Exhibit 10.5





                           DEFERRED COMPENSATION PLAN
                              FOR THE DIRECTORS OF
                            PHELPS DODGE CORPORATION

                      (Restated Effective January 1, 1999)

                                TABLE OF CONTENTS



ARTICLE I - PREAMBLE

ARTICLE II - DEFINITIONS 1
         2.1      DEFINITIONS
         2.2      CONSTRUCTION

ARTICLE III - ELIGIBILITY
         3.1      SELECTION OF PARTICIPANTS
         3.2      PARTICIPATION AGREEMENT
         3.3      REVISED PARTICIPATION AGREEMENTS

ARTICLE IV - CONTRIBUTIONS
         4.1      PARTICIPANT CONTRIBUTIONS

ARTICLE V - PAYMENT OF FEES IN STOCK IN LIEU OF CASH
         5.1      GENERAL
         5.2      PARTICIPANT ELECTIONS
         5.3      PAYMENT OF FEES IN COMPANY STOCK

ARTICLE VI - ACCELERATION OF BENEFITS
         6.1      ACCELERATION OF BENEFITS

ARTICLE VII - CREDITING OF CONTRIBUTIONS AND EARNINGS
         7.1      TRANSFER TO TRUSTEE; ALLOCATION OF CONTRIBUTIONS
         7.2      INVESTMENT EARNINGS OR LOSSES
         7.3      INVESTMENT DIRECTION
         7.4      COMPANY STOCK FUND

ARTICLE VIII - VESTING
         8.1      VESTING

ARTICLE IX - PAYMENT OF BENEFITS
         9.1      TIME OF PAYMENT
         9.2      METHOD OF PAYMENT
         9.3      BENEFICIARY DESIGNATIONS

ARTICLE X - ADMINISTRATION OF THE PLAN
         10.1     ADOPTION OF TRUST
         10.2     POWERS OF THE PLAN ADMINISTRATOR
         10.3     CREATION OF COMMITTEE
         10.4     CHAIRMAN AND SECRETARY
         10.5     APPOINTMENT OF AGENTS
         10.6     MAJORITY VOTE AND EXECUTION OF INSTRUMENTS
         10.7     ALLOCATION OF RESPONSIBILITIES
         10.8     CONFLICT OF INTEREST
         10.9     ACTION TAKEN BY COMPANY
         10.10    DELEGATIONS OF AUTHORITY
         10.11    INDEMNIFICATION

ARTICLE XI - CLAIMS REVIEW PROCEDURE
         11.1     CLAIMS
         11.2     APPEALS

ARTICLE XII - LIMITATION ON ASSIGNMENT; PAYMENTS TO LEGALLY
              INCOMPETENT DISTRIBUTEE; CORRECTIONS
         12.1     ANTI-ALIENATION CLAUSE
         12.2     PERMITTED ARRANGEMENTS
         12.3     PAYMENT TO MINOR OR INCOMPETENT
         12.4     UNDERPAYMENT OR OVERPAYMENT OF BENEFITS

ARTICLE XIII - AMENDMENT, MERGER AND TERMINATION
         13.1     AMENDMENT
         13.2     MERGER OR CONSOLIDATION OF COMPANY
         13.3     TERMINATION OF PLAN OR DISCONTINUANCE OF CONTRIBUTIONS

ARTICLE XIV - GENERAL PROVISIONS
         14.1     LIMITATION ON PARTICIPANTS' RIGHTS
         14.2     STATUS OF PARTICIPANTS AS UNSECURED CREDITORS
         14.3     STATUS OF TRUST FUND
         14.4     UNIFORM ADMINISTRATION
         14.5     HEIRS AND SUCCESSORS
         14.6     NO LIABILITY FOR ACCELERATION OF PAYMENTS

                           DEFERRED COMPENSATION PLAN
                              FOR THE DIRECTORS OF
                            PHELPS DODGE CORPORATION


                                    ARTICLE I

                                    PREAMBLE

           Phelps Dodge Corporation (the "Company"), a corporation organized and
existing under the laws of the State of New York, previously adopted the
Deferred Compensation Plan for the Directors of Phelps Dodge Corporation (the
"Plan"). The Plan was most recently amended and restated in its entirety
effective December 4, 1996 and again effective September 30, 1997. The Company
has now decided to amend and restate the Plan in its entirety effective January
1, 1999 (the "Effective Date").

           The purpose of this Plan is to provide non-employee directors of the
Company with the opportunity to defer all or a portion of their annual retainer
fees and/or meeting fees and to elect to receive shares of Company Stock in lieu
of such fees. This Plan is not intended to "qualify" for favorable tax treatment
pursuant to Section 401(a) of the Internal Revenue Code of 1986 (the "Code") or
any successor section or statute.

                                   ARTICLE II

                                   DEFINITIONS
2.1        DEFINITIONS.

           When a word or phrase appears in this Plan with the initial letter
capitalized, and the word or phrase does not begin a sentence, the word or
phrase shall generally be a term defined in this Section 2.1 or in the Preamble.
The following words and phrases used in the Plan with the initial letter
capitalized shall have the meanings set forth in this Section 2.1, unless a
clearly different meaning is required by the context in which the word or phrase
is used:

           (a) "Account" or "Accounts" means the accounts which may be
maintained by the Plan Administrator to reflect the interest of a Participant
under the Plan.

           (b) "Beneficiary" means the person or trust that a Participant, in
his most recent written designation filed with the Plan Administrator, shall
have designated to receive his Accounts under the Plan in the event of his
death.

           (c) "Board" means the Board of Directors of the Company.

