Document:

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                                                              Exhibit 10(l)

                            THE J. M. SMUCKER COMPANY
                      VOLUNTARY DEFERRED COMPENSATION PLAN

         The J. M. Smucker Company Deferred Compensation Plan (hereinafter
referred to as the "Plan"), effective as of May 1, 2003, is hereby adopted and
established by The J. M. Smucker Company, (hereinafter referred to as the
"Company") and will be maintained by the Company for the purpose of providing
benefits for certain employees as provided herein.

                                    ARTICLE I

                          ELIGIBILITY AND PARTICIPATION

         Section 1.1 The Company's Board of Directors has identified certain
members of management who are highly compensated employees eligible to
participate in the Plan and has provided such individuals with written notice of
eligibility (each a "Participant").

         Section 1.2 The individuals described in Section 1.1 shall be eligible
to participate in the Plan and may do so by filing a written election with the
Company via the election to defer form attached to this Plan or by filing such
other form approved by the Company. In the first year in which a Participant
becomes eligible to participate in the Plan, the newly eligible Participant may
make an election to defer compensation for services to be performed for the
Company within 30 days after he or she becomes eligible. All other elections to
defer payment of compensation must be made before the beginning of the calendar
year for which the compensation is earned.

         Section 1.3 For each participant, the Company shall establish and
maintain a separate deferred compensation account (the "Voluntary Deferral
Account"). The amount of each Participant's compensation which is deferred
pursuant to the election to defer form shall be credited to the Voluntary
Deferral Account as of the date such compensation otherwise would be payable.
Participants shall always be 100% percent vested in the balance in their
Voluntary Deferral Account and any earnings and losses on such amounts. No
amount shall actually be set aside for payment under the Plan, and the Voluntary
Deferral Account and shall be maintained for record keeping purposes only. Any
Participant to whom an amount is credited under the Plan shall be deemed a
general, unsecured creditor of the Company.

         Section 1.4 Any Participant may defer all or any portion (up to the
limits specified in Section 2.1 of this Plan) of his or her compensation
otherwise earned by him or her for the calendar year beginning after the date of
such election. Any amounts deferred shall be paid to the Participant only as
provided in this Plan. Any Participant may change the amount of, or suspend,
future deferrals with respect to compensation otherwise payable to him or her
for calendar years beginning after the date of change or suspension. The
election to defer shall be irrevocable as to the deferred compensation for the
period for which the election is made.

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                                   ARTICLE II

                              DEFERRED COMPENSATION

         Section 2.1 Each Participant will have the right to defer up to fifty
percent of his/her respective annual base salary and up to one hundred percent
of his/her respective annual bonus award, and such amounts will be deemed
contributed to the Participant's Voluntary Deferral Account. At the option of
the Participant, as set forth in the deferred form and subject to the provisions
of section 3.6 below, such amounts may be deferred until the Participant's
retirement or for a term of three, five, or ten years. Annually, the Company
will provide to each Participant an election to defer form which must be
completed before the end of December in order to be effective for the subsequent
calendar year's compensation.

         Section 2.2 All amounts credited under the terms of the Plan to the
Voluntary Deferral Account maintained in the name of a Participant by the
Company shall be credited with earnings or losses based upon the Participant's
deemed investments made pursuant to the investment election form attached to
this Plan. The investment vehicles available pursuant to this Plan are listed in
Exhibit A attached to the Plan. Such earnings or losses shall continue to be
credited to the balance in the Voluntary Deferral Account until the entire
amount credited to the account has been distributed to the Participant or to the
Participant's beneficiary in accordance with a beneficiary designation form
delivered to the Company. The Company retains the right to change the available
investment vehicles at its sole discretion. Participants will have the right to
change deemed investment vehicles in accordance with administrative procedures
adopted by the Company by completing a new investment election form.

                                   ARTICLE III

                                  DISTRIBUTION

         Section 3.1 For amounts deferred until retirement or termination of
employment, on the first anniversary of the date on which a Participant's
employment with the Company and all other related employers of the Company (as
determined under Code Section 414) terminates for any reason, (other than death,
Total Disability (as defined in the 1998 Equity and Performance Incentive Plan),
or Change in Control Performance Incentive Plan), distribution of the amount
credited to the Voluntary Deferral Account shall commence. The distributions
will be in ten annual installments, and shall reflect any gains or losses in
Participants Account in such manner as the Company shall determine. In the
alternative, the Participant may select one of the alternatives set forth below.
Selection of an alternative shall be made at the time the Participant first
elects to participate in the Plan, and may be subsequently changed provided such
new election is made at least 12 months prior to termination of employment. The
alternative forms of distribution shall be:

                  (a) lump sum payable within 60 days of retirement or
         termination of employment;  or

                  (b) substantially equal annual installments for not less than
         two and not greater than ten years. Distribution shall commence on the
         first anniversary of the date on which the Participant's employment
         with the Company and any other related employers of the Company (as
         determined under Code Section 414) terminates. Subsequent installments,
         if any, will be made on the each anniversary date following the date of
         the first installment. The final installment will be the balance of the
         Participant's Voluntary Deferral Account.

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         Section 3.2 Within 30 days following the date on which a Participant's
employment with the Company and all other related employers of the Company (as
determined under Code Section 414) terminates as a result of death, Total
Disability, or Change in Control, the Company will distribute a lump sum of the
amount credited to the Participant's Voluntary Deferral Account in accordance
with this Plan.

         Section 3.3 If a Participant should die before distribution of the full
amount of the Voluntary Deferral Account has been made to the Participant, any
remaining amounts shall be distributed to the Participant's Primary Beneficiary
by the method designated by the Participant in writing in the Beneficiary
Designation form. If the Primary Beneficiary is no longer alive, then such
amounts shall be distributed to the Participant's Secondary Beneficiary by the
method designated by the Participant in the Beneficiary Designation form and if
no designation has been made, in a lump sum distribution as soon as
administratively feasible following such beneficiary's death. If a Participant
has not designated a beneficiary, or if no designated beneficiary is living on
the date of distribution, then, notwithstanding any provision herein to the
contrary, such amounts shall be distributed to such Participant's spouse, or if
deceased or none, then the Participant's children per stirpes, or if none, then
to the Participant's estate, in a lump sum distribution as soon as
administratively feasible following such Participant's death.

         Section 3.4 If, at any time following termination of employment, the
value of a Participant's Voluntary Deferral Account is less than $10,000, the
Company may elect to distribute such account balance in a lump sum payment
regardless of the Participant's election.

         Section 3.5 Notwithstanding the above provisions, no amount may be
distributed from the Plan if such amount would not be deductible under Code
Section 162(m), as determined by the Board of Directors in its sole discretion.

         Section 3.6 Anything herein to the contrary notwithstanding, if, at any
time, a court or the Internal Revenue Service determines that an amount in a
Participant's Voluntary Deferral Account is includable in the gross income of
the Participant and subject to tax, the Board of Directors of the Company may,
in its sole discretion, permit a lump sum distribution of an amount equal to the
amount determined to be includable in the Participant's gross income.

                                   ARTICLE IV

                        AMENDMENT AND TERMINATION OF PLAN

         The Company, through the action of the Board or a committee designated
by the Board, reserves the right to amend or terminate the Plan at any time. Any
such termination shall be in writing and shall be effective when made.
Notification to Participants of any amendment or termination shall be in writing
and delivered by first class mail, addressed to each Participant at the
Participant's last known address, or by other notice acknowledged in writing by
the Participant. Any amounts credited to the Voluntary Deferral Account of any
Participant shall remain subject to the provisions of the Plan and distribution
will not be accelerated because of the termination of the Plan. No amendment or
termination shall directly or indirectly reduce the balance of any Voluntary
Deferral Account described in this Plan as of the effective date of such
amendment or termination. No additional credits or contributions will be made to
the Voluntary Deferral Accounts of the Participants under the Plan after
termination of the Plan, but Voluntary Deferral Accounts of the Participants
under the Plan will continue to fluctuate with investment

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gains and losses until all benefits are distributed to the participants or to
their beneficiaries. Upon termination of the Plan, distribution of amounts
credited to the Voluntary Deferral Accounts or of the Participants shall be made
to the Participants or their beneficiaries in accordance with Article III of
this Plan.

