As filed with the Securities and Exchange Commission on March 25, 1994
Registration No. 33-52257
33-52257-01
==============================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
---------------
AMENDMENT NO. 3
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------
P.T. ALatieF Freeport Finance Company B.V.
(Exact name of Issuer as specified in its charter)
Freeport-McMoRan Copper & Gold Inc.
(Exact name of Guarantor as specified in its charter)
Issuer: The Netherlands Not applicable
Guarantor: Delaware 74-2480931
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
---------------
Building "Coolse Poort"
Coolsingel 139 (9th Floor)
3012 AG Rotterdam
The Netherlands
011 31 10 402 4323
(Address, including zip code, and
telephone number, including area
code, of the Issuer's
principal executive offices)
First Interstate Bank Building
One East First Street
Suite 1600
Reno, Nevada 89501
(702) 688-3000
(Address, including zip code, and telephone
number, including area code,
of Guarantor's principal executive offices)
Michael C. Kilanowski, Jr.
1615 Poydras Street
New Orleans, Louisiana 70112
(504) 582-4000
(Name, address, including zip code, and
telephone number, including area code,
of agent for service)
Copies to:
David W. Ferguson John P. Mead
Davis Polk & Wardwell Sullivan & Cromwell
450 Lexington Avenue 125 Broad Street
New York, New York 10017 New York, New York 10004
Approximate date of commencement of proposed sale to the public: As soon
as practicable after this Registration Statement becomes effective.
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the
following box. ( )
If any of the securities being registered on this form are to be offered
on a delayed or continuous basis pursuant to Rule 415 under the Securities Act
of 1933, other than securities offered only in connection with dividend or
interest reinvestment plans, check the following box. ( )
---------------
The Registrants hereby amend this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrants
shall file a further amendment which specifically states that this
Registration Statement shall thereafter become effective in accordance with
Section 8(a) of the Securities Act of 1933 or until the Registration Statement
shall become effective on such date as the Commission, acting pursuant to said
Section 8(a), may determine.
==============================================================================
[GRAPHIC 1]
SUBJECT TO COMPLETION, DATED MARCH 25, 1994
- ------------------------------------------------------------------------------
P R O S P E C T U S
- ------------------------------------------------------------------------------
$120,000,000
P.T. ALatieF Freeport Finance Company B.V.
% Senior Notes Due 2001
Unconditionally Guaranteed by
[LOGO] Freeport-McMoRan Copper & Gold Inc.
Interest payable and Due , 2001
---------------
The % Senior Notes Due 2001 (the "Guaranteed Notes") will be issued by
P.T. ALatieF Freeport Finance Company B.V., a corporation organized under the
laws of The Netherlands (the "Issuer"). The Issuer is a wholly owned
subsidiary of Freeport-McMoRan Copper & Gold Inc. ("FCX"). The Guaranteed
Notes will be unsecured and will be unconditionally guaranteed on a senior
basis as to principal, premium, if any, Additional Amounts (as defined), if
any, and interest by FCX. The Issuer will lend the net proceeds of the
Guaranteed Notes to P.T. ALatieF Freeport Infrastructure Corporation ("AFIC")
and one or more affiliated entities which will use the proceeds of such loan
to purchase infrastructure assets from P.T. Freeport Indonesia Company, an
Indonesian limited liability company also domesticated in Delaware ("PT-FI").
See "Use of Proceeds" and "Business of the Issuer." FCX directly owns 81.28%
of PT-FI's outstanding capital stock.
The Guaranteed Notes are not redeemable prior to , 1999. On or after
, 1999, the Guaranteed Notes are redeemable at the option of the Issuer, in
whole or in part, at the redemption prices set forth herein. If any
withholding tax is imposed in the future, the Issuer will, subject to certain
exceptions, pay Additional Amounts so that the net amount received by the
holder of a Guaranteed Note after such withholding will be equal to the amount
that would have been received if no tax had been applicable. Upon the
occurrence of certain changes with respect to United States, Netherlands or
Indonesian tax law requiring Additional Amounts to be paid by the Issuer with
respect to the Guaranteed Notes or an increase in Underlying Additional
Amounts (as defined) required to be paid by PT-FI, AFIC or any Infrastructure
Affiliate (as defined) with respect to the PT-FI Note (as defined) or the
Underlying Notes (as defined), the Issuer may redeem the Guaranteed Notes, in
whole but not in part, at 100% of the principal amount thereof, plus accrued
and unpaid interest to the date of redemption. Upon a Repurchase Event (as
defined), each holder of Guaranteed Notes may require FCX to repurchase such
Guaranteed Notes at 101% of the principal amount thereof plus accrued interest
to the date of repurchase. See "Description of the Guaranteed Notes."
Application will be made to list the Guaranteed Notes on the New York
Stock Exchange.
---------------
See "Special Considerations" for a discussion of certain factors that should
be considered in connection with an investment in the Guaranteed Notes.
---------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR
HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION PASSED UPON THE ACCURACY OR AD-
EQUACY OF THIS PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
==============================================================================
Price to Underwriting Proceeds to
Public(1) Discount(2) Issuer(1)(3)
- ------------------------------------------------------------------------------
Per Guaranteed Note % % %
- ------------------------------------------------------------------------------
Total $ $ $
==============================================================================
(1) Plus accrued interest, if any, from 1994.
(2) PT-FI has agreed to reimburse the Issuer for the underwriting discount.
(3 Before deduction of expenses payable by the Issuer estimated at $
. Taking into account PT-FI's reimbursement to the Issuer of the
underwriting discount and offering expenses, Proceeds to Issuer will be
$120,000,000.
---------------
The Guaranteed Notes are offered by the several Underwriters when, as
and if issued by the Issuer and delivered to and accepted by the several
Underwriters and subject to their right to reject orders in whole or in part.
It is expected that the Guaranteed Notes will be ready for delivery on or
about , 1994.
CS First Boston Chase Securities, Inc.
---------------
The date of this Prospectus is , 1994.
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR
MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT
BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL
OR THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO THE REGISTRATION OR QUALIFICATION UNDER THE SECURITIES
LAWS OF ANY SUCH STATE.
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR
EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE
GUARANTEED NOTES AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE
OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
THE OFFERING OF THE GUARANTEED NOTES IS NOT AND SHALL NOT BE DIRECTED TO
PERSONS ESTABLISHED OR DOMICILED OR HAVING THEIR NORMAL PLACE OF RESIDENCE IN
THE NETHERLANDS.
INCORPORATION OF DOCUMENTS BY REFERENCE
The Annual Report on Form 10-K of FCX for the fiscal year ended December
31, 1992 (as amended on June 25, 1993), the Quarterly Reports on Form 10-Q of
FCX for the fiscal quarters ended March 31, 1993, June 30, 1993 and September
30, 1993 and the Current Reports on Form 8-K of FCX dated April 13, 1993 (as
amended on May 21, 1993 and August 5, 1993), June 15, 1993, June 30, 1993,
January 7, 1994, January 12, 1994 and March 2, 1994 are incorporated by
reference in this Prospectus.
All documents filed by FCX pursuant to Section 13(a), 13(c), 14 or 15(d)
of the Securities and Exchange Act of 1934, as amended (the "Exchange Act")
subsequent to the date of this Prospectus and prior to the termination of the
offering of the Guaranteed Notes shall be deemed to be incorporated by
reference in this Prospectus and to be a part hereof from the date of filing
of such documents.
Any statement contained herein or in a document incorporated or deemed to
be incorporated by reference herein shall be deemed to be modified or
superseded for purposes of this Prospectus to the extent that a statement
contained herein or in any subsequently filed document which also is or is
deemed to be incorporated by reference herein modifies or supersedes such
statement. Any such statement so modified or superseded shall not be deemed,
except as so modified or superseded, to constitute a part of this Prospectus.
Copies of the above documents (excluding exhibits to the information that
is incorporated by reference unless such exhibits are specifically
incorporated by reference into the information this Prospectus incorporates)
may be obtained upon request without charge from FCX, c/o Freeport-McMoRan
Inc. at 1615 Poydras Street, New Orleans, Louisiana 70112 (telephone (504)
582-4000), attention: Michael C. Kilanowski, Jr., Secretary.
ENFORCEMENT OF CIVIL LIABILITIES
The Issuer is a Netherlands corporation. All or a substantial portion of
its assets are located outside the United States. The Issuer has been advised
by legal counsel in The Netherlands, Stibbe Simont Monahan Duhot, that the
United States and The Netherlands do not currently have a treaty providing for
reciprocal recognition and enforcement of judgments (other than arbitration
awards) in civil and commercial matters. Therefore, a final judgment for the
payment of money rendered by any federal or state court in the United States
based on civil liability, whether or not predicated solely upon the federal
securities laws, would not be enforceable in The Netherlands. However, if the
party in whose favor such final judgment is rendered brings a new suit in a
competent court in The Netherlands, such party may submit to the Netherlands
court the final judgment which has been rendered in the United States. If the
Netherlands court finds that the jurisdiction of the federal or state court in
the United States has been based on grounds which are internationally
acceptable and that proper legal procedures have been observed, the
Netherlands court would, in principle, give binding effect to the final
judgment which has been rendered in the United States unless such judgment
contravenes Netherlands' principles of public policy.
FCX, the Guarantor of the Guaranteed Notes, is a Delaware corporation
with its principal executive offices in the United States. Accordingly,
process may be served and judgements enforced against FCX in the United
States, including judgments predicated upon the civil liabilities provisions
of the federal securities laws of the United States.
PROSPECTUS SUMMARY
The following summary is qualified by the detailed information and
financial statements in this Prospectus (the "Prospectus").
FCX and the Issuer
P.T. ALatieF Freeport Finance Company B.V. (the "Issuer") is a wholly
owned subsidiary of Freeport-McMoRan Copper & Gold Inc. ("FCX") that has been
organized for the purpose of issuing the Guaranteed Notes and lending the net
proceeds thereof to P.T. ALatieF Freeport Infrastructure Corporation ("AFIC")
and one or more Infrastructure Affiliates (as defined below). Such proceeds
will be used by AFIC and such Infrastructure Affiliates to purchase from P.T.
Freeport Indonesia Company ("PT-FI") certain infrastructure assets supporting
PT-FI's mining activities in Irian Jaya, Indonesia. See "The Enhanced
Infrastructure Project and AFIC" below and "Use of Proceeds."
FCX, a Delaware corporation, conducts its operations in Indonesia through
its 81.28% directly owned subsidiary PT-FI. PT-FI is a limited liability
company organized under the laws of the Republic of Indonesia and domesticated
in Delaware. PT-FI engages in the exploration for and development, mining,
production and processing of copper, gold and silver in Indonesia and in the
marketing of concentrates containing such metals worldwide. In 1993, FCX
acquired the Spanish company Rio Tinto Minera, S.A. ("RTM"), which provides
an additional market for a portion of PT-FI's copper concentrates. See "Recent
Developments--Purchase of Interest in RTM." FCX also owns Eastern Mining
Company, Inc. ("Eastern Mining"), a separate subsidiary which has been granted
certain mineral exploration rights in Irian Jaya, Indonesia.
PT-FI is among the world's largest copper companies in terms of reserves
and believes that it has one of the lowest cost copper-producing operations in
the world, taking into account customary by-product credits for related gold
and silver production. PT-FI's operations are set in remote, rugged,
mountainous terrain and are characterized by relatively high ore-grade mineral
deposits. FCX, through PT-FI or its predecessor, has operated in Indonesia
since 1967, substantially increasing reserves and production during this time.
Since the signing of its original Contract of Work in 1967, PT-FI has enjoyed
and continues to enjoy favorable and stable relations with the Government of
the Republic of Indonesia (the "Indonesian Government").
In 1993, PT-FI achieved record copper production of 658.4 million
recoverable* pounds, approximately 6% more than in 1992. Gold production was a
record 786,700 recoverable ounces, an increase of 23% over 1992. See "Summary
FCX Operating Data" below.
- --------------------
* As used herein, "recoverable" reflects adjustments made in the metal
content of the feedstock ore for estimated losses in mining, concentrating,
smelting and refining. FCX uses the terms "recoverable" and "payable"
interchangeably.
PT-FI currently has two principal mines in operation in Irian Jaya,
Indonesia: Grasberg and Ertsberg East, located within approximately three
kilometers of each other. The Grasberg deposit commenced operations in 1990
and now contains the largest single gold reserve of any mine in the world and
one of the five largest open pit copper reserves. Ertsberg East is an
underground mine which commenced operations in 1980 and is expected to be
depleted by the second half of 1994.
PT-FI also has several mines in various stages of development. The
Intermediate Ore Zone (the "IOZ"), which lies below the Ertsberg East ore
body, is currently under development and is entering the initial stages of
production. The Deep Ore Zone (the "DOZ"), also an underground mine, lies
below the IOZ. Production at the DOZ, which was temporarily suspended in 1991,
is expected to resume once the IOZ ore body is depleted sometime after 1998.
Also under development is the "DOM" (from the Dutch word meaning "cathedral")
ore body, an underground mine situated on a mountain adjacent to Ertsberg
East.
In addition to continued delineation of the Grasberg deposit and other
existing deposits, PT-FI is continuing its ongoing exploration program for
copper and gold mineralization within the 24,700 acre mining area covered by
its original Contract of Work (the "1967 Mining Area"). PT-FI recently
discovered mineralization at two sites, Big Gossan and Wanagon, which are
located west of the Ertsberg open pit and southwest of Grasberg. Mine planning
for development of Big Gossan has commenced, and development is expected to
begin in late 1994 or early 1995. In addition, PT-FI has begun driving a
horizontal access adit from the mill site at the 2,900 meter level, which is
below the Grasberg ore body as currently delineated. The new adit, expected to
be completed in 1996, will facilitate further deep exploration and delineation
of the extent of the Grasberg deposit. Preliminary drilling from the existing
3,700 meter level adit indicates significant additional mineralization below
the existing proved and probable reserves.
A new Contract of Work signed by PT-FI and the Indonesian Government on
December 30, 1991 (the "New COW") covers both the 1967 Mining Area and a new
contiguous 6.5 million acre exploration area (the "New COW Area"). On April
29, 1993 Eastern Mining was granted exclusive exploration rights on 2.5
million acres adjacent to the New COW Area (the "Eastern Mining Area").
Preliminary investigation of the New COW Area has indicated many promising
targets. Within the New COW Area extensive stream sediment sampling has
generated analytical results which are being evaluated. No assurance can be
given that any of the exploration areas in the 1967 Mining Area (other than
Big Gossan), the New COW Area or the Eastern Mining Area contains commercially
exploitable mineral deposits. FCX's exploration expenses were $33.7 million
for 1993, compared to $12.2 million for 1992.
At December 31, 1993, PT-FI's total estimated proved and probable
reserves were 26.8 billion recoverable pounds of copper and 39.1 million
recoverable ounces of gold. Net of 1993 production, PT-FI's total estimated
proved and probable reserves increased since December 31, 1992 by 5.9 billion
recoverable pounds of copper (a 28% increase) and 7.0 million recoverable
ounces of gold (a 22% increase). These new reserves were added primarily at
the Grasberg deposit, but also include additions at the DOZ deposit and the
recently discovered Big Gossan deposit.
The following table summarizes PT-FI's estimated proved and probable
reserves at the end of each of the years shown, as verified by Independent
Mining Consultants, Inc. (see "Special Considerations--FCX--Reserves").
<TABLE>
<CAPTION>
December 31,
-------------------------------------------------------
1989 1990 1991 1992 1993
---- ---- ---- ---- ----
(in millions)
<S> <C> <C> <C> <C> <C>
Reserves:
Ore reserves--dry metric tons............................... 256.4 445.7 768.0 733.2 1,074.1
Copper--recoverable pounds.................................. 8,300 13,900 21,800 20,900 26,800
Gold--recoverable ounces.................................... 8.1 19.5 32.4 32.1 39.1
</TABLE>
During 1993, PT-FI completed, within budget and ahead of schedule, the
production facilities designed to enable it to mine and mill at least 66,000
metric tons* of ore per day ("MTPD"). Average mill throughput during 1993 was
62,300 MTPD, an increase of 63% from the average level of ore milled in 1991.
Additionally, PT-FI has begun work on a further expansion to 115,000 MTPD
which is expected to be completed by year-end 1995 and to result in annual
production rates approaching 1.1 billion pounds of copper and 1.5 million
ounces of gold. Expansion from the current 66,000 MTPD to 115,000 MTPD is
projected to require an investment of approximately $685 million (of which
approximately $120 million had been spent through December 31, 1993),
excluding the capital required for the Enhanced Infrastructure Project (as
defined below) and other infrastructure improvements.
- --------------------
As used herein, ``ton'' refers to a metric ton, which is equivalent to
2,204.62 pounds on a dry weight basis.
Freeport-McMoRan Inc. ("FTX") currently owns approximately 70% of FCX's
outstanding common stock. FCX directly owns 81.28% of PT-FI's outstanding
common stock. Of the remaining 18.72% of the outstanding PT-FI common stock,
9.36% is owned by the Indonesian Government and 9.36% is owned by an
Indonesian corporation, P.T. Indocopper Investama Corporation ("PT-II"), in
which FCX owns a 49% interest.
The Enhanced Infrastructure Project and AFIC
The location of PT-FI's operations in a remote and undeveloped area
requires that such operations be virtually self-sufficient. PT-FI's
infrastructure in Irian Jaya currently includes an airport, a heliport, a 119
kilometer road with bridges and tunnels, an aerial service tramway to
transport personnel, equipment and supplies to the mines, a hospital and two
town sites with schools, housing and other required facilities sufficient to
support approximately 10,000 persons.
PT-FI has commenced a long-term program (the "Enhanced Infrastructure
Project" or "EIP"), the goal of which is to develop and promote the growth of
local activities and enterprises in Irian Jaya through the creation of certain
necessary physical support facilities. The full Enhanced Infrastructure
Project includes plans for various commercial, residential, educational,
retail, medical, recreational, environmental and other infrastructure
facilities to be constructed during the next 10 to 20 years, which facilities
would be available for PT-FI's workforce and others. In connection with the
expansion of PT-FI's mining and processing facilities to 115,000 MTPD, the
first phase of the Enhanced Infrastructure Project is being implemented. This
first phase envisages the construction of dwelling units and related power,
water and waste disposal systems, a light industrial park and new small
business development facilities, improvements to the port and airport
facilities, an 84-room guest house with dining, recreational and meeting
facilities near the airport and other general infrastructure facilities.
AFIC was formed in 1993 principally to purchase and operate certain
existing infrastructure assets and new EIP assets. P.T. ALatieF Nusakarya
Corporation ("ALatieF"), which is one of an affiliated group of corporations
(the "ALatieF Group"), owns 66.7% and PT-FI owns 33.3% of AFIC's capital
stock. ALatieF Group is one of the largest Indonesian retail and property
management groups. Pursuant to the Joint Venture Agreement between ALatieF and
PT-FI (the "Joint Venture Agreement"), PT-FI has agreed to sell to AFIC new
EIP assets and existing infrastructure assets at an aggregate price of $270
million through 1995. The first acquisition, principally consisting of
dormitory-style residential properties and associated food service facilities,
was completed in December 1993 for a purchase price of $90 million. This
acquisition was financed, and future acquisitions will be financed, with the
proceeds of indebtedness in a principal amount equal to two-thirds of the
acquisition cost and equity contributions equal to one-third of the
acquisition cost. See "Business of the Issuer--AFIC". AFIC currently
anticipates acquiring approximately $45 million of EIP assets in each of June
and December 1994, although the timing and amount of such purchases may
change. These assets are expected to consist principally of a guest house and
additional residential properties. The acquisitions which are anticipated for
1994 and later are subject to the execution of definitive agreements and
certain Indonesian Government approvals. Depending on the long-term growth of
PT-FI's operations, the total cost of the EIP, including subsequent phases,
could range between $500 million and $600 million. Indonesian laws or
regulations may require that certain EIP assets that would otherwise be sold
to AFIC be held by a separate entity. Accordingly, one or more affiliated
entities having similar equity ownership and capital structure to AFIC (each,
an "Infrastructure Affiliate") may be organized to acquire and operate such
assets.
The net proceeds of the Guaranteed Notes will be loaned by the Issuer to
AFIC and one or more Infrastructure Affiliates to provide the balance of the
debt funding required for the purchases of the first $270 million of
infrastructure assets from PT-FI. PT-FI has agreed to reimburse the Issuer for
the underwriting discount and expenses associated with the issuance of these
Guaranteed Notes so that the net proceeds to the Issuer from the issuance of
the Guaranteed Notes are expected to equal the offering price thereof. AFIC
and each Infrastructure Affiliate will issue one or more promissory notes (the
"Underlying Notes") to the Issuer in an aggregate principal amount equal to
the principal amount of loans by the Issuer to such entity. PT-FI will enter
into one or more agreements with AFIC and any Infrastructure Affiliate (each,
a "Master Services Agreement") pursuant to which PT-FI will compensate AFIC or
such Infrastructure Affiliate for the use and occupancy of the infrastructure
assets purchased by such entity with the proceeds of the Guaranteed Notes.
The Master Services Agreements will provide for minimum payments by PT-FI
thereunder in an aggregate amount sufficient to satisfy all costs and expenses
of AFIC or such Infrastructure Affiliate, including, without limitation,
principal of, interest on and any Underlying Additional Amounts (as defined
below) payable with respect to, the Underlying Notes. Each Master Services
Agreement will have a term of 120 days beyond the final payment of the
Guaranteed Notes. See "Business of the Issuer--Master Services Agreements."
The rights of AFIC and any Infrastructure Affiliate under the Master Services
Agreements will be pledged to secure the obligations of AFIC and such
Infrastructure Affiliate to the Issuer under the Underlying Notes. The
Guaranteed Notes, however, will not be secured by any infrastructure assets or
the Underlying Notes. See "Description of the Guaranteed Notes--Application of
Proceeds Under Indenture."
Ownership Structure
(GRAPHIC A)
(SEE APPENDIX A FOR DESCRIPTION OF GRAPHIC MATERIAL)
The Issuer's principal executive office is located at Building "Coolse
Poort", Coolsingel 139, 9th Floor, 3012 AG Rotterdam, The Netherlands and its
telephone number is 011-31-10 402-4323. FCX's principal executive office is
located at First Interstate Bank Building, One East First Street, Suite 1600,
Reno, Nevada 89501 and its telephone number is (702) 688-3000.
Recent Developments
Issuance of Gold-Denominated Preferred Stock
On January 21, 1994, FCX issued 4,305,580 Depositary Shares, Series II,
each representing 0.05 shares of Gold-Denominated Preferred Stock, Series II,
in an underwritten public offering. The net proceeds of $158.5 million are
being used by PT-FI to fund capital expenditures associated with the expansion
of mining and milling activities and to reduce borrowings under the PT-FI
Credit Agreement (as defined below), thereby increasing the facility's
availability for general corporate purposes. For a brief description of the
terms of the Gold-Denominated Preferred Stock, see "Description of FCX
Preferred Stock and Special Preference Stock -- Gold-Denominated Preferred
Stock."
Redemption of Zero Coupon Notes
Effective January 18, 1994, FCX redeemed its outstanding Zero Coupon
Exchangeable Notes due 2011 (the "Zero Coupon Notes"). Of the $118.6 million
principal amount of Zero Coupon Notes outstanding at the initiation of the
call for redemption, $118.3 million principal amount was converted into an
aggregate of approximately 6.7 million shares of FCX's Class A Common Stock.
The balance of the Zero Coupon Notes was redeemed for cash.
Purchase of Interest in RTM
In March 1993, FCX acquired a 65% interest in RTM, which is principally
engaged in the smelting and refining of copper in Spain, for approximately $50
million, excluding transaction costs. In December 1993, RTM redeemed the
remaining 35% interest for approximately $19 million. RTM has announced plans
to expand its smelter production capacity from its current 150,000 metric tons
of metal per year to approximately 180,000 metric tons of metal per year by
mid-1995 at a cost of approximately $50 million. RTM is studying further
expansion to as much as 270,000 metric tons of metal production per year.
During 1993, PT-FI supplied RTM with approximately 90,000 metric tons of
copper concentrate and is expected to supply approximately 150,000 metric tons
in 1994, providing for approximately 20% and 33%, respectively, of RTM's
requirements in those years. Beginning in 1996, PT-FI is expected to provide
the RTM smelter with approximately one-half of its copper concentrate
requirements. For further information concerning RTM, see "Management's
Discussion and Analysis of Financial Condition and Results of Operations"
herein, FCX's Current Report on Form 8-K dated April 13, 1993, as amended May
21, 1993, and as amended August 5, 1993, incorporated by reference in this
Prospectus (which Current Report includes financial information with respect
to RTM and the RTM acquisition) and FCX's Current Report on Form 8-K dated
January 7, 1994 (which includes financial information for the nine months
ended September 30, 1993 as if RTM had been consolidated since March 31,
1993).
Recent Infrastructure Developments
In December 1993, PT-FI announced the execution of a Letter of Intent
with Duke Energy Corp. ("Duke Energy"), a wholly owned affiliate of Duke Power
Company, and PowerLink Corporation ("PowerLink"), a subsidiary of Northstar
Energy Corporation, pursuant to which PT-FI would sell its existing and to be
constructed power generation and transmission assets and certain other
power-related assets to a joint venture (the "Power Joint Venture") whose
ownership consists of Duke Energy (30%), PowerLink (30%), PT-FI (30%) and an
Indonesian investor (10%). The total value of the transaction is estimated at
$200 million and is expected to be concluded in two phases. The first sale,
representing the existing assets, is expected to exceed $100 million and to
occur in mid-1994. The final sale, representing the to-be-constructed
expansion-related assets, is expected to occur during the first half of 1995.