           (d) "Company Stock" means the common stock of the Company.

           (e) "Company Stock Fund" means the Investment Fund established by the
Plan Administrator pursuant to Section 7.3(a) that will be invested in Company
securities.

           (f) "Deferral Contributions" means the Deferral Contributions made by
a Participant pursuant to Section 4.1.

           (g) "Deferral Contributions Account" means the Account maintained to
record the Deferral Contributions made by a Participant pursuant to Section 4.1.
The Deferral Contributions Account shall be divided into as many subaccounts as
the Plan Administrator deems necessary.

           (h) "Director" shall mean each member of the Board who is neither an
officer nor an Employee of the Company.

           (i) "Employee" means any individual classified by the Company as a
common law employee of the Company. For this purpose, the classification that is
relevant is the classification in which such individual is placed by the Company
for purposes of this Plan and the classification of such individual for any
other purpose (e.g., employment tax or withholding purposes) shall be
irrelevant. If an individual is characterized as a common law employee of the
Company by a governmental agency or court but not by the Company, such
individual shall be treated as an employee who has not been designated for
participation in this Plan.

           (j) "Fair Market Value" means the mean of the high and low prices of
the Company Stock on the Consolidated Trading Tape on the date of determination
or, if no sale of Company Stock is recorded on the Tape on such date, then on
the next preceding day on which there was such a sale.

           (k) "Fees" means the sum of a Participant's annual retainer fees and
meeting fees payable to the Participant as a Director.

           (l) "Investment Fund" means the investment fund or funds established
by the Plan Administrator pursuant to Section 7.3.

           (m) "Participant" means any Director who elects to participate in the
Plan.

           (n) "Participation Agreement" means the agreement entered into by the
Company and a Participant as set forth in Section 3.2.

           (o) "Plan Administrator" means the committee designated by the
Company to carry out its responsibilities under the Plan as set forth in Section
10.3.

           (p) "Plan Year" means the 12 month period beginning on each January 1
and ending on the next following December 31.

           (q) "Termination Date" means the date as of which a Participant
ceases to be a Director.

           (r) "Trust Agreement" means any trust agreement established pursuant
to the Plan between the Company and the Trustee or any trust agreement hereafter
established, the provisions of which are incorporated herein by reference.

           (s) "Trustee" means the Trustee under the Trust Agreement.

           (t) "Trust Fund" means all assets of whatsoever kind or nature held
from time to time by the Trustee pursuant to the Trust Agreement, without
distinction as to income and principal and without regard to source, (i.e.,
Participant contributions, earnings or forfeitures).

           (u) "Valuation Date" means the last business day of each calendar
quarter and such other dates as the Plan Administrator may designate.

2.2        CONSTRUCTION.

           The masculine gender, where appearing in the Plan, shall include the
feminine gender (and vice versa), and the singular shall include the plural,
unless the context clearly indicates to the contrary. Headings and subheadings
are for the purpose of reference only and are not to be considered in the
construction of this Plan. If any provision of this Plan is determined to be for
any reason invalid or unenforceable, the remaining provisions shall continue in
full force and effect. All of the provisions of this Plan shall be construed and
enforced in accordance with the laws of the State of New York.

                                   ARTICLE III

                                   ELIGIBILITY

3.1        SELECTION OF PARTICIPANTS.

           (a) GENERAL. Each Director, as defined in Section 2.1(h), is eligible
to participate in the Plan.

           (b) NO WAITING PERIODS. A Participant need not complete any
particular period of service in order to be eligible to make Deferral
Contributions.

3.2        PARTICIPATION AGREEMENT.

           Each Participant shall enter into a Participation Agreement in such
form and at such time as the Plan Administrator shall require. The Participation
Agreement shall set forth the Participant's Deferral Contributions and indicate
the manner in which distributions are to be made from the Participant's Accounts
and when distributions are to commence. If the Participant elects to make
Deferral Contributions, the Participation Agreement also shall authorize the
reduction of the Participant's Fees in an amount equal to his Deferral
Contributions. The Participation Agreement also may set forth such other
information as the Plan Administrator shall require. The Participation Agreement
must be executed and delivered to the Plan Administrator on or before December
31st of the year preceding the Plan Year for which the election is made. Any
person who becomes a Director during a Plan Year may, not later than the 30th
day after his or her term begins, enter into a Participation Agreement and defer
payment of all or a part of his or her Fees payable for the portion of such Plan
Year following such election.

3.3        REVISED PARTICIPATION AGREEMENTS.

           A Participant may file a new Participation Agreement in order to
change an election made in a previously filed Participation Agreement. If the
Participant changes the amount or rate of his Deferral Contributions, the new
amount or rate of Deferral Contributions will become effective as of the end of
the Plan Year in which such new Participation Agreement is filed and only with
respect to Fees payable for services as a Director thereafter. If the new
Participation Agreement changes the method and/or timing of the commencement of
distributions, the new election will only be honored if at least one (1) full
calendar year elapses between (a) the date as of which such new Participation
Agreement is filed and (b) both (1) the date as of which a distribution would
otherwise have commenced and (2) the date as of which such distribution will
commence under such election. Notwithstanding the foregoing, such timing
restrictions shall not apply to a Participant's election to receive cash or
Company securities with respect to the portion of his Accounts invested in the
Company Stock Fund.