                                    ARTICLE V

                                CLAIMS PROCEDURE

         Section 5.1 For purposes of handling claims with respect to this Plan,
the "Claims Reviewer" shall be the Company, unless another person or
organizational unit is designated by the Company as Claims Reviewer.

         Section 5.2 An initial claim for benefits under the Plan must be made
by the Participant or his or her beneficiary in accordance with the terms of the
Plan through which the benefits are provided. Not later than 90 days after
receipt of such a claim, the Claims Reviewer will render a written decision on
the claim to the claimant, unless special circumstances require the extension of
such 90-day period. If such extension is necessary, the Claims Reviewer shall
provide the Participant or the Participant's beneficiary with written
notification of such extension before the expiration of the initial 90-day
period. Such notice shall specify the reason or reasons for such extension and
the date by which a final decision can be expected. In no event shall such
extension exceed a period of 90 days from the end of the initial 90-day period.

In the event the Claims Reviewer denies the claim of a Participant or the
beneficiary in whole or in part, the Claims Reviewer's written notification
shall specify, in a manner calculated to be understood by the claimant, the
reason for the denial; a reference to the Plan or other document or form that is
the basis for the denial; a description of any additional material or
information necessary for the claimant to perfect the claim; an explanation as
to why such information or material is necessary; and an explanation of the
applicable claims procedure.

Should the claim be denied in whole or in part and should the claimant be
dissatisfied with the Claims Reviewer's disposition of the claimant's claim, the
claimant may have a full and fair review of the claim by the Company upon
written request therefore submitted by the claimant or the claimant's duly
authorized representative and received by the Company within 60 days after the
claimant receives written notification that the claimant's claim has been
denied. In connection with such review, the claimant or the claimant's duly
authorized representative shall be entitled to review pertinent documents and
submit the claimant's views as to the issues, in writing. The Company shall act
to deny or accept the claim within 60 days after receipt of the claimant's
written request for review unless special circumstances require the extension of
such 60-day period. If such extension is necessary, the Company shall provide
the claimant with written notification of such extension before the expiration
of such initial 60-day period. In all events, the Company shall act to deny or
accept the claim within 120 days of the receipt of the claimant's written
request for review. The action of the Company shall be in the form of a written
notice to the claimant and its contents shall include all of the requirements
for action on the original claim.

In no event may a claimant commence legal action for benefits the claimant
believes are due to the claimant until the claimant has exhausted all of the
remedies and procedures afforded the claimant by this Article V.

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                                   ARTICLE VI

                                 ADMINISTRATION

         Section 6.1 The right of a Participant or the Participant's beneficiary
to receive a distribution hereunder shall be an unsecured claim against the
general assets of the Company, and neither a Participant nor his or her
designated beneficiary shall have any rights in or against any amount credited
to any Voluntary Deferral Accounts under this Plan or any other assets of the
Company. The Plan at all times shall be considered entirely unfunded both for
tax purposes and for purposes of Title I of the Employee Retirement Income
Security Act of 1974, as amended. Any funds invested hereunder shall continue
for all purposes to be part of the general assets of the Company and available
to its general creditors in the event of bankruptcy or insolvency. Voluntary
Deferral Accounts under this Plan and any benefits which may be payable pursuant
to this Plan are not subject in any manner to anticipation, sale, alienation,
transfer, assignment, pledge, encumbrance, attachment, or garnishment by
creditors of a Participant or a Participant's beneficiary. The Plan constitutes
a mere promise by the Company to make benefit payments in the future. No
interest or right to receive a benefit may be taken, either voluntarily or
involuntarily, for the satisfaction of the debts of, or other obligations or
claims against, such person or entity, including claims for alimony, support,
separate maintenance and claims in bankruptcy proceedings.

         Section 6.2 The Plan shall be administered by the benefits committee or
such other committee as designated by the Board of Directors of the Company. The
committee administering the Plan shall have the authority, duty and power to
interpret and construe the provisions of the Plan and the duty and
responsibility of maintaining records, making the requisite calculations and
disbursing the payments hereunder. The Board shall have the authority to
determine and identify participants eligible to participate in the Plan.

         Section 6.3 Expenses of administration shall be paid by the Company.
The committee administering the Plan shall be entitled to rely on all tables,
valuations, certificates, opinions, data and reports furnished by any actuary,
accountant, controller, counsel or other person employed or retained by the
Company with respect to the Plan.

         Section 6.4 The committee administering the Plan shall furnish
individual annual statements of accrued benefits to each Participant, or current
beneficiary, in such form as determined by the administrator or as required by
law.

         Section 6.5 The sole rights of a Participant or beneficiary under this
Plan shall be to have this Plan administered according to its provisions, to
receive whatever benefits he or she may be entitled to hereunder, and nothing in
the Plan shall be interpreted as a guaranty that any funds in any trust which
may be established in connection with the Plan or assets of the Company will be
sufficient to pay any benefit hereunder. Further, the adoption and maintenance
of this Plan shall not be construed as creating any contract of employment
between the Company and any Participant. The Plan shall not affect the right of
the Company to deal with any participants in employment respects, including
their hiring, discharge, compensation, and conditions of employment.

         Section 6.6 The Company may from time to time establish rules and
procedures which it determines to be necessary for the proper administration of
the Plan and the benefits payable to an individual in the event that individual
is declared incompetent and a conservator or other person legally charged with
that individual's care is appointed. Except as otherwise provided

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herein, when the Company determines that such individual is unable to manage his
or her financial affairs, the Company may pay such individual's benefits to such
conservator, person legally charged with such individual's care, or institution
then contributing toward or providing for the care and maintenance of such
individual. Any such payment shall constitute a complete discharge of any
liability of the Company and the Plan for such individual.

         Section 6.7 Each Participant shall keep the Company informed of his or
her current address and the current address of his or her designated
beneficiary. The Company shall not be obligated to search for any person. If
such person is not located within three years after the date on which payment of
the Participant's benefits payable under this Plan may first be made, payment
may be made as though the Participant or his or her beneficiary had died at the
end of such three-year period.

         Section 6.8 Notwithstanding any provision herein to the contrary,
neither the Company nor any individual acting as an employee or agent of the
Company shall be liable to any Participant, former Participant, designated
beneficiary, or any other person for any claim, loss, liability or expense
incurred in connection with the Plan, including without limitation, the
investment performance of any deemed investments, unless attributable to fraud
or willful misconduct on the part of the Company or any such employee or agent
of the Company.

         Section 6.9 All questions pertaining to the construction, validity and
effect of the Plan shall be determined in accordance with the laws of the United
States, and to the extent not preempted by such laws, by the laws of the State
of Ohio.

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                                    EXHIBIT A
                                       TO
                      VOLUNTARY DEFERRED COMPENSATION PLAN

         Deferred amounts may be tracked with investments in either (or a
combination of):

              1.  Common shares of the Company; or

              2.  Funds of Fidelity Management and Research Company or any of
                  its affiliates, which are available as designated investments
                  under the Company's 401 (k) plan.<PAGE>
                                                                   Exhibit 10.14

                         PHELPS DODGE 2003 STOCK OPTION
                            AND RESTRICTED STOCK PLAN

                                   SECTION 1

                                     PURPOSE

         The purpose of the Plan is to foster and promote the long-term
financial success of the Corporation and materially increase shareholder value
by (a) motivating superior performance by means of performance-related
incentives, (b) encouraging and providing for the acquisition of an ownership
interest in the Corporation by Employees, and (c) enabling the Corporation to
attract and retain the services of an outstanding team upon whose judgment,
interest and special effort the successful conduct of its operations is largely
dependent.