Under the agreement, the Power Joint Venture will own these assets and be
responsible for providing the electrical power services required by PT-FI at
its mining, milling and support operations in Irian Jaya, including the power
services required for the expansion of ore throughput to 115,000 MTPD. PT-FI
has also entered into two separate letters of intent with respect to sales to
joint ventures of certain aircraft, airport and related operations and certain
port facilities and related marine logistics, construction equipment and other
assets. These transactions are subject to the execution of definitive
agreements, financing and certain Indonesian Government approvals. See
"Business of FCX--Transportation, Other Infrastructure and Recent
Infrastructure Developments."
The Offering
Securities Offered............. $120,000,000 aggregate principal amount of
% Senior Notes Due 2001.
Interest Payment Dates......... and , commencing , 1994.
Guaranty....................... Payment of principal, premium, if any,
Additional Amounts, if any, and interest on
the Guaranteed Notes and any obligation to
repurchase Guaranteed Notes following a
Repurchase Event or pursuant to an Asset
Disposition Offer will be unconditionally
guaranteed on a senior basis by FCX.
Optional Redemption............ The Guaranteed Notes are redeemable at the
option of the Issuer, in whole or in part,
on or after , 1999 at a redemption price
equal to % of the principal amount
thereof through , 2000 and thereafter
at 100% of the principal amount thereof,
plus in each case accrued and unpaid
interest to the date of redemption.
Sinking Fund................... None.
Withholding Tax................ There is currently no United States,
Netherlands or Indonesian withholding tax
applicable to payments on the Guaranteed
Notes. If any such withholding tax is
imposed in the future, subject to certain
exceptions, the Issuer will pay Additional
Amounts so that the net amount received by
the holder of a Guaranteed Note after such
withholding will be equal to the amount that
would have been received if no tax had been
applicable. See "Description of the
Guaranteed Notes--Maturity, Interest and
Principal." Any reference in this Prospectus
to principal, premium or interest with
respect to any Guaranteed Note shall be
deemed to include any such Additional
Amounts payable in connection therewith.
Tax Redemption................. Upon the occurrence of certain changes with
respect to United States, Netherlands or
Indonesian tax law requiring Additional
Amounts to be paid by the Issuer or an
increase in the Underlying Additional
Amounts (as defined below) to be paid by
PT-FI, AFIC or any Infrastructure Affiliate
with respect to the PT-FI Note or the
Underlying Notes, the Issuer may redeem the
Guaranteed Notes, in whole but not in part,
at 100% of the principal amount thereof plus
accrued and unpaid interest to the date of
redemption. See "Description of the
Guaranteed Notes--Tax Redemption."
Assumption by FCX.............. FCX may at any time, in its sole discretion,
assume all obligations of the Issuer in
respect of the Guaranteed Notes and may be
substituted for the Issuer in all respects,
in which event the Issuer will be released
from all obligations under the Guaranteed
Notes and the indenture pursuant to which
the Guaranteed Notes will be issued (the
"Indenture").
Certain Covenants.............. The Indenture will restrict, among other
things, the ability of FCX to incur liens on
the capital stock of PT-FI without equally
and ratably securing the Guaranteed Notes,
to engage in certain transactions with
affiliates and to merge with or consolidate
with or into, or sell or otherwise transfer
its properties and assets as an entirety.
The Indenture will also require that the
proceeds of certain Asset Dispositions be
used to repay certain debt or be reinvested
in natural resource businesses. All of these
limitations are subject to a number of
important qualifications, however. See
"Description of the Guaranteed
Notes--Certain Covenants."
Change of Control.............. Upon a Repurchase Event, each holder of the
Guaranteed Notes may require FCX to
repurchase such holder's Guaranteed Notes at
101% of the principal amount thereof plus
accrued and unpaid interest and Additional
Amounts, if any, to the date of repurchase.
A "Repurchase Event" is defined to mean the
occurrence of a Change of Control followed
by a Rating Decline within 60 days of the
first public announcement of such Change of
Control. See "Description of the Guaranteed
Notes--Repurchase in Event of Change of
Control and Rating Decline."
Absence of Public Market....... The Guaranteed Notes are a new issue of
securities with no established trading
market. Each of the Underwriters has advised
the Issuer that it intends to act as a
market maker for the Guaranteed Notes.
However, the Underwriters are not obligated
to do so and any such market-making may be
discontinued at any time without notice. No
assurance can be given as to the liquidity
of the trading market for the Guaranteed
Notes.
Listing........................ Application will be made to list the
Guaranteed Notes on the New York Stock
Exchange.
Use of Proceeds................ The net proceeds will be loaned to AFIC and
one or more Infrastructure Affiliates for
the purchase of infrastructure assets from
PT-FI as part of the first phase of the EIP.
Pending such use, the net proceeds will be
loaned by the Issuer to PT-FI on a senior
unsecured basis. See "Use of Proceeds."
Special Considerations......... See "Special Considerations" for a
discussion of certain factors that should be
considered in connection with an investment
in the Guaranteed Notes.
Summary FCX Financial Data
The following Summary Financial Data are derived from the consolidated
financial statements of FCX and should be read in conjunction with those
statements. The income statement data for the three years ended December 31,
1993 and the balance sheet data as of December 31, 1993 and 1992 are derived
from audited consolidated financial statements included and incorporated by
reference herein. The income statement data for the years ended December 31,
1990 and 1989 and the balance sheet data as of December 31, 1991, 1990 and
1989 are derived from audited consolidated financial statements not included
in this Prospectus.
<TABLE>
<CAPTION>
Years Ended December 31,
------------------------------------------------------------------------------
1989 1990 1991 1992 1993
------ ------ ------ ------ ------
(in thousands, except ratios)
<S> <C> <C> <C> <C> <C>
Income Statement Data:
Revenues(1)........................$367,886 $434,148 $467,522 $714,315 $925,932
Cost of sales:
Site production and delivery....... 118,489 160,045 204,353 308,948 567,148
Depreciation and amortization...... 24,594 35,479 38,397 48,272 67,906
-------- -------- -------- -------- --------
Total cost of sales............... 143,083 195,524 242,750 357,220 635,054
-------- -------- -------- -------- --------
Exploration expenses............... 363 4,086 6,502 12,185 33,748
Provision for restructuring
charges........................... -- -- -- -- 20,795
General and administrative
expenses.......................... 21,206 29,989 40,550 68,481 81,399
-------- -------- -------- -------- --------
Total costs and expenses.......... 164,652 229,599 289,802 437,886 770,996(2)
-------- -------- -------- -------- --------
Operating income................... 203,234 204,549 177,720 276,429 154,936(2)
Minority interest.................. (17,415) (13,726) (12,199) (31,075) (9,134)
Net income applicable to
common stock...................... 98,927 90,179 96,159(4) 122,868 21,862(3)
Ratio of Earnings to Fixed
Charges(5):....................... 27.6x 9.2x 4.5x 6.5x 3.6x
Balance Sheet Data (at end of period):
Net property, plant and
equipment....................... 264,688 502,171 601,675 993,412 1,646,603
Total assets...................... 415,072 676,727 1,157,615 1,694,005 2,116,653
Long-term debt (including
current portion thereof)........ 130,000 294,000 631,961 723,583 228,967
Minority interest................. 19,632 8,899 14,237 21,449 46,781
Gold-Denominated Preferred Stock.. -- -- -- -- 232,620
Stockholders' equity.............. 113,759 176,557 172,545 646,457 947,927
Other Financial Data:
EBITDA(6)......................... 227,828 240,028 216,117 324,701 222,842(2)
Depreciation and amortization..... 24,594 35,479 38,297 48,272 67,906
Capital expenditures.............. 138,448 187,544 239,954 367,842 453,122
Interest incurred(7).............. 7,261 21,761 39,727 42,871 39,846
Ratio of EBITDA to
interest incurred............... 31.4x 11.0x 5.4x 7.6x 5.6x
<FN>
- ------------------
(1) Net of treatment charges, royalties to the Indonesian Government and
amortization of the cost of the price protection program.
(2) Includes charges totaling $37.1 million ($14.7 million noncash) related
to restructuring the administrative organization at FTX, the parent
company of FCX, and adjustments to general and administrative expenses and
site production and delivery costs. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations."
(3) Includes the items discussed in Note 2 ($20.5 million after taxes and
minority interest; $.10 per share) and a noncash charge of $9.9 million
($.05 per share) related to the changes in accounting principle as
discussed in Note 1 of "Notes to Financial Statements."
(4) Reflects a $5.8 million reduction for the cumulative effect of the change
in accounting for postretirement benefits and a $26.5 million reduction in
PT-FI's income tax provision due to the signing of the New COW.
(5) For purposes of calculating the ratio of earnings to fixed charges,
earnings consist of income from continuing operations before income taxes,
minority interest and fixed charges. Fixed charges consist of interest
and that portion of rent deemed representative of interest.
(6) Earnings before interest, taxes and depreciation and amortization
(EBITDA) consists of operating income after non-recurring expenses ($37.1
million in 1993 as discussed in Note 2) plus depreciation and
amortization. EBITDA should not be considered by an investor as an
alternative to net income as an indicator of FCX's operating performance
or to the information included in FCX's statement of cash flow and
accompanying Management's Discussion and Analysis as a measure of
liquidity.
(7) Includes interest expense plus capitalized interest.
</TABLE>
Summary FCX Operating Data
<TABLE>
<CAPTION>
Years Ended December 31,
------------------------------------------------------------------------------
1989 1990 1991 1992 1993
------ ------ ------ ------ ------
PT-FI Results(1)
<S> <C> <C> <C> <C> <C>
Mill Operations:
Ore milled--metric tons
("MT") per day.................. 24,700 31,700 38,200 57,600 62,300
Average copper grade.............. 1.84% 1.61% 1.77% 1.59% 1.57%
Grams of gold--per MT............. .60 .98 1.23 1.35 1.46
Recoverable Metal Production(2):
Copper--thousand pounds........... 317,400 361,800 466,700 619,100 658,400
Gold--ounces...................... 139,000 284,000 420,800 641,000 786,700
Recoverable Metal Sales:
Copper--thousand pounds........... 317,800 348,000 439,700 651,800 645,700
Gold--ounces...................... 140,000 273,000 397,900 679,300 762,900
Average Realizations:
Copper--per pound(3)..............$ 1.24 $ 1.20 $ 1.01 $ 1.03 $ .90
Gold--per ounce................... 383.28 378.30 358.76 340.11 361.74
Gross Profit Per Pound of Copper:
Average realized price.............. 123.6 Cents 120.4 Cents 101.1 Cents 103.3 Cents 90.4 Cents
------- ------- ------- ------- -------
Production Costs:
Site production and delivery...... 37.2 46.0 46.5 47.4 49.3
Gold and silver credits........... (20.3) (32.0) (34.0) (36.2) (43.4)
Treatment charges................. 25.1 25.2 23.5 27.1 23.7
Royalty on recoverable metals..... 3.4 3.1 2.4 2.4 1.5
------- ------- ------- ------- -------
Cash production costs........... 45.4 42.3 38.4 40.7 31.1
Depreciation and amortization..... 7.8 10.2 8.7 7.4 8.7
------- ------- ------- ------- -------
Total production costs.......... 53.2 52.5 47.1 48.1 39.8
------- ------- ------- ------- -------
Revenue adjustments(4)............ 0.4 0.7 (2.9) (0.4) (2.4)
------- ------- ------- ------- -------
Gross profit per pound.............. 70.8 Cents 68.6 Cents 51.1 Cents 54.8 Cents 48.2 Cents
======= ======= ======= ======= =======
RTM Results (since March 1993 acquisition)
Smelter operations:
Concentrate treated--MT........... 330,200
Anode production--MT.............. 135,800
Cathode production--MT............ 103,100
Gold operations:
Ore milled--MTPD.................. 17,900
Grade--grams per MT............... 1.05
Production--recoverable ounces.... 132,500
Average realized price............ $ 369.06
<FN>
- ------------------
(1) Mill operations, recoverable metal production, recoverable metal sales
and average realizations reflect 100% of PT-FI's results and have not
been adjusted for the minority ownership in PT-FI.
(2) Derived by multiplying total annual mill throughput in tons times grade
times recovery percentage times a recoverable factor of .965 for copper
and .963 for gold and multiplying the product by 2,204.62 (in the case of
copper) or dividing the product by 31.1035 (in the case of gold).
(3) Includes amounts recognized on current period sales under the price
protection program. Excludes the adjustments discussed in Note 4.
(4) Reflects adjustments primarily for prior period concentrate sales
contractually priced (net of related amounts recognized under the price
protection program) or adjusted during the respective periods. In
addition, for periods subsequent to the year ended December 31, 1990,
reflects amortization of the cost of PT-FI's price protection program for
such periods. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations."
</TABLE>
SPECIAL CONSIDERATIONS
An investment in the Guaranteed Notes involves certain risks.
Accordingly, prospective investors should consider carefully the following
special considerations, in addition to the other information concerning FCX
and the Issuer and their business contained in this Prospectus, before
purchasing the Guaranteed Notes offered hereby.
FCX
Prices of Minerals
Because FCX's revenues are derived almost entirely from the sale of
concentrates containing copper, gold and silver by PT-FI, FCX's earnings are
directly related to market prices for copper, gold and, to a lesser extent,
silver. Prices for such minerals have historically fluctuated widely and are
affected by numerous factors beyond FCX's control. A price protection program
has been implemented for estimated copper sales priced during 1994 at a price
of $.90 per pound. During the fourth quarter of 1993, copper prices averaged
significantly below $.90 per pound.
Location and Industry Risks
The current mining area, most of the new 6.5 million acre exploration
area and the Eastern Mining Area, are located in steeply mountainous terrain,
which makes access to certain parts of these areas difficult. These areas are
subject to considerable rainfall, which has in the past led to periodic floods
and mud slides. The mining area is located in an area of known seismic
activity, and some earth tremors have been experienced from time to time.
None of these factors has caused personal injury to FCX employees or
significant property damage not covered by insurance or any significant
interruptions to production, although no assurance can be given that delays,
injury or damage will not occur in the future. The climate and remoteness of
the area have required PT-FI to overcome special engineering difficulties.
PT-FI is also subject to the usual risks encountered in the mining industry,
including unexpected geological conditions resulting in cave-ins, flooding and
rock-bursts and unexpected changes in rock stability conditions. FTX
purchases, for the benefit of PT-FI, substantial insurance involving such
amounts and types of coverage as it believes are appropriate for PT-FI's
exploration, development, mining and processing activities in Indonesia.
Political Factors
Maintaining its good relationship with the Indonesian Government is of
particular importance to PT-FI because its operations are located solely in
Indonesia. The Indonesian Government currently owns 9.36% of PT-FI's
outstanding common stock. PT-FI operates in Indonesia by virtue of the New
COW, which has a 30-year term and provides for two 10-year extensions under
certain conditions. The 1967 Foreign Capital Investment Law, which expresses
Indonesia's foreign investment policy, provides basic guaranties of remittance
rights and protection against nationalization, a framework for incentives and
some basic rules as to other rights and obligations of foreign investors.
PT-FI's rights and obligations relating to taxes, exchange controls,
repatriation and other matters are governed by the New COW, which was
concluded pursuant to the 1967 Foreign Capital Investment Law.
Indonesia has a presidential republic system of government. Elections
for the Indonesian Parliament and the office of President are held every five
years. President Suharto, who assumed power following an attempted communist
coup, was reelected in March 1993 to serve a sixth consecutive five-year term.
Reserves
With respect to PT-FI's reserves, it should be noted that such quantities
are estimates only. The mines from which PT-FI's reserves are presently being
or are expected to be produced may not conform to geological or other
expectations with the result that the volume and grade of reserves recovered
and the rates of production may be more or less than anticipated. Further,
market price fluctuations in copper, gold and, to a lesser extent, silver, and
changes in operating and capital costs may render certain ore reserves
uneconomic to develop. No assurance can be given that PT-FI's exploration
programs will result in the replacement of current reserves with new reserves.
Relationship of FCX and FTX
FTX currently owns approximately 70% of the combined total outstanding
shares of FCX's Class A Common Stock and Class B Common Stock. Through this
ownership, FTX has control over FCX, and through FCX, over PT-FI. FTX thus
controls the composition of the Board of Directors of FCX and the Board of
Commissioners of PT-FI and the dividend policies of both and also has
sufficient voting control under Delaware law to effect major corporate actions
at FCX such as "going private" transactions and mergers without the
concurrence of other stockholders. Among the various companies owned or
controlled by FTX, it is intended that FCX and its subsidiaries will have
priority with respect to the exploration, development and mining of copper and
associated minerals in Indonesia. However, if any conflict of interest arises
between FCX or one of its subsidiaries and another company owned or controlled
by FTX relating to business opportunities in Indonesia, FTX will resolve such
dispute. In addition, FCX and PT-FI are parties, with FTX, to a Management
Services Agreement, pursuant to which FTX provides a variety of management
services to FCX and PT-FI. Under the terms of this Agreement, FCX and PT-FI
reimburse FTX on a monthly basis at FTX's cost for such services, including
allocated overhead. In addition, FTX is a party to a credit agreement,
pursuant to which, under certain circumstances, FTX might be required to
pledge the stock of FCX owned by FTX and its affiliates to secure its
outstanding borrowings under such credit agreement. See "Relationship of the
FCX Group with the FTX Group" and Note 7 of Notes to Financial Statements
herein.
FCX made payments to FTX pursuant to the Management Services Agreement
of $44.9 million and $49.0 million (excluding $10.7 million of
restructuring costs) and paid dividends to FTX of $85.4 million and $85.9
million in 1992 and 1993, respectively.
Environmental Matters
Although the management of FCX believes that it is in compliance with
Indonesian environmental laws, rules and regulations, and that there will
be no significant adverse impact on the environment as a result of the
planned expansion of its operations, the Indonesian Government may revise
its environmental laws and regulations periodically. The impact, if any,
of such possible revisions on FCX's current or future operations cannot be
accurately predicted. In February 1994, the Indonesian Government approved
an environmental impact study, submitted by PT-FI, with respect to the
proposed expansion of copper production to 115,000 MTPD.
Holding Company Structure
FCX is a holding company which conducts its business through its
subsidiaries PT-FI, RTM and Eastern Mining. As a result, FCX's cash flow and
consequent ability to meet its debt obligations are primarily dependent upon
the earnings of its subsidiaries, and on dividends and other payments
therefrom. Any right of FCX to participate in any distribution of the assets
of its subsidiaries upon the liquidation, reorganization or insolvency thereof
would, with certain exceptions, be subject to the claims of creditors
(including trade creditors) and preferred stockholders, if any, of such
subsidiaries.
Fraudulent Conveyance Considerations
FCX has guaranteed the payment of principal of, premium, if any,
Additional Amounts, if any, and interest on the Guaranteed Notes. It is
possible, however, that under certain circumstances a court could hold that
the direct obligations of FCX to any other direct creditor of FCX could be
superior to the obligations under the Guaranty. In addition, it is possible
that the amount for which FCX is liable under such Guaranty would be limited
or subject to avoidance by application of fraudulent conveyance laws and other
similar legal principles. If any of the obligations of FCX with respect to
the Guaranty are held unenforceable, as a fraudulent conveyance or otherwise,
claims of creditors of FCX effectively will have priority with respect to the
assets and earnings of such companies over the claims of the holders of the
Guaranteed Notes. Although the standards will vary depending upon the law of
the jurisdiction applied, in general, if a court were to find that at the time
of the issuance of the Guaranty, FCX issued the Guaranty with the intent of
defrauding creditors or received less than fair consideration or reasonably
equivalent value for issuing the Guaranty and among other things, was
insolvent or rendered insolvent by reason of issuing the Guaranty, was engaged
in a business for which its remaining assets constituted unreasonably small
capital, or was acting with the intent or belief that it would incur debts
beyond its ability to repay such debts as they matured (as the foregoing terms
are defined or interpreted under applicable federal and state bankruptcy and
fraudulent conveyance statutes), then such court could avoid the payment of
amounts by FCX pursuant to the Guaranty and require the return of such
payments to FCX. The Guaranty could also become equitably subordinated to
general creditors of FCX or could, under certain circumstances, be
invalidated. Management of FCX believes that, after giving effect to the
application of the proceeds from the Offering, FCX would not be considered
insolvent at the time of the issuance of the Guaranty or rendered insolvent by
reason of such issuance, would not be considered to be engaged in a business
or transaction for which its assets constituted unreasonably small capital to
carry on its business and would not be considered to intend to incur, or
believe that it would incur, debts beyond its ability to pay such debts as
they mature.
The Issuer
Dependence Upon PT-FI for Revenues from Infrastructure Assets
The Issuer will obtain funds to service the Guaranteed Notes from
payments from PT-FI, AFIC and any Infrastructure Affiliate in respect of
advances made to such entities by the Issuer with the net proceeds of the
Guaranteed Notes. The Underlying Notes will be secured by a pledge of the
rights of AFIC and any Infrastructure Affiliate under their respective Master
Services Agreements. The Guaranteed Notes, however, will not be secured. AFIC
and any Infrastructure Affiliate will be dependent upon revenues from PT-FI
for use and occupancy of the infrastructure assets of AFIC and such
Infrastructure Affiliate under the Master Services Agreements in order to
service the Underlying Notes. These infrastructure assets are located in a
remote and undeveloped area, are designed to support PT-FI's mining activities
and are generally not suitable for alternative uses. Accordingly, the
performance of AFIC and any Infrastructure Affiliate is largely dependent upon
the performance of PT-FI.
Certain Infrastructure Properties Not Yet Identified
Certain of the infrastructure assets that are planned to be sold to AFIC
have not yet been built. No assurance can be given that such assets will be
built in a timely manner. In addition, if the aggregate audited cost of
construction of the infrastructure assets to be sold to AFIC by PT-FI pursuant
to the Joint Venture Agreement is less than $270 million, PT-FI has agreed to
make available additional assets for purchase, with the approval of ALatieF,
so that the aggregate audited construction cost of the assets sold is not less
than $270 million. Accordingly, certain of the assets that may be acquired by
the Issuer have not yet been identified. Nevertheless, the Joint Venture
Agreement provides that fees payable by PT-FI and third parties to AFIC for
use of such assets must be sufficient to provide specified minimum returns on
the shareholders' investments. See "Business of the Issuer." The proceeds of
this Offering will initially be loaned by the Issuer to PT-FI by means of a
promissory note issued to the Issuer (the "PT-FI Note") pending the use of
such proceeds to fund the acquisition of infrastructure assets by AFIC or one
or more Infrastructure Affiliates. See "Use of Proceeds." There can be no
assurance that any such infrastructure assets will be acquired or that such
proceeds will be loaned to AFIC or one or more Infrastructure Affiliates.
Sources of Capital
ALatieF and PT-FI have committed to subscribe for additional shares of
capital stock of AFIC in the aggregate amounts of $40 million and $20 million,
respectively. These obligations are not secured. Any delay or default by
ALatieF in funding its equity commitments could delay or prevent the transfer
of some or all of the infrastructure assets proposed to be acquired by AFIC
from PT-FI. See "Business of the Issuer -- AFIC." Pending any such transfer,
PT-FI would continue to be obligated on the PT-FI Note, with respect to net
proceeds of this Offering previously loaned by the Issuer to PT-FI and not
theretofore repaid. See "Description of the Guaranteed Notes--Application of
Proceeds under Indenture."
Lack of Public Market for the Guaranteed Notes
There is no existing market for the Guaranteed Notes. The Issuer and FCX
intend to apply for listing of the Guaranteed Notes on the New York Stock
Exchange, but there can be no assurance as to the liquidity of any market that
may develop for the Guaranteed Notes, the ability of holders of the Guaranteed
Notes to sell their Guaranteed Notes or the price at which such holders would
be able to sell their Guaranteed Notes. If such market were to develop, the
Guaranteed Notes could trade at prices that may be lower than the initial
offering price thereof, depending on many factors, including prevailing
interest rates, FCX's operating results and markets for similar debt
securities. The Underwriters have advised FCX that they currently intend to
make a market in the Guaranteed Notes. However, they are not obligated to do
so, and any market making with respect to the Guaranteed Notes may be
discontinued at any time without notice.
Historically, the market for non-investment grade debt has been subject
to disruptions that have caused substantial volatility in the prices of
securities similar to the Guaranteed Notes. There can be no assurance that the
market for the Guaranteed Notes will not be subject to similar disruptions.
USE OF PROCEEDS
The proceeds from the sale of the Guaranteed Notes, $120 million, will
be loaned by the Issuer to AFIC and one or more Infrastructure Affiliates.
PT-FI has agreed to reimburse the Issuer for the underwriting discount and
expenses associated with the issuance of the Guaranteed Notes. The proceeds of
such loan will be used by AFIC and any such Infrastructure Affiliate, together
with the proceeds of equity subscriptions by the stockholders of AFIC and any
such Infrastructure Affiliate, to purchase infrastructure assets from PT-FI
having an aggregate purchase price of $180 million. Pending such application,
the proceeds from the sale of the Guaranteed Notes will be loaned on a senior
unsecured basis to PT-FI and used for general corporate purposes, including
funding of capital expenditures associated with the expansion of its mining
and milling activities and the development of infrastructure assets.
FCX CAPITALIZATION
The following table sets forth the unaudited consolidated capitalization
of FCX at December 31, 1993 and as adjusted to reflect (i) the sale of the
Guaranteed Notes offered hereby and the application of the net proceeds
thereof, (ii) the sale in January 1994 of 4,305,580 Depositary Shares, Series
II, each representing 0.05 shares of Gold-Denominated Preferred Stock, Series
II, and the application of the net proceeds thereof and (iii) the call for
redemption of the Zero Coupon Notes and the issuance of approximately 5.8
million shares of Class A Common Stock upon conversion thereof.