                                   ARTICLE IV

                                  CONTRIBUTIONS

4.1        PARTICIPANT CONTRIBUTIONS.

           (a) GENERAL RULE. For any Plan Year, a Participant may elect to defer
all or a portion of the Fees otherwise payable to him. Any such deferrals shall
be expressed in whole percentages or as a specific dollar amount, as specified
in the Participant's Participation Agreement. Amounts deferred by the
Participant shall be contributed by the Company directly to the Trust, if one is
established. If a Trust is not established, such deferrals shall remain part of
the Company's general assets, but shall be accounted for separately.

           (b) LIMITATIONS ON DEFERRALS. The Plan Administrator may impose
limitations on the amount of a Participant's Deferral Contributions in
accordance with such uniform rules as it may adopt from time to time.

           (c) CHANGE IN CONTRIBUTIONS. A Participant may change the amount or
percentage of Deferral Contributions as of the first day of any Plan Year by
filing a new Participation Agreement or any other form permitted by the Plan
Administrator. The change shall become effective as provided in Section 3.3.

           (d) SUSPENSION OF DEFERRAL CONTRIBUTIONS. A Participant may suspend
the Deferral Contributions being made from his Fees as of the first day of any
Plan Year by filing a new Participation Agreement on or before the last day of
the preceding Plan Year. If a Participant suspends his Deferral Contributions,
he or she shall be permitted to execute a new Participation Agreement and to
begin making Deferral Contributions. The Deferral Contributions made pursuant to
such new Participation Agreement may then commence in accordance with the
provisions of Section 3.3.

           (e) EFFECT OF TERMINATION DATE. A Participant's Deferral
Contributions shall be discontinued upon his Termination Date. If a
Participant's Termination Date has occurred, no Deferral Contributions will be
withheld from the Participant's final Fees that are payable following the
Participant's Termination Date. If the Participant later becomes a Director, he
may reenter the Plan in accordance with the provisions of Section 3.2 that are
applicable to new Participants.

                                    ARTICLE V

                    PAYMENT OF FEES IN STOCK IN LIEU OF CASH

5.1 GENERAL. A Participant may elect to be paid all or a portion of the Fees in
the form of Company Stock in lieu of cash payment of such Fees. If so elected,
payment of Fees in the form of Company Stock shall be made in accordance with
this Article V.

5.2 PARTICIPANT ELECTIONS. Each Participant who elects to be paid all or a
portion of Fees for a given calendar year in the form of Company Stock must file
a written election with the Plan Administrator no later than December 31 of the
year preceding the calendar year in which the services for which the Fees are
payable are performed; provided, however, that any newly elected or appointed
Director may file an election for any year not later than 30 days after the date
the person first becomes a Director. This election shall only apply to Fees
payable for services performed in periods after the election is filed and shall
be deemed to apply to subsequent Plan years unless the Participant revokes or
changes the election by filing a new election in accordance with this Section
5.2. A Participant's election filed prior to a calendar year shall be
irrevocable as to that year at the close of the previous year, and a Director's
election filed during a year (if permitted under this Section 5.2) shall be
irrevocable upon filing. The election must specify the portion of Fees to be
received in the form of Company Stock under the Plan.

5.3 PAYMENT OF FEES IN COMPANY STOCK. At the date on which Fees are otherwise
payable to a Participant who elects to receive all or a portion of Fees in
Company Stock, the Company shall issue to the Participant a number of whole
shares of Company Stock having an aggregate Fair Market Value at that date equal
to the Fees, or as nearly as possible equal to the Fees (but in no event greater
than the Fees), that would have been payable at such date but for the
Participant's election to receive Company Stock. The Company shall pay to the
Participant in cash any portion of the Fees not paid in whole shares of Company
Stock.

                                   ARTICLE VI

                            ACCELERATION OF BENEFITS

6.1        ACCELERATION OF BENEFITS.

           (a) GENERAL. A Participant may elect to receive an accelerated
withdrawal from his Deferral Contributions Account by filing an election with
the Plan Administrator on such forms as may be prescribed from time to time by
the Plan Administrator. If a Participant makes such an election, except as
otherwise provided below, the Participant shall receive a single lump sum
payment equal to 90% of the Participant's Deferral Contributions Account
balance. For purposes of determining the amount to be distributed, the
Participant's Deferral Contributions Account shall be valued as of the Valuation
Date immediately preceding the date of the withdrawal. The accelerated
withdrawal shall be paid as soon as reasonably possible following the filing of
the election by the Participant.

           (b) FORFEITURE. The Participant shall forfeit the remaining 10% of
his Deferral Contributions Account as of the day on which the accelerated
withdrawal is distributed to the Participant. If a Participant's Deferral
Contribution Account is paid from a Trust, the amount forfeited pursuant to this
Section shall be used by the Company to reduce the administrative expenses of
the Trust.

           (c) SUSPENSION OF PARTICIPATION. If a Participant elects to receive
an accelerated withdrawal, the Participant's right to make Deferral
Contributions shall be suspended for 12 months from the date the accelerated
withdrawal is paid to the Participant. Upon expiration of the 12 month
suspension period, the Participant shall be permitted to execute a new
Participation Agreement and to begin making Deferral Contributions. The Deferral
Contributions made pursuant to such new Participation Agreement may then
commence in accordance with the provisions of Section 3.3.

                                   ARTICLE VII

                     CREDITING OF CONTRIBUTIONS AND EARNINGS

7.1        TRANSFER TO TRUSTEE; ALLOCATION OF CONTRIBUTIONS.

           If a Trust is established, all Deferral Contributions shall be
transmitted to the Trustee by the Company as soon as reasonably practicable. If
a Trust is not established, all Deferral Contributions shall be held as part of
the Company's general assets, but accounted for separately. Whether or not a
Trust is established, the Deferral Contributions shall be credited to the
Deferral Contributions Account maintained for that Participant. The Plan
Administrator may maintain subaccounts as it deems necessary or desirable. All
payments from an Account between Valuation Dates shall be charged against the
Account as of the preceding Valuation Date. The Accounts are bookkeeping
accounts only and the Plan Administrator is not in any way obligated to
segregate assets for the benefit of any Participant.