                                   SECTION 2

                                   DEFINITIONS

                  2.1 Definitions. Whenever used herein, the following terms
shall have the respective meanings set forth below:

                  (a) "Act" shall mean the Securities Exchange Act of 1934, as
         amended.

                  (b) "Adjustment Event" shall mean any stock dividend, stock
         split or share combination of, or extraordinary cash dividend on, the
         Common Shares or recapitalization of the Corporation.

                  (c) "Board" shall mean the Board of Directors of the
         Corporation.

                  (d) "Common Shares" shall mean the Common Shares of the
         Corporation.

                  (e) "Cause" shall mean (i) the willful failure by the
         Participant to perform substantially his duties as an Employee (other
         than due to physical or mental illness) after reasonable notice to the
         Participant of such failure, (ii) serious misconduct on the part of the
         Participant that is injurious to the Corporation or any Subsidiary in
         any way, including, without limitation, by way of damage to any of
         their respective reputations or standings in their respective
         industries, (iii) the conviction of, or entrance of a plea of nolo
         contendere by, the Participant with respect to a crime that constitutes
         a felony or (iv) the breach by the Participant of any written covenant
         or agreement with the Corporation or any

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         Subsidiary not to disclose any information pertaining to the
         Corporation or any Subsidiary or not to compete or interfere with the
         Corporation or any Subsidiary.

                  (f) A "Change of Control" shall be deemed to have taken place
         at the time (i) when any "person" or "group" of persons (as such terms
         are used in Section 13 and 14 of the Act), other than the Corporation
         or any employee benefit plan sponsored by the Corporation, becomes the
         "beneficial owner" (as such term is used in Section 13 of the Act) of
         25% or more of the total number of the Corporation's common shares at
         the time outstanding, or (ii) of the approval by the vote of the
         Corporation's stockholders holding at least 50% (or such greater
         percentage as may be required by the Certificate of Incorporation or
         By-Laws of the Corporation or by law) of the voting stock of the
         Corporation of any merger or consolidation with any other corporation
         (other than a merger or consolidation which would result in the voting
         securities of the Corporation outstanding immediately prior thereto
         continuing to represent (either by remaining outstanding or by being
         converted into voting securities of the entity surviving such merger or
         consolidation (the "Surviving Entity") or its direct or indirect parent
         (the "Survivor Parent")) at least 80% of the combined voting power of
         the securities of the Corporation or the Surviving Entity or Survivor
         Parent outstanding immediately after such merger or consolidation);
         sale of assets; liquidation; or reorganization in which the Corporation
         will not survive as a publicly owned corporation (the transactions
         described above being collectively referred to as the "Transaction");
         provided that a Change of Control will occur in the circumstances
         described above only if the Transaction is ultimately consummated, or
         (iii) when the individuals who, at the beginning of any period of two
         years or less, constituted the Board cease, for any reason, to
         constitute at least a majority thereof, unless the election or
         nomination for election of each new director was approved by the vote
         of at least two-thirds of the directors then still in office who were
         directors at the beginning of such period.

                  (g) "Code" shall mean the Internal Revenue Code of 1986, as
         amended.

                  (h) "Committee" shall mean a Committee of the Board, which
         shall consist of two or more members. Each member of the Committee
         shall be a "Non-Employee Director" within the meaning of Rule 16b-3 as
         promulgated under the Act, or meet any other applicable standard for
         administrators under that or any similar rule which may be in effect
         from time to time. Each member of the Committee shall serve at the
         pleasure of the Board.

                  (i) "Corporation" shall mean Phelps Dodge Corporation, a New
         York corporation, and any successor thereto.

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                  (j) "Disability" shall mean the Participant is eligible to
         receive benefits under the Phelps Dodge Corporation Long-Term
         Disability Plan ("LTD Plan"), or any successor to the LTD Plan. If no
         long-term disability plan is currently sponsored by the Corporation,
         "Disability" shall be determined by referring to the terms and
         conditions of the long-term disability plan most recently sponsored by
         the Corporation.

                  (k) "Employee" shall mean any executive or other key employee
         of the Corporation or any Subsidiary (as determined by the Committee in
         its sole discretion).

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

                  (m) "Immediate Family Member" shall mean with respect to a
         Participant, the Participant's spouse, ancestors (including parents and
         grandparents), siblings (including half-brothers and sisters), and
         descendants (including children, grand children and great
         grandchildren), as well as any entity, such as a limited liability
         company, partnership or trust, in which all of the beneficial ownership
         interests are held directly or indirectly by the Participant or a
         natural person who is an Immediate Family Member. For purposes of this
         definition, individuals who have the legal relationship described
         herein through legal adoption and the children of the Participant's
         spouse or the spouse of one of the Participant's children or
         grandchildren shall be treated as Immediate Family Members.

                  (n) "Option" shall mean the right to purchase Common Shares at
         a stated price for a specified period of time. For purposes of the
         Plan, an Option may be either (i) an "Incentive Stock Option" within
         the meaning of Section 422 of the Code or (ii) an Option which is not
         an Incentive Stock Option (a "Nonqualified Stock Option").

                  (o) "Participant" shall mean any Employee designated by the
         Committee to receive an option or share of Restricted Stock under the
         Plan.

                  (p) "Plan" shall mean the 2003 Stock Option and Restricted
         Stock Plan, as set forth herein and as the same may be amended from
         time to time.

                  (q) "Predecessor Plans" shall mean the Phelps Dodge 1993 Stock
         Option and Restricted Stock Plan and the Phelps Dodge 1998 Stock Option
         and Restricted Stock Plan.

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                  (r) "Restricted Period" shall mean the period during which
         shares of Restricted Stock are subject to forfeiture and restrictions
         on transferability pursuant to Section 6.2 of the Plan.

                  (s) "Restricted Stock" shall mean stock granted to a
         Participant pursuant to the Plan which is subject to forfeiture and
         restrictions on transferability in accordance with Section 6 of the
         Plan.

                  (t) "Retirement" shall mean termination of a Participant's
         employment on or after the Participant's normal retirement date or
         early retirement under any pension or retirement plan of the
         Corporation or a Subsidiary.

                  (u) "Subsidiary" shall mean any company in which the
         Corporation and/or another Subsidiary owns 50% or more of the total
         combined voting power of all classes of stock.

                  2.2 Gender and Number. Except when otherwise indicated by the
context, words in the masculine gender used in the Plan shall include the
feminine gender, the singular shall include the plural and the plural shall
include the singular.

                                   SECTION 3

                                 ADMINISTRATION

                  3.1 Power to Grant and Establish Terms of Awards. The
Committee shall have authority, subject to the terms of the Plan, to determine
the Employees eligible for Options and awards of Restricted Stock and those to
whom Options or Restricted Stock shall be granted, the number of Common Shares
to be covered by each Option or award of Restricted Stock, any conditions that
may be imposed upon the grant of an Option, the time or times at which Options
or Restricted Stock shall be granted, and the terms and provisions of the
instruments by which Options or Restricted Stock shall be evidenced; to
designate Options as Incentive Stock Options or Nonqualified Stock Options; to
permit Participants to elect to defer the issuance of Common Shares otherwise
deliverable upon the exercise of an Option on such terms and subject to such
conditions as the Committee shall determine; and to determine the period of time
during which restrictions on Restricted Stock shall remain in effect. The grant
of any Option to any Employee or an award of Restricted Stock shall neither
entitle such Employee to, nor disqualify him from, participation in any other
grant of Options or award of Restricted Stock. Notwithstanding anything else
contained in the preceding sentence to the contrary, in no event may the number
of Common Shares subject to Options granted to any single Participant within any
12-month period exceed 350,000 Common Shares, as such number may be adjusted
pursuant to Section 4.3.