<TABLE>
<CAPTION>
<S><C><C>
December 31, 1993
--------------------------------
Actual As Adjusted(1)
----------- ------------
(in thousands)
Cash and short-term
investments................................................................... $ 13,798 $ 275,507
========== ==========
RTM short-term borrowings..................................................... $ 31,692 $ 31,692
Current portion of RTM gold and silver denominated loans(2)................... 13,774 13,774
Current portion of long-term debt............................................. 3,325 3,325
---------- ----------
Total current debt........................................................ 48,791 48,791
---------- ----------
RTM notes payable to banks.................................................... 2,049 2,049
Note payable to FTX........................................................... 12,270 12,270
PT-FI bank loan............................................................... 13,000 --
RTM gold and silver denominated loans(2)...................................... 25,510 25,510
AFIC medium-term bank loan.................................................... 57,000 57,000
Guaranteed Notes offered hereby............................................... -- 120,000
Zero Coupon Exchangeable Notes due 2011....................................... 102,039 --
---------- ----------
Total long-term debt...................................................... 211,868 216,829
---------- ----------
Minority interest............................................................. 46,781 62,328
---------- ----------
Gold-Denominated Preferred Stock represented by depositary
shares, issued and outstanding 300,000 shares............................... 232,620 232,620
Gold-Denominated Preferred Stock, Series II, represented by depositary
shares, Series II, issued and outstanding 215,279 shares, as adjusted....... -- 167,380
---------- ----------
232,620 400,000
---------- ----------
Stockholders' equity:
Preferred Stock, par value $0.10, 2,000,000 shares authorized:
Step-Up Convertible Preferred Stock represented by depositary
shares, issued and outstanding 700,000 shares(3).......................... 350,000 350,000
Special Stock, par value $0.10, 110,000,000 shares authorized:
Special Preference Stock represented by depositary shares,
issued and outstanding 26,400,000 shares.................................. 224,400 224,400
Class A Common Stock, issued and outstanding 58,022,582 shares
actual; 63,803,313 shares, as adjusted(4)................................. 5,802 6,380
Class B Common Stock, par value $0.10, authorized 200,000,000
shares, issued and outstanding 142,129,602 shares........................... 14,213 14,213
Capital in excess of par value................................................ 334,166 426,456
Cumulative foreign translation adjustment..................................... (10,012) (10,012)
Retained earnings............................................................. 29,358 29,358
---------- ----------
Total stockholders' equity................................................ 947,927 1,040,795
---------- ----------
Total capitalization.......................................................... $1,487,987 $1,768,743
========== ==========
<FN>
- ------------------
(1) Does not include adjustments for dividends paid on February 1, 1994
totaling $30.8 million for Common Stock and $10.4 million for Preferred
Stock. Assumes estimated underwriting discount and expenses in
connection with the Offering of approximately $3.5 million.
(2) Payable with 107,800 ounces of gold, 36,800 ounces within one year, and
953,100 ounces of silver, 423,600 ounces within one year, which are
carried at the market prices of gold ($331.70 per ounce) and silver
($3.70 per ounce), respectively, at the date of acquisition.
(3) In addition to the 515,279 currently outstanding shares of
Gold-Denominated Preferred Stock.
(4) Does not include (a) approximately 9.1 million shares of Class A Common
Stock authorized for issuance upon conversion of the Company's Special
Preference Stock, or (b) approximately 11.6 million shares of Class A
Common Stock authorized for issuance upon conversion of the Step-Up
Convertible Preferred Stock.
</TABLE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Ore Reserve Addition and Ongoing Exploration Program
Total estimated proved and probable recoverable reserves at PT-FI have
increased since December 31, 1992 by 5.9 billion pounds of copper (a 28%
increase), 7.0 million ounces of gold (a 22% increase), and 32.0 million
ounces of silver (a 72% increase), bringing PT-FI's total year-end 1993
estimated proved and probable recoverable reserves to 26.8 billion pounds of
copper, 39.1 million ounces of gold and 76.7 million ounces of silver. The
increases, net of production during the year, were added primarily at the
Grasberg deposit, but also include additions at PT-FI's underground mine at
the DOZ deposit and the recently discovered Big Gossan deposit.
In addition to continued delineation of the Grasberg deposit and other
deposits including Big Gossan, PT-FI is proceeding with its ongoing
exploration program for mineralization within the original mining area. During
1993, PT-FI initiated helicopter-supported surface drilling of the Wanagon
gold/silver/copper prospect, located approximately 2 kilometers northwest of
Big Gossan and approximately 3 kilometers southwest of Grasberg, where seven
holes were drilled. Significant copper mineralization has been encountered
below the 2,900 meter elevation.
Preliminary exploration of the New COW Area has indicated numerous
promising targets. Extensive stream sediment sampling within the new acreage
has generated analytical results which are being evaluated. This sampling
program, when coupled with regional mapping completed on the ground and from
aerial photographs, has led to the outlining of over 50 exploration targets.
PT-FI has also completed a fixed-wing air-magnetometer survey of the entire
New COW Area. Detailed follow-up exploration of these anomalies by additional
mapping and sampling and through the use of both aerial and ground magnetic
surveys is now in progress. Systematic drilling of these targets has already
commenced with significant mineralization being discovered at several
prospects. Additional drilling is required to determine if any of these are
commercially viable. Initial surface and stream sampling has also begun on the
Eastern Mining Area.
1993 Results of Operations Compared with 1992
After discussions with the staff of the Securities and Exchange
Commission (the "Commission"), FCX is reclassifying certain expenses and
accruals previously recorded in 1993 as restructuring and valuation of assets.
The Commission staff required that certain of the amounts reportable be
reclassified or characterized as changes in accounting principle. FCX and
its independent accountants, Arthur Andersen & Co., believe the previously
reported presentation was appropriate under the circumstances; however, FCX
concluded that further contesting the position of the Commission staff
would not have been productive because these required changes were
immaterial to the presentation of FCX's operations and they had no impact
on net income or net income per share.
FCX reported 1993 net income applicable to common stock of $21.9 million
($.11 per share) compared with net income of $122.9 million ($.66 per share)
for 1992. The results for 1993 reflect (a) a $15.7 million loss for RTM since
its acquisition and (b) charges totaling $52.6 million ($30.4 million to net
income or $.15 per share), of which $28.3 million was noncash, related to (1)
restructuring the administrative organization at FTX, the parent company of
FCX, (2) adjustments to general and administrative expenses and site
production and delivery costs discussed below, and (3) changes in accounting
principle. As discussed further below, operating income was lower in 1993 due
to a lower gross margin resulting primarily from lower copper realizations;
higher exploration expenses; administrative restructuring costs, and higher
general and administrative costs. Also impacting net income were lower
interest expense resulting from reduced debt levels, a higher effective tax
rate and an increase in preferred dividends. See Notes 1 and 6 of "Notes to
Financial Statements".
Revenues in 1993 increased as a result of the acquisition of RTM, adding
sales of copper cathodes and anodes ($204.9 million), gold bullion ($57.4
million), and other byproducts ($26.1 million). Excluding RTM, revenues
declined 4% when compared to 1992. Copper price realizations, taking into
account PT-FI's $.90 per pound price protection program, were 12% lower than
in 1992, but gold price realizations were up 6%. Although ore production
averaged 62,300 MTPD in 1993 (8% higher than in 1992), copper sales volumes
decreased slightly from 1992 primarily because of sales from inventory in
1993. Gold sales volumes in 1993 benefited from significantly higher
fourth-quarter 1993 gold grades (a 46% increase over fourth-quarter 1992 and a
38% increase over third-quarter 1993), which are not anticipated to continue
in 1994, and an increase in gold recovery rates for the year, which improve
with higher gold grades. See "Summary FCX Operating Data".
A reconciliation of revenues from 1992 to 1993 is presented below (in
millions):
Revenues -- 1992.................................... $714.3
RTM revenues........................................ 288.4
Elimination of intercompany sales................... (47.7)
Concentrate:
Price realizations:
Copper.......................................... (84.7)
Gold............................................ 14.7
Sales volumes:
Copper.......................................... (5.5)
Gold............................................ 30.2
Treatment charges................................. 23.6
Adjustments to prior year concentrate sales....... (13.0)
Other............................................. 5.6
------
Revenues -- 1993.................................... $925.9
======
Revenues in 1993 also benefited from a decline in treatment charges
of 3.4 cents per pound from 1992 resulting from a tightening in the
concentrate market, as the industry's inventories were reduced for much of
1993. Additionally, lower copper prices led to lower treatment charges
since these charges vary with the price of copper.
Adjustments to prior year concentrate sales include changes in prices
on all metals for prior year open sales as well as the related impact on
treatment charges. Open copper sales at the beginning of 1993 were
recorded at an average price of $1.04 per pound, but subsequently were
adjusted downward as copper prices fell during the year, negatively
impacting 1993 revenues. As of December 31, 1993, 213.4 million pounds of
copper remained to be contractually priced during future quotational
periods. As a result of PT-FI's price protection program, discussed
below, these pounds are recorded at $.90 per pound. The copper price on
the London Metal Exchange ("LME") was $.84 per pound on February 1, 1994.
In June 1993, two of PT-FI's four mill level ore passes caved,
resulting in a blockage of a portion of the ore pass delivery system. The
blockage's primary effect was to limit mill throughput to approximately
40,700 MTPD for approximately eight weeks. The impact of the blockage was
minimized by using an ore stockpile adjacent to the mill and installing
conveyors to alternative ore pass systems. The ore pass blockage has been
rectified through the temporary use of alternative delivery systems and
by-passes. A permanent delivery system is expected to be in service by
mid-1994. The copper recovery rate for 1993 was adversely affected
because the ore milled from the stockpile contained higher than normal
oxidized copper, which yields lower copper recoveries. PT-FI's insurance
policies are expected to cover the property damage and business
interruption claims relative to the blockage.
PT-FI's unit site production and delivery costs, excluding the $10.0
million charge discussed below, increased slightly from 1992 primarily as
a result of costs incurred in connection with the ore pass blockage and an
increase in production overhead costs related to expansion activities.
Unit cash production costs declined significantly to 31.1 cents per pound
in 1993 from 40.7 cents per pound in 1992, benefiting from higher gold and
silver credits, lower treatment charges, and reduced royalties primarily
due to lower copper prices on which such royalties are based. PT-FI's
depreciation rate increased from 7.4 cents per recoverable pound during
1992 to 8.3 cents in 1993, reflecting the increased cost relating to the
66,000 MTPD expansion. As a result of the reserve additions discussed
earlier, PT-FI's depreciation rate is expected to decrease to 7.5 cents
per recoverable pound for 1994, absent any other significant changes in
ore reserves. In addition, FCX is amortizing costs in excess of book
value ($2.4 million of amortization in 1993) relating to certain capital
stock transactions with PT-FI. Amortization of these excess costs is
expected to be $3.6 million per year starting in 1994.
Exploration expenditures in Irian Jaya totaled $12.2 million in 1992,
compared to $31.7 million in 1993, and they are projected to be
approximately $35 million in 1994. Exploration expenditures in Spain are
expected to be approximately $6 million in 1994.
FCX's general and administrative expenses increased from $68.5
million in 1992 to $81.4 million in 1993 primarily because of the
additional personnel and facilities needed due to the expansion at
PT-FI and the acquisition of RTM. Included in the 1993 expense is $5.0
million for RTM (since its acquisition in March 1993) and charges of
$6.3 million primarily consisting of a write-off of deferred charges
incurred in 1992 related to a planned securities offering that was
withdrawn ($2.0 million) and costs to downsize FCX's computing and
management information systems (``MIS'') structure ($4.0 million).
Further increases in general and administrative expenses by FCX are
anticipated in conjunction with continuing expansion at PT-FI. General
and administrative expenses, including those of RTM, are currently
expected to increase by approximately 25% in 1994.
During the second quarter of 1993, FTX undertook a restructuring of
its administrative organization. This restructuring represented a major
step by FTX to lower its costs of operating and administering its
businesses in response to weak market prices of the commodities produced
by its operating units. As part of this restructuring, FTX significantly
reduced the number of employees engaged in administrative functions,
changed its MIS environment to achieve efficiencies, reduced its needs for
office space, outsourced a number of administrative functions, and
implemented other actions to lower costs. As a result of this
restructuring process, the level of FCX's administrative cost has been
reduced substantially over what it would have been otherwise, which
benefit will continue in the future. However, the restructuring process
entailed incurring certain one-time costs by FTX, portions of which were
allocated to FCX pursuant to its Management Services Agreement (the
"Management Agreement") with FTX.
FCX's restructuring costs totaled $20.8 million, including $10.7
million allocated from FTX based on historical allocations, consisting
of the following: $8.3 million for personnel related costs; $3.2
million relating to excess office space and furniture and fixtures
resulting from the staff reduction; $6.1 million relating to the cost
to downsize its computing and MIS structure; and $3.2 million of
deferred charges relating to PT-FI's 1989 credit facility which was
substantially revised in June 1993 (the "PT-FI Credit Agreement"). As
of December 31, 1993, the remaining accrual for these restructuring
costs totaled $1.5 million relating to excess office space.
In connection with the restructuring project, FCX changed its
accounting system and undertook a detailed review of its accounting
records. As a result of this process, FCX recorded a $10.0 million charge
to site production and delivery costs comprised of the following: $5.0
million for materials and supplies inventory obsolescence; $2.5 million
for revised estimates of value added taxes and import duties related to
prior years; and $2.5 million of adjustments for various items identified
in converting its accounting system.
Interest expense was $18.9 million in 1992 and $15.3 million in 1993,
excluding $24.0 million and $24.5 million of capitalized interest,
respectively.
The New COW provides a 35% corporate income tax rate for PT-FI and a
15% withholding tax on interest for debt incurred after the signing of the
New COW and on dividends paid to FCX by PT-FI. The additional withholding
required on interest and on dividends paid to FCX by PT-FI, and a $15.7
million loss by RTM for which no tax benefit is recorded, results in a
1993 effective tax rate of 52%.
Trends and Outlook--Marketing
PT-FI's copper concentrates, which contain significant amounts of
recoverable gold and silver, are sold primarily under long-term sales
agreements which accounted for virtually all of PT-FI's 1993 sales. PT-FI
has commitments from various parties to purchase virtually all of its
estimated 1994 production. Concentrate sales agreements provide for
provisional billings based on world metals prices, primarily the LME,
generally at the time of loading. As is customary within the industry,
sales under these long-term contracts usually "final-price" within a few
months of shipment. Certain terms of the long-term contracts, including
treatment charges, are negotiated annually on a portion of the tonnage to
reflect current market conditions. Treatment charges have declined during
1993 as a result of the tightening in the concentrate market and are
expected to remain at or below 1993 levels. RTM has commitments from most
of its suppliers for 1994 treatment charge rates in excess of current spot
market rates.
The increased production at PT-FI has required it to market its
concentrate globally. Its principal markets include Japan, Asia, Europe
and North America. PT-FI's mill throughput is currently forecast to be
approximately 67,000 MTPD for 1994 as PT-FI continues to integrate new
mill equipment for the expansion to 115,000 MTPD. Current estimates for
1994 production are approximately 700 million pounds of copper and 780,000
ounces of gold for PT-FI and 165,000 ounces of gold at RTM. RTM, whose
smelter can be expanded, was acquired to provide low-cost smelter capacity
for a portion of PT-FI's concentrate and to improve PT-FI's competitive
position in marketing concentrate to other parties.
During 1993, copper prices dropped to their lowest levels since 1987,
reflecting lower demand caused by the continuing global recession, but
recovered to a level in excess of $.80 per pound. Prices for copper, gold
and silver are influenced by many factors beyond FCX's control and can
fluctuate sharply. PT-FI has a price protection program for virtually all
of its estimated copper sales to be priced in 1994 at an average floor
price of $.90 per pound of copper, while allowing full benefit from prices
above this amount. Based on projected 1994 PT-FI copper sales of
approximately 720 million pounds, a 1 cent per pound change in the average
annual copper price received over $.90 per pound would have an
approximately $6 million effect on pretax operating income and cash flow.
Based on projected 1994 gold sales of approximately 800,000 ounces by
PT-FI, a $10 per ounce change in the average annual gold price received
would have an approximately $8 million effect on 1994 pretax operating
income and cash flow.
Capital Resources and Liquidity
Cash flow from operations decreased from $252.6 million for 1992 to
$158.5 million during 1993, due primarily to lower net income and an
increase in inventories. Materials and supplies increased over year-end
1992 as additional explosives, reagents and chemicals, fuel, and spare
parts were required for the expanding PT-FI operations. For the year
ended December 31, 1993, consolidated working capital decreased by $352.0
million from December 31, 1992, primarily as a result of a $358.0 million
decrease in cash and short-term investments, which was used to reduce
long-term debt and fund capital expenditures, and the negative working
capital position of RTM.
Cash flow used in investing activities totaled $579.7 million in 1992
compared with $463.5 million in 1993. Capital expenditures increased 23%
in 1993 due to increased expansion activities. During 1992, FCX acquired
an indirect interest in PT-FI for $211.9 million.
Cash flow provided by financing activities totaled $618.2 million in
1992 compared with $53.1 million used in financing activities in 1993.
FCX issued shares of its Step-Up Preferred Stock and its Gold-Denominated
Preferred Stock during 1993 for net proceeds totaling $561.1 million. Net
proceeds from the two offerings were used in part to reduce borrowings
under the PT-FI amended credit agreement by a net $537.0 million, thereby
increasing the facility's availability for general corporate purposes and
the continued expansion of mining and milling operations. Also in 1993,
PT-FI received net proceeds of $80.0 million from the sale of a portion of
PT-FI's infrastructure assets. In 1992, $212.5 million was received from
the sale of a 10% interest in PT-FI to Indonesian investors in December
1991 and $392.0 million was received from the sale of Class A Common Stock
and Special Preference Stock. Dividend payments rose in 1993 due to
increased Class A shares outstanding and dividends paid on the Special
Preference and Preferred Stock issued in 1992 and 1993. FCX called its
Zero Coupon Notes for redemption in January 1994 (substantially all of
which were exchanged for Class A Common Stock) and completed a public
offering of its Gold-Denominated Preferred Stock, Series II which yielded
net proceeds of $158.5 million to be used primarily for expansion related
activities.
Cash flow from operations increased from $73.9 million for 1991 to
$252.6 million during 1992, due primarily to higher net income. Customer
accounts receivable rose by $76.1 million to $130.6 million because of
increased sales. Partially offsetting the increase in receivables was an
increase in accounts payable and accrued liabilities associated with
expansion activities. Cash flow used in investing activities increased
from $240.0 million during 1991 to $579.7 million for 1992, due to
increased capital expenditures for the 57,000 MTPD expansion and the
purchase of an indirect interest in PT-FI. Cash flow from financing
activities increased $415.8 million in 1992 compared with 1991, primarily
due to the sale of Class A Common Stock, Special Preference Stock, and a
10% interest in PT-FI to Indonesian investors. The proceeds from these
financing activities were used to purchase an indirect interest in PT-FI
and to fund ongoing expansion related expenditures.
RTM's principal operations currently consist of a copper smelter. The
FCX purchase proceeds will be used by RTM for working capital requirements
and capital expenditures, including funding a portion of the expansion of
its smelter production capacity (expected to cost approximately $50
million) from its current 150,000 metric tons of metal per year to 180,000
metric tons of metal per year by mid-1995. On February 28, 1994, RTM
obtained a commitment for short-term bank financing for up to $45 million
to fund the cost of expansion to 180,000 metric tons of metal per year, of
which $5 million is currently outstanding. FCX expects to replace this
financing at maturity with long-term financing. RTM is also studying
further expansion of the smelter facilities to as much as 270,000 metric
tons of metal production per year and is assessing the opportunity to
expand its tankhouse operations from 135,000 metric tons per year to
215,000 metric tons per year. RTM's 1993 cash flow from operations was
negative ($5.9 million) primarily due to cash requirements related to
shut-down costs for RTM's gold mine. RTM has relied on short-term credit
facilities and the FCX purchase proceeds to fund this shortfall. In
addition, RTM is currently evaluating financing alternatives to fund its
short-term needs and to provide long-term funding for expansion. RTM's
future cash flow is dependent on a number of variables including
fluctuations in the exchange rate between the United States dollar and the
Spanish peseta, future prices and sales volumes of gold, the size and
timing of the smelter and tankhouse expansions, and the supply/demand for
smelter capacity and its impact on related treatment and refining charges.
During 1992, the Company established the EIP. The full EIP
(currently expected to involve aggregate costs of as much as $500 million
to $600 million) includes plans for commercial, residential, educational,
retail, medical, recreational, environmental and other infrastructure
facilities to be constructed during the next 20 years for PT-FI
operations. The EIP will develop and promote the growth of local and
other third-party activities and enterprises in Irian Jaya through the
creation of certain necessary support facilities. The initial phase of
the EIP is under construction and is scheduled for completion in 1995.
Additional expenditures for EIP assets beyond the initial phase depend on
the long-term growth of PT-FI's operations and would be expected to be
funded by third-party financing sources, which may include debt, equity or
asset sales. Certain portions of the EIP and other existing infrastructure
assets are expected to be sold in the near future to provide additional
funds for the expansion to 115,000 MTPD.
Through 1995, capital expenditures are expected to be greater than
cash flow from operations. Upon completion of the previously announced
115,000 MTPD expansion by year-end 1995, annual production is expected to
approach 1.1 billion pounds of copper and 1.5 million ounces of gold.
Subsequently, capital expenditures will be determined by the results of
FCX's exploration activities and ongoing capital maintenance programs.
Estimated capital expenditures for 1994 and 1995 for the expansion to
115,000 MTPD, the initial phase of the EIP, ongoing capital maintenance
expenditures, and the expansion of RTM's smelter to 180,000 metric tons of
metal per year are expected to range from $850 million to $950 million and
will be funded by operating cash flow, sales of existing and
to-be-constructed infrastructure assets and a wide range of financing
sources FCX believes are available as a result of the future cash flow
from PT-FI's mineral reserve asset base. These sources include, but are
not limited to, PT-FI's credit facility and the public and private
issuances of securities.
The New COW contains provisions for PT-FI to conduct or cause to be
conducted a feasibility study relating to the construction of a copper
smelting facility in Indonesia and for the eventual construction of such a
facility, if it is deemed to be economically viable by PT-FI and the
Government of Indonesia. PT-FI has participated in a group assessing the
feasibility of constructing a copper smelting facility in Indonesia.
PT-FI amended its $550.0 million credit agreement in June 1993. The
amended credit agreement, which, among other things eliminated a required
debt service reserve and provided a lower interest rate, is guaranteed by
FCX and FTX, and is structured as a three year revolving line of credit
followed by a 3 1/2 year reducing revolving line of credit. As of February
1, 1994, $425.0 million was available to PT-FI under the credit facility.
To the extent FTX and its other subsidiaries incur additional debt, the
amount available to PT-FI under the credit facility may be reduced. See
"Description of Certain Indebtedness--PT-FI Credit Agreement."
Payment of future dividends by FCX will depend on the payment of
dividends by PT-FI, which, in turn, depends on PT-FI's economic resources,
profitability, cash flow and capital expenditures. It is the policy of
PT-FI to maximize its dividend payments to stockholders, taking into
account its operational cash needs including debt service requirements.
FCX currently pays an annual cash dividend of 60 cents per share to its
common shareholders. Management anticipates that this dividend will
continue at this level through completion of the expansion in 1995, absent
significant changes in the prices of copper and gold. However, FCX's
Board of Directors determines its dividend payment on a quarterly basis
and in its discretion may change or maintain the dividend payment. In
determining dividend policy, the Board of Directors considers many
factors, including current and expected future prices and sales volumes,
future capital expenditure requirements and the availability and cost of
financing from third parties.
PT-FI has had good relations with the Indonesian Government since it
commenced operations in Indonesia in 1967. The New COW provides that the
Indonesian Government will not nationalize the mining operations of PT-FI
or expropriate assets of PT-FI. Disputes under the New COW are to be
resolved by international arbitration. The 1967 Foreign Capital
Investment Law, which expresses Indonesia's foreign investment policy,
provides basic guaranties of remittance rights and protection against
nationalization, a framework for incentives and some basic rules as to
other rights and obligations of foreign investors.
Environmental
FTX and affiliates, including FCX, have a history of commitment to
environmental responsibility. Since the 1940s, long before public
attention focused on the importance of maintaining environmental quality,
FTX has conducted preoperational, bioassay, marine ecological, and other
environmental surveys to ensure the environmental compatibility of its
operations. FTX's Environmental Policy commits FTX's operations to full
compliance with local, state, and federal laws and regulations.
PT-FI believes it is in compliance with Indonesian environmental
laws, rules, and regulations. PT-FI had a team of environmental
scientists from a leading Indonesian scientific institution conduct a
study to update its 1984 Environmental Impact Assessment that covered
expansion to 66,000 MTPD. Subsequently, that document was expanded by
other independent scientists to cover all environmental aspects of the
current expansion to 115,000 MTPD. The latest study document was approved
by the Indonesian Government in February 1994.
FCX has made, and will continue to make, expenditures at its
operations for protection of the environment. Increasing emphasis on
environmental matters can be expected to require FCX to incur additional
costs, which will be charged against income from future operations. On
the basis of its analysis of its operations in relation to current and
presently anticipated environmental requirements, management does not
anticipate that these investments will have a significant adverse impact
on its future operations, liquidity, capital resources, or financial
position.
1992 Results of Operations Compared with 1991
FCX reported 1992 net income of $122.9 million ($.66 per share),
compared with 1991 net income of $96.2 million ($.53 per share). A
reconciliation of revenues from 1991 to 1992 is presented below (in
millions):
Revenues - 1991....................................... $467.5
Price realizations:
Copper.............................................. 8.8
Gold................................................ (7.4)
Sales volumes:
Copper.............................................. 218.5
Gold................................................ 95.7
Treatment charges..................................... (73.0)
Adjustments to prior year concentrate sales........... 12.5
Other................................................. (8.3)
------
Revenues--1992........................................ $714.3
======
Revenues increased 53% in 1992, reflecting higher production rates
due to the mine/mill expansion, higher gold grades, and the sale of all
year-end 1991 inventory. Price realizations were relatively unchanged
between years (2% increase in copper realizations and 5% decrease in gold
realizations), but sales volumes benefited significantly from the
expansion, higher gold grades, and inventory sales discussed above. Copper
sales volumes increased 48% and gold sales volumes increased 71%.
