement between you and the
Company pursuant to the Plan. Capitalized terms used herein that are not
defined in the Award of Restricted Stock letter shall have the meanings
assigned to such terms in the Plan. This award of Restricted Stock is subject
to the terms and conditions of the Plan, as supplemented by this letter.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
1.&nbsp;Restriction on Transfer. Except as provided in paragraphs 3 and 4
below, the shares of Restricted Stock awarded to you hereunder may not be sold,
assigned, transferred, pledged, hypothecated or otherwise encumbered
until&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(the
&#147;Restricted Period&#148;).


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Notwithstanding the foregoing, if the Restricted Period for any shares of
Restricted Stock would lapse during any &#147;blackout period&#148; as defined in Section
306(a)(4) of the Sarbanes-Oxley Act of 2002, then, unless otherwise determined
by the Committee, the Restricted Period for such shares shall not lapse until
the first day following the expiration of such blackout period.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
2.&nbsp;Forfeiture of Restricted Stock. Except as provided in paragraph 3
below, if your employment with the Company and its Subsidiaries terminates
prior to the end of any applicable Restricted Period for any reason including,
without limitation, any termination by you or by the Company in its absolute
discretion, your shares of Restricted Stock, for which the applicable
Restricted Period has not lapsed, shall revert back to the Company without any
payment to you and you shall cease to have any rights with respect to such
shares of Restricted Stock. In the case of such reversion, such shares shall
be retransferred to the Company by means of the stock power referred to in
paragraph 5 below.

</DIV>

<P align="center" style="font-size: 10pt; font-family: Arial, sans-serif">
&nbsp;
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>


<DIV style="font-family: Arial, sans-serif">

<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
3.&nbsp;Death, Disability or Retirement. If your employment with the Company
and its Subsidiaries terminates by reason of your death or your Disability
(except for a termination occurring within six months of the Grant Date on
account of your Disability), any Restricted Period still in effect shall lapse
upon your termination of employment. For purposes of this Award of Restricted
Stock, the Committee has determined as of the date of grant that the following
additional terms and conditions shall be applicable:


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR valign="top" style="font-size: 10pt; color: #000000; background: #FFFFFF">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="1%" nowrap align="left">a.</TD>
    <TD width="2%">&nbsp;</TD>
    <TD><DIV style="text-align: left">If your employment with the Company and its
Subsidiaries terminates (except for a termination that occurs
within six months of the Grant Date) by reason of your
Retirement on or after your Normal Retirement Date, as
defined in the Phelps Dodge Retirement Plan (or any successor
plan thereof), any Restricted Period still in effect shall
lapse upon your termination of employment.</DIV></TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: #FFFFFF">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="1%" nowrap align="left">b.</TD>
    <TD width="2%">&nbsp;</TD>
    <TD><DIV style="text-align: left">If your employment with the Company and its
Subsidiaries terminates (except for a termination that occurs
within six months of the Grant Date) by reason of your
Retirement on or after your Early Retirement Date, as defined
in the Phelps Dodge Retirement Plan (or any successor plan
thereof), and before your Normal Retirement Date under
conditions determined by the Committee, in its sole
discretion, not to be adverse to the Company, and you sign a
release of claims in such form as is satisfactory to the
Company (in its sole discretion), any Restricted Period still
in effect shall lapse upon your termination of employment.</DIV></TD>
</TR>

</TABLE>

<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
4.&nbsp;Change of Control. Any Restricted Period still in effect shall lapse
in the event that, on or after the date six months after the Grant Date, a
Change of Control occurs.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
5.&nbsp;Rights as a Shareholder. Subject to the provisions of paragraph 7
below, you shall have all the rights of a holder of Common Shares with respect
to your Restricted Stock, including the right to vote the shares and to receive
dividends. Notwithstanding the foregoing, your Restricted Stock shall be held
by the Company prior to the lapse of the applicable Restricted Period and you
shall deliver to the Company a stock power executed in blank in such form as
the Company shall determine.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
6.&nbsp;Administration. The Plan is administered by the Committee and any
interpretation or construction of the Plan or this letter by the Committee, and
any determination made by the Committee pursuant to the Plan or this letter,
shall be conclusive and binding on the Company, you and any other interested
party.

</DIV>

<P align="center" style="font-size: 10pt; font-family: Arial, sans-serif">
2
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>


<DIV style="font-family: Arial, sans-serif">

<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
7.&nbsp;Conversion and Property Distributions. In the event your Restricted
Stock is exchanged for or converted into securities other than Common Shares or
in the event that any distribution is made with respect to such Restricted
Stock either in Common Shares or in other property or by way of an
extraordinary cash dividend, the securities or other property or cash that you
receive shall be subject to the same restrictions as apply to your Restricted
Stock, including those provided by the last sentence of paragraph 5 above.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
8.&nbsp;Withholding. You shall be required to pay, as a condition of
receiving a share certificate without legend, any applicable federal, state or
local tax withholding requirements, which, if the Committee shall permit, may
be satisfied by the withholding of shares of Restricted Stock with respect to
which the Restricted Period has lapsed, subject to such terms and conditions as
the Committee shall impose.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
9.&nbsp;Governing Law. This Agreement shall be construed and enforced in
accordance with, and governed by, the laws of the State of New York.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Please sign one of the two copies of this letter where indicated below and
the attached Stock Power and return them to Linda Lewis, Manager, Executive
Compensation (Phelps Dodge Corporation, One North Central Avenue, Phoenix, AZ
85004) at your earliest convenience. Please retain the other copy of this
letter for your records.

<DIV align="center">
<TABLE style="font-size: 9pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="30%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="40%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" valign="top" align="left">PHELPS DODGE CORPORATION</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">By:</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>

<TR style="font-size: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Senior Vice President</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">ACCEPTED AND AGREED TO:</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>

<TR style="font-size: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Date:</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>

<TR style="font-size: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>

<!-- End Table Body -->
</TABLE>
</DIV>


</DIV>

<P align="center" style="font-size: 10pt; font-family: Arial, sans-serif">
3
</BODY>
</HTML>

</TEXT>
</DOCUMENT>