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                  3.2 Administration. Any Option grant or award of Restricted
Stock made by the Committee may be subject to such conditions, not inconsistent
with the terms of the Plan, as the Committee shall determine. The Committee, by
majority action thereof, is authorized to prescribe, amend and rescind rules and
regulations relating to the Plan, to provide for conditions deemed necessary or
advisable to protect the interests of the Corporation, to interpret the Plan and
to make all other determinations necessary or advisable for the administration
and interpretation of the Plan to carry out its provisions and purposes.
Determinations, interpretations or other actions made or taken by the Committee
pursuant to the provisions of the Plan shall be final, binding and conclusive
for all purposes and upon all persons. The Committee may consult with legal
counsel, who may be counsel to the Corporation, and shall not incur any
liability for any action taken in good faith in reliance upon the advice of
counsel. Without limiting the generality of the foregoing, the Committee may
delegate to any officer of the Corporation or any committee comprised of
officers of the Corporation the authority to take any and all actions permitted
or required to be taken by the Committee hereunder; provided that such
delegation shall not be permitted with respect to Options or other awards
granted or to be granted to any officer of the Corporation and that, to the
extent the Committee delegates authority to grant Options and other awards
hereunder, such delegation shall specify the aggregate number of Common Shares
that may be awarded pursuant to such delegation and may establish the maximum
number of Common Shares that may be subject to any award made pursuant to such
delegation and any other limitations thereon that the Committee may choose to
impose.

                                   SECTION 4

                              STOCK SUBJECT TO PLAN

                  4.1 Number. The stock as to which Options and awards of
Restricted Stock may be granted shall be Common Shares. When Options are
exercised or Restricted Stock is awarded, the Corporation may either issue
unissued Common Shares or transfer issued shares held in its treasury. Subject
to adjustment as provided in Section 4.3 below, the total number of Common
Shares (i) which may be sold to Employees under the Plan pursuant to Options and
(ii) that may be transferred or issued as Restricted Stock pursuant to Section 6
shall not exceed the sum of (A) 3,500,000 Common Shares, and (B) the number of
Common Shares remaining available for issuance under the Phelps Dodge 1998 Stock
Option and Restricted Stock Plan on the Effective Date. Notwithstanding the
foregoing, the total number of Common Shares that may be transferred or issued
hereunder as awards of Restricted Stock pursuant to Section 6 shall not exceed
1,500,000 Common Shares, plus that number of the Common Shares referred to in
subclause (B) of the immediately preceding sentence that, on the Effective Date,
were available for awards of restricted stock under the Phelps Dodge 1998 Stock
Option and Restricted Stock Plan. Any Option settled in cash shall reduce the
number of

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Common Shares under the Plan by the number of shares that would have been issued
had the Option been exercised for Common Shares.

                  4.2 Canceled, Terminated or Forfeited Awards. If, after the
Effective Date, an Option granted hereunder or an Option granted under a
Predecessor Plan which is outstanding on the date hereof expires, or is
terminated, canceled or otherwise surrendered by a Participant prior to its
exercise, or if shares of Restricted Stock are returned to the Corporation
pursuant to the terms of the Plan or if shares of Restricted Stock awarded under
a Predecessor Plan which are still restricted on the date hereof are returned to
the Corporation prior to the time at which a Participant's rights become
nonforfeitable, the Common Shares covered by such Option immediately prior to
such expiration or other termination or the Common Shares affected by such
return of Restricted Stock shall be available for future grants under the Plan.

                  4.3 Adjustment in Capitalization. The number and price of
Common Shares covered by each Option, the maximum number of Common Shares that
be awarded as Options under Section 3.1 and the total number of Common Shares
that may be sold, issued or transferred under the Plan shall be proportionately
adjusted to reflect, as deemed equitable and appropriate by the Committee, an
Adjustment Event. To the extent deemed equitable and appropriate by the
Committee, subject to any required action by stockholders, in any merger,
consolidation, reorganization, liquidation, dissolution, or other similar
transaction, any Option granted under the Plan shall pertain to the securities
and other property to which a holder of the number of Common Shares covered by
the Option would have been entitled to receive in connection with such event.

         Any shares of stock (whether Common Shares, shares of stock into which
Common Shares are converted or for which Common Shares are exchanged or shares
of stock distributed with respect to Common Shares) or cash or other property
received with respect to any award of Restricted Stock granted under the Plan as
a result of any Adjustment Event, any distribution of property or any merger,
consolidation, reorganization, liquidation, dissolution or other similar
transaction shall, except as provided in Section 6.4 or as otherwise provided by
the Committee at or after the date an award of Restricted Stock is made by the
Committee, be subject to the same terms and conditions, including restrictions
on transfer, as are applicable to such shares of Restricted Stock and any stock
certificate(s) representing or evidencing any shares of stock so received shall
be legended in substantially the same manner as provided in Section 6.5 hereof.

                                       6
<PAGE>
                                   SECTION 5

                                  STOCK OPTIONS

                  5.1 Grant of Options. The date of grant of an Option under the
Plan will be the date on which the Option is awarded by the Committee or, if so
determined by the Committee, the date on which occurs any event the occurrence
of which is an express condition precedent to the grant of the Option. The
aggregate Fair Market Value of the Common Shares with respect to which Incentive
Stock Options are exercisable for the first time by a Participant during any
calendar year under the Plan and any other stock option plan of the Corporation
or any Subsidiary shall not exceed $100,000 or such other amount as may be
subsequently specified by the Internal Revenue Code of 1986, as amended. Options
shall be evidenced by instruments in such form or forms as the Committee may
from time to time approve.

                  5.2 Option Price. The Option price per share shall be at or
above the Fair Market Value of the optioned shares on the day the Option is
granted (as determined under Section 5.1).

                  5.3 Payment. Upon exercise, the Option price shall be paid (i)
in cash, including an assignment of the right to receive cash proceeds of the
sale of Common Shares subject to the Option; (ii) in the discretion of the
Committee, in already owned Common Shares of the Corporation having a Fair
Market Value on the date of exercise equal to such Option price or in a
combination of cash and Common Shares or (iii) in accordance with such
procedures or in such other form as the Committee shall from time to time
determine.

                  5.4 Term and Exercise of Options. Each Incentive Stock Option
shall expire not later than the tenth anniversary of the date of its grant, and
each Nonqualified Stock Option shall expire not later than the day after the
tenth anniversary of the date of its grant. Options shall become exercisable in
three or four substantially equal annual installments commencing on the first
anniversary of the date of grant, as the Committee in its discretion shall
determine, or at such other times and upon the occurrence of such other events
or conditions as the Committee may determine at or after the grant of such
Option. Notwithstanding the foregoing, the Committee may include in any Option
instrument, initially or by amendment at any time, a provision making any
installment or installments exercisable at such earlier or later date, or upon
the occurrence of such earlier or later event, as may be specified by such
provision. Without limiting the generality of the foregoing, the Committee may
approve, pursuant to the foregoing sentence, provisions making installments
exercisable (i) upon a Participant's Retirement (provided that, in the event
that the Participant is retiring prior to his normal retirement date and such
retirement is not determined by the Committee to be adverse to the Corporation,
such acceleration shall be conditioned upon the execution by the Participant

                                       7
<PAGE>
of a release in favor of the Corporation and its affiliates in a form acceptable
to the Corporation), (ii) not later than the date the Participant ceases to be
employed by the Corporation if he ceases to be so employed within two years
following a Change of Control of the Corporation, and (iii) at such time and for
such period as the Committee deems appropriate, in the event of a Change of
Control. Except as may be provided in any provision approved by the Committee
pursuant to this Section 5.4, after becoming exercisable each installment shall
remain exercisable until expiration, termination or cancellation of the Option.
An Option may be exercised from time to time, in whole or in part, up to the
total number of Common Shares with respect to which it is then exercisable.