Partially offsetting the benefit from sales volumes increases was a 3.6
cents per pound increase in treatment charges because of tight market
conditions in the smelting industry early in 1992 and increased spot
market sales attributable to higher than anticipated production due to the
early completion of the 57,000 MTPD expansion program. A $5.7 million
upward revenue adjustment was made in 1992 compared with a $6.8 million
downward revenue adjustment in 1991 for prior year concentrate sales
contractually priced during the year.
Cost of sales for 1992 were $357.2 million, an increase of 47% from
1991 due primarily to the 48% increase in copper sales volumes. Unit site
production and delivery costs in 1992 approximated 1991 costs. FCX's
depreciation rate declined from an average 8.7 cents per recoverable pound
in 1991 to 7.4 cents in 1992 because of the significant increase in ore
reserves during 1991.
Interest expense was $21.5 million during 1991 compared with $18.9
million in 1992, excluding $18.3 million and $24.0 million of capitalized
interest, respectively.
General and administrative expenses rose from $40.6 million in 1991
to $68.5 million in 1992, because of several financing transactions and
operational and environmental studies in 1992 which required additional
corporate personnel whose salaries and related overhead, were charged to
FCX. General and administrative expenses also increased because of the
additional personnel and facilities needed in Indonesia for the expanding
operations.
Minority interest share of net income reflects FCX's 90% ownership
interest in PT-FI for 1991, compared with its 80% interest during 1992.
.
BUSINESS OF FCX
General
FCX, a Delaware corporation, conducts its operations in Indonesia
through its 81.28% directly owned subsidiary, PT-FI, a limited liability
company organized under the laws of Indonesia and domesticated in
Delaware. Of the remaining 18.72% of the outstanding PT-FI common stock,
9.36% is owned by the Indonesian Government and 9.36% is owned by PT-II,
in which FCX owns a 49% interest. PT-FI engages in the exploration for
and development, mining and processing of concentrates containing copper,
gold and silver in Indonesia and the marketing of concentrates containing
such metals worldwide. In 1993, FCX acquired RTM, as described under
"Prospectus Summary-- Recent Developments." FCX also owns Eastern Mining,
a separate subsidiary which has been granted certain mineral exploration
rights in Irian Jaya, Indonesia.
PT-FI's operations are located in the rugged highlands of the
Sudirman Mountain Range in the province of Irian Jaya, Indonesia, located
on the western half of the island of New Guinea. Over the last 25 years,
PT-FI has met an extraordinary combination of engineering and construction
challenges to develop its mining and milling complex and supporting
infrastructure in one of the least explored areas in the world. PT-FI's
largest mine, Grasberg, discovered in 1988, contains the largest single
gold reserve and one of the five largest open-pit copper reserves of any
mine in the world. In order to develop the Grasberg deposit, PT-FI
undertook an expansion program in stages, initially from 20,000 MTPD to
57,000 MTPD. Expansion from 57,000 MTPD to 66,000 MTPD was completed in
1993 ahead of schedule and within budget. PT-FI has begun work on a
further expansion of its overall mining and milling rate to 115,000 MTPD
which is expected to be completed by year-end 1995 and to result in annual
production rates approaching 1.1 billion pounds of copper and 1.5 million
ounces of gold.
Copper and Gold
Copper. Copper's primary property, that of high thermal and
electrical conductivity, makes it one of the most important metals in the
industrial world. It is used worldwide in electrical wiring, phone lines,
plumbing, industrial machinery, transportation equipment, consumer, and
general products. Building construction accounts for over 40% of all
copper consumed and the average car contains more than 40 pounds of
copper. Copper remains the product of choice in the plumbing market due
to its durability and bactericide properties. Another important area of
copper consumption involves its use as the basis for many industrial
alloys including brass, bronze, and as an important addition with other
alloys based on lead, zinc, nickel and aluminum.
Gold. Gold is used as a source of decoration in jewelry, a raw
material for industrial uses, and as a store of value especially during
times of economic or political uncertainty.
Jewelry accounts for one-half of the world's consumption of gold.
Gold's natural softness prevents fabrication in its pure form but when
alloyed with such metals as copper, zinc, silver and nickel, a wide range
of colors in gold jewelry can be achieved. Changes in real income have
the most impact on the direction of gold jewelry demand. From 1980 to
1992, gold fabrication in Asia increased at a trend line growth rate of
over 20% as the rise in economic prosperity created a large, wealthy
population with a strong affinity towards the metal.
Industrial uses of gold account for less than 10% of total demand.
These uses are mostly confined to dentistry and the electronics industry
where it is used for plating fine wires and contacts to assure minimum
resistance. Gold is also used in the manufacture of certain
semi-conductors and printed circuits.
Gold as an investment vehicle can take the form of physical purchases
of gold bars, coins and jewelry or through paper purchases of gold futures
and option contracts or gold mining equities. The latter medium is more
prevalent in the modern world and can have a significant impact on gold
prices.
The demand for and supply of gold affects gold prices but not in the
same manner as those of the vast majority of other commodities. Because
the supply of gold is made up largely of gold produced in past years, the
amount produced in a single year constitutes a very small portion of the
total supply. Thus, variations in current production levels do not have a
significant impact on the price of gold.
Contract of Work
In 1967, PT-FI's predecessor, Freeport Indonesia, Incorporated, a
Delaware corporation ("FII"), and the Indonesian Government entered into a
contract of work (the "1967 COW") governing FII's mining activities in
Indonesia. From 1967 until the end of 1991, FII operated as the sole
contractor for the production and marketing of certain minerals from a
24,700 acre area (the "1967 Mining Area"). On December 30, 1991, FII was
merged into PT-FI in Delaware and PT-FI and the Indonesian Government
signed a new contract of work (the "New COW") which superseded the 1967
COW. The New COW covers both the 1967 Mining Area and an additional
contiguous 6.5 million acre exploration area (the "New COW Area"). The
New COW has a 30-year term with provisions for two 10-year extensions
under certain conditions. Since the signing of the 1967 COW, PT-FI has
enjoyed and continues to enjoy favorable and stable relations with the
Indonesian Government.
The New COW contains a provision under which PT-FI must progressively
relinquish its rights to the parts of the New COW Area in amounts equal to
25% of the 6.5 million acres at the end of each of three specified
periods, the first of which is scheduled to expire on December 30, 1994,
and the last of which is set to expire five to seven years after the
signing of the New COW. In light of these relinquishment provisions, PT-FI
has implemented an active exploration program with a focus on both what it
believes to be the most promising exploration opportunities in the New COW
Area as well as identification of areas which appear to hold the least
promise. See "Management's Discussion and Analysis of Financial Condition
and Results of Operations--Ore Reserve Addition and Ongoing Exploration
Program." The New COW also contains provisions for PT-FI to conduct or
cause to be conducted a feasibility study relating to the construction of
a copper smelting facility in Indonesia and for the eventual construction
of such a facility by PT-FI, if such facility is deemed to be economically
viable by PT-FI and the Indonesian Government and is not constructed by
others. PT-FI is pursuing with another company the feasibility of
constructing a copper smelting facility in Indonesia, in which PT-FI would
hold a minority interest and supply approximately one-half of the
smelter's currently anticipated copper concentrate requirements.
The New COW provides that PT-FI may be required after 2001, if
requested by the Indonesian Government to meet the then existing
requirements of Indonesian law, and subject to certain other specified
conditions, to sell up to an additional 25% of its common stock through
offerings on the Jakarta Stock Exchange or up to an additional 31% if sold
otherwise to Indonesian nationals, with all such sales to be at market
prices to be determined at the times of sale. However, the New COW
further stipulates that PT-FI is entitled to the benefit of any changes in
Indonesian law, regulations, or policy subsequent to the signing of the
New COW that impose less burdensome divestiture requirements. Indonesian
regulations promulgated in 1992 require that 20% of the capital stock of a
corporation such as PT-FI ultimately be held by Indonesian investors. The
Investment Coordinating Board of Indonesia has indicated that such
regulations apply to PT-FI.
On April 29, 1993, FCX's subsidiary, Eastern Mining, was granted
exclusive exploration rights on 2.5 million acres adjacent to the New COW
Area (see "Eastern Mining" below.)
Ore Reserves of PT-FI
The following table summarizes PT-FI's estimated proved and probable
reserves at the end of each of the years shown, as verified by Independent
Mining Consultants, Inc. (see "Special Considerations--FCX --Reserves"):
<TABLE>
<CAPTION>
December 31,
------------------------------------------------------------------
1989 1990 1991 1992 1993
----- ------ ------ ------ ------
(in millions)
<S> <C> <C> <C> <C> <C>
Reserves:
Ore reserves--dry metric tons......... 256.4 445.7 768.0 733.2 1,074.1
Copper--recoverable pounds............ 8,300 13,900 21,800 20,900 26,800
Gold--recoverable ounces.............. 8.1 19.5 32.4 32.1 39.1
</TABLE>
Primarily as a result of the drilling operations at the Grasberg
mine (see "Mines in Production" below), PT-FI's proved and probable copper
and gold ore reserves have increased since December 31, 1989 by
approximately 223% and 383%, respectively, and from year-end 1992 by
approximately 28% and 22%, respectively. PT-FI's Grasberg deposit now
contains the largest single gold reserve and one of the five largest
open-pit copper reserves of any mine in the world.
This increase in proved and probable reserves, net of production,
reflects the addition of approximately 340.9 million tons of ore since
December 31, 1992 (a 46% increase) as the result of a drilling program
that includes data obtained from the surface down to the 3,100 meter
elevation at the Grasberg copper/gold ore body, bringing total proved and
probable ore reserves to approximately 1,074.1 million tons. PT-FI's
proved and probable reserves at Grasberg do not include reserves below the
3,100 meter level. PT-FI has begun driving an adit (the "Amole adit") from
the mill site to a point below the currently delineated Grasberg ore body
at the 2,900 meter level. The Amole adit, expected to be completed in
1996, will facilitate further deep exploration to delineate the extent of
the Grasberg deposit below the 3,100 meter level. Preliminary drilling
from the existing 3,700 meter adit indicates significant additional
mineralization below the existing proved and probable reserves. There can
be no assurance, however, that PT-FI's exploration programs will result in
the delineation of additional reserves in commercial quantities.
PT-FI's proved and probable ore reserves at December 31, 1993 of
approximately 1,074.1 million tons had an average grade of 1.31% copper
and 1.47 grams of gold per ton compared with approximately 733.2 million
tons of ore with an average grade of 1.47% copper and 1.72 grams of gold
per ton at December 31, 1992.
The Grasberg mine reserves alone approximate 976.6 million tons of
ore at an average grade of 1.25% copper and 1.55 grams of gold per ton.
Mines in Production
PT-FI currently has two mines in operation: Grasberg and Ertsberg
East, both within the 1967 Mining Area. PT-FI milled ore at an average
rate of approximately 57,600 MTPD in 1992 and 62,300 MTPD in 1993.
Open-pit mining of the Grasberg ore body commenced in January 1990.
In 1993, Grasberg mine output totaled approximately 19.8 million tons of
ore, providing approximately 81% of total PT-FI ore production.
Production from the Grasberg ore body during January 1994 averaged 77,700
MTPD.
Ertsberg East is an underground mine which commenced production in
1980. Block caving operations are conducted in two separate zones of the
ore body with a common haulage level at the 3,530 meter elevation. In
1993, mine output from Ertsberg East totaled approximately 4.4 million
tons of ore and provided approximately 18% of total PT-FI ore production.
Ertsberg East is expected to be depleted by the second half of 1994, and
production primarily from Grasberg, supplemented by production from the
IOZ ore body (see "Mines in Development" below), is expected to offset the
Ertsberg East production. Production from Ertsberg East during January
1994 averaged 2,700 MTPD.
Mines in Development
Three major additions to PT-FI's underground mining operations, which
are intended to replace existing underground production areas when they
become depleted, have previously been developed: the DOM, the DOZ and the
IOZ. The IOZ is located vertically between the Ertsberg East and the DOZ
ore bodies.
The DOM ore body's initial working level is some 380 meters above the
Ertsberg East mining operation. The DOM ore body will initially be mined
using the block caving method. Pre-production development is complete and
the first block cave area has been prepared. All maintenance, warehouse
and service facilities are in place. Production at the DOM has been
deferred as a result of the continued increase in the Grasberg ore
reserves.
The mine being developed at the IOZ ore body is situated
approximately 350 meters above the 2,900 meter level adit. Delineation
drilling and pre-production development began in 1991. The IOZ is being
developed to gradually replace production from the Ertsberg East mine
beginning in 1993 using the same block caving method. Mining will proceed
downward from the IOZ to the DOZ.
The DOZ, also an underground mine within the 1967 Mining Area, lies
vertically below the IOZ ore body and is currently capable of production.
Initial production from the DOZ commenced in 1989. However, at the end of
1991, mine output from the DOZ was temporarily suspended, and it is
anticipated that it will resume once the IOZ ore body has been depleted
sometime after 1998.
Exploration
In addition to continued delineation of the Grasberg deposit and
other deposits discussed above, PT-FI is continuing its ongoing
exploration program for copper and gold mineralization within the 1967
Mining Area. Two anomalous zones in the vicinity of PT-FI's current mining
operations are under active exploratory drilling. The Big Gossan and
Wanagon mineralizations are located west of the Ertsberg open pit,
southwest of the Grasberg copper/gold ore body and anchor the ends of a
clearly defined mineralized structure trending roughly east-west for 4.5
kilometers. The Big Gossan mineralization, as drilled to date, extends
approximately 1,100 meters from just east of the intersection of the Amole
adit.
Over 50 holes have been drilled from the Amole adit and from an
exploration drift being driven in a westerly direction parallel to the Big
Gossan structure, which drilling resulted in the addition of 8.5 million
metric tons of ore at an average grade of 2.4% copper and 0.77 grams of
gold per metric ton to PT-FI's total proved and probable reserves at
December 31, 1993. Earlier surface drilling of the western portion of the
Big Gossan anomaly, approximately 300-500 meters west of the underground
drilling, established a mineral resource in excess of 6 million metric
tons with an average grade of 5% copper and 2.9 grams of gold per metric
ton which is not included in PT-FI's total proved and probable reserves at
December 31, 1993. Further underground exploration of the resources
established by the surface drilling as well as the area between it and the
reserves discovered near the Amole adit will be carried out in 1994 from
the exploration drift as it is extended.
Mine planning for development of Big Gossan has commenced with
development estimated to cost approximately $100 million and to begin in
late 1994 or early 1995.
During the first quarter of 1993, PT-FI initiated
helicopter-supported surface drilling of the Wanagon gold/silver/copper
prospect. Seven holes were drilled during 1993 at Wanagon, located
approximately 2 kilometers northwest of Big Gossan and approximately 3
kilometers southwest of Grasberg. Significant copper values have been
encountered below the 2,900 meter elevation. Target evaluation in other
parts of the 1967 Mining Area is also continuing.
Preliminary exploration of the New COW Area has indicated many
promising targets. Extensive stream sediment sampling within the new
acreage has generated analytical results which are being evaluated. This
sampling program, when coupled with the regional mapping completed on the
ground and from aerial photographs, has led to the outlining of over 50
exploration targets. Detailed follow-up exploration of these anomalies by
additional mapping and sampling and through the use of both ground and
aerial magnetic surveys is now in progress. PT-FI has completed a
fixed-wing air-magnetometer survey of the entire New COW Area and,
together with extensive geologic data gathered from surface sampling, this
air-magnetometer survey will enable PT-FI to efficiently direct future
exploratory efforts. Drilling of several of these targets has already
commenced.
PT-FI has focused its initial drilling in the New COW Area on two
prospects 30 kilometers and 40 kilometers north of Grasberg that display
anomalous geochemical and magnetic characteristics. Although these
prospects require additional exploratory drilling, initial results
indicate a large mineralized district that covers three times the aerial
extent or approximately 75,000 acres when compared to the original
24,700-acre district that contained the Ertsberg, Grasberg, Ertsberg East,
IOZ, DOZ, Big Gossan and DOM ore bodies. The discovery of widespread
igneous activity, including volcanic rocks, in these new areas indicates
the potential for Grasberg-type stockwork and porphyry deposits as well as
skarn-type copper/gold deposits similar to the Ertsberg, Ertsberg East,
IOZ, DOZ and DOM ore bodies. PT-FI has also initiated drilling programs
for four other prospects. Drilling results are being interpreted. No
assurance can be given that any of these new areas contain commercially
exploitable mineral deposits.
PT-FI's exploration expenses were $31.7 million for 1993, compared to
$12.2 million for 1992.
Milling, Expansion and Production
Milling. Most of the ore from PT-FI's mines moves by a conveyor
system to an ore pass through which it drops to the mill site. At the mill
site, which is located approximately 2,900 meters above sea level, the ore
is crushed and ground. The powdered ore is then mixed in tanks with
chemical reagents and continuously agitated with air. At this stage the
copper-bearing concentrate rises to the top of the tanks from which it is
removed and thickened. The product leaves the mill site as a thickened
concentrate slurry, consisting of approximately 65% solids by weight.
During 1993, the recovery rates for the milling facilities averaged
approximately 87.0% of the copper content and 76.2% of the gold content of
the ore processed, compared to 88.2% and 73.7%, respectively, during 1992.
Expansion. In 1993 PT-FI completed, within budget and ahead of
schedule, the expansion of its production facilities increasing its mining
and milling capacity from 57,000 MTPD to 66,000 MTPD at its Indonesian
complex. During 1992, production averaged 57,600 MTPD. The average mill
throughput during 1993 was 62,300 MTPD. PT-FI has begun work on a further
expansion of its overall mining and milling rate to 115,000 MTPD at an
estimated cost of approximately $685 million, excluding the capital
required for the EIP and other infrastructure improvements, of which
approximately $120 million had been spent through December 31, 1993. This
expansion is expected to be completed by or about year-end 1995. Funding
for this expansion will be obtained from existing cash balances, cash flow
from operations and additional financing, if required. Such expansion
beyond 66,000 MTPD will also require certain Indonesian Government
approvals. This expansion will further PT-FI's goal of approaching annual
copper production of 1.1 billion pounds and annual gold production of
approximately 1.5 million ounces.
Production. In 1993, PT-FI achieved record copper production of
658.4 million recoverable pounds, approximately 6% more than in 1992.
Gold production was a record 786,700 recoverable ounces, an increase of
23% over 1992.
Transportation, Other Infrastructure and Recent Infrastructure
Developments
Transportation. From the mill site, the thickened concentrate is
pumped down two 115 kilometer pipelines to the port site facility at
Amamapare. At the port site the slurry is filtered, dried and stored for
shipping. The concentrate is transported by front-end loaders from the
storage shed to a conveyor belt shiploader system. When ships arrive,
they are loaded at the dock facilities at the port site until they draw
their maximum water. The ships normally move to deeper water, where
loading is completed from shuttling barges.
Other Infrastructure. The location of PT-FI's operations in a remote
and undeveloped area requires that such operations be virtually
self-sufficient. The existing facilities, in addition to those described
above, include an airport, a heliport, a 119 kilometer road with bridges
and tunnels, an aerial service tramway to transport personnel, equipment
and supplies to the mines, a hospital and two town sites with schools,
housing and other required facilities sufficient to support approximately
10,000 persons, including approximately 360 who are located at the port
site.
AFIC was formed in 1993 principally to purchase and operate certain
existing and new infrastructure facilities designed to serve the
residential and community needs associated with the current and expected
long-term expansion of FCX's operations and to facilitate the long-term
economic development of the area of Irian Jaya in which its mining and
milling operations are located. See "Business of the Issuer."
In conjunction with the expansion of the mining and processing
facilities to 115,000 MTPD, the first phase of the EIP is being
implemented. PT-FI has commenced the EIP, the goal of which is to develop
and promote the growth of local and other third party activities and
enterprises in Irian Jaya through the creation of certain necessary
physical support facilities. The assets acquired and to be acquired by
AFIC and one or more Infrastructure Affiliates are part of the EIP. The
full EIP includes plans for various commercial, residential, educational,
retail, medical, recreational, environmental and other infrastructure
facilities to be constructed during the next 10 to 20 years, which
facilities would be available for PT-FI's workforce and others. These
facilities will support PT-FI's expansion of its production by providing
housing and related support facilities for the benefit of PT-FI's
employees and their families and by expanding logistical facilities and
transportation systems in Irian Jaya. The first phase of the EIP
envisages the construction of dwelling units and related power, water and
waste disposal systems, a light industrial park and new small business
development facilities, improvements to the port and airport facilities,
an 84-room guest house with dining, recreational and meeting facilities
near the airport and other general infrastructure facilities. Depending on
the long-term success of PT-FI's exploration program, the total cost of
the EIP, including subsequent phases, could range between $500 million and
$600 million.
Recent Infrastructure Developments. In December 1993, PT-FI
announced the execution of a Letter of Intent with Duke Energy and
PowerLink, pursuant to which PT-FI would sell its existing and
to-be-constructed power generation and transmission assets and certain
other power-related assets to a joint venture (the "Power Joint Venture")
whose ownership consists of Duke Energy (30%), PowerLink (30%), PT-FI
(30%) and an Indonesian investor (10%). The total value of the
transaction is estimated at $200 million and is expected to be concluded
in two phases. The first sale, representing the existing assets, is
expected to exceed $100 million and to occur in mid-1994. The final sale,
representing the to-be-constructed expansion-related assets, is expected
to occur during the first half of 1995. Under the agreement, the Power
Joint Venture will own these assets and be responsible for providing the
electrical power services required by PT-FI at its mining, milling and
support operations in Irian Jaya including the power services required for
the expansion of ore throughput to 115,000 MTPD.
PT-FI has also entered into two separate letters of intent with
respect to the sale to joint ventures of certain aircraft, airport and
related operations (the "Airport Joint Venture") and certain construction
equipment, port facilities and related marine, logistics and related
assets (the "Port Joint Venture"). PT-FI would have a 25% equity interest
in the Airport Joint Venture, with certain Indonesian investors
controlling the remainder. PT-FI would enter into one or more agreements
with the Airport Joint Venture for air transport services for both
passengers and cargo. It is expected that the purchase price of the assets
transferred to the Airport Joint Venture will be approximately $30
million.
The Port Joint Venture is expected to be owned by a multinational
shipping concern and three to five Indonesian investors (one of which is
expected to be ALatieF). PT-FI is not expected to have an equity interest
in the Port Joint Venture. PT-FI would enter into one or more agreements
with the Port Joint Venture for use of the transferred assets. It is
expected that the purchase price of the assets transferred to the Port
Joint Venture will not exceed $100 million.
The foregoing letters of intent are not binding and are subject to
the execution of definitive agreements, financing, and certain Indonesian
Government approvals. No assurance can be given that any of these
transactions will be consummated.
Marketing
PT-FI's copper concentrates, which contain significant gold and
silver components, are sold primarily under long-term U.S.
dollar-denominated contracts, pursuant to which the selling price is based
on world metals prices, generally the London Metal Exchange settlement
prices for Grade A copper metal, less certain allowances. Under a major
long-term contract signed in late 1990, approximately 34% and 44% of the
concentrates produced by PT-FI in 1992 and 1993, respectively, were sold
to a pool of Japanese copper smelting companies. PT-FI also supplies
copper concentrates to other Asian, European and North American smelters
and international trading companies under long-term sales agreements.
Approximately 66% of 1992 copper production was sold under long-term
contracts, with the balance sold on the spot market. Spot sales were
especially high in 1992 because the 57,000 MTPD expansion program was
completed earlier than planned. Virtually all of PT-FI's 1993 production
of copper concentrates was sold under prior commitments, and PT-FI has
commitments from various parties to purchase virtually all of its
estimated 1994 production of copper concentrates.
PT-FI has in place a price protection program that eliminates
exposure to copper price declines below an average of 90 cents per
recoverable pound for estimated copper sales pricing in 1994, while
allowing full benefit to PT-FI from prices above that level. The cost of
the 1994 price protection program, $6 million, is included in product
inventories and is being amortized as an adjustment to revenues as sales
are priced during 1994.
Eastern Mining
FCX's subsidiary Eastern Mining was granted an exploration permit
(the "SIPP") on April 29, 1993 which gives exclusive rights for a limited
period to explore for minerals on 2.5 million acres (the "SIPP Area")
adjacent to the 6.5 million acre exploration area covered by PT- FI's New
COW. Preliminary exploration of the SIPP Area is under way.
A draft of a contract of work ("Eastern Mining Draft") was initialled
on January 30, 1993 by the Ministry of Mines and Energy of the Indonesian
Government and Eastern Mining which covers the SIPP Area. The Eastern
Mining Draft will be submitted to the President of Indonesia, with
execution of a definitive contract of work expected in 1994. The Eastern
Mining Draft, as initialled, provides for a 30-year term and for two
10-year extensions under certain circumstances. Upon execution, an
Indonesian limited liability company will be formed to hold the definitive
contract of work which initially is to be owned 80% by Eastern Mining and
10% by each of PT-II and an unrelated Indonesian corporation.
Purchase of Interest in RTM
In March 1993, FCX acquired a 65% interest in RTM, which is
principally engaged in the smelting and refining of copper in Spain, for
approximately $50 million, excluding transaction costs. In December 1993,
RTM redeemed the remaining 35% interest for approximately $19 million.