7.2        INVESTMENT EARNINGS OR LOSSES.

           As of each Valuation Date, the Plan Administrator will calculate the
positive or negative rate of return for each of the Investment Funds in
accordance with Section 7.3(c), other than the Company Stock Fund, which is
valued in accordance with Section 7.4. The Plan Administrator then will
determine the portion of the "adjusted balance" of each of the Participant's
Accounts that is invested in each of the Investment Funds and will multiply that
amount by the appropriate rate of return to arrive at the positive or negative
earnings adjustment for that Account and that Investment Fund. The earnings
adjustments so calculated shall then be allocated to the Participant's Accounts.
For this purpose, the "adjusted balance" of an Account will be the balance of
the Account as of the preceding Valuation Date less all withdrawals,
distributions and other amounts chargeable against the Account pursuant to any
other provisions of this Plan since the prior Valuation Date. The earnings
adjustments allocated to any Account shall be allocated among the subaccounts of
that Account in the same manner.

7.3        INVESTMENT DIRECTION.

           (a) INVESTMENT FUNDS. The Plan Administrator shall designate one or
more Investment Funds in which each Participant shall direct the investment of
amounts credited to his Accounts. Unless the Plan Administrator designates
otherwise, the Investment Funds available under this Plan shall include each of
the investment funds established by the plan administrator of the Phelps Dodge
Corporation Supplemental Savings Plan and such other Investment Funds, if any,
designated by the Plan Administrator. The Investment Funds may be changed from
time to time by the Plan Administrator.

           (b)        PARTICIPANT DIRECTIONS.

                      (1) GENERAL. Upon becoming a Participant in the Plan, each
Participant may direct that all of the amounts attributable to his Accounts be
invested in a single investment fund or may direct fractional (percentage)
increments of his Accounts to be invested in such fund or funds as he shall
desire, on such forms and in accordance with such procedures, if any, as may be
established by the Plan Administrator. As of each Valuation Date, a Participant
may change his designations with respect to future contributions and direct
transfers among Investment Funds by filing an election with the Plan
Administrator, on a form prescribed by the Plan Administrator, or in accordance
with any other procedure designated by the Plan Administrator. The designation
will continue until changed by the timely submission of a new form.

                      (2) DEFAULT SELECTION.  In the absence of any designation,
a Participant will be deemed to have directed the investment of his Accounts in
such Investment Funds as the Plan Administrator, in its sole and absolute
discretion, shall determine, or if a Trust is established, as the Trustee, in
its sole and absolute discretion, shall determine. Prior to the Effective Date,
the Plan only permitted Participants to invest in two Investment Funds known as
the "interest account" and the "stock account". Amounts invested in the stock
account or the interest account as of the Effective Date will continue to be
invested in those accounts (or the Investment Funds that are the successors to
such accounts in the Plan Administrator's discretion) until a Participant
directs the Plan Administrator otherwise.

                      (3) IMPACT OF  ELECTION.  The  Participant's  selection of
Investment Funds shall serve only as a measurement of the value of the Accounts
of a Participant pursuant to Section 7.2 and Section 7.3(c), and neither the
Plan Administrator nor the Trustee, if a Trust is established, is required to
invest a Participant's Accounts in accordance with the Participant's selections.

           (c) RATE OF RETURN. As soon as possible after each Valuation Date,
the Plan Administrator shall determine the rate of return, positive or negative,
experienced on each of the Investment Funds, other than the Company Stock Fund,
which is valued in accordance with Section 7.4. The rate of return determined by
the Plan Administrator in good faith and in its discretion pursuant to this
Section shall be binding and conclusive on the Participant, the Participant's
Beneficiary and all parties claiming through them. The Plan Administrator may
delegate the responsibility for calculating the rate of return and the
calculation and allocation of the investment earnings adjustments to the
Accounts to a third party.

           (d) CHARGES. In the exercise of its discretion, the Plan
Administrator may charge one or more of the Participant's Accounts for the
reasonable expenses of carrying out investment instructions directly related to
the Accounts, as the Plan Administrator deems appropriate.

7.4        COMPANY STOCK FUND.

           (a) ESTABLISHMENT OF COMPANY STOCK FUND. The Plan Administrator shall
direct that one or more of the Investment Funds consist, primarily or
exclusively, of Company securities. A Participant's ability to direct
investments into or out of such Fund shall be subject to such procedures as the
Plan Administrator may prescribe from time to time to assure compliance with
Rule 16b-3 of the Securities and Exchange Act of 1934, as amended, and other
applicable requirements. Such procedures also may limit or restrict a
Participant's ability to make (or modify previously made) elections pursuant to
Sections 3.2 or 3.3.