                  5.5 Termination of Employment. If the Participant ceases to be
employed by the Corporation or a Subsidiary other than by reason of death,
Disability, Retirement or the Participant's termination for Cause, all Options
granted to him and exercisable on the date of his termination of employment
shall terminate on the earlier of such Options' expiration or one month (or such
greater period of time, not to exceed one year, determined by the Committee in
its sole discretion) after the day his employment ends. If the Participant
ceases to be employed on account of Disability or Retirement, all Options
granted to him and exercisable on the date of his termination of employment due
to Disability or his Retirement shall terminate on the earlier of such Options'
expiration or the fifth anniversary of the day of such termination or
Retirement. If the Participant's employment is terminated for Cause, all Options
granted to such Participant which are then outstanding shall be forfeited.
Except as otherwise determined by the Committee at or after grant of any Option,
any installment which has not become exercisable prior to the time the
Participant ceases to be employed by the Corporation or a Subsidiary other than
by reason of death shall lapse and be thenceforth unexercisable. Whether
authorized leave of absence or absence in military or governmental service may
constitute employment for the purposes of the Plan shall be conclusively
determined by the Committee.

                  5.6 Exercise upon Death of Participant. Each Participant
having Nonqualified Stock Options may designate, on such forms as may be
approved by the Corporation from time to time, a beneficiary or beneficiaries
with respect to the Participant's Nonqualified Stock Options should the
Participant die prior to the exercise of the Participant's Nonqualified Stock
Options. To be effective, any beneficiary designation forms completed by a
Participant must have been delivered to the Corporation. A Participant may
change a beneficiary designation by executing and delivering to the Corporation
a new beneficiary designation form. Upon receipt of such designation by the
Corporation, such designation or change of designation shall be effective as of
the date of the notice, regardless of whether the Participant is living at the
time the notice is received by the Corporation . If the Participant dies while
he is employed by the Corporation or a Subsidiary, his Options may be exercised,
for the full number of Common Shares covered thereby for which such Options were
not previously

                                       8
<PAGE>
exercised, by his estate, personal representative or beneficiary who acquires
the Options by beneficiary designation, will or by the applicable laws of
descent and distribution, at any time prior to the earlier of the Options'
expiration or the fifth anniversary of the Participant's death. Such Options
shall terminate upon the earlier of such Options' expiration or the fifth
anniversary of such Participant's death. If the Participant dies while he is no
longer employed by the Corporation, his Options may be exercised, for the number
of Common Shares as to which he could have exercised them on the date of his
death, by his estate, personal representative or beneficiary who acquires the
Options by beneficiary designation, will or by the applicable laws of descent
and distribution, at any time prior to the termination date provided by Section
5.5.

                                   SECTION 6

                                RESTRICTED STOCK

                  6.1 Grant of Restricted Stock. Any award made hereunder of
Restricted Stock shall be subject to the terms and conditions of the Plan and to
any other terms and conditions not inconsistent with the Plan (including, but
not limited to, requiring the Employee to pay the Corporation an amount equal to
the par value per share for each share of Restricted Stock awarded) as shall be
prescribed by the Committee in its sole discretion. The Committee may require
that, as a condition to any award of Restricted Stock under the Plan, the
Employee shall have entered into an agreement with the Corporation setting forth
the terms and conditions of such award and such other matters as the Committee,
in its sole discretion, shall have determined. As determined by the Committee,
the Corporation shall either (i) transfer or issue to each Participant to whom
an award of Restricted Stock has been made the number of shares of Restricted
Stock specified by the Committee or (ii) hold such shares of Restricted Stock
for the benefit of the Participant for the Restricted Period.

                  6.2 Restrictions on Transferability. Shares of Restricted
Stock may not be sold, assigned, transferred, pledged, hypothecated or otherwise
encumbered by the Participant during the Restricted Period, except as
hereinafter provided.

                  6.3 Rights as a Shareholder. Except for the restrictions set
forth herein and unless otherwise determined by the Committee, the Participant
shall have all the rights of a shareholder with respect to such shares of
Restricted Stock, including, but not limited to, the right to vote and the right
to receive dividends.

                  6.4 Lapse of Restricted Period. Unless the Committee shall
otherwise determine at or after the date an award of Restricted Stock is made to
the Participant by the Committee, the Restricted Period shall commence upon the
date of grant and shall lapse with respect to the shares of Restricted Stock on
the earlier of: (a) the third anniversary of the date of grant, in the case of
an award of restricted stock that vests

                                       9
<PAGE>
based on the passage of time and the performance of continuous service as an
employee, (b) the first anniversary of the date of grant, in the case of a
restricted stock award that vests based on the achievement of specified
performance criteria or (c) the date of a Change of Control, unless sooner
terminated as otherwise provided herein. The determination of whether the
Participant has achieved such performance goals shall be made by the Committee
in its sole discretion. Notwithstanding the foregoing, if a Participant incurs a
tax liability in respect of an award of Restricted Stock prior to the time the
Restricted Period would otherwise lapse hereunder (other than by reason of the
election by the Participant under the Code to be taxed as the time of grant),
the Restricted Period shall lapse on the date such tax liability arises with
respect to the number of whole Common Shares having a Fair Market Value at such
time no greater than the amount required to satisfy all tax withholding
requirements applicable thereto (as determined in accordance with Section 9.3
hereof). Unless the Committee determines otherwise, the Corporation shall
withhold such released Common Shares to satisfy such withholding obligations.

                  6.5 Legend. Each certificate issued to a Participant in
respect of shares of Restricted Stock awarded under the Plan shall be registered
in the name of the Participant and shall bear the following (or similar) legend:

                  "The shares of stock represented by this certificate are
         subject to the terms and conditions contained in the Phelps Dodge 2003
         Stock Option and Restricted Stock Plan and may not be sold, pledged,
         transferred, assigned, hypothecated, or otherwise encumbered in any
         manner until".

                  6.6 Death, Disability or Retirement. Unless the Committee
shall otherwise determine at the date of grant, if a Participant ceases to be
employed by the Corporation or any Subsidiary by reason of death, Disability or
Retirement, the Restricted Period covering all shares of Restricted Stock
transferred or issued to such Participant under the Plan shall immediately
lapse.

                  6.7 Termination of Employment. Unless the Committee shall
otherwise determine at or after the date of grant, if a Participant ceases to be
employed by the Corporation or any Subsidiary for any reason other than those
specified in Section 6.6 at any time prior to the date when the Restricted
Period lapses, all shares of Restricted Stock owned by such Participant shall
revert back to the Corporation upon the Participant's termination of employment.
Whether authorized leave of absence or absence in military or government service
may constitute employment for the purposes of the Plan shall be conclusively
determined by the Committee.

                  6.8 Issuance of New Certificates. Upon the lapse of the
Restricted Period with respect to any shares of Restricted Stock, such shares
shall no longer be

                                       10
<PAGE>
subject to the restrictions imposed under Section 6.2 and the Corporation shall
issue or have issued new share certificates without the legend described in
Section 6.5 in exchange for those previously issued.

                                   SECTION 7

                        TERMINATION AND AMENDMENT OF PLAN

         The Board may terminate or amend the Plan in any respect at any time,
except that without the approval of the holders of a majority of Common Shares
present and voting on the proposal at a meeting of shareholders, the total
number of shares that may be sold, issued or transferred under the Plan may not
be increased (except by adjustment pursuant to Section 4.3), the category of
persons eligible to receive Options and shares of Restricted Stock may not be
changed, the purchase price at which shares may be offered pursuant to Options
may not be reduced (except by adjustment pursuant to Section 4.3) and the
expiration date of the Plan may not be extended. No action of the Board or
shareholders, however, may, without the consent of a Participant alter or impair
his rights under any Option or award of Restricted Stock previously granted.