RTM has announced plans to expand its smelter production capacity from its
current 150,000 metric tons of metal per year to approximately 180,000
metric tons of metal per year by 1995 at a cost of approximately $50
million. RTM is studying further expansion to as much as 270,000 metric
tons of metal production per year. During 1993, PT-FI supplied RTM with
approximately 90,000 metric tons of copper concentrate and is expected to
supply approximately 150,000 metric tons in 1994, providing for
approximately 20% and 33%, respectively, of RTM's requirements in those
years. Beginning in 1996, PT-FI is expected to provide the RTM smelter
with approximately one-half of its copper concentrate requirements. For
further information concerning RTM, see "Management's Discussion and
Analysis of Financial Condition and Results of Operations" herein, FCX's
Current Report on Form 8-K dated April 13, 1993, as amended May 21, 1993,
and as amended August 5, 1993, incorporated by reference in this
Prospectus (which Current Report includes financial information with
respect to RTM and the RTM acquisition) and FCX's Current Report on Form
8-K dated January 7, 1994 (which includes financial information for the
nine months ended September 30, 1993 as if RTM had been consolidated since
March 31, 1993).
Republic of Indonesia
The economy of Indonesia is based on export commodity agriculture,
the extraction of petroleum, natural gas and other mineral resources,
wholesale and retail trade, and to an increasing extent, manufacturing.
Indonesia has a presidential republic system of government. President
Suharto assumed power in 1966 following an attempted communist coup and
has been in office since then. The Indonesian Government has maintained a
high degree of stability for the past 26 years. President Suharto was
re-elected in March 1993 to serve a sixth consecutive five-year term.
The Indonesian Government has promoted policies designed to help
develop Indonesia economically and has encouraged foreign investment in
numerous areas where such investment would benefit the Indonesian economy.
Indonesia's foreign investment policy is expressed in the 1967 Foreign
Capital Investment Law. It provides basic guaranties of remittance rights
and protection against nationalization, a framework for incentives and
some basic rules as to the other rights and obligations of foreign
investors. PT-FI's rights and obligations relating to taxes, exchange
controls, repatriation and other matters are governed by the New COW which
was concluded pursuant to the 1967 Foreign Capital Investment Law.
PT-FI has had and continues to enjoy a good working relationship with
the Indonesian Government. PT-FI's mining complex was Indonesia's first
copper mining project and was the first major foreign investment made in
Indonesia following the new economic development program instituted by the
Suharto administration in 1967. PT-FI works closely with the various
levels of the Indonesian Government in development efforts in the vicinity
of its operations. PT-FI incurs significant costs associated with
providing health and educational assistance, job training, employment
opportunities, agricultural assistance and other community development
services and facilities for the Indonesian people living in the areas of
its operations. In 1990, PT-FI established a foundation to provide
educational and work opportunities for the benefit of the people of Irian
Jaya. PT-FI has contributed or will contribute at least $10 million to
the foundation for community projects over the next several years. PT-FI
also has in place a long-term business development program to provide
financing for new and emerging businesses, many of which are expected to
be suppliers of goods and services for PT-FI's operations. Over time,
PT-FI anticipates investing $25 million in this program.
FCX has the benefit of political risk insurance from the Overseas
Private Investment Corporation, the Multilateral Investment Guaranty
Agency and commercial insurers, where available, which covers a portion of
its investment in PT-FI. The insurance is primarily designed to cover
certain breach of contract risks.
Research and Development
FTX has maintained engineering and mine development groups in New
Orleans, Louisiana, which provide the engineering, design and construction
supervision activities required to implement new ventures and apply
improvements to existing operations of PT-FI. In February 1993, FTX
outsourced its corporate engineering, research and development, corporate
environmental and corporate safety functions and, to that end, contracted
with a new company initially owned and staffed by former employees of FTX,
Crescent Technology, Inc., that will furnish similar services to PT-FI.
Environmental Matters
The management of FCX believes that it is in compliance with the
environmental laws, rules and regulations in Indonesia and Spain,
respectively. PT-FI had a team of environmental scientists from a
leading Indonesian scientific institution conduct a study to update its
1984 Environmental Evaluation Study, with particular focus on its
66,000 MTPD expansion program. The study has been submitted to the
Indonesian Government. In February 1994, the Indonesian Government
approved an environmental impact study, submitted by PT-FI, with
respect to the proposed expansion of copper production to 115,000 MTPD.
It is possible that both the Indonesian Government and the government
of Spain could revise their environmental laws and/or regulations
periodically. The impact, if any, of such possible revisions on PT-FI's
and RTM's operations, respectively, cannot be accurately predicted.
Both PT-FI and RTM, through FTX, maintain insurance coverage in
amounts deemed prudent for certain types of damages associated with
environmental liabilities which arise from sudden, unexpected and
unforeseen events.
PT-FI has made, and continues to make, expenditures at its operations
for protection of the environment. Public emphasis on environmental
matters can be expected to require both PT-FI and RTM to incur additional
costs, which will be charged against income from future operations. On
analyzing its operations in relation to current and presently anticipated
environmental requirements, neither PT-FI nor RTM anticipates that these
investments will have a significant adverse impact on its future
operations, liquidity, capital resources or financial position.
Employees
In order to allow access to the FTX employee benefit plans for United
States citizens employed full time in PT- FI's business, such persons are
formally employed by a United States subsidiary of FTX. For all
operational purposes, however, such individuals are regarded as employees
of PT-FI and references herein to PT-FI employees include such
individuals.
FCX, PT-FI and FTX are parties to a Management Services Agreement
pursuant to which FTX furnishes various management services to FCX and
PT-FI. See "Relationship of the FCX Group with the FTX Group--Management
Services Agreement."
As of December 31, 1993, PT-FI had a total of 6,054 employees
(approximately 94% Indonesian), compared with 5,300 employees
(approximately 92% Indonesian) at year-end 1992. In addition, as of
December 31, 1993, PT-FI had approximately 6,600 contract workers, most of
whom were Indonesian. Approximately 40% of PT-FI's Indonesian employees
are members of the All Indonesia Workers' Union, which operates under
Indonesian Government supervision, and with which PT-FI has a labor
agreement running until September 30, 1995 covering PT-FI's hourly paid
Indonesian employees. PT-FI has experienced no work stoppages in recent
years, and relations with the union have generally been good. The
management of FCX believes that PT-FI has good relations with all other
personnel employed in its operations.
Competition
PT-FI competes with other mining companies in connection with the
sale of its mineral concentrates and the recruitment and retention of
qualified personnel. Some competing companies possess financial resources
equal to or greater than those of PT-FI. The management of FCX believes
that PT-FI is one of the lowest cost copper producers in the world, taking
into account customary by-product credits for related gold and silver
production.
Legal Proceedings
Although each of FCX and PT-FI from time to time is involved in
various legal proceedings of a character normally incident to the ordinary
course of its business, the management of each of FCX and PT-FI believes
that the potential liability in any known pending or threatened proceeding
will not have a material adverse effect on the financial condition or
results of operations of FCX or PT-FI, respectively. Each of FCX and
PT-FI, through FTX, maintains liability insurance to cover some, but not
all, potential liabilities normally incident to the ordinary course of its
business, as well as other insurance coverages of the types customary in
its business, with such coverage limits as management deems prudent.
BUSINESS OF THE ISSUER
The Issuer is a wholly owned subsidiary of FCX that has been
organized for the purpose of issuing the Guaranteed Notes and to lend the
net proceeds thereof to AFIC and one or more Infrastructure Affiliates.
The Indenture prohibits the Issuer from engaging in any business
activities other than issuing the Guaranteed Notes and applying the
proceeds therefrom as provided in the Indenture, enforcing its rights
under the PT-FI Note and taking such actions as are called for by the
Indenture. The Indenture also prohibits the Issuer from issuing any
additional securities. The Issuer was incorporated in The Netherlands in
1994.
AFIC and any Infrastructure Affiliate will use the net proceeds
loaned by the Issuer to purchase certain existing and new infrastructure
assets that are part of the EIP. The majority shareholder of AFIC is, and
the majority shareholder of any Infrastructure Affiliate will be, ALatieF,
which is part of ALatieF Group, a major Indonesian retail and property
management company. The acquired assets will be managed by AFIC or an
Infrastructure Affiliate and will be made available to PT-FI and its
employees and designees under arrangements that will provide the
shareholders of AFIC or such Infrastructure Affiliate with a guaranteed
minimum return on investment. See "Master Services Agreements."
AFIC and one or more Infrastructure Affiliates are expected to
purchase an aggregate of approximately $180 million in additional assets.
Funding will be provided by equity contributions from AFIC's shareholders
($60 million) and debt ($120 million, which will be funded with the net
proceeds of the Guaranteed Notes offered hereby).
The location of PT-FI's operations in a remote and undeveloped area
requires that such operations be virtually self-sufficient. The
facilities currently include an airport, a heliport, a 119 kilometer road
with bridges and tunnels, an aerial service tramway to transport
personnel, equipment and supplies to the mines, a hospital and two town
sites with schools, housing and other required facilities sufficient to
support approximately 10,000 persons. In conjunction with the expansion
of the mining and processing facilities to 115,000 MTPD, the first phase
of the EIP is currently being implemented.
The first purchase of assets by AFIC was completed in December 1993.
Most of the assets purchased are located at Tembagapura, on the access
road to PT-FI's mining area. The buildings purchased include
dormitory-style residential properties and associated food service
facilities, office, security, shop and warehouse facilities, recreation
centers and a shopping center.
Future purchases are expected to cover similar existing facilities
serving PT-FI's Indonesia operations. In addition, as part of the EIP,
PT-FI is planning and developing a new residential community, New Town,
to relieve development constraints at Tembagapura. New Town will offer a
variety of commercial, administrative civic and cultural facilities. The
commercial cluster will include a department store, supermarket, bank,
restaurants and a variety of retail service facilities. The first phase
of the New Town development is planned to include housing for 3,500
persons and is scheduled to be completed by December 1995. A light
industrial park, to be located south of New Town, is planned to serve as
the "hub" distribution, logistics and support staging area for PT-FI's
current and future operations.
Finally, to accommodate the increasing number of visitors and guests
of PT-FI, an 84-room guest house is being developed at Timika. This
facility will include a main lodge building, guest cottage and
recreational facilities. Completion is scheduled for June 1994. See
"Business of FCX--Transportation, Other Infrastructure and Recent
Infrastructure Developments."
Certain assets to be purchased by AFIC and any Infrastructure
Affiliate have not been identified and the Issuer will have no control
over the selection of such assets. Under the Joint Venture Agreement (as
defined below), PT-FI has certain rights to substitute the assets sold to
AFIC. See "Special Considerations -- Certain Infrastructure Properties
Not Yet Identified" and "--AFIC."
Master Services Agreements
AFIC and any Infrastructure Affiliate will enter into one or more
Master Services Agreements with PT-FI pursuant to which AFIC or such
Infrastructure Affiliate will make available to PT-FI, its affiliates and
employees or designated third parties, certain infrastructure assets
acquired from PT-FI and certain services in connection therewith. The
Master Services Agreements will provide that the fees paid by PT-FI for
use of such assets for any period will not be less than the reasonable
expenses of AFIC or such Infrastructure Affiliate for such period,
including, without limitation, principal of, interest on and Underlying
Additional Amounts with respect to the Underlying Notes. PT-FI has
expressly agreed that all amounts required to be paid with respect to
AFIC's outstanding debt, the Underlying Notes and any Master Services
Agreement will be deemed to be "reasonable" for this purpose; however, if
AFIC or any Infrastructure Affiliate incurs "unreasonable" expenses,
PT-FI's covenant would not require reimbursement in respect of those
amounts, with the effect that AFIC or such Infrastructure Affiliate, after
paying those expenses, would be left with insufficient funds to make
required payments on the Underlying Notes. All payments by PT-FI under the
Master Services Agreements will be made in U.S. dollars. AFIC and any
Infrastructure Affiliate will pledge their rights under their respective
Master Services Agreements as security for the Underlying Notes.
The Master Services Agreements may not be amended without the consent
of the holders of a majority in outstanding principal amount of the
Guaranteed Notes unless (i) such amendment does not reduce the amounts
payable by PT-FI and third parties to AFIC or an Infrastructure Affiliate
for any period prior to the stated maturity of the Guaranteed Notes to an
amount less than an amount sufficient to cover all of the expenses of AFIC
or such Infrastructure Affiliate with respect to the Underlying Notes for
such period and (ii) such amendment does not otherwise adversely affect
the interests of the holders of the Guaranteed Notes. See "Description of
the Guaranteed Notes."
AFIC
Pursuant to the Joint Venture Agreement between ALatieF and PT-FI
dated March 11, 1993 (the "Joint Venture Agreement"), ALatieF and PT-FI
agreed to organize AFIC for the purpose of purchasing from PT-FI and
operating certain existing and new infrastructure properties that are part
of the EIP. It is expected that a similar agreement will be entered into
with respect to each Infrastructure Affiliate. AFIC's purpose is to serve
the residential and community needs associated with the expected long-term
expansion of PT-FI's operations and to facilitate the long-term economic
development of the area of Irian Jaya in which its mining and milling
operations are located.
PT-FI and ALatieF initially purchased shares of AFIC's equity for an
aggregate price of $30 million. ALatieF currently owns two-thirds of the
outstanding shares and PT-FI currently owns one-third. ALatieF and PT-FI
have agreed to contribute an additional $60 million to AFIC's authorized
capital in the same proportion as their current share ownership in
installments through December 31, 1995. If either PT-FI or ALatieF
defaults on the payment of the subscription price, the non-defaulting
party will have the right to subscribe for the shares to be subscribed for
by the defaulting party and to acquire all (but not part) of the
defaulting party's shares. See "Special Considerations -- Sources of
Capital."
PT-FI has agreed to be responsible for arranging financing for AFIC
in a principal amount of up to $180 million for a seven-year period ending
in 2000. Pursuant to this commitment, PT-FI arranged the loan under the
AFIC Credit Agreement in the principal amount of $60 million and is
required to arrange additional financing in the principal amount of $120
million. AFIC will be solely responsible for refinancing at the end of the
initial seven-year term.
Pursuant to the Joint Venture Agreement, ALatieF and PT-FI have
generally agreed not to transfer any shares of AFIC to any other person,
subject to certain exceptions and except, in the case of ALatieF, with the
consent of AFIC's shareholders. Any transfer of shares pursuant to the
Joint Venture Agreement is subject to the receipt of all necessary
approvals of the Indonesian Government. Each party may transfer its
shares to an affiliate that has a net worth acceptable to the other party
(or if the transferring party undertakes to guarantee such affiliate's
fulfillment of its obligations under the Joint Venture Agreement).
ALatieF has the non-transferable option to acquire all of AFIC's
shares owned by PT-FI or any of its affiliates on or after October 26,
2000. The purchase price for such shares would be equal to the par value
of such shares if the option is exercised on October 26, 2000 or the fair
market value of such shares (determined in accordance with the Joint
Venture Agreement) if exercised thereafter.
ALatieF has agreed that if it wishes to accept a bona fide offer from
a third party to purchase any or all of its shares of AFIC, PT-FI will
have a right of first refusal to acquire all of the shares proposed to be
sold on the terms and conditions specified in the offer. If the party
owning a majority of AFIC's shares of capital stock (currently ALatieF)
receives an offer from an Indonesian person (or a group including a
certain portion of Indonesian persons) to purchase all of such party's
shares, such party will, if requested by the other party, seek to include
the other party's shares in that sale.
If ALatieF elects to pursue a public offering of the shares of AFIC,
the parties have agreed to cooperate to obtain all approvals necessary or
desirable for AFIC to be authorized to offer its shares to the public. If
ALatieF elects to have any of AFIC's shares then owned by it included in
such offering, PT-FI has agreed to allow the same percentage of its shares
of AFIC to be included in such offering.
The Joint Venture Agreement provides that AFIC's Board of Directors
will consist of a maximum of three members, all of whom will be nominated
by ALatieF, and the Board of Commissioners will consist of at least three
members who will be nominated by ALatieF and PT-FI in proportion to their
respective holdings of shares of AFIC. The Board of Directors of AFIC is
responsible for the management and day-to-day operations of AFIC. The
approval of a majority of the members of the Board of Commissioners,
including at least one Commissioner elected from persons nominated by
PT-FI, is required before the Board of Directors can cause AFIC to take
certain actions, including (i) adoption of an annual operating and capital
budget, (ii) borrowing money, binding AFIC as guarantor or granting
certain security interests, (iii) acquiring or selling property having a
value in excess of limits set by the Board of Commissioners from time to
time, (iv) proposing any amendment to AFIC's Articles of Association, (v)
participating in any other business enterprise, including establishing any
subsidiary or (vi) distributing to shareholders the proceeds arising from
the sale of any infrastructure assets.
PT-FI and ALatieF have agreed to cause AFIC to use its equity capital
contributed by the parties and the proceeds of the financing to acquire
infrastructure properties from PT-FI for an aggregate purchase price of
$180 million in addition to the $90 million of infrastructure assets
previously acquired by AFIC. The purchase price of such assets will be
equal to the audited construction cost thereof. If AFIC acquires
infrastructure assets that are under construction, AFIC is required to pay
to PT-FI a construction management fee equal to 2.5% of the purchase price
thereof, unless waived by PT-FI.
The purchase price for each asset will be equal to the total cost of
construction of the asset, and the total price for all assets listed in
the Joint Venture Agreement (including those previously acquired) will be
$270 million. If the actual cost of the assets to be sold to AFIC is less
than $270 million, PT-FI will make available for acquisition by AFIC
additional properties approved by ALatieF so that the cost of all acquired
infrastructure properties is not less than $270 million.
PT-FI and AFIC have agreed to cooperate with each other to cause the
geographical area encompassing the site of AFIC's assets to be established
as an economic development zone so that they will enjoy certain benefits,
including relief from certain taxes and duties. Although an economic
development zone has not been established, PT-FI has received letters from
the Director General of Taxes and the Director General of Customs and
Excise which provide PT-FI relief from postponed import duties,
value-added taxes and other taxes that would have become due at the time
of any transfer of assets to AFIC.
The Joint Venture Agreement provides that PT-FI may at any time
reacquire any asset previously transferred to AFIC if PT-FI determines
that a commercially exploitable deposit of minerals exists under, near or
as part of such asset, if PT-FI requires all or part of such asset as the
location of equipment or other facilities in connection with its mining
and milling activities, if PT-FI determines that the asset has become or
is likely to become a physical hazard to any person or property or if
PT-FI reasonably determines that such reacquisition is necessary or
advisable to enable it to comply with the New COW. In the event of such a
reacquisition, AFIC has the option to require PT-FI to construct a
property substantially similar to the reacquired asset, substitute another
asset if available or pay a repurchase price equal to the greater of the
fair market value of the asset or the debt encumbering such asset.
With respect to each infrastructure asset acquired from PT-FI, AFIC
has agreed to comply fully with the standards set forth in the purchase
and sale agreement (or a services agreement entered into for such
property), for the management, operation and maintenance of such property.
Each service contract (including the Master Services Agreements) will be
structured so that the revenues received by AFIC under such contract and
from third parties will result in an annual after-tax cash flow to AFIC of
not less than 15% on equity and 10% on debt on the original purchase price
of the acquired infrastructure assets in each of the first seven years
ending December 2000. Thereafter, for so long as PT-FI conducts mining
operations in that area of Irian Jaya where the acquired infrastructure
assets are located, the rate of return will be fixed at 11.67% per annum
after tax applied to the original purchase price of the acquired
infrastructure assets, calculated in accordance with the Joint Venture
Agreement. PT-FI has agreed that until December 2000, subject to certain
exceptions, it will subordinate or assign its share of any profits
distributed by AFIC to ALatieF so that ALatieF will receive 100% of all
distributable cash flow of AFIC in the most tax effective manner for both
parties.
MANAGEMENT OF FCX
Set forth below is information regarding the names, ages, principal
occupations, other directorships and positions over the past five years of
the directors and executive officers of FCX. Certain information
regarding compensation and securities ownership of these directors and
officers is incorporated by reference. See "Incorporation of Documents By
Reference."
Directors
The following table shows, as of December 31, 1993, the ages,
principal occupations and employment during the past five years, other
directorships and positions with FCX of each of its current directors, and
the years in which they first became directors of FCX. None of the
organizations referred to in such table is an affiliate of FCX except for
FTX and PT-FI.
Principal Occupations Year First
Other Directorships and Positions Elected a
Name of Director Age Over the Past Five Years Director
- ----------------- ---- --------------------------------- ----------
Leland O. Erdahl 65 Consultant. President and Chief 1988
Executive Officer of Albuquerque
Uranium Corp., producer and seller
of uranium concentrates, until
1992. President and Chief Executive
Officer of Stolar Inc., mining
industry services, products, and
equipment, until 1991. Director of
Canyon Resources Corporation, Hecla
Mining Company and Original Sixteen
to One Mine, Inc. Trustee of Freedom
Investment Trusts I, II and III.
Ronald Grossman 57 Consultant, Commissioner of PT-FI. 1988
Senior Vice President of FCX until
1993. Executive Vice President and
Chief Financial Officer of FTX
until 1993. Senior Vice President
of FTX until 1992.
Rene L. Latiolais 51 Director, President and Chief 1993
Operating Officer of FTX. Commissioner
of PT-FI. Executive Vice President
of FTX until 1993. Senior Vice
President of FTX until 1992.
George A. Mealey 60 President and Chief Executive Officer 1988
of FCX. Executive Vice President of
FTX. Director and Executive Vice
President of PT-FI.
James R. Moffett 55 Chairman of the Board of FCX. 1992
Director, Chairman of the Board and
Chief Executive
Officer of FTX. President Commissioner
of PT-FI.
Wolfgang F. Siege 61 Senior Vice President of Kreditanstalt 1988
fur Wiederaufbau, a bank owned by the
Federal Republic of Germany (the "FRG")
and the states comprising the FRG.
Elwin E. Smith 71 Sole proprietor of Elwin Smith Inter- 1988
national, consultants to global
industrial corporations.
Eiji Umene 68 Executive Advisor of Nippon Steel 1992
Corporation. Managing Director of
Nippon Steel Corporation and President
of its subsidiary, Nippon Steel
U.S.A., Inc., until 1989. Director of
Schlumberger Limited.
Executive Officers
In addition to the elected executive officers of FCX (the "Elected FCX
Executive Officers"), certain officers and employees of affiliates of FCX are
deemed by FCX to be executive officers of FCX (the "Designated FCX Executive
Officers") for purposes of the federal securities laws. Listed below are the
names and ages, as of December 31, 1993, of each of the Elected FCX Executive
Officers and the Designated FCX Executive Officers, together with the
principal positions and offices with FCX, FTX and PT-FI held by each. All
officers of FCX, FTX and PT-FI are elected or appointed for one-year terms,
subject to earlier death, resignation or removal.
Name Age Position or Office
---- --- -------------------------------
Richard C. Adkerson* 47 Senior Vice President of FTX.
Commissioner of PT-FI.
John G. Amato 49 General Counsel of FCX. General
Counsel of FTX.
Commissioner of PT-FI.
Richard H. Block* 43 Senior Vice President of FTX.
Thomas J. Egan* 49 Senior Vice President of FTX.
Charles W. Goodyear* 35 Senior Vice President of FTX.
Commissioner of PT-FI.
Hoediatmo Hoed* 54 President Director of PT-FI.
W. Russell King* 44 Senior Vice President of FTX.
Rene L. Latiolais* 51 Director of FCX. Director,
President and
Chief Operating Officer of FTX.
Commissioner
of PT-FI.
George A. Mealey 60 Director, President and Chief
Executive Officer of FCX. Executive
Vice President of FTX. Director and
Executive Vice President of PT-FI.
James R. Moffett 55 Director and Chairman of the Board
of FCX. Director, Chairman of the
Board and Chief Executive Officer
of FTX. President Commissioner of
PT-FI.
- --------------------
* This individual is a Designated FCX Executive Officer and not an Elected FCX
Executive Officer. He is deemed by FCX to be a Designated FCX Executive
Officer solely for purposes of the federal securities laws in view of his
position and responsibilities as an executive officer of FTX or PT-FI as
applicable; he holds no actual position as an officer of FCX.
The individuals listed above, with the exceptions of Messrs. Adkerson,
Amato and Goodyear, have served FCX, FTX or PT-FI in various executive
capacities for at least the last five years. Until 1989, Mr. Adkerson was a
partner in Arthur Andersen & Co. and Mr. Goodyear was a Vice President of
Kidder, Peabody & Co. Incorporated, an investment banking firm. During the
past five years and prior to that period, Mr. Amato was engaged in the private
practice of law and served as outside counsel to FCX, FTX and PT-FI.
RELATIONSHIP OF THE FCX GROUP
WITH THE FTX GROUP
Ownership of Stock
FTX currently owns approximately 70% of the combined total outstanding
shares of FCX's Class A Common Stock and Class B Common Stock. Through this
ownership, FTX has, and will continue to have, the ultimate ability to control
FCX and, through the direct ownership by FCX of 81.28% of PT-FI's capital
stock, to control PT-FI. FTX and its consolidated subsidiaries other than FCX
and PT-FI (the "FTX Group") have and will continue to have a variety of other
corporate relationships with FCX and PT-FI. In addition to such other
obligations as it may assume, FTX, as a controlling stockholder of FCX, has a
fiduciary obligation under Delaware law to act in good faith and to exercise
its rights of control in a manner that is fair and reasonable to the other
stockholders of FCX.
FTX, as FCX's ultimate controlling stockholder, controls and will
continue to have the power to control the election of directors and decisions
with respect to the use of cash generated by FCX and its subsidiaries (the
"FCX Group"), including those with respect to the FCX Group's dividend policy.
The determination of FTX as to the use of cash generated by the FCX Group may
be affected by factors related to the cash requirements of the FTX Group. FTX
also has sufficient voting control under Delaware corporate law to effect
major corporate actions such as "going private" transactions and mergers
without the concurrence of other stockholders.