           (b) UNITS AND "MARKET VALUE PER SHARE". The Deferral Contributions
allocated to the Company Stock Fund pursuant to Section 7.3 shall be deemed to
be invested in a number of notional common shares of the Company (the "Units")
equal to the quotient of (i) the dollar amount of such Deferral Contributions
divided by (ii) the Fair Market Value per share on the date the Deferral
Contributions then being allocated to the Company Stock Fund would otherwise
have been paid to the Participant. In the case of a transfer of any amount from
another Investment Fund to the Company Stock Fund, the amount being transferred
shall be deemed to be invested in a number of Units equal to the quotient of (i)
the dollar amount of such transfer divided by (ii) the Fair Market Value per
share on the effective date of such transfer. Fractional Units shall be
credited, but shall be rounded to the nearest hundredth percentile, with amounts
equal to or greater than .005 rounded up and amounts less than .005 rounded
down. Whenever a dividend other than a dividend payable in the form of the
Company's common shares is declared with respect to the Company Stock, the
number of Units in the Participant's Company Stock Fund Account shall be
increased by the number of Units determined by dividing (i) the product of (A)
the number of Units in the Participant's Company Stock Fund Account on the
related dividend record date and (B) the amount of any cash dividend declared by
the Company on a common share (or, in the case of any dividend distributable in
property other than common shares, the per share value of such dividend as
determined by the Company for purposes of income tax reporting) by (ii) the Fair
Market Value per share on the related dividend payment date. In the case of any
dividend declared on the Company Stock which is payable in common shares, the
Participant's Company Stock Fund Account shall be increased by the number of
Units equal to the product of (i) the number of Units credited to the
Participant's Stock Account on the related dividend record date and (ii) the
number of shares of common shares (including any fraction thereof) distributable
as a dividend on a common share. In the event of any change in the number or
kind of outstanding common shares by reason of any recapitalization,
reorganization, merger, consolidation, stock split or any similar change
affecting the common shares, other than a stock dividend as provided above, the
Board shall make an appropriate adjustment in the number of Units credited to
the Participant's Company Stock Fund Account.

           (c) VALUATION OF UNITS ON TRANSFER OR DISTRIBUTION. Any transfer or
cash distribution from the Participant's Company Stock Fund Account, whether to
another Investment Fund or to the Participant or his or her Beneficiary and
whether part of a lump sum distribution or an installment payment, shall be
determined by multiplying the number of Units then subject to distribution by
the Fair Market Value per share on the date prior to the date as of which
distribution is to be made. In the event of a distribution from the
Participant's Company Stock Fund Account to be paid in common shares, the number
of common shares payable shall be equal to the number of whole Units subject to
such distribution. Any fractional Units will be settled in cash based on the
Fair Market Value per share on the date prior to the date as of which
distribution is to be made.

           (d) INSTALLMENT PAYMENTS. If a Participant elects to be paid in
substantially equal annual, quarterly or monthly installments pursuant to
Section 9.2, the number of Units subject to such distribution shall be equal to
the product of (i) the number of Units in the Company Stock Fund Account on the
date of such distribution and (ii) a fraction, the numerator of which is one (1)
and the denominator of which is the total number of installments remaining to be
paid at that time.

                                  ARTICLE VIII

                                     VESTING

8.1        VESTING.

           A Participant shall have a fully vested, nonforfeitable interest in
his Accounts at all times.

                                   ARTICLE IX

                               PAYMENT OF BENEFITS

9.1        TIME OF PAYMENT.

           Distributions will be made to a Participant at the time elected by
the Participant in the Participation Agreement. As provided in Section 3.2 and
Section 3.3, a Participant may elect in his initial or any revised Participation
Agreement to defer the receipt of distributions until the first business day of
any Plan Year following the Plan Year in which Fees are deferred but not later
than the Plan Year in which occurs the Participant's seventy-fifth (75th)
birthday. If such an election has been made (and, if the election was made in a
revised Participation Agreement, the Participation Agreement has been in effect
for the requisite period of time provided in Section 3.3), distributions to the
Participant (or the Participant's Beneficiary in the case of death) shall be
postponed to the extent necessary to honor such election. If the Participant
fails to specify the date as of which a distribution is to commence, such
distribution shall commence on the first business day of the Plan Year
immediately following the Plan Year in which the Participant's Termination Date
occurs.

9.2        METHOD OF PAYMENT.

           Any payments from a Participant's Accounts shall be made either in a
lump sum in cash or in cash payments in substantially equal annual, quarterly,
or monthly installments over a period certain not exceeding 10 years, such
method of payment to be elected by the Participant in his initial Participation
Agreement or in any revised Participation Agreement that has been in effect for
the requisite period of time specified in Section 3.3. Notwithstanding the
foregoing, to the extent a Participant's Accounts are invested in the Company
Stock Fund at the time payment is to be made, payments from a Participant's
Accounts may be made in whole shares of Company securities if the Participant so
elects in his initial Participation Agreement or in any revised Participation
Agreement. Any distribution from the Company Stock Fund Account shall be made in
accordance with Sections 7.4(c) and (d). If installment payments are made, the
provisions of Sections 7.2 and 7.3 shall continue to apply to the unpaid
balance. Unless a Participant has affirmatively elected to receive payments in
installments over a period of 10 years or less and to receive payment of the
portion of his Accounts invested in the Company Stock Fund in whole shares of
Company securities, the Participant's Accounts shall be distributed in one cash
lump sum. If a Participant is married at the time a Participation Agreement, or
a revised Participation Agreement, is filed, an election to receive payments in
other than a lump sum shall be ineffective unless the Participant's spouse
consents to such election on a form prescribed by or acceptable to the Plan
Administrator for that purpose.