                                   SECTION 8

             APPLICABILITY OF PLAN TO GRANTS UNDER PREDECESSOR PLANS

         The provisions of the Plan relating to Options and Restricted Stock
grants shall apply to, and govern, existing Option and restricted stock grants
made under the Predecessor Plans as if such awards were granted hereunder
(except that no such awards shall count against the share limit set forth in
Section 4.1) and such Options and restricted stock grants shall, where
appropriate, be deemed to have been amended to provide any additional rights,
subject in the case of Options and restricted stock grants outstanding as of the
date of adoption of this Plan by the Board, to the right of an affected
Participant to consent to the application of such amendments to such grants as
provided in Section 7.

                                   SECTION 9

                            MISCELLANEOUS PROVISIONS

                  9.1 Nontransferability of Awards. Unless the Committee
otherwise determines at or after grant to permit any award made hereunder to be
transferable to the Immediate Family Members of a Participant, an award granted
under the Plan may not be sold, transferred, pledged, assigned or otherwise
alienated or hypothecated, other than in accordance with a beneficiary
designation effective on the death of the Participant, by will or by the
applicable laws of descent and distribution. All rights with respect to

                                       11
<PAGE>
awards granted to a Participant under the Plan shall be exercisable during his
lifetime only by such Participant.

                  9.2 Securities Law Compliance. Instruments evidencing Options
or awards of Restricted Stock may contain such provisions as the Committee deems
appropriate in respect of any securities laws and such other provisions, not
inconsistent with the Plan, as the Committee deems advisable. Common Shares
received pursuant to the Plan shall be transferable only if the proposed
transfer will be in compliance with applicable securities laws.

                  9.3 Tax Withholding. The Corporation shall have the power to
withhold, or require a Participant to remit to the Corporation promptly upon
notification of the amount due, an amount sufficient to satisfy federal, state
and local withholding tax requirements on any award under the Plan, and the
Corporation may defer payment of cash or issuance or delivery of Common Shares
until such requirements are satisfied. Subject to any required withholding of
Common Shares pursuant to Section 6.4, the Committee may, in its discretion,
permit a Participant to elect, subject to such conditions as the Committee shall
impose, (i) to have Common Shares otherwise issuable or deliverable under the
Plan withheld by the Corporation or (ii) to deliver to the Corporation
previously acquired shares of Stock, in each case, having a Fair Market Value
sufficient to satisfy all or part of the minimum amount of the Participant's
total federal, state and local tax withholding obligation associated with the
transaction.

                  9.4 Term of Plan. This Plan shall be effective as of the date
of approval by the holders of the Common Shares at the 2003 Annual Meeting of
Shareholders. This Plan shall expire on March 31, 2013 (except as to Options and
Restricted Stock outstanding on that date), unless sooner terminated pursuant to
Section 7 of the Plan.

                  9.5 Governing Law. The Plan, and all Agreements hereunder,
shall be construed in accordance with and governed by the laws of the State of
New York.

                                       12
<PAGE>
                             STOCK OPTION AGREEMENT

            Phelps Dodge 2003 Stock Option and Restricted Stock Plan

         STOCK OPTION AGREEMENT, dated _____________ __, __, between PHELPS
DODGE CORPORATION, a New York corporation (the "Corporation"), and _____________
(the "Employee").

         The Compensation and Management Development Committee of the Board of
Directors of the Corporation (such Committee, and any successor committee
appointed by the Board of Directors of the Corporation to administer the
Corporation's 2003 Stock Option and Restricted Stock Plan (the "Plan"), is
hereinafter referred to as the "Committee") has granted to the Employee an
option under the Plan to purchase Common Shares of the Corporation on the terms
set forth below.

         To evidence the option so granted, and to set forth their terms and
conditions as provided in the Plan, the Corporation and the Employee hereby
agree as follows:

         1. Confirmation Of Grant Of Option; Option Price. The Corporation
hereby evidences and confirms its grant to the Employee of (i) an option (the
"Option") to purchase ___ of the Corporation's Common Shares at an option price
of $ ____ per share. The Option granted hereby shall be subject to the
provisions of the Plan. Capitalized terms used herein that are not defined in
this Agreement shall have the meanings assigned to such terms in the Plan.

         2. Term For Exercise.

         (a) The Option shall become exercisable, subject to the provisions of
this Section 2 and Sections 3 and 4 hereof, in installments of ______ Common
Shares on the first anniversary of the date of grant of the Option, ______
Common Shares on the second anniversary and _____ Common Shares on the third
anniversary. Unless an earlier expiration date is specified by this Agreement
(or, if applicable, in Supplement A), the Option shall expire at 5:00 P.M.,
Arizona Mountain Standard Time (such time shall hereinafter be referred to as
the "End of Business"), on the day after the tenth anniversary of the date on
which the Option was granted (the "Termination Date").

         (b) Without limiting the generality of the foregoing, in the event:

                  (i) of the consummation, following the approval by the vote of
         the Corporation's stockholders holding at least 50% (or such greater
         percentage as may be required by the Certificate of Incorporation or
         By-Laws of the Corporation or by law) of the voting stock of the
         Corporation, of any merger or consolidation with any other corporation
         (other than a merger or consolidation which would result in the voting
         securities of the

                                       1
<PAGE>
         Corporation outstanding immediately prior thereto continuing to
         represent (either by remaining outstanding or by being converted into
         voting securities of the entity surviving such merger or consolidation
         (the "Surviving Entity") or its direct or indirect parent (the
         "Survivor Parent")), at least 80% of the combined voting power of the
         securities of the Corporation or the Surviving Entity or Survivor
         Parent outstanding immediately after such merger or consolidation);
         sale of assets; liquidation; or reorganization in which the Corporation
         will not survive as a publicly owned corporation (the transactions
         described above being collectively referred to as the "Transaction")
         (the consummation of any such Transaction hereinafter referred to as a
         "Merger Consummation"); or (ii) any of the Corporation's Common Shares
         are purchased pursuant to a tender or exchange offer other than an
         offer by the Corporation, any Subsidiary of the Corporation (as defined
         in the Plan and hereinafter referred to as a "Subsidiary"), or any
         employee benefit plan maintained by the Corporation or a Subsidiary
         (such purchase hereinafter referred to as a "Tender Purchase");

then the Option shall become exercisable during the period beginning on the date
of the Merger Consummation or Tender Purchase, as the case may be, and ending on
the thirtieth day following such date (but in no event shall the Option become
exercisable under this paragraph earlier than six months from the date on which
the Option was granted (the "Grant Date")). If any portion of the Option shall
be exercised, the Option shall thereafter remain exercisable, according to its
terms, only with respect to the number of Common Shares as to which the Option
would otherwise be exercisable less the number of Common Shares with respect to
which the Option has previously been exercised.

         3. Who May Exercise. During the Employee's lifetime the Option may be
exercised only by him. Each Participant having Nonqualified Stock Options may
designate, on such forms as may be approved by the Corporation from time to
time, a beneficiary or beneficiaries with respect to the Participant's
Nonqualified Stock Options should the Participant die prior to the exercise of
the Participant's Nonqualified Stock Options. To be effective, any beneficiary
designation forms completed by a Participant must have been delivered to the
Corporation. A Participant may change a beneficiary designation by executing and
delivering to the Corporation a new beneficiary designation form. Upon receipt
of such designation by the Corporation, such designation or change of
designation shall be effective as of the date of the notice, regardless of
whether the Participant is living at the time the notice is received by the
Corporation. If the Employee dies while in the employ of the Corporation or one
of its Subsidiaries, the Option may be exercised for the full number of Common
Shares specified in Section 1 hereof less the number of Common Shares with
respect to which the Option has previously been exercised, by the Employee's
estate, personal representative or

                                       2
<PAGE>
beneficiary who acquired the right to exercise the Option by will or by the laws
of descent and distribution, at any time prior to the End of Business on the
earlier of the Termination Date or the fifth anniversary of the Employee's
death. If the Employee dies while he is no longer employed by the Corporation or
a Subsidiary, his Options may be exercised for the full number of Common Shares
as to which he could have exercised them on the date of his death, by his
estate, personal representative or beneficiary who acquired the right to
exercise the Option by will or by the laws of descent and distribution, at any
time prior to the termination date provided by Section 4 hereof. Following the
End of Business on the earlier of the Termination Date, the fifth anniversary of
the Employee's death or the termination date provided by Section 4, as the case
may be, the Option shall expire.