Although PT-FI has in the past relied on FTX to provide many management,
administrative and technical services and will continue, under the Management
Agreement discussed below, to make use of these services, it has always
operated as a separate unit within FTX and will continue to do so.
Under the terms of a credit agreement dated as of June 1, 1993, as
amended (the "PT-FI Credit Agreement"), failure by FTX to maintain control of
PT-FI or direct or indirect ownership of at least 50.1% of the PT-FI common
stock would allow acceleration of the indebtedness thereunder. Similarly, for
FCX to retain the benefits of insurance provided by the Overseas Private
Investment Corporation, it is necessary for at least a majority of FCX's
capital stock and of each class thereof to be held beneficially by U.S.
persons.
Conflicts of Interests
FTX is involved in the exploration for and extraction of natural
resources. To avoid conflicts between the interests of the various FTX
entities with respect to any future opportunities which may arise, it is
anticipated that the FCX Group will have a priority with respect to copper
exploration, development and mining in Indonesia. If the FCX Group determines
for any reason not to pursue any opportunity within its area of priority, then
FTX will be free to offer it to another FTX entity as it sees fit. It may be
determined that it would be impractical for the FCX Group to act with respect
to a particular exploration or development opportunity outside the mining area
covered by the contract of work which preceded the New COW. For example, due
to the size of the exploration area covered by the New COW, development of
certain mineral prospects may be beyond the financial or other resources of
FCX and might be undertaken by FTX alone or in conjunction with one or more
third parties, which could include one of FTX's other subsidiaries. In
addition, acquisition of certain mineral prospects or mining companies may be
beyond the financial or other resources of FCX and might be undertaken by FTX
alone or in conjunction with one of its other subsidiaries. Such development
or acquisitions could lead to competition between the FCX Group and members of
the FTX Group.
Management Agreement
Pursuant to the terms of a Management Services Agreement (the "Management
Agreement"), FTX furnishes general executive, administrative, financial,
accounting, legal, environmental, insurance, personnel, engineering, tax,
research and development, sales and certain other services to FCX and PT-FI.
The nature and extent of the services provided under the Management Agreement
are similar to those historically provided by FTX. The services of each of
the executive officers of FCX and certain officers and employees of PT-FI are
provided to FCX and PT-FI under the Management Agreement.
The Management Agreement is subject to termination by any party on any
December 31 if six months' prior written notice is given. FCX and PT-FI have
agreed to reimburse FTX at FTX's cost, including allocated overhead, for such
services on a monthly basis. The Management Agreement also provides for the
use of the services of certain of FCX's and PT-FI's employees by FTX and its
subsidiaries on a similar cost reimbursement basis. The cost of such services
is reimbursed monthly. The total amount charged by FTX to FCX and PT-FI,
excluding any amounts paid with respect to employees seconded to PT-FI from
FTX, was $33.4 million, $44.9 million and $49.0 million (excluding $10.7
million of restructuring costs) for the years ended December 31, 1991, 1992
and 1993, respectively.
In February 1993, FTX outsourced its corporate engineering, research and
development, environmental and safety functions and, to that end, contracted
with a new company initially owned and staffed by former employees of FTX.
The new company will furnish services similar to services provided by FTX in
the past, and is anticipated to save PT-FI significant costs.
Debt Instruments
The FTX Group maintains a revolving credit agreement with a syndicate of
banks, dated as of June 1, 1993, as amended and restated (the "FTX Credit
Agreement"), to provide funds for FTX's general corporate purposes. The FTX
Credit Agreement provides that, under certain circumstances relating to excess
borrowings thereunder or events of default thereunder, FTX and such affiliates
must pledge stock owned by them, including the Class A Common Stock and Class
B Common Stock of FCX owned directly by FTX, to secure outstanding borrowings
under the FTX Credit Agreement. As of the date of this Prospectus, no FCX
stock was pledged under the FTX Credit Agreement. To the extent FTX and its
other subsidiaries incur additional debt, the amount available to PT-FI under
the PT-FI Credit Agreement may be reduced.
DESCRIPTION OF THE GUARANTEED NOTES
General
The Guaranteed Notes will be issued under an indenture to be dated as of
, 1994 (the "Indenture"), by and among the Issuer, FCX and Chemical Bank, as
Trustee (the "Trustee"). FCX will provide, without charge, to each person,
including any beneficial owner, to whom this Prospectus is delivered, upon
such person's written or oral request, a copy of the Indenture relating to the
Guaranteed Notes and the Guaranty. Any such request should be delivered to
FCX, c/o FTX at 1615 Poydras Street, New Orleans, Louisiana 70112 (telephone
(504) 582-4000), attention: Michael C. Kilanowski, Jr., Secretary. The
following summaries of certain provisions of the Indenture do not purport to
be complete and are subject to, and are qualified in their entirety by
reference to, all the provisions of the Indenture, including the definitions
therein of certain terms included herein. Wherever particular sections or
defined terms of the Indenture are referred to herein, such sections or
defined terms shall be incorporated herein by reference. Unless the context
otherwise requires, references to sections and defined terms refer to sections
and defined terms of the Indenture.
The Guaranteed Notes will be senior obligations of the Issuer
unconditionally guaranteed on a senior basis by FCX, limited to $120 million
in aggregate principal amount. The Guaranteed Notes will be issued in
registered form, without coupons, in denominations of $1,000 and any integral
multiple thereof. The principal of, premium, if any, Additional Amounts, if
any, and interest on the Guaranteed Notes will be payable, and the Guaranteed
Notes will be exchangeable and transferable, at the office or agency of the
Issuer maintained for such purpose in The City of New York; provided, that
payment of interest may be made at the option of the Issuer by check mailed to
the holders of the Guaranteed Notes. Unless otherwise designated by the
Issuer, the office of the Trustee maintained for such purpose shall be the
Trustee's office or agency in The City of New York. No service charge will be
made for any registration of transfer or exchange of Guaranteed Notes, but the
Issuer may require payment of a sum sufficient to cover any tax, assessment or
other governmental charge payable in connection therewith.
The Indenture contains no restrictions on the ability of FCX to incur
additional debt or to pay dividends or other distributions to its
stockholders.
Maturity, Interest and Principal
The Guaranteed Notes will mature on , 2001. Interest on the
Guaranteed Notes will accrue at a rate of % per annum, and will be payable
semi-annually on each and commencing , 1994, to the
holders of record of the Guaranteed Notes on the immediately preceding
and .
There is currently no United States, Netherlands or Indonesian
withholding tax applicable to payments on the Guaranteed Notes. If any such
withholding tax is imposed in the future, the Issuer will, subject to certain
exceptions, pay Additional Amounts so that the net amount received by the
holder of a Guaranteed Note after such withholding will be equal to the amount
that would have been received if no tax had been applicable.
"Additional Amounts" means, subject to certain limitations and exceptions
(as set forth below), payment by the Issuer to a holder of a Guaranteed Note
of such amounts as may be necessary so that every net payment of principal of,
or interest on, the Guaranteed Notes, after deduction or withholding for or on
account of any present or future tax, assessment or other governmental charge
imposed upon such holder by reason of the making of such payment or deemed
payment by the United States, The Netherlands and Indonesia or any political
subdivision or taxing authority of or in any of them, will not be less than
the amount provided for in the Guaranteed Notes. However, the payments for or
on account of the following shall be excluded from the above definition of
"Additional Amounts":
(a) any tax, assessment or other governmental charge imposed by the
United States or any political or taxing authority thereof or therein
which would not have been imposed but for (i) the existence of any present
or former connection between such holder (or between a fiduciary, settlor,
beneficiary, member or shareholder of, or possessor of a power over, such
holder, if such holder is an estate, trust, partnership or corporation)
and the United States, including, without limitation, such holder (or such
fiduciary, settlor, beneficiary, member, shareholder or possessor) being
or having been a citizen or resident thereof or being or having been
present or engaged in a trade or business therein or having had a
permanent establishment therein, (ii) such holder's past or present status
as a personal holding company, foreign personal holding company or
controlled foreign corporation with respect to the United States or as a
corporation which accumulates earnings to avoid United States federal
income tax or (iii) such holder's past or present status as the actual or
constructive owner of 10% or more of the total combined voting power of
all classes of stock entitled to vote of FCX or certain affiliates of FCX;
(b) any tax, assessment or other governmental charge imposed by The
Netherlands or any political subdivision or taxing authority thereof or
therein which would not have been imposed but for the existence of any
present or former connection between such holder (or between a fiduciary,
settlor, beneficiary, member or shareholder of, or possessor of a power
over, such holder, if such holder is an estate, trust, partnership or
corporation) and The Netherlands, including, without limitation, such
holder (or such fiduciary, settlor, beneficiary, member, shareholder or
possessor) being or having been a citizen, resident or deemed resident
thereof or being or having been present or engaged in a trade or business
therein or having had a permanent establishment therein;
(c) any tax, assessment or other governmental charge imposed by
Indonesia or any political subdivision or taxing authority thereof or
therein which would not have been imposed but for the existence of any
present or former connection between such holder (or between a fiduciary,
settlor, beneficiary, member or shareholder of, or possessor of a power
over, such holder, if such holder is an estate, trust, partnership or
corporation) and Indonesia including, without limitation, such holder (or
such fiduciary, settlor, beneficiary, member, shareholder or possessor)
being or having been a citizen or resident thereof or being or having been
present or engaged in a trade or business therein or having had a
permanent establishment therein;
(d) any tax, assessment or other governmental change that would not
have been imposed but for the presentation of a Guaranteed Note for
payment on a date more than 15 days after the date on which such payment
became due and payable or the date on which payment thereof is duly
provided for, whichever occurs later;
(e) any estate, inheritance, gift, sales, transfer, personal
property or similar tax, assessment or other governmental charge;
(f) any tax, assessment or other governmental charge which is
payable otherwise than by withholding from payments of the principal of or
interest on a Guaranteed Note;
(g) any tax, assessment or other governmental charge which would not
have been imposed but for the failure of the holder to comply with
certification, information or other reporting requirements concerning the
nationality, residence, identity or connections of the holder or
beneficial owner of such Guaranteed Note (i) with the United States, if
the tax, assessment or governmental charge is imposed by the United States
or any political subdivision or taxing authority thereof or therein, (ii)
with The Netherlands, if the tax, assessment or governmental charge is
imposed by The Netherlands or any political subdivision or taxing
authority thereof or therein, and (iii) with Indonesia, if the tax,
assessment or governmental charge is imposed by Indonesia or any political
subdivision or taxing authority thereof or therein, if in each case such
compliance is required by statute or by regulation of the respective
taxing authority to establish entitlement to an exemption from such tax,
assessment or other governmental charge; or
(h) any combination of items (a), (b), (c), (d), (e), (f) and (g);
nor shall Additional Amounts be paid to any holder who is a fiduciary or
partnership or other than the sole beneficial owner of the Guaranteed Notes to
the extent the beneficiary or settlor with respect to such fiduciary or a
member of such partnership or a beneficial owner of the Guaranteed Notes would
not have been entitled to payment of Additional Amounts had such
beneficiary, settlor, member or beneficial owner been the holder of the
Guaranteed Note.
Guaranty
Payment of the principal of, premium, if any, Additional Amounts, if any,
and interest on the Guaranteed Notes as well as any obligations of FCX to
repurchase the Guaranteed Notes following any Repurchase Event (as defined
below) or an Asset Disposition Offer (as defined below) will be
unconditionally guaranteed on a senior basis by FCX.
Application of Proceeds under Indenture
The proceeds of the Offering of the Guaranteed Notes will be loaned by
the Issuer to AFIC or one or more Infrastructure Affiliates and used to
purchase infrastructure assets from PT-FI. See "Use of Proceeds." The
Guaranteed Notes will not be secured by any infrastructure assets or the
Underlying Notes. However, the obligations of AFIC and each Infrastructure
Affiliate to the Issuer pursuant to the Underlying Notes will be secured by a
pledge of the Master Services Agreements, as described below. Prior to the
time that AFIC or an Infrastructure Affiliate purchases infrastructure assets
from PT-FI, the proceeds from the Guaranteed Notes will be loaned to PT-FI on
a senior, unsecured basis, as described below. The Indenture permits the
Issuer to subsequently advance to PT-FI, AFIC or an Infrastructure Affiliate
the proceeds of any repayments of the PT-FI Note or the Underlying Notes. The
terms of the Underlying Notes are designed, together with the PT-FI Note, to
provide the Issuer with funds in amounts and at times sufficient to allow the
Issuer to meet all of its obligations on the Guaranteed Notes.
PT-FI Note
The proceeds from the sale of the Guaranteed Notes will initially be
loaned by the Issuer to PT-FI on a senior, unsecured basis, and PT-FI will
issue the PT-FI Note to the Issuer. The PT-FI Note will initially be in an
aggregate principal amount equal to the aggregate principal amount of the
Guaranteed Notes. The PT-FI Note will bear interest at a rate equal to the
interest rate on the Guaranteed Notes plus up to .25% per annum, payable
semi-annually on the interest payment dates on the Guaranteed Notes. The PT-FI
Note will require PT-FI to pay to the Issuer such Underlying Additional
Amounts as will allow the Issuer to pay any Additional Amounts that may be
required to be paid by the Issuer on the Guaranteed Notes. The PT-FI Note will
mature on , 2001. The PT-FI Note will be subject to prepayment, in
whole or in part, upon demand of the Issuer at any time. PT-FI will not have
the right to prepay voluntarily the PT-FI Note. PT-FI may, with the Issuer's
consent, reborrow funds it has previously repaid to the Issuer, and the
principal amount of the PT-FI Note will be increased accordingly.
Underlying Notes
The proceeds from the sale of the Guaranteed Notes are intended to be
loaned by the Issuer to AFIC and one or more Infrastructure Affiliates to fund
the purchase of infrastructure assets from PT-FI. Certain of the
infrastructure assets to be acquired from PT-FI have not been identified. The
first acquisition of infrastructure assets with the proceeds from the
Guaranteed Notes is anticipated to take place in mid-1994.
Prior to the time that AFIC or an Infrastructure Affiliate purchases
infrastructure assets from PT-FI, it will notify the Issuer of such planned
purchase, the aggregate purchase price for such assets, and the U.S. dollar
amount to be borrowed by AFIC or such Infrastructure Affiliate to fund that
purchase. The Issuer will require PT-FI to repay all or a portion of the PT-FI
Note in an amount equal to the U.S. dollar amount to be loaned by the Issuer
to AFIC or such Infrastructure Affiliate. AFIC or such Infrastructure
Affiliate will issue an Underlying Note in an amount equal to the amount
loaned to it by the Issuer. The repayment of the PT-FI Note and the issuance
of the Underlying Note will occur simultaneously.
The Underlying Notes will be denominated in U.S. dollars, will bear
interest at a rate equal to the interest rate on the Guaranteed Notes plus up
to .25% and will be subject to redemption at any time in whole or in part (i)
in connection with the repayment of the Guaranteed Notes, (ii) to fund a loan
by the Issuer to PT-FI on the same terms as the PT-FI Note or (iii) to fund a
loan by the Issuer to AFIC or an Infrastructure Affiliate on the same terms as
the Underlying Notes.
There is currently a 10% withholding tax applicable to payments on the
Underlying Notes and the PT-FI Note. AFIC, any Infrastructure Affiliate and
PT-FI will pay the Underlying Additional Amounts so that the amount received
by the Issuer after such withholding will be equal to the amount that would
have been received if no such tax had been payable.
"Underlying Additional Amounts" means payment to the Issuer by PT-FI,
AFIC or an Infrastructure Affiliate of such amounts as may be necessary so
that every net payment of principal of, or interest on, the PT-FI Note or any
Underlying Note, as the case may be, after deduction or withholding for or on
account of any present or future tax, assessment or other governmental charge
imposed upon such holder by reason of the making of such payment or deemed
payment by the United States, The Netherlands and Indonesia or any political
subdivision or taxing authority of or in any of them, will not be less than
the amount provided for in the PT-FI Note or such Underlying Note, as the case
may be.
The Underlying Notes will be secured by a pledge by AFIC or the
applicable Infrastructure Affiliate of all rights under the Master Services
Agreement entered into by AFIC or such Infrastructure Affiliate in connection
with the purchase of infrastructure assets with the proceeds from the
Underlying Notes. See "Business of the Issuer--Master Services Agreements."
The Underlying Notes will provide that AFIC or such Infrastructure Affiliate
will not amend, waive or terminate that Master Services Agreement if such
amendment (i) would reduce the amounts payable by PT-FI to AFIC and all
Infrastructure Affiliates for any period prior to the Stated Maturity of the
Guaranteed Notes to an amount less than an amount sufficient to assure the
payment of the principal of, interest on and Underlying Additional Amounts
with respect to, the Underlying Notes or (ii) would in any other respect have
a material adverse effect on the holders of the Guaranteed Notes, unless in
either such case the holders of a majority in principal amount of the
Guaranteed Notes consent to such amendment, waiver or termination. In
addition, payment of amounts under the Master Services Agreements in respect
of principal of, interest on and Underlying Additional Amounts with respect
to, the Underlying Notes shall be made directly to a U.S. dollar account
maintained by the Issuer with Chemical Bank outside Indonesia.
The Indenture will require the Issuer to take or cause to be taken, all
action required or desirable to maintain good and valid title to the PT-FI
Note and the Underlying Notes. The Indenture will prohibit the Issuer from
amending, waiving or terminating any provisions in the PT-FI Note or the
Underlying Notes other than in connection with a permitted repayment of any
such note. The Issuer will agree in the Indenture to enforce diligently and
expeditiously all of its rights under the PT-FI Note and the Underlying Notes.
Optional Redemption
The Guaranteed Notes are not redeemable prior to , 1999, except as
provided below under "Tax Redemption." The Guaranteed Notes are redeemable at
the option of the Issuer, in whole or in part, on or after , 1999, upon
not less than 30 nor more than 60 days' notice, at the redemption price of %
through , 2000 and thereafter at 100% of the principal amount thereof,
in each case plus accrued interest to the date of redemption. In the case of a
partial redemption, selection of the Guaranteed Notes to be redeemed shall be
made by the Trustee in such manner as in its sole discretion it shall deem
appropriate and fair. Guaranteed Notes may be redeemed in part in multiples of
$1,000 only.
Tax Redemption
The Guaranteed Notes may be redeemed, in whole but not in part, at the
option of the Issuer, upon not less than 30 nor more than 60 days' notice, at
the redemption price of 100% of the principal amount plus accrued interest to
the redemption date, if the Issuer, PT-FI, AFIC or any Infrastructure
Affiliate becomes legally obligated, as a result of statutory or regulatory
changes adopted on or after the date hereof generally affecting United States,
Netherlands or Indonesian withholding taxes, to pay amounts on the Guaranteed
Notes, the PT-FI Note or the Underlying Notes, as the case may be, in excess
of amounts required to be paid by the Issuer, PT-FI, AFIC or such
Infrastructure Affiliate on the date of the issuance of the Guaranteed Notes,
PT-FI Note or the Underlying Notes, as the case may be; provided, however,
that (1) no such notice of redemption may be given earlier than 90 days prior
to the earliest date on which the Issuer would be required to pay such
Additional Amounts, or PT-FI, AFIC or any Infrastructure Affiliate would be
required to pay such Underlying Additional Amounts, were a payment in respect
of the Guaranteed Notes, PT-FI Note or the Underlying Notes then due, as the
case may be, and (2) at the time such notice of redemption is given, such
obligation to pay such Additional Amounts or Underlying Additional Amounts
remains in effect. Immediately prior to the publication of any notice of
redemption pursuant to this paragraph, the Issuer shall deliver to the Trustee
(i) a certificate stating that the Issuer is entitled to effect such
redemption and setting forth a statement of facts showing that the conditions
precedent to the right of the Issuer so to redeem have occurred, and (ii) an
opinion of independent legal counsel of recognized standing to the effect that
the Issuer has or will become obligated to pay such Additional Amounts or that
PT-FI, AFIC or any Infrastructure Affiliate, as the case may be, has or will
become obligated to pay such Underlying Additional Amounts, in each case as a
result of such change.
Certain Covenants
Merger and Consolidation
Neither the Issuer nor FCX will merge or consolidate with or into, or
permit any person to consolidate with or merge into the Issuer or FCX, or
convey, sell, transfer, lease or otherwise dispose of all or substantially all
of its assets to any person, unless (i) the resulting, surviving or transferee
person (if not FCX or the Issuer, as the case may be), shall be a person
organized and existing under the laws of the United States or any State
thereof or the District of Columbia except that, if only the Issuer enters
into one of the aforementioned transactions, such person may be a person
organized under the laws of The Netherlands, and such person shall expressly
assume all obligations of the Issuer or FCX, as the case may be, for the
payment of all amounts due in respect of the Guaranteed Notes and the
performance of the Issuer's or FCX's, as the case may be, obligations under
the Indenture by supplemental indenture satisfactory to the Trustee pursuant
to the Indenture, (ii) immediately after giving effect to such merger,
consolidation, sale or conveyance (and treating any Debt which becomes an
obligation of, or any Lien which applies to any assets of, such successor
entity or any Subsidiary of FCX or the Issuer as a result of such transaction
as having been incurred by such entity or such Subsidiary at the time of such
transaction), the Issuer or FCX, as the case may be, or such successor person
shall not be in default in the performance of any covenant or condition of the
Indenture to be performed or observed by the Issuer or FCX, as the case may
be, and no Event of Default and no event which, after notice or lapse of time
or both, would become an Event of Default shall have occurred and be
continuing and (iii) the Issuer and FCX shall each have delivered to the
Trustee an Officers' Certificate and an Opinion of Counsel, each stating that
such merger, consolidation, sale or conveyance and such supplemental indenture
(if any) comply with the Indenture.
Limitation on Liens
FCX will not create, incur, assume or suffer to exist any Lien upon any
Capital Stock of the Issuer or PT-FI owned by FCX or any of its Subsidiaries
securing any Indebtedness unless contemporaneously therewith effective
provision is made to secure the Guaranteed Notes equally and ratably with such
Indebtedness (or if such Indebtedness is subordinate in right of payment to
the Guaranteed Notes, then the Guaranteed Notes are to be so secured prior to
such Indebtedness) for so long as such Indebtedness is so secured.
"Capital Lease Obligations" of a person means any obligation which is
required to be classified and accounted for as a capital lease on a balance
sheet of such person prepared in accordance with Generally Accepted Accounting
Principles.
"Capital Stock" means any and all shares, interests, rights to purchase,
options, participations or other equivalents of or interests in (however
designated) corporate stock, including any Preferred Stock.
"Commodity Price Protection Agreement" of any person means any forward
contract, commodity swap, commodity option or other financial agreement or
arrangement designed to protect against fluctuations in commodity prices.
"Currency Exchange Protection Agreement" of any person means any forward
foreign exchange agreement, currency swap, currency option or other financial
agreement or arrangement designed to protect against fluctuations in currency
exchange rates.
"Debt" of any person means, without duplication,
(i) the principal of and premium (if any) in respect of (A) indebtedness
of such person for money borrowed and (B) indebtedness evidenced by notes,
debentures, bonds or other similar instruments for the payment of which such
person is responsible or liable;
(ii) all Capital Lease Obligations of such person;
(iii) all obligations of such person issued or assumed as the deferred
(for 180 days or more) purchase price of property, all conditional sale
obligations of such person and all obligations of such person under any title
retention agreement (but excluding trade accounts payable arising in the
ordinary course of business);
(iv) all obligations of such person for the reimbursement of any obligor
on any letter of credit, banker's acceptance or similar credit transaction
(other than obligations with respect to letters of credit securing obligations
(other than obligations described in (i) through (iii) above) entered into in
the ordinary course of business of such person to the extent such letters of
credit are not drawn upon or, if and to the extent drawn upon, such drawing is
reimbursed no later than the third Business Day following receipt by such
person of a demand for reimbursement following payment on the letter of
credit);
(v) the amount of all obligations of such person with respect to the
redemption, repayment or other repurchase of any Redeemable Stock (but
excluding any accrued dividends);
(vi) all obligations of the type referred to in clauses (i) through (v)
of other persons and all dividends of other persons for the payment of which,
in either case, such person is responsible or liable, directly or indirectly,
as obligor, guarantor or otherwise, including by means of any Guaranty; and
(vii) all obligations of the type referred to in clauses (i) through (vi)
of other persons secured by any Lien on any property or asset of such person
(whether or not such obligation is assumed by such person), the amount of such
obligation being deemed to be the lesser of the value of such property or
assets or the amount of the obligation so secured.
"Generally Accepted Accounting Principles" or "GAAP" means generally
accepted accounting principles in the United States which are in effect on the
date of determination.
"Indebtedness" of any person means, without duplication, all obligations
of such person under any Debt, Interest Rate Protection Agreement, Currency
Exchange Protection Agreement or Commodity Price Protection Agreement.
"Interest Rate Protection Agreement" of any person means any interest
rate swap agreement, interest rate cap agreement or other financial agreement
or arrangement designed to protect against fluctuations in interest rates,
including any agreement which exchanges a fixed rate interest obligation for a
floating rate interest obligation.
"Lien" means any mortgage, deed of trust, pledge, charge, security
interest, assignment, conditional sale, encumbrance or other title retention
agreement.
"Preferred Stock", as applied to Capital Stock of any corporation, means
Capital Stock of any class or classes (however designated) which is preferred
as to the payment of dividends, or as to the distribution of assets upon any
voluntary or involuntary liquidation or dissolution of such corporation, over
shares of Capital Stock of any other class of such corporation.
"Redeemable Stock" means any Capital Stock that by its terms or otherwise
is required to be redeemed on or prior to the first anniversary of the Stated
Maturity of the Guaranteed Notes or is redeemable at the option of the holder
thereof at any time on or prior to the first anniversary of the Stated
Maturity of the Guaranteed Notes.