9.3        BENEFICIARY DESIGNATIONS.

           In the event of the death of the Participant, the Participant's
interest in his Accounts shall be paid to the Participant's Beneficiary. Each
Participant shall have the right to designate, on forms supplied by and
delivered to the Plan Administrator, a Beneficiary or Beneficiaries to receive
his benefits hereunder in the event of the Participant's death. If the
Participant is married at the time the Beneficiary Designation is filed, the
designation will be ineffective unless the designation names the spouse as the
Beneficiary of at least 50% of the Participant's Accounts or the Participant's
spouse consents to the designation. Subject to the spousal consent requirements
noted in the preceding sentence, each Participant may change his Beneficiary
designation from time to time in the manner described above. Upon receipt of
such designation by the Plan Administrator, such designation or change of
designation shall become effective as of the date of the notice, whether or not
the Participant is living at the time the notice is received. There shall be no
liability on the part of the Company, the Plan Administrator or the Trustee, if
any, with respect to any payment authorized by the Plan Administrator in
accordance with the most recent valid Beneficiary designation of the Participant
in its possession before receipt of a more recent and valid Beneficiary
designation. If no designated Beneficiary is living when benefits become
payable, or if there is no designated Beneficiary, the Beneficiary shall be the
Participant's spouse; or if no spouse is then living, such Participant's issue,
including any legally adopted child or children, in equal shares by right of
representation; or if no such designated Beneficiary and no such spouse or issue
is living upon the death of a Participant, or if all such persons die prior to
the full distribution of such Participant's benefits, then the Beneficiary shall
be the estate of the Participant.

                                    ARTICLE X

                           ADMINISTRATION OF THE PLAN

10.1       ADOPTION OF TRUST.

           The Company may, in its discretion, enter into a Trust Agreement with
the Trustee, which Trust Agreement shall form a part of this Plan and is hereby
incorporated herein by reference.

10.2       POWERS OF THE PLAN ADMINISTRATOR.

           (a) GENERAL POWERS OF PLAN ADMINISTRATOR. The Plan Administrator
shall have the power and discretion to perform the administrative duties
described in this Plan or required for proper administration of the Plan and
shall have all powers necessary to enable it to properly carry out such duties.
Without limiting the generality of the foregoing, the Plan Administrator shall
have the power and discretion to construe and interpret this Plan, to hear and
resolve claims relating to the Plan and to decide all questions and disputes
arising under the Plan. The Plan Administrator shall determine, in its
discretion, the status and rights of a Participant and the identity of the
Beneficiary or Beneficiaries entitled to receive any benefits payable on account
of the death of a Participant.

           (b) DISTRIBUTIONS. If a Trust is established, all benefit
disbursements by the Trustee shall be made upon the instructions of the Plan
Administrator. If a Trust is not established, the Company shall make all benefit
disbursements from its general assets upon the instruction of the Plan
Administrator.

           (c) DECISIONS CONCLUSIVE. The decisions of the Plan Administrator
upon all matters within the scope of its authority shall be binding and
conclusive upon all persons.

           (d) REPORTING. The Plan Administrator shall file all reports and
forms lawfully required to be filed by the Plan Administrator and shall
distribute any forms, reports or statements to be distributed to Participants
and others.

           (e) INVESTMENTS. If a Trust is established, the Plan Administrator
shall keep itself advised with respect to the investment of the Trust Fund and
periodically shall report to the Company regarding the investment and
reinvestment of the Trust Fund.

10.3       CREATION OF COMMITTEE.

           A committee shall perform the Company's duties as Plan Administrator.
The committee shall consist of at least two members, and they shall hold office
during the pleasure of the Board. Unless and until the Company appoints other
individuals to serve on this committee, the committee members shall be the
members of the Company's Benefits Administration Committee as they may change
from time to time. The committee members shall serve without compensation but
shall be reimbursed for all expenses by the Company. The committee shall conduct
itself in accordance with the provisions of this Article X. The members of the
committee may resign with 30 days notice in writing to the Company and may be
removed immediately at any time by written notice from the Company.

10.4       CHAIRMAN AND SECRETARY.

           The committee shall elect a chairman from among its members and shall
select a secretary who is not required to be a member of the committee and who
may be authorized to execute any document or documents on behalf of the
committee. The secretary of the committee or his designee shall record all acts
and determinations of the committee and shall preserve and retain custody of all
such records, together with such other documents as may be necessary for the
administration of this Plan or as may be required by law.

10.5       APPOINTMENT OF AGENTS.

           The committee may appoint such other agents, who need not be members
of the committee, as it may deem necessary for the effective performance of its
duties, whether ministerial or discretionary, as the committee may deem
expedient or appropriate. The compensation of any agents who are not employees
of the Company shall be fixed by the committee within any limitations set by the
Board.

10.6       MAJORITY VOTE AND EXECUTION OF INSTRUMENTS.

           In all matters, questions and decisions, the action of the committee
shall be determined by a majority vote of its members. They may meet informally
or take any ordinary action without the necessity of meeting as a group. All
instruments executed by the committee shall be executed by a majority of its
members or by any member of the committee designated to act on its behalf.

10.7       ALLOCATION OF RESPONSIBILITIES.

           The committee may allocate responsibilities among its members or
designate other persons to act on its behalf. Any allocation or designation,
however, must be set forth in writing and must be retained in the permanent
records of the committee.

10.8       CONFLICT OF INTEREST.

           No member of the committee who is a Participant shall take any part
in any action in connection with his participation as an individual. Such action
shall be voted or decided by the remaining members of the committee.

10.9       ACTION TAKEN BY COMPANY.

           Any action to be taken by the Company shall be taken by resolution
adopted by the Board; provided, however, that by resolution the Board may
delegate to any committee of the Board, any committee of officers or other
employees, or any officer of the Company the authority to take any actions
hereunder.

10.10      DELEGATIONS OF AUTHORITY.

           All delegations of responsibility set forth in this document
regarding the determination of benefits and the interpretation of the terms of
the Plan confer discretionary authority upon the Plan Administrator.