         4. Exercise After Termination of Employment. If the Employee shall
cease to be employed by the Corporation or a Subsidiary other than by reason of
death, Disability (as defined in the Plan), Retirement (as defined in the Plan)
or the Employee's termination for Cause (as defined in the Plan), the Option
shall remain exercisable, to the extent exercisable on the date of such
termination, until the End of Business on the earlier of the Termination Date or
the date which is one month after the day his employment ends. If the Employee's
employment shall terminate due to Disability or Retirement, the Option shall
remain exercisable, to the extent exercisable on the date of the Employee's
termination of employment, until the End of Business on the earlier of the
Termination Date or the fifth anniversary of the date of such termination of
employment; provided, however, that, in the event the Employee's employment with
the Corporation terminates not earlier than six months from the Grant Date as a
result of the Employee's Disability or Retirement, unless the Employee retires
prior to his Normal Retirement Date, as defined under the Phelps Dodge
Retirement Plan (or any successor plan thereof) under conditions determined by
the Committee to be adverse to the Corporation or the Employee does not sign a
release of claims satisfactory to the Corporation, the Option shall become
exercisable immediately prior to the End of Business on the date the Employee's
employment terminates for the purchase of the full number of Common Shares
specified in Section 1 of the Agreement less the number of Common Shares with
respect to which the Option has previously been exercised. If the Employee's
employment is terminated for Cause, all Options granted to the Employee which
are then outstanding shall be forfeited as of the effective time of such
termination but in no event later than the End of Business on such termination
date. Any portion of the Option which is not exercisable on the date the
Employee's employment terminates for any reason other than death, Disability, or
Retirement shall expire at the End of Business on such termination date. Any
portion of the Option which did not expire on the date the Employee's employment
terminates and which is not exercised within the period established under this
Section 4 shall expire following the End of Business on the last day on which
the Option could have been exercised.

                                       3
<PAGE>
         5. Restrictions on Exercise. The Option may be exercised only with
respect to full Common Shares. No fractional shares shall be issued. The Option
may not be exercised in whole or part:

         (a) if any requisite approval or consent of any governmental authority
of any kind having jurisdiction over the exercise of options shall not have been
secured or if, as determined by the Committee, a violation of any applicable
securities laws may result; or

         (b) unless the Common Shares subject to the Option shall be effectively
listed on the New York Stock Exchange and registered under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), which listing and
registration may be upon official notice of issuance of such Common Shares.

         The Corporation may require that, as a condition to any exercise of the
Option, the Employee represent to the Corporation in writing that he is
acquiring the Common Shares subject to such exercise for his own account for
investment only and not with a view to the distribution thereof.

         6. Manner of Exercise. To the extent the Option shall be exercisable in
accordance with the terms hereof, and subject to the applicable law and
regulations and such administrative regulations as the Committee may have
adopted, the Option may be exercised in whole or from time to time in part by
written notice to the Committee, (i) identifying the Option by Grant Date, the
option price and whether or not the Agreement includes Supplement A, (ii)
specifying the number of Common Shares with respect to which the Option is being
exercised, and (iii) accompanied by full payment of the option price for such
Common Shares (1) in United States dollars by personal check or cash, including
an assignment of the right to receive cash proceeds of the sale of Common Shares
subject to the Option, (2) in Common Shares of the Corporation owned by the
Employee for at least three months prior to the day of exercise, represented by
certificates duly endorsed to the Corporation or its nominee with any requisite
transfer tax stamps attached, the market value of which shall be equal to the
option price for the Common Shares with respect to which the Option is being
exercised, or (3) in a combination of (1) and (2) above. The market value of any
Common Shares delivered pursuant to the immediately preceding sentence shall be
the mean of the high and low prices of such Common Shares on the Consolidated
Trading Tape on the day of exercise or, if there was no such sale on such day,
on the day next preceding the day of exercise on which there was a sale.

         For valuation purposes, the day of exercise of the Option shall be
deemed to be the day on which notice, addressed to the Committee, either to
exercise the Option in whole or in part by the payment of Common Shares
(together with duly endorsed certificates as provided above and any other
required payment) is received at the Corporation's principal office, except that
if such notice (together with certificates and

                                       4
<PAGE>
other payment if required) is received on a Saturday or Sunday or on a holiday
observed by the Corporation's principal office, or after the End of Business on
any other day, the day of exercise shall be deemed to be the next business day.
"Written notice" shall include, without limitation, notice by telegram, telex,
cable or telecopy facsimile.

         In the event that the Option shall be exercised by a person other than
the Employee in accordance with the provisions of Section 3 hereof, such person
shall furnish the Corporation with evidence satisfactory to it of his or her
right to exercise the same and of payment or provision for payment of any
estate, transfer, inheritance or death taxes payable with respect to the Option
or with respect to any related Common Shares or payment. The Corporation may
require the Employee or other person exercising the Option to furnish or execute
such documents as the Corporation shall deem necessary to evidence such
exercise, to determine whether registration is then required under the
Securities Act of 1933, as amended, or to comply with or satisfy the
requirements of the Exchange Act, or any other law.

         7. Nonassignability. Unless the Committee shall otherwise so specify by
a supplement to this Agreement approved in connection with the award hereof or
at any subsequent time, the Option shall not be assignable or transferable
except by beneficiary designation, will or by the applicable laws of descent and
distribution to the extent contemplated by Section 3 hereof. At the request of
the Employee, Common Shares purchased on exercise of the Option may be issued or
transferred in the name of the Employee and another person jointly with the
right of survivorship, or in the name of a trust or other legal entity
established to hold property for the benefit of the Employee or members of his
immediate family.

         8. Rights As Stockholder. The Employee shall have no rights as a
stockholder with respect to any Common Shares covered by the Option until the
issuance of a certificate or certificates to him for such Common Shares. No
adjustment shall be made for dividends or other rights for which the record date
is prior to the issuance of such certificate or certificates.

         9. Capital Adjustments. The number and price of the Common Shares
covered by the Option shall be proportionately adjusted to reflect, as deemed
equitable and appropriate by the Committee, any stock dividend, stock split or
share combination of, or extraordinary cash dividend on, the Corporation's
Common Shares or any recapitalization of the Corporation. To the extent deemed
equitable and appropriate by the Committee, subject to any required action by
the stockholders of the Corporation, in any merger, consolidation,
reorganization, liquidation, dissolution, or other similar transaction, the
Option shall pertain to the securities and other property, if any, which a
holder of the number of Common Shares covered by the Option would have been
entitled to receive in connection with such event.

                                       5
<PAGE>
         10. Withholding.

         (a) The Corporation's obligation to deliver Common Shares upon the
exercise of the Option shall be subject to payment by the Employee of any amount
required to be withheld with respect to such exercise pursuant to any applicable
federal, state or local tax withholding requirements.

         (b) Unless this Agreement includes Supplement A (making it an incentive
stock option), the Employee may elect to satisfy all or any part of his federal,
state and local tax obligations (including, without limitation, FICA) with
respect to such exercise by having the Corporation withhold from any Common
Shares otherwise deliverable to him in connection with the exercise of the
Option a number of Common Shares, or by delivering Common Shares already owned
by the Employee, having a market value equal in amount to the obligations to be
so satisfied. The market value of Common Shares withheld or delivered shall be
the mean of the high and low prices of such Common Shares on the Consolidated
Trading Tape on the day of exercise or, if there was no such sale on such day,
on the next preceding day on which there was a sale.