"Stated Maturity" means, with respect to any security, the date specified
in such security as the fixed date on which the principal of such security is
due and payable, including pursuant to any mandatory redemption provision (but
excluding any provision providing for the repurchase of such security at the
option of the holder thereof upon the happening of any contingency unless such
contingency has occurred).
"Subsidiary" of a person means any corporation, association, partnership
or other business entity of which more than 50% of the total voting power of
shares of Capital Stock or other interests (including partnership interests)
entitled (without regard to the occurrence of any contingency) to vote in the
election of directors, managers or trustees thereof is at the time owned or
controlled, directly or indirectly, by such person or any of its Subsidiaries,
and any partnership of which more than 50% of the partnership interests are
owned, directly or indirectly, by such person or any of its Subsidiaries.
Transactions with Affiliates
FCX will not, and will not permit the Issuer, PT-FI or any Transferee
Subsidiary to enter into any transaction or series of related transactions
with any Affiliate of FCX (other than FCX, PT-FI, the Issuer or any
Majority-Owned Subsidiary of any of FCX, the Issuer or PT-FI) that involves
aggregate consideration in excess of $1 million and that is not in the
ordinary course of its business and consistent with past practice between FCX,
the Issuer, PT-FI or such Transferee Subsidiary, on the one hand, and its
respective Affiliates, on the other hand, unless the transaction or series of
related transactions is in writing and either (i) the Board of Directors of
FCX or, as to any transaction involving PT-FI and its Subsidiaries, the Board
of Commissioners of PT-FI, has adopted a resolution approving such transaction
as having terms which are no less favorable to such person than those that
would have been obtained in a comparable transaction by such person with an
unrelated third person or (ii) FCX, the Issuer, PT-FI or such Transferee
Subsidiary, as the case may be, delivers to the Trustee on behalf of the
holders of the Guaranteed Notes a written opinion of a nationally recognized
investment banking firm stating that such transaction is fair to FCX, the
Issuer, PT-FI or such Transferee Subsidiary, as the case may be, from a
financial point of view. The following transactions shall not be subject to
this covenant: (1) transactions representing the pro rata rights of Affiliates
of FCX, the Issuer, PT-FI or any Transferee Subsidiary as stockholders of FCX,
the Issuer, PT-FI or such Transferee Subsidiary, including the right to
receive pro rata dividends or other distributions, (2) the entry into or
preformance of obligations under any management or administrative services
arrangement or tax sharing or other similar agreement or arrangement that is
either consistent with past practices of FCX, the Issuer, PT-FI or any
Transferee Subsidiary or is approved by the Board of Directors of FCX as being
in the best interests of FCX, the Issuer, PT-FI or such Transferee Subsidiary,
as the case may be, (3) the sale, lease or other disposition of EIP Assets,
now existing or to be constructed, or Undeveloped Mining Assets, and all
arrangements related to the development, operation, use and financing of such
assets (other than any sale, lease or other disposition to, or arrangement
with, an entity which is an Affiliate other than by virtue of FCX's interest
therein); provided that the Board of Directors of FCX, or, as to any
transaction involving PT-FI and its Subsidiaries, the Board of Commissioners
of PT-FI, shall have approved such transaction as being in the best interests
of FCX or PT-FI, as the case may be, (4) transactions between FCX, the Issuer,
PT-FI or such Transferee Subsidiary, or any of their respective Subsidiaries,
on the one hand, and any employee of FCX, the Issuer, PT-FI or such Transferee
Subsidiary, or any of their respective Subsidiaries, on the other hand, (5)
the payment of reasonable and customary fees to directors and commissioners of
FCX, the Issuer, PT-FI or such Transferee Subsidiary and (6) any amendment to
the Bank Master Services Agreement or any related agreement or arrangement
involving any assets subject to such agreement that is made at the request of
the Banks party to the AFIC Credit Agreement.
"Affiliate" of any specified person means (i) any other person which,
directly or indirectly, is in control of, is controlled by or is under common
control with such specified person or (ii) any other person who is a director
or officer (A) of such specified person, (B) of any Subsidiary of such
specified person or (C) of any person described in clause (i) above. For
purposes of this definition, control of a person means the power, direct or
indirect, to direct or cause the direction of the management and policies of
such person whether by contract or otherwise and the terms "controlling" and
"controlled" have meanings correlative to the foregoing. Notwithstanding the
foregoing, no bank (or trustee or security agent therefor) party to the AFIC
Credit Agreement, the PT-FI Credit Agreement or the FTX Credit Agreement, or
any amendment to or replacement of any of the foregoing, shall be deemed to be
an "Affiliate" by virtue of compliance with the requirements of any of the
foregoing agreements, amendments or replacements, including the granting of
the Liens provided for therein.
"EIP Assets" means the commercial, residential, educational, retail,
medical, recreational, environmental and other infrastructure facilities
(including without limitation power, water and waste disposal systems, an
industrial park, small business development facilities, port, marine,
logistics and related assets under construction, airport, flood control or
road facilities, hotel or other guest facilities and other general
infrastructure facilities), constructed or to be constructed in connection
with or to support the mining and milling operations of PT-FI in Irian Jaya,
Indonesia; provided that the mining and milling production facilities of PT-FI
in Irian Jaya, Indonesia shall not constitute EIP Assets.
"Majority-Owned Subsidiary" means a Subsidiary of which more than 50% of
the total voting power of shares of Capital Stock or other interests
(including partnership interests) entitled (without regard to the occurrence
of any contingency) to vote in the election of directors, managers or trustees
thereof is at the time owned or controlled, directly or indirectly, by such
person, and any partnership of which more than 50% of the partnership
interests are owned, directly or indirectly, by such person.
"Transferee Subsidiary" means any Subsidiary of FCX to which PT-FI has
transferred, after the date of the Indenture, property, plant and equipment
with an aggregate net book value on the date of transfer in excess of $10
million.
"Undeveloped Mining Assets" means the rights to explore for, mine,
process, store and transport minerals and any assets or facilities used in
connection with such rights or the exercise thereof; provided that the term
"Undeveloped Mining Assets" shall not include (i) any such rights with respect
to COW Area Block A, (ii) any assets or facilities used in connection with
mining or processing on COW Area Block A or (iii) any such rights, assets or
facilities to the extent acquired or developed with the proceeds of an Asset
Disposition. The term "COW Area Block A" is defined in the New COW and
includes all currently existing producing mines and proved and probable
reserves of PT-FI in Irian Jaya, Indonesia.
Certain Sales of Assets
FCX will not, and will not permit PT-FI or any Transferee Subsidiary to,
consummate any Asset Disposition other than in the ordinary course of
business, unless: (i) FCX, PT-FI or such Transferee Subsidiary, as the case
may be, receives consideration at the time of such Asset Disposition at least
equal to the fair market value (as determined in good faith, including as to
the value of all non-cash consideration, by the Board of Directors of FCX or,
as to any transaction involving PT-FI or its Subsidiaries, the Board of
Commissioners of PT-FI, whose determination shall be conclusive, of the shares
or assets subject to such Asset Disposition, provided, that the requirements
of this clause (i) will not apply to an Asset Disposition constituting a
spin-off or other distribution to stockholders of FCX, PT-FI or such
Transferee Subsidiary or, in the case of property subject to a Lien, to the
sale of such property in a commercially reasonable manner by or on behalf of
the person secured thereby or the taking possession of such property by such
person in satisfaction of debt, and (ii) within the time period specified
below, either (a) FCX, PT-FI or such Transferee Subsidiary applies the Net
Proceeds either: (1) to acquire Guaranteed Notes or to repay any Senior Debt
of FCX or any Debt of PT-FI (other than Indebtedness owing to any Affiliate of
FCX or PT-FI but including any Indebtedness owing by PT-FI to AFIC under the
Bank Master Services Agreement) or such Transferee Subsidiary or any
Indebtedness secured by such shares or assets sold or otherwise disposed of,
or (2) to commence to reinvest, either directly or through a Majority-Owned
Subsidiary of FCX, such Net Proceeds in any natural resource business
(including, without limitation, the production, exploration, extraction,
development or refining of natural resources), whether or not conducted by FCX
or PT-FI as of the date of the Indenture; or (b) to the extent FCX, PT-FI or
such Transferee Subsidiary does not apply (or commence to apply) all or any
part of such Net Proceeds in accordance with the immediately preceding clause
(a), FCX makes an offer (the "Asset Disposition Offer") in accordance with
applicable law to purchase a principal amount of the Guaranteed Notes and any
other Senior Debt of FCX or any Debt of PT-FI or a Subsidiary thereof (other
than Indebtedness owed to any Affiliate of FCX or PT-FI, but including any
Indebtedness owed by PT-FI to AFIC under the Bank Master Services Agreement),
which is senior to or pari passu with the Guaranteed Notes and which contains
a covenant substantially similar to this one equal to the amount of such Net
Proceeds which FCX, PT-FI or such Transferee Subsidiary have not so applied
(or commenced to apply in the case of clause (ii)(a)(2) above) pursuant to
clause (a) above (the "Asset Disposition Offer Amount") at 100% of the
principal amount thereof plus accrued interest or 100% of accreted value in
the case of Indebtedness issued at a discount to its face amount. Other than
in the case of an Asset Disposition of the type described in clause (B) of the
definition of Net Proceeds, the acquisition or repayment must be completed, or
such reinvestment must commence, or such Asset Disposition Offer must be made,
within 360 days after the later of the consummation of the Asset Disposition
or the receipt of the Net Proceeds therefrom. In the case of an Asset
Disposition of the type described in clause (B) of the definition of Net
Proceeds, FCX, PT-FI or such Transferee Subsidiary must complete an
application of the Net Proceeds under either clause (ii)(a)(1) or (ii)(b)
above at or prior to the distribution, spin-off, dividend or repurchase
covered by clause (B) of the definition of Net Proceeds. Notwithstanding the
foregoing, the acquisition, reinvestment or Asset Disposition Offer required
by this covenant need not be made except to the extent that the aggregate
cumulative amount of Net Proceeds received by FCX, PT-FI and any Transferee
Subsidiary from all Asset Dispositions and not previously applied as provided
in either clauses (a) or (b) above exceeds $150 million. To the extent the
Asset Disposition Offer is not fully subscribed, the remaining Net Proceeds
may be used for general corporate purposes, including without limitation the
payment of dividends. Pending the required application of Net Proceeds, such
Net Proceeds may be invested only in Permitted Investments. If an Asset
Disposition Offer would otherwise be required to be made and the amount of
such Asset Disposition Offer would be less than $20 million, FCX shall not be
required to make such offer until such time as the total amount of Asset
Dispositions which have occurred and as to which Asset Disposition Offers have
not been made exceeds $20 million.
"Asset Disposition" means, with respect to any person, any sale,
transfer, conveyance, lease or other disposition (including, without
limitation, by way of merger or consolidation, spin-off, or sale of shares of
Capital Stock in any Subsidiary of such person but excluding any
Sale-Leaseback Transaction) that is entered into and completed after the date
of the Indenture to any person (other than a Majority-Owned Subsidiary of FCX,
PT-FI or the Issuer) of (i) any assets (other than EIP Assets or Undeveloped
Mining Assets) of such person or (ii) any shares of Capital Stock of such
person's Subsidiaries (other than a Subsidiary substantially all of whose
assets are EIP Assets, Undeveloped Mining Assets or both), which, in either
case, results in Net Proceeds of $10 million or more. For purposes of this
definition, the term "Asset Disposition" shall not include (i) any sale,
transfer, conveyance, lease or other disposition of assets and properties of
FCX governed by the "Merger and Consolidation" covenant or (ii)
the granting of any Lien unless and until the property subject to such Lien is
sold by or on behalf of the person secured thereby or such person takes
possession of such property in satisfaction of debt.
"Net Proceeds" from an Asset Disposition means:
(A) cash payments received (including any cash payments received by
way of deferred payment of principal pursuant to a note or installment
receivable or otherwise, but only as and when received and also including
any cash received upon sale or disposition of such note or receivable or
upon sale or other disposition of other non-cash proceeds, but excluding
any consideration received in the form of assumption by the acquiring
person of Debt or other obligations relating to such properties or assets
or received in any other non-cash form) therefrom; and
(B) (i) in the case of an Asset Disposition (other than an Asset
Disposition described in clauses (ii) or (iii) below) the aggregate fair
market value of any non-cash assets received as consideration for such
Asset Disposition, but only to the extent that such non-cash assets are
then distributed by FCX as a dividend or other distribution to its
stockholders, (ii) in the case of an Asset Disposition constituting a
spin-off or other distribution to stockholders of FCX, the aggregate fair
market value on the date of such Asset Disposition of any non-cash assets
that are distributed by FCX as a dividend or other distribution to its
stockholders as part of such Asset Disposition and (iii) in the case of an
Asset Disposition pursuant to which FCX sells or otherwise conveys any
non-cash assets to any of its stockholders (other than pursuant to a pro
rata distribution to all of its stockholders) as consideration for the
repurchase by FCX of any of its Capital Stock from such stockholders, the
aggregate fair market value of the Capital Stock repurchased, provided
that in each such case, fair market value shall be determined in good
faith by the Board of Directors of FCX and such determination shall be
conclusive; and, provided further, that, in the case of each of subclauses
(i), (ii) and (iii) of this clause (B), any such Net Proceeds shall be
deemed to have been received, in respect of any Asset Disposition, at the
time when FCX distributes or otherwise sells or conveys such non-cash
assets to its stockholders,
in each case, net of all expenses, commissions and other fees or obligations
incurred, all taxes required to be accrued and reasonable reserves for the
after-tax cost of any indemnification (including environmental
indemnification) payments and in each case net of all payments made on any
Debt which is secured by any assets subject to such Asset Disposition, in
accordance with the terms of any Lien upon such assets, or which must by its
terms, or in order to obtain a necessary consent to such Asset Disposition, or
by applicable law be repaid out of the proceeds from such Asset Disposition,
and net of all distributions and other payments required to be made to
minority interest holders in Subsidiaries or joint ventures as a result of
such Asset Disposition.
"Permitted Investment" means (i) interest bearing deposit accounts in
United States national or state banks having a combined capital and surplus of
not less than $100 million and a Moody's Bank Credit Report Service short-term
deposit rating of P-1; (ii) bankers' acceptances drawn on and accepted by
commercial banks having a combined capital and surplus of not less than $100
million and a Moody's Bank Credit Report Service short-term deposit rating of
P-1; (iii) obligations of the United States of America or any agency or
instrumentality of the United States of America; (iv) commercial or finance
company paper which is rated A-1 by Standard & Poor's or P-1 by Moody's
Investors Service; (v) corporate debt securities rated A-1 by Standard &
Poor's or P-1 by Moody's Investors Service; (vi) repurchase agreements with
banking or financial institutions having a combined capital and surplus of not
less than $100 million and a Moody's Bank Credit Report Service short-term
deposit rating of P-1 with respect to any of the foregoing obligations or
securities; and (vii) money market funds with assets of at least $1 billion
and portfolio guidelines consistent with the foregoing obligations and
securities. Such investments shall have maturity dates, or shall be subject
to redemption by the holder at the option of the holder, prior to the date
which is one year from the date of purchase of such investment.
"Sale-Leaseback Transaction" means an arrangement relating to property
now owned or hereafter acquired whereby a person transfers such property to
another person and the transferor leases it from such person.
"Senior Debt" of any person means any Debt of such person unless, in the
instrument creating or evidencing the same or pursuant to which the same is
outstanding, it is provided that such obligations are subordinated in right of
payment to the Guaranteed Notes; provided, however, that Senior Debt shall not
be deemed to include (1) any obligations of such person to any Subsidiary, (2)
any liability for Federal, state, local or other taxes owed or owing by such
person or (3) any accounts payable or other liability to trade creditors
arising in the ordinary course of business (including Guaranties thereof or
instruments evidencing such liabilities).
Repurchase in Event of Change of Control and Rating Decline
Upon the occurrence of any Repurchase Event (as defined below), each
holder of a Guaranteed Note shall have the right, at such holder's option, to
require FCX to repurchase, and upon the exercise of such right FCX shall
repurchase, all or any part of such holder's Guaranteed Notes, in integral
multiples of $1,000, on the Repurchase Date (as defined below) at a repurchase
price in cash equal to 101% of the principal amount thereof plus accrued and
unpaid interest, if any, to any Repurchase Date (the "Repurchase Price"), on
the terms and conditions described below.
Unless the Issuer shall have already called for the redemption of all
outstanding Guaranteed Notes, within 30 days of the occurrence of any
Repurchase Event, FCX or, at the request of FCX, the Trustee, shall mail to
all holders of record of the Guaranteed Notes, and cause to be published as
provided in the Indenture, a notice of the occurrence of such Repurchase Event
and of the rights of each holder of Guaranteed Notes in connection therewith.
To exercise a repurchase right, a holder of Guaranteed Notes shall
deliver to the Trustee within 30 days after receiving the notice of the type
described above, (1) irrevocable written notice of such holder's exercise of
such right and (2) the Guaranteed Notes with respect to which the repurchase
right is being exercised, duly endorsed for transfer to FCX. Guaranteed Notes
held by a securities depository may be delivered in such other manner as may
be agreed to by such securities depository and FCX or the Trustee. If the
Repurchase Date falls during the period between the close of business on
or in any year and the opening of business on the following
or , and the Guaranteed Notes have not been called for redemption on a
redemption date within such period (or on such or ), any
Guaranteed Notes delivered to the Trustee to be repurchased must be
accompanied by payment of an amount equal to the interest thereon, if any,
which the registered holder thereof is to receive on such or
, and, notwithstanding such repurchase, such interest payment will be made by
FCX to the registered holder thereof on the next preceding or
.
In the event a repurchase right shall be exercised in accordance with the
terms of the Indenture, FCX shall pay or cause to be paid the Repurchase Price
in cash to such holder on the Repurchase Date.
If any Guaranteed Note surrendered for repurchase shall not be so paid on
the Repurchase Date, such Guaranteed Note shall, until paid, continue to
accrue interest, to the extent permitted by applicable law, from the
Repurchase Date at the rate per annum specified on the face thereof. FCX
shall pay to the holder of such Guaranteed Note the accrued amounts arising
from this paragraph at the same time that it pays the Repurchase Price.
Any Guaranteed Note which is to be repurchased only in part shall be
surrendered at any office or agency of FCX designated for that purpose by FCX
(with, if FCX or the Trustee so requires, due endorsement by, or a written
instrument of transfer in form satisfactory to, FCX and the Trustee duly
executed by, the holder thereof or his attorney duly authorized in writing),
and FCX shall execute, and the Trustee shall authenticate and deliver to the
holder of such Guaranteed Note without service charge, a new Guaranteed Note
or Notes, of any authorized denomination as requested by such holder, in
aggregate principal amount equal to and in exchange for the unrepurchased
portion of the Guaranteed Note so surrendered.
"Repurchase Event" means the occurrence of a Change of Control followed
by a Rating Decline within the period of 60 days following the first public
announcement of the circumstances giving rise to that Change of Control (the
"Announcement") (which period shall be extended if during such 60 days either
both Rating Agencies shall have placed FCX on credit watch or one of the
Rating Agencies shall have placed FCX on credit watch and the other Rating
Agency shall have made the determination described in the definition of Rating
Decline, until such time as it can be determined that there has been a Rating
Decline).
"Change of Control" means the occurrence of any of the following events:
(i) any "person" (as such term is used in Sections 13(d) and 14(d)
of the Exchange Act) (other than FTX in respect of FCX and FCX in respect
of the Issuer) is or becomes the beneficial owner (as defined in Section
13(d) of the Exchange Act and the rules promulgated thereunder except that
a person shall be deemed to have "beneficial ownership" of all shares that
any such person has the right to acquire, whether such right is
exercisable immediately or only after the passage of time), directly or
indirectly, of more than 50% of the total voting power of the Voting Stock
of the Issuer or FCX;
(ii) FCX ceases to own, directly or indirectly, at least 50.1% of
the outstanding shares of the Capital Stock of PT-FI, or ceases to have
the right, by share ownership, contract or otherwise, to elect at least
one-half of the members of the Board of Commissioners of PT-FI; provided
that no Change of Control shall be deemed to have occurred upon a
consolidation or merger of PT-FI with or into FCX or into any Subsidiary
of FCX in which FCX's direct or indirect percentage ownership interest
equals or exceeds FCX's direct or indirect percentage ownership interest
in PT-FI immediately prior to such transaction; or
(iii) any direct or indirect sale, transfer, lease or conveyance, in
one transaction or in a series of related transactions, of assets of PT-FI
having a fair market value (as determined in good faith by the Board of
Directors of FCX, which determination shall be conclusive) in excess of
half of the aggregate fair market value (determined as set forth above) of
PT-FI's assets as of the time of such sale, lease, transfer or conveyance
to any person (other than a direct or indirect Subsidiary of FCX in which
FCX's direct or indirect percentage ownership interest equals or exceeds
FCX's direct or indirect percentage ownership interest in PT-FI
immediately prior to such transaction) occurs.
A "Rating Decline" shall be deemed to have occurred if the Guaranteed
Notes shall be rated by each of the Rating Agencies at a rating which is lower
than the rating of the Guaranteed Notes by such Rating Agency on the day
before the Announcement by more than one gradation (whether or not within the
same Rating Category).
"Rating Agency" means Standard & Poor's Rating Group and its successors
("S&P") and Moody's Investors Service, Inc. and its successors ("Moody's"),
or, if either S&P or Moody's shall not make a rating of the Guaranteed Notes
publicly available, a nationally recognized statistical rating agency or
agencies, as the case may be, selected by FCX which shall be substituted for
S&P or Moody's or both, as the case may be.
"Rating Category" means each major rating category symbolized by (x) in
the case of S&P, AAA, AA, A, BBB, BB, B, CCC, CC and C and each such Rating
Category shall include pluses or minuses ("gradations") modifying such capital
letters; (y) in the case of Moody's, Aaa, Aa, A, Baa, Ba, B, Caa, Ca and C and
each such Rating Category shall include added numerals such as 1, 2 or 3
("gradations") modifying such letters; and (2) with respect to any other
Rating Agency, comparable or equivalent symbols.
"Voting Stock" of a corporation means all classes of Capital Stock of
such corporation then outstanding and normally entitled to vote in the
election of directors.
Events of Default; Notice of Default and Waiver
The Indenture provides that, if an Event of Default specified therein
shall have occurred and be continuing, either the Trustee or the holders of
not less than 25% in aggregate principal amount of the Guaranteed Notes then
outstanding may declare 100% of the principal amount thereof plus accrued and
unpaid interest, if any, and Additional Amounts, if any, through the date of
such declaration, on all Guaranteed Notes then outstanding to be immediately
due and payable. In the case of certain events of bankruptcy or insolvency,
the principal amount plus accrued and unpaid interest through the date of the
occurrence of such event shall automatically become and be immediately due and
payable. Under certain circumstances, the holders of a majority in aggregate
principal amount of the outstanding Guaranteed Notes may rescind any such
acceleration with respect to the Guaranteed Notes and its consequences.
Interest shall accrue and be payable on demand on overdue interest and
Additional Amounts, if any (to the extent that the payment of such interest
shall be legally enforceable).
Under the Indenture, an Event of Default is defined as any of the
following: (i) default in payment of interest or Additional Amounts, with
respect to any Guaranteed Note, when the same becomes due and payable, and
continuance of such default for 30 days, (ii) default in payment of the
principal with respect to any Guaranteed Note when the same becomes due and
payable at its Stated Maturity, upon redemption or otherwise, (iii) failure by
the Issuer to redeem or repurchase the Guaranteed Notes when required to do so
under the Indenture or the Guaranteed Notes, (iv) failure by the Issuer or FCX
to comply with the "Mergers and Consolidations" covenant, (v) failure by the
Issuer or FCX to comply with any of its other agreements or covenants in the
Guaranteed Notes or the Indenture, but only upon the receipt by the Issuer of
notice of such default from the Trustee or from holders of not less than 25%
in aggregate principal amount of the Guaranteed Notes then outstanding and the
Issuer's or FCX's failure, as the case may be, to cure such default within 60
days after receipt by the Issuer of such notice, (vi) the acceleration of the
maturity or non-payment within any applicable grace period after final
maturity of any other Indebtedness (other than Non-Recourse Debt and other
than Debt described in clause (v) of the definition of "Debt") of the Issuer,
FCX, PT-FI, AFIC, any Infrastructure Affiliate or any Significant Subsidiary
in a principal amount exceeding $20 million (or an equivalent amount in
another currency) if such acceleration has not been rescinded or annulled
within 30 days, (vii) the rendering of one or more judgments or decrees for
the payment of money against the Issuer, FCX, PT-FI, AFIC, any Infrastructure
Affiliate or any Significant Subsidiary in an aggregate amount equal to or in
excess of $20 million (net of insurance) and either (a) any such judgments or
decrees are not vacated, discharged, stayed or bonded pending appeal within 60
days after the judgment becomes final and nonappealable or (b) an enforcement
proceeding has been commenced by any creditor upon such judgment or decree,
(viii) certain events of bankruptcy or insolvency of the Issuer, FCX, PT-FI,
AFIC, any Infrastructure Affiliate or any Significant Subsidiary or (ix) the
FCX Guaranty shall cease for any reason to be in full force and effect or FCX
shall assert that the FCX Guaranty is not in full force and effect.
The Trustee shall give notice to holders of the Guaranteed Notes of any
continuing default known to it within 90 days after the occurrence thereof;
provided, that the Trustee may withhold such notice as to any default other
than a payment default, if it determines in good faith that withholding the
notice is in the interest of the holders.