10.11      INDEMNIFICATION.

           To the extent permitted by law, the Company shall and does hereby
jointly and severally indemnify and agree to hold harmless its employees,
officers and directors who serve in fiduciary or other capacities with respect
to the Plan from all loss, damage, or liability, joint or several, including
payment of expenses in connection with defense against any such claim, for their
acts, omissions and conduct, and for the acts, omissions or conduct of their
duly appointed agents, which acts, omissions or conduct constitute or are
alleged to constitute a breach of such individual's fiduciary or other
responsibilities under the Act or any other law, except for those acts,
omissions, or conduct resulting from his own willful misconduct, willful failure
to act, or gross negligence; provided, however, that if any party would
otherwise be entitled to indemnification hereunder in respect of any liability
and such party shall be insured against loss as a result of such liability by
any insurance contract or contracts, such party shall be entitled to
indemnification hereunder only to the extent by which the amount of such
liability shall exceed the amount thereof payable under such insurance contract
or contracts.

                                   ARTICLE XI

                             CLAIMS REVIEW PROCEDURE

11.1       CLAIMS.

           (a) FILING OF CLAIM. A Participant or Beneficiary entitled to
benefits need not file a written claim to receive benefits. If a Participant,
Beneficiary or any other person is dissatisfied with the determination of his
benefits, eligibility, participation or any other right or interest under this
Plan, such person may file a written statement setting forth the basis of the
claim with the Plan Administrator in a manner prescribed by the Plan
Administrator. In connection with the determination of a claim, or in connection
with review of a denied claim, the claimant may examine this Plan and any other
pertinent documents generally available to Participants relating to the claim
and may submit comments in writing.

           (b) NOTICE OF DECISION. A written notice of the disposition of any
such claim shall be furnished to the claimant within 30 days after the claim is
filed with the Plan Administrator, provided that the Plan Administrator may have
an additional period to decide the claim if it advises the claimant in writing
of the need for an extension and the date on which it expects to decide the
claim. The notice of disposition of a claim shall refer, if appropriate, to
pertinent provisions of this Plan, shall set forth in writing the reasons for
denial of the claim if the claim is denied (including references to any
pertinent provisions of this Plan), and where appropriate shall explain how the
claimant can perfect the claim.

11.2       APPEALS.

           (a) REVIEW. If the claim is denied, in whole or in part, the claimant
shall also be notified in writing that a review procedure is available.
Thereafter, within 90 days after receiving the written notice of the Plan
Administrator's disposition of the claim, the claimant may request in writing,
and shall be entitled to, a review meeting with the Plan Administrator to
present reasons why the claim should be allowed. The claimant shall be entitled
to be represented by counsel at the review meeting. The claimant also may submit
a written statement of his claim and the reasons for granting the claim. Such
statement may be submitted in addition to, or in lieu of, the review meeting
with the Plan Administrator. The Plan Administrator shall have the right to
request of and receive from a claimant such additional information, documents or
other evidence as the Plan Administrator may reasonably require. If the claimant
does not request a review meeting within 90 days after receiving written notice
of the Plan Administrator's disposition of the claim, the claimant shall be
deemed to have accepted the Plan Administrator's written disposition, unless the
claimant shall have been physically or mentally incapacitated so as to be unable
to request review within the 90 day period.

           (b) DECISION FOLLOWING REVIEW. A decision on review shall be rendered
in writing by the Plan Administrator ordinarily not later than 60 days after
review, and a written copy of such decision shall be delivered to the claimant.
If special circumstances require an extension of the ordinary period, the Plan
Administrator shall so notify the claimant. In any event, if a claim is not
determined within 120 days after submission for review, it shall be deemed to be
denied

           (c) DECISIONS FINAL; PROCEDURES MANDATORY. To the extent permitted by
law, a decision on review by the Plan Administrator shall be binding and
conclusive upon all persons whomsoever. To the extent permitted by law,
completion of the claims procedures described in this Section shall be a
mandatory precondition that must be complied with prior to commencement of a
legal or equitable action in connection with the Plan by a person claiming
rights under the Plan or by another person claiming rights through such a
person. The Plan Administrator may, in its sole discretion, waive these
procedures as a mandatory precondition to such an action.

                                   ARTICLE XII

                  LIMITATION ON ASSIGNMENT; PAYMENTS TO LEGALLY
                      INCOMPETENT DISTRIBUTEE; CORRECTIONS

12.1       ANTI-ALIENATION CLAUSE.

           No benefit which shall be payable under the Plan to any person shall
be subject in any manner to anticipation, alienation, sale, transfer,
assignment, pledge, encumbrance or charge, and any attempt to anticipate,
alienate, sell, transfer, assign, pledge, encumber, charge or otherwise dispose
of the same shall be void. No benefit shall in any manner be subject to the
debts, contracts, liabilities, engagements or torts of any person, nor shall it
be subject to attachment or legal process for or against any person, except to
the extent as may be required by law.

12.2       PERMITTED ARRANGEMENTS.

           Section 12.1 shall not preclude arrangements for the withholding of
applicable taxes from benefit payments, arrangements for the recovery of benefit
overpayments, or arrangements for direct deposit of benefit payments to an
account in a bank, savings and loan association or credit union (provided that
such arrangement is not part of an arrangement constituting an assignment or
alienation).

12.3       PAYMENT TO MINOR OR INCOMPETENT.

           Whenever any benefit which shall be payable under the Plan is to be
paid to or for the benefit of any person who is then a minor or determined by
the Plan Administrator to be incompetent by qualified medical advice, the Plan
Administrator need not require the appointment of a guardian or custodian, but
shall be authorized to cause the same to be paid over to the person having
custody of the minor or incompetent, or to cause the same to be paid to the
minor or incompetent without the intervention of a guardian or custodian, or to
cause the same to be paid to a legal guardian or custodian of the minor or
incompetent if one has been appointed or to cause the same to be used for the
benefit of the minor or incompetent.

12.4       UNDERPAYMENT OR OVERPAYMENT OF BENEFITS.

           In the event that, through mistake or computational error, benefits
are underpaid or overpaid, there shall be no liability for any more than the
correct amount of benefits under the Plan. Overpayments may be deducted from
future payments under the Plan, and underpayment may be added to future payments
under the Plan. In lieu of receiving reduced benefits under the Plan, a
Participant or Beneficiary may elect to make a lump sum repayment of any
overpayment.

                                  ARTICLE XIII

                        AMENDMENT, MERGER AND TERMINATION

13.1       AMENDMENT.

           The Company shall have the right at any time, by an instrument in
writing duly executed, acknowledged and delivered to the Plan Administrator, to
modify, alter or amend this Plan, in whole or in part, prospectively or
retroactively; provided, however, that the duties and liabilities of the Plan
Administrator and any Trustee hereunder shall not be substantially increased
without their written consent; and provided further that the amendment shall not
reduce any Participant's interest in the Plan, calculated as of the date on
which the amendment is adopted.

13.2       MERGER OR CONSOLIDATION OF COMPANY.

           The Plan shall not be automatically terminated by the Company's
acquisition by or merger into any other employer, but the Plan shall be
continued after such acquisition or merger if the successor employer elects and
agrees to continue the Plan. All rights to amend, modify, suspend, or terminate
the Plan shall be transferred to the successor employer, effective as of the
date of the merger.

13.3       TERMINATION OF PLAN OR DISCONTINUANCE OF CONTRIBUTIONS.

           It is the expectation of the Company that this Plan and the payment
of contributions hereunder will be continued indefinitely. However, continuance
of the Plan is not assumed as a contractual obligation of the Company, and the
right is reserved at any time to terminate this Plan or to reduce, temporarily
suspend or discontinue contributions hereunder. If the Plan is terminated or
contributions are reduced, temporarily suspended, or discontinued, the Accounts
of the affected Participants will continue to be held pursuant to the Plan until
the date or dates on which such Accounts would have become distributable had the
Plan not been terminated or had contributions not been reduced, temporarily
suspended, or discontinued. In the exercise of its discretion, however, the Plan
Administrator may direct that the Accounts of any Participant affected by the
termination of the Plan, or the reduction, temporary suspension, or
discontinuance of contributions, be distributed as of an earlier date or dates.

                                   ARTICLE XIV

                               GENERAL PROVISIONS

14.1       LIMITATION ON PARTICIPANTS' RIGHTS.

           Participation in the Plan shall not give any Participant the right to
be retained as a Director or any right or interest in any Trust Fund or in the
general assets of the Company other than as herein provided. The Company
reserves the right to dismiss any Participant without any liability for any
claim either against the Trust Fund, except to the extent herein provided, or
against the Company.

14.2       STATUS OF PARTICIPANTS AS UNSECURED CREDITORS.

           Each Participant is an unsecured creditor of the Company and, except
for the Deferral Contributions placed in any Trust Fund as provided in this
Plan, no assets of the Company will be segregated from the general assets of the
Company for the payment of benefits under this Plan. If the Company acquires any
insurance policies or other investments to assist it in meeting its obligations
to Participants, those policies or other investments will nonetheless remain
part of the general assets of the Company.

14.3       STATUS OF TRUST FUND.

           A Trust Fund may be established to assist the Company in meeting its
obligations to the Participants and to provide the Participants with a measure
of protection in certain limited instances. In certain circumstances, the assets
of any Trust Fund may be used for the benefit of the Company's creditors and, as
a result, any such Trust Fund is considered to be part of the Company's general
assets. Benefit payments due under this Plan shall either be paid from the Trust
Fund, if any, or from the Company's general assets as directed by the Plan
Administrator. Despite the establishment of any Trust Fund, it is intended that
the Plan be considered to be "unfunded" for purposes of the Act and the Code.

14.4       UNIFORM ADMINISTRATION.

           Whenever in the administration of the Plan any action is required by
the Plan Administrator, such action shall be uniform in nature as applied to all
persons similarly situated.

14.5       HEIRS AND SUCCESSORS.

           All of the provisions of this Plan shall be binding upon all persons
who shall be entitled to any benefits hereunder, and their heirs and legal
representatives.

14.6       NO LIABILITY FOR ACCELERATION OF PAYMENTS.

           Under the Plan, Participants are allowed, to a certain extent, to
designate the dates on which distributions are to be made to them. The Plan
Administrator, however, also has the right, in the exercise of its discretion,
to accelerate payments. By accepting the benefits offered by the Plan, each
Participant (and each Beneficiary claiming through a Participant) acknowledges
that the Plan Administrator may override the Participant's elections and agrees
that neither the Participant nor any Beneficiary shall have any claim against
the Plan Administrator, the Trustee, if any, or the Company if distributions are
made earlier than anticipated by the Participant due to the Plan Administrator's
exercise of its discretion to accelerate payments.

           To signify its adoption of this Plan document, the Company has caused
this Plan document to be executed by a duly authorized officer of the Company on
this _____ day of _________, 1998.

                                                        PHELPS DODGE CORPORATION


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