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

         12. Supplements. Attached hereto are the following supplements:

         Supplement A - Incentive Stock Options

         Supplement B - Change of Control

Any such supplements so attached are incorporated herein and constitute a part
of this Agreement as though set forth in full herein. Additional supplements may
be added to this Agreement at a later date by the Committee; provided, however,
that if any such additional supplement adversely affects the rights of the
Employee under this Agreement, such supplement shall not be or become effective
unless and until the Employee consents to its addition in writing. All
capitalized terms used in such supplements without definition shall have the
meaning determined under this Agreement.

         13. Predecessor Plans. The Employee hereby acknowledges and agrees that
all of the Employee's outstanding options that were granted pursuant to the
Predecessor Plans (as defined in the Plan) shall hereafter become subject to the
terms of this Agreement.

                                       6
<PAGE>
         IN WITNESS WHEREOF, the Corporation and the Employee have duly executed
this Agreement as of the date set forth above.

                                                     PHELPS DODGE CORPORATION

                                                     By
                                                       -------------------------
                                                       Senior Vice President

                                                       -------------------------
                                                       Employee

                                       7
<PAGE>
                                                                    Supplement A
                                                       [Incentive Stock Option -
                                                         2003 Stock Option Plan]

         Supplement A to the Stock Option Agreement (the "Agreement") dated
between Phelps Dodge Corporation (the "Corporation") and (the "Employee").

         1. Term of the Option. Each incentive stock option shall expire on the
tenth anniversary of the date of its grant.

         2. Disposition of Shares. If the Employee disposes of any Common Shares
received upon exercise of the Option within two years after the Option was
granted to him or within one year after the Common Shares were transferred to
him upon exercise of the Option, whether by sale, gift, or otherwise, the
Employee shall notify the Secretary of the Corporation of the number of such
Common Shares disposed of, the date on which disposed of, the manner of
disposition and the amount, if any, realized upon such disposition, and shall
promptly pay to the Corporation the amount, if any, that the Corporation
specifies in a written notice to the Employee as required to be withheld with
respect to such exercise and disposition pursuant to any applicable federal,
state or local tax withholding requirements.

         3. Interpretation of Agreement. The Option is intended to be an
incentive stock option within the meaning of Section 422 of the Internal Revenue
Code of 1986, as amended.
<PAGE>
                                                                    Supplement B
                                                            [Change of Control -
                                                         2003 Stock Option Plan]

         Supplement B to the Stock Option Agreement (the "Agreement") dated
_______, between Phelps Dodge Corporation (the "Corporation") and
______________________, (the "Employee").

         1. Additional Trigger Event for Exercisability. In addition to the
provisions of Section 2 of the Agreement, in the event the Employee's employment
with the Corporation or any Subsidiary terminates by reason of a Qualifying
Termination (as defined below) not earlier than six months from the date on
which the Option was granted and within two years after a Change of Control (as
defined below) of the Corporation, the Option shall become exercisable, no later
than the date of such termination, for the purchase of the full number of Common
Shares specified in Section 1 of the Agreement.

         For the purpose of this Supplement B:

         A "Change of Control" shall have the meaning set forth in the Plan.

         A "Qualifying Termination" means a termination of the Employee's
employment with the Corporation or any Subsidiary of the Corporation (under
circumstances where the Employee is no longer employed by the Corporation or any
such Subsidiary) (i) by the Employee for Good Reason, or (ii) by the Corporation
or a Subsidiary without Cause as specifically defined below in this Supplement
B, and (iii) prior to the Employee's death or Disability as specifically defined
below in this Supplement B.

         a. Cause. For purposes of the definition of Qualifying Termination,
"Cause" shall mean willful misconduct in the performance of the Employee's
duties which results in a material detriment to the Corporation, and its
subsidiaries, taken as a whole.

         b. Disability. For purposes of the definition of Qualifying
Termination, "Disability" shall have the meaning given to that term in the
Phelps Dodge Corporation Long-Term Disability Insurance Plan.

         c. Good Reason. For purposes of the definition of Qualifying
Termination, "Good Reason" means a termination of employment with the
Corporation and its Subsidiaries by the Employee under any of the following
circumstances:

                  (i) such termination occurs more than 180 days following the
         time when a Change of Control takes place and such Change of Control
         has not been approved by a resolution adopted by the Board of Directors
         of the Corporation as constituted immediately prior to such Change of
         Control; or

                                       1
<PAGE>
                  (ii) the Employee terminates his or her employment on account
         of one or more of the following events (and the Employee has not agreed
         to such event in writing):

                           (A) the assignment to the Employee of any duties
                  inconsistent, in a way materially adverse to the Employee,
                  with his or her positions, duties, responsibilities and status
                  with the Corporation and its Subsidiaries immediately prior to
                  a Change of Control, or a material reduction in the duties and
                  responsibilities held by the Employee immediately prior to
                  such Change of Control; a change in the Employee's reporting
                  responsibilities, titles or offices as in effect immediately
                  prior to such Change of Control; or any removal of the
                  Employee from or any failure to re-elect the Employee to any
                  position with the Corporation or any Subsidiary that the
                  Employee held immediately prior to such Change of Control
                  except in connection with the Employee's promotion or the
                  termination of his or her employment; or

                           (B) a reduction by the Corporation or any Subsidiary
                  in the Employee's base salary as in effect immediately prior
                  to such Change of Control; the failure by the Corporation or
                  any such Subsidiary to continue in effect any employee benefit
                  plan or compensation plan (including any incentive
                  compensation or bonus programs) in which the Employee is
                  participating immediately prior to such Change of Control
                  unless the Employee is permitted to participate in other plans
                  providing him or her with substantially comparable benefits;
                  or the taking of any action by the Corporation or any such
                  Subsidiary, which would adversely affect the Employee's
                  participation in or materially reduce his benefits under any
                  such employee benefit or compensation plan; or

                           (C) the Corporation's or any Subsidiary's requiring
                  the Employee to be based anywhere other than a location within
                  50 miles of his or her location immediately prior to such
                  Change of Control; or the Corporation's or any Subsidiary's
                  requiring the Employee to travel on the Corporation's or any
                  Subsidiary's business to an extent substantially more
                  burdensome than his or her travel obligations immediately
                  prior to such Change of Control.

                                       2
<PAGE>
[PHELPS DODGE CORPORATION LETTERHEAD]

_____ __, 2003

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 _____ __, 2003 ("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 2003 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 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.

         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 "Restricted Period").

         Notwithstanding the foregoing, if the Restricted Period for any shares
of Restricted Stock would lapse during any "blackout period" 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.

         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.
<PAGE>
         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. 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.

         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 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

                                       2
<PAGE>
85004) at your earliest convenience. Please retain the other copy of this letter
for your records.

                                                     PHELPS DODGE CORPORATION

                                                     By:
                                                        ------------------------
                                                        Senior Vice President

ACCEPTED AND AGREED TO:

----------------------------

Date:

----------------------------

                                       3
<PAGE>
[PHELPS DODGE CORPORATION LETTERHEAD]

_____ __, 2003

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 _____ __, 2003 ("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 2003 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 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.

         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.

         Notwithstanding the foregoing, if the Restricted Period for any shares
of Restricted Stock would lapse during any "blackout period" as defined in
Section 306(a)(4) of the Sarbanes-Oxley Act of 2002, then, unless otherwise
determined by the Committee, the
<PAGE>
Restricted Period for such shares shall not lapse until the first day following
the expiration of such blackout period.

         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. 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.

                                       2
<PAGE>
         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 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:
                                                        ------------------------
                                                        Senior Vice President

ACCEPTED AND AGREED TO:

--------------------------------

Date:

--------------------------------

                                       3

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