The holders of a majority in aggregate principal amount of the
outstanding Guaranteed Notes may direct the time, method and place of
conducting any proceeding for any remedy available to the Trustee or
exercising any trust or power conferred on the Trustee; provided, that the
Trustee may refuse to follow any direction which is in conflict with any law
or the Indenture and subject to certain other limitations. Before proceeding
to exercise any right or power under the Indenture at the direction of such
holders, the Trustee shall be entitled to receive from such holders reasonable
security or indemnity satisfactory to it against the cost, expenses and
liabilities which might be incurred by it in complying with any such
direction. No holder of any Guaranteed Note will have any right to pursue any
remedy with respect to the Guaranteed Notes, unless (i) such holder shall have
previously given the Trustee written notice of a continuing event of default;
(ii) the holders of at least 25% in aggregate principal amount of the
outstanding Guaranteed Notes shall have made a written request to the Trustee
to pursue such remedy; (iii) such holder or holders shall have offered to the
Trustee reasonable indemnity satisfactory to it; (iv) the holders of a
majority in aggregate principal amount of the outstanding Guaranteed Notes
shall not have given the Trustee a direction inconsistent with such request
within 60 days after receipt of such request; and (v) the Trustee shall have
failed to comply with the request within such 60-day period.
Notwithstanding the foregoing, the right of any holder (x) to receive
payments of principal, premium, if any, Additional Amounts, if any, or
interest payable with respect to any Guaranteed Note and any interest in
respect of a default in the payment of any such amounts on such Guaranteed
Note, on or after the due date expressed in such Guaranteed Note or (y) to
institute suit for the enforcement of any such payment rights shall not be
impaired or adversely affected without such holder's consent. The holders of
at least a majority in aggregate principal amount at maturity of Guaranteed
Notes at the time outstanding may waive any existing default and its
consequences, other than (i) any default in any payment on the Guaranteed
Notes, or (ii) any default in respect of certain covenants or provisions in
the Indenture which may not be modified without the consent of the holder of
each Guaranteed Note as described in "Modification" below.
The Issuer and FCX will be required to furnish to the Trustee annually a
statement as to any default by the Issuer or FCX in the performance and
observance of their respective obligations under the Indenture.
"Non-Recourse Debt" means any Debt issued pursuant to any agreement or
instrument which limits the liability of the borrower to the collateral
securing such Debt so long as such collateral does not include any assets
within or constituting a part of COW Area Block A.
"Significant Subsidiary" means any Subsidiary of FCX which at the time of
determination either (A) had assets which, as of the date of FCX's most recent
quarterly consolidated balance sheet, constituted at least 5% of FCX's total
assets on a consolidated basis as of such date, or (B) had revenues for the
12-month period ending on the date of FCX's most recent quarterly consolidated
statement of income which constituted at least 5% of FCX's total revenues on a
consolidated basis for such period.
Modification
Modification and amendment of the Indenture or the Guaranteed Notes may
be effected by the Issuer, FCX and the Trustee with the consent of the holders
of not less than a majority in aggregate principal amount of the Guaranteed
Notes then outstanding. However, without the consent of each holder affected
thereby, no amendment may, among other things, (i) change the stated maturity
of the principal of, or any installment of interest on, any Guaranteed Note,
alter the principal amount of a Guaranteed Note or the rate of, or extend the
time of payment of, interest thereon or any premium or Additional Amounts
payable thereon, change the place of payment where or the coin or currency in
which amounts due on the Guaranteed Notes are payable, reduce or alter the
method of computation of any amount payable on redemption or repayment thereof
(or the time at which any such redemption may be made); (ii) make any
reduction in the principal amount of Guaranteed Notes whose holders must
consent to an amendment or any waiver under the Indenture or modify the
Indenture provisions relating to such amendments or waivers; (iii) impair or
affect the right to institute suit for the enforcement of any payment with
respect to the Guaranteed Notes; (iv) following the mailing of an Asset
Disposition Offer or an occurrence of a Repurchase Event, modify the Indenture
provisions with respect to such offer or Repurchase Event in a manner adverse
to such holder or (v) change in any manner adverse to the interests of any
holders of the Guaranteed Notes the obligations of FCX pursuant to the FCX
Guaranty.
Without the consent of any holder of Guaranteed Notes, the Issuer, FCX
and the Trustee may amend the Indenture to (i) cure any ambiguity, defect or
inconsistency; (ii) provide for the assumption by a successor to the Issuer or
FCX of the respective obligations of the Issuer or FCX under the Indenture,
(iii) provide for uncertificated Guaranteed Notes in addition to certificated
Guaranteed Notes, so long as such uncertificated Guaranteed Notes are in
registered form for United States federal income tax purposes, (iv) make any
change that does not adversely affect the interests of the holders of
Guaranteed Notes, (v) make any change to comply with any requirement of the
Commission in connection with the qualification of the Indenture under the
Trust Indenture Act of 1939, as amended, or (vi) add to the covenants or
obligations of the Issuer or FCX under the Indenture or surrender any right,
power or option conferred by the Indenture on the Issuer or FCX.
Satisfaction, Discharge and Defeasance of the Indenture
The Issuer may satisfy and discharge the obligations of the Issuer and
FCX under the Indenture and the Guaranty by delivering to the Trustee for
cancellation all outstanding Guaranteed Notes or by depositing with the
Trustee, after the Guaranteed Notes have become due and payable, cash
sufficient to pay at the Stated Maturity all of the outstanding Guaranteed
Notes and paying all other sums payable under the Indenture by the Issuer.
Under terms satisfactory to the Trustee, the Issuer may discharge
substantially all obligations of the Issuer and FCX under the Indenture to
holders of Guaranteed Notes which by their terms are due and payable within
one year (or are scheduled for redemption within one year) by irrevocably
depositing with the Trustee in trust for the benefit of the holders, (i) money
in an amount or (ii) U.S. government obligations which through the payment of
interest and principal will provide, not later than one day before the due
date of payments in respect of the Guaranteed Notes, money in an amount, or
(iii) a combination thereof, sufficient to pay and discharge the principal of
and premium, if any, Additional Amounts, if any, and interest on, the
Guaranteed Notes then outstanding at and through the maturity or redemption
date; provided that FCX has theretofore assumed the obligations of the Issuer
under the Guaranteed Notes as described under "Assumption of Direct
Obligations by FCX."
FCX may also discharge substantially all of its obligations under the
Indenture ("defeasance"); provided that FCX has theretofore assumed the
obligations of the Issuer under the Guaranteed Notes as described under
"Assumption of Direct Obligations by FCX." Under terms satisfactory to the
Trustee, the Issuer and FCX may instead be released from the obligations
imposed by certain provisions of the Indenture ("Defeasable Events"),
including the covenants described above limiting liens, consolidations,
mergers, transactions with affiliates and investments by the Issuer and
requiring repurchase of the Guaranteed Notes in the event of certain Asset
Dispositions and upon an occurrence of any Repurchase Event and omit to comply
with such provisions without creating an Event of Default ("covenant
defeasance"). Defeasance or covenant defeasance may be effected only if,
among other things, the Issuer or FCX irrevocably deposits with the Trustee in
trust for the benefit of the holders, (i) money in an amount or (ii) United
States government obligations which through the payment of interest and
principal will provide, not later than one day before the due date of
principal of, premium, if any, and each installment of interest in respect of
the Guaranteed Notes, money in an amount, or (iii) a combination thereof,
sufficient to pay and discharge the principal of, premium, if any, and
interest on the Guaranteed Notes then outstanding at maturity or at the
earliest date at which the Issuer or FCX may redeem such Guaranteed Notes if
the Issuer or FCX has made adequate arrangements with the Trustee to redeem
such Guaranteed Notes at such time. Such a trust may only be established if
the Issuer has delivered to the Trustee an Opinion of Counsel acceptable to
the Trustee (who may be counsel to the Issuer) to the effect that the
defeasance and discharge will not be deemed, or result in, a taxable event,
with respect to holders of the Guaranteed Notes and that the creation of the
trust will not violate the Investment Company Act of 1940. The Indenture will
not be discharged if, among other things, an Event of Default (other than a
Defeasable Event), or an event which with notice or lapse of time would have
become such an Event of Default, shall have occurred and be continuing on the
date of such deposit or during the period ending on the 91st day after such
date. In the event of any such defeasance and discharge, the holders of the
Guaranteed Notes will thereafter be able to look only to such trust fund for
payment of principal and interest on the Guaranteed Notes.
Information Concerning the Trustee
Chemical Bank will initially be the Trustee and Registrar under the
Indenture. Chemical Bank has performed a variety of financial services for
FCX and is agent bank and a lender under FTX's Credit Agreement.
Financial Reports
The Issuer and FCX will each provide to the Trustee a copy of all
financial reports each files with the Commission. If, during any reporting
period, FCX is not required to file such reports with the Commission, FCX will
provide to the Trustee the same financial reports concerning FCX as if FCX
were so required.
Assumption of Direct Obligations by FCX
FCX may at any time, in its sole discretion, directly assume, by a
supplemental indenture, the obligations of the Issuer for the payment of the
principal of, premium, if any, Additional Amounts, if any and interest on the
Guaranteed Notes and for the fulfillment of all covenants of the Issuer
contained in the Indenture. Upon such assumption by FCX, FCX will succeed to
and be substituted in all respects for the Issuer under the Indenture, and the
Issuer will be released from all of its obligations under the Indenture and
the Guaranteed Notes.
TAXATION
The following summary of certain United States federal, Netherlands and
Indonesia income taxes is based on the advice of Miller & Chevalier,
Chartered, tax counsel to the Issuer and FCX, with respect to United States
federal income taxes, Stibbe Simont Monahan Duhot, Netherlands counsel to the
Issuer and FCX, with respect to Netherlands taxes and Drs. Siddharta &
Siddharta, a member firm of Coopers & Lybrand (International), Indonesia tax
advisors to the Issuer and FCX, with respect to Indonesian taxes. For purposes
of this summary, a "U.S. Holder" is any holder of Guaranteed Notes that is (i)
a citizen or resident of the United States, (ii) a corporation, partnership,
or other entity created or organized in or under the laws of the United
States, or (iii) an estate or trust the income of which is subject to United
States federal income taxation regardless of source. A "Non-U.S. Holder" is
any holder of Guaranteed Notes that is not a U.S. Holder. This summary is
addressed to original holders that hold the Guaranteed Notes as capital assets
and does not address aspects of United States federal income taxation that may
be applicable to particular U.S. Holders, such as insurance companies, banks,
or dealers in securities or currencies, or to U.S. Holders that will hold a
Guaranteed Note as part of a position in a "straddle" or as part of a hedging
transaction for United States tax purposes or that have a "functional
currency" other than the United States dollar. PROSPECTIVE INVESTORS SHOULD
CONSULT THEIR OWN TAX ADVISORS AS TO THE UNITED STATES, NETHERLANDS,
INDONESIA, AND ANY OTHER TAX CONSEQUENCES OF AN INVESTMENT IN THE GUARANTEED
NOTES.
United States Income Tax Considerations
The Issuer believes, and intends to take the position, that the
Guaranteed Notes are debt of the Issuer for United States federal income tax
purposes. It is possible because of the FCX Guaranty that the Internal
Revenue Service ("IRS") could assert that the Guaranteed Notes are debt of
FCX, but such a characterization should not affect holders to which this
summary applies. Recently enacted legislation authorizes the Treasury
Secretary to issue regulations recharacterizing "multiple-party financing
transactions" as a transaction directly among any two or more of the parties
involved where the Secretary determines that such recharacterization is
"appropriate" to prevent avoidance of any United States federal taxes. It is
possible that such regulations could be issued and could apply retroactively
to the Guaranteed Notes with the result, depending on the scope of such
regulations, that the Guaranteed Notes might be recharacterized for United
States federal tax purposes as debt of FCX, AFIC, or an Infrastructure
Affiliate. The following discussion assumes that the Guaranteed Notes will be
treated as debt of the Issuer for federal income tax purposes.
Interest. The gross amount of interest (including Additional Amounts, if
any, paid in respect of withholding taxes) on a Guaranteed Note will be
included in the income of a U.S. Holder in accordance with the holder's usual
method of tax accounting, and will be treated as foreign source income for
United States federal income tax purposes.
Sale, Exchange or Disposition. A U.S. Holder will recognize gain or loss
upon the sale, exchange or other disposition of the Guaranteed Notes in an
amount equal to the difference between the amount realized upon the sale,
exchange or other disposition and the U.S. Holder's adjusted tax basis in such
Guaranteed Notes. Gain or loss recognized by a U.S. Holder on a sale,
exchange or other disposition of Guaranteed Notes will be long-term capital
gain or loss if the Guaranteed Notes have been held more than one year at the
time of the sale. Any gain or loss recognized by a U.S. Holder generally will
be treated as from sources within the United States.
Assumption of Guaranteed Notes by FCX. It is unclear whether the
assumption of the obligations on the Guaranteed Notes by FCX pursuant to its
option would constitute a taxable event for federal income tax purposes. Under
proposed Treasury regulations, an alteration of a legal right or obligation is
not a modification of a debt instrument if it occurs by operation of the
original terms of the instrument. If the assumption were treated as a
significant modification of the Guaranteed Notes, however, it would be treated
as a taxable exchange of the Guaranteed Notes for new notes of FCX ("New FCX
Notes"). Holders would recognize gain or loss on the exchange measured by the
difference between the issue price of the New FCX Notes (as determined under
applicable Treasury regulations) and the adjusted tax basis of the Guaranteed
Notes.
Taxation of Non-U.S. Holders. Non-U.S. Holders will not be subject to
United States federal income tax on payments of interest (and Additional
Amounts, if any) with respect to the Guaranteed Notes, unless such interest
and Additional Amounts are effectively connected with the conduct by such
Non-U.S. Holder of a trade or business in the United States. If the Guaranteed
Notes were treated as FCX debt, Non-U.S. Holders would not be subject to
United States income or withholding taxes on interest (and Additional Amounts,
if any) so long as (1) the Guaranteed Note is not effectively connected with
the conduct by such Non-U.S. Holder of a trade or business in the United
States, (2) the Non-U.S. Holder is not related to FCX through stock ownership,
and (3) at least 80% of FCX's gross income for a relevant three-year testing
period has been derived from sources outside the United States and is
attributable to non-U.S. active business operations. Significantly more than
80% of FCX's income (which is derived primarily from interest and dividends
from PT-FI) has been and is likely to continue to be active foreign business
income. A Non-U.S. Holder generally will not be subject to United States
federal income tax on any gain realized on the sale, exchange, or other
disposition of Guaranteed Notes, unless (i) such gain is effectively connected
with the conduct by such Non-U.S. Holder of a trade or business in the United
States, or (ii) in the case of gain realized by an individual Non-U.S. Holder,
such Non-U.S. Holder is present in the United States for 183 days or more
during the year of such sale, exchange or disposition and certain other
conditions are met. The same rules would apply to a sale, exchange or other
disposition if the Guaranteed Notes were treated as FCX debt.
Information Reporting and Backup Withholding. Certain payments in
respect of Guaranteed Notes may be subject to information reporting to the IRS
and to a 31% United States backup withholding tax. Backup withholding will
not apply, however, to a holder who furnishes a correct taxpayer
identification number or certificate of foreign status and makes any other
required certification or who is otherwise exempt from backup withholding.
Generally, a U.S. Holder will provide such certification on Form W-9 (Request
for Taxpayer Identification Number and Certification) and a Non-U.S. Holder
will provide such certification on Form W-8 (Certificate of Foreign Status).
Netherlands Tax Considerations
Payments under the Guaranteed Notes by the Issuer and by any paying agent
to a holder of the Guaranteed Notes will not be subject to Netherlands
withholding tax.
A holder of the Guaranteed Notes is not subject to Netherlands income tax
in respect of any payments under the Guaranteed Notes or in respect of any
gain realized on the alienation of the Guaranteed Notes, provided that such
holder:
i) is not a resident or deemed resident of The Netherlands;
ii) does not own an enterprise or an interest in an enterprise which is
carried on through a permanent establishment or permanent representative in
The Netherlands to which or to whom the Guaranteed Notes or the payments under
the Guaranteed Notes are attributable; and
iii) does not have a substantial interest or deemed substantial interest
in the share capital of the Issuer or, in the event a holder does have such
interest, such interest is attributable to an enterprise carried on by the
holder or on his behalf.
A taxpayer is considered to have a substantial interest in the share
capital of the Issuer if he owned during the preceding five years, directly or
indirectly, at least one third of the entire paid-in capital or of the paid-in
capital of a certain class or classes of shares of the Issuer. If the
taxpayer is an individual, shares owned by certain relatives will be
attributed to the taxpayer, but in the case of attribution from relatives the
taxpayer will only be deemed to own a substantial interest in the Issuer if he
owns, directly or indirectly, with attribution from his spouse, more than 7%
of the nominal paid-in capital of the Issuer or of a certain class or classes
of shares of the Issuer.
A holder of the Guaranteed Notes is not subject to Netherlands net wealth
tax in respect of the Guaranteed Notes, provided such holder is not an
individual, or, if such holder is an individual, provided that such holder
does not own an enterprise or an interest in an enterprise which is carried on
through a permanent establishment or permanent representative in The
Netherlands to which or to whom the Guaranteed Notes are attributable.
No gift, estate or inheritance tax arises in The Netherlands on a gift of
Guaranteed Notes by, or on the death of a holder of, the Guaranteed Notes who
is neither a resident nor a deemed resident of The Netherlands, unless such
holder of the Guaranteed Notes owns, or owned, an enterprise or an interest in
an enterprise which is carried on through a permanent establishment or
permanent representative in The Netherlands to which or to whom the Guaranteed
Notes are attributable.
Indonesia Tax Considerations
Payments of interest under the PT-FI Note and the Underlying Notes are
currently subject to Indonesian withholding tax in the amount of 10%, a
reduced rate applicable to residents of The Netherlands under the double tax
treaty between Indonesia and The Netherlands. AFIC has agreed, and each
Infrastructure Affiliate will agree, to pay Underlying Additional Amounts with
respect to the Underlying Notes so that the net amount received by the Issuer
after such withholding will be equal to the amount that would have been
received if no such tax had been payable. If PT-FI, AFIC and/or any
Infrastructure Affiliate becomes legally obligated, as a result of statutory
or regulatory changes adopted on or after the date hereof generally affecting
Indonesian withholding taxes, to pay Underlying Additional Amounts on the
PT-FI Note or the Underlying Notes, as the case may be, the Issuer may redeem
the Guaranteed Notes, in whole but not in part, at 100% of the principal
amount thereof plus accrued and unpaid interest on the date of redemption.
See "Description of the Guaranteed Notes--Tax Redemption."
DESCRIPTION OF CERTAIN INDEBTEDNESS
The following summary of the instruments governing certain indebtedness
of AFIC does not purport to be complete and is qualified in its entirety by
reference to such instruments, copies of which have been filed, or
incorporated by reference, as exhibits to the Registration Statement of which
this Prospectus is a part. Capitalized terms used but not defined herein have
the meanings ascribed to them in such instruments. Simultaneously with the
issuance of the Guaranteed Notes, the AFIC Credit Agreement and related
documents will be amended in certain respects, which will require the consent
of the lenders that are signatories under the AFIC Credit Agreement (the
"Banks"). Unless otherwise indicated the following descriptions of the AFIC
Credit Agreement assume the effectiveness of such amendments and consent.
AFIC Credit Agreement
Pursuant to the AFIC Credit Agreement dated as of December 15, 1993,
among AFIC, the Banks and The Chase Manhattan Bank (National Association), as
agent for the Banks (the "Agent"), the Banks have made a term loan to AFIC in
an aggregate principal amount of $60 million with a final maturity of December
15, 1999. The loan bears interest on the unpaid principal amount at a rate
per annum equal to a reserve adjusted eurodollar rate plus 2-1/2%. AFIC is
required to repay the principal amount of the loan in quarterly installments
of $750,000 commencing March 15, 1994 through September 15, 1999. In addition,
the AFIC Credit Agreement provides for mandatory prepayments upon the
occurrence of certain events.
Description of Guaranty and Security. The obligations of AFIC under the
AFIC Credit Agreement are guaranteed by PT-FI and they are secured by a pledge
of all of AFIC's existing assets financed with proceeds of borrowings under
the AFIC Credit Agreement and related receivables but not including the Master
Services Agreements (other than the Bank Master Services Agreement).
Covenants of AFIC and PT-FI. Financial covenants under the AFIC Credit
Agreement include (i) a requirement that AFIC maintain certain insurance
coverage and certain limitations with respect to the use of proceeds of such
insurance, (ii) restrictions on mergers, consolidations and acquisitions by
AFIC with certain limited exceptions related to identified infrastructure
assets, (iii) restrictions on sales of assets (subject to certain limited
exceptions), (iv) a restriction on AFIC's entry into new lines of business,
(v) a limitation on AFIC granting liens in respect of its assets subject to
certain exceptions, including for liens created pursuant to the security
documents in favor of the Banks, (vi) a limitation on investments which may be
made by AFIC, (vii) a restriction on dividend payments by AFIC, subject to
certain exceptions for quarterly cash dividends so long as there is no default
on the loans and subject to certain other conditions, (viii) a limitation on
affiliate transactions and (ix) a restriction on the ability of AFIC to
transfer any ownership interests in AFIC or any securities convertible into
any such shares, without prior written consent of Banks. The AFIC Credit
Agreement also limits the ability of AFIC to incur additional indebtedness
other than the Underlying Notes.
Under the Guarantee Agreement, PT-FI has agreed to certain covenants,
including a limitation on its ability to incur debt. The Guarantee Agreement
requires that PT-FI maintain a Fixed Charge Ratio (as defined) as of the end
of any fiscal quarter of 1.25 to 1. The Guarantee Agreement contains certain
additional covenants, including covenants which limit the ability of PT-FI to
merge or consolidate with other entities or to convey, sell, lease, transfer
or otherwise dispose of a substantial portion of its assets.
Events of Default. The AFIC Credit Agreement specifies certain events of
default which permit the Banks to declare all outstanding amounts under the
AFIC Credit Agreement to be due and payable. These include, among other
things, a default in the payment when due of any installment of principal on
the loan; a default in the payment when due of any interest on the loan and
continuance of such default for five days after the due date; PT-FI default
in payment of any amounts due under the PT-FI Guarantee; bankruptcy of AFIC or
PT-FI; any representation, warranty or certificate by AFIC or PT-FI in the
AFIC Credit Agreement or related documents shall prove to have been false or
misleading in any material respect when made; a default by any of AFIC or
PT-FI in the performance of its covenants set forth in the AFIC Credit
Agreement or related agreements, subject in the case of certain covenants to a
notice requirement; a default by AFIC in the payment when due of any amount in
respect of any indebtedness (other than the loan under the AFIC Credit
Agreement) having an aggregate principal amount of at least $500,000, or the
occurrence of any event specified in an agreement relating to any indebtedness
(other than the loan under the AFIC Credit Agreement) that has the effect to
cause or (with or without the giving of any required notice or the expiration
of any grace period or both) to permit the holders of such indebtedness to
cause indebtedness of AFIC at least equal to $500,000 to become due; a
cross-default of any PT-FI debt over $10 million; a default by PT-FI under the
FTX Credit Agreement; termination of the New COW; a failure by PT-FI to make
payments under the Bank Master Services Agreement; judgment and ERISA
defaults; a default by any of AFIC, ALatieF or PT-FI in its obligations under
any Project Document that is not remedied or waived within 30 days after the
occurrence thereof; a failure by FTX to own directly or indirectly,
beneficially or of record, at least 50.1% of the voting stock of PT-FI or
otherwise to possess the power to direct the management of PT-FI.
Bank Master Services Agreement. AFIC has entered into a Master Services
Agreement dated as of December 15, 1993 with PT-FI (the "Bank Master Services
Agreement") pursuant to which AFIC has agreed to assume responsibility for the
performance of certain administrative and supply services related to the
initial group of assets transferred by PT-FI to AFIC. The Bank Master Services
Agreement provides that PT-FI will pay sufficient amounts thereunder to cover
all of AFIC's expenses, including debt servicing so long as loans under the
AFIC Credit Agreement are outstanding. PT-FI has also agreed to provide
certain support services including electricity, water, waste disposal,
transportation, maintenance and repairs, security and other similar services
necessary in connection with the ownership, construction, maintenance and
operation by AFIC of the acquired assets. These support services may
initially be provided by PT-FI to AFIC free of charge, although PT-FI reserves
the option to later establish reasonable charges and contractual arrangements
for any and all such support services.
PT-FI Credit Agreement
PT-FI entered into an amended $550 million credit agreement in June 1993
(the "PT-FI Credit Agreement"). The PT-FI Credit Agreement, guaranteed by FCX
and FTX, is structured as a three year revolving line of credit followed by a
3 1/2 year reducing revolving line of credit. The PT-FI Credit Agreement is
part of an $800 million committed credit facility available to FTX and its
subsidiaries including PT-FI and is subject to a borrowing base, redetermined
annually by the banks, which establishes maximum consolidated debt for FTX and
its subsidiaries, including PT-FI. PT-FI's limit under the facility is $550
million subject to the borrowing base discussed above. Interest is variable
and commitment fees are payable at 0.375% per annum on the average daily
unused commitment. The PT-FI Credit Agreement provides for working capital
requirements, specified coverage of fixed charges, and restrictions on other
borrowings. PT-FI has assigned its existing and future sales contracts and
pledged its rights under the New COW, accounts receivable and other assets as
security for its borrowings under the PT-FI Credit Agreement. As of December
31, 1993, $547.5 million was available under the current borrowing base and
$412.0 million of borrowings were unused under the credit facility. To the
extent FTX and its other subsidiaries incur additional debt, the amount
available to PT-FI under the PT-FI Credit Agreement may be reduced. The
average interest rate on borrowings under the PT-FI Credit Agreement was 4.4%
during 1993, 5.1% during 1992 and 7.4% during 1991.
The PT-FI Credit Agreement contains covenants addressing financial
reporting requirements, maintenance of insurance, limitations on mