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                                                                   Exhibit 10.12

[PHELPS DODGE CORPORATION LETTERHEAD]


July 8, 2002


Phelps Dodge Corporation

                            Award of Restricted Stock

Dear :

            Phelps Dodge Corporation (the "Company") is pleased to confirm to
you that at a meeting held on July 2, 2002 ("Grant Date"), the Compensation and
Management Development Committee of the Board of Directors of Phelps Dodge
Corporation (the "Committee") awarded you ____ shares of Restricted Stock of the
Company pursuant to the 1998 Stock Option and Restricted Stock Plan (the
"Plan").

            This letter will confirm the following agreement between you and the
Company pursuant to the Plan. Capitalized words used in this letter and defined
in the Plan are used as so defined. This award of Restricted Stock is subject to
the terms and conditions of the Plan, as supplemented by this letter.

            1. 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.

                  a.    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.


                  b.    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.

                  c.    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.


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            2. 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.

            3. Death, Disability or Retirement. If your employment with the
Company and its Subsidiaries terminates by reason of your Death, your Disability
or your Retirement (except for a termination occurring within six months of the
Grant Date on account of your Disability or Retirement), any Restricted Period
still in effect shall lapse upon your termination of employment.

            4. 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.

            5. 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.

            6. 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.

            7. Conversions 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.

            8. 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


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shares of Restricted Stock with respect to which the Restricted Period has
lapsed, subject to such terms and conditions as the Committee shall impose.

            9. Governing Law. This Agreement shall be construed and enforced in
accordance with, and governed by, the laws of the State of New York.

            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.


                                            PHELPS DODGE CORPORATION

                                            By:  _______________________________
                                                       Sr. Vice President


ACCEPTED AND AGREED TO:

_______________________________________________


Date:

_______________________________________________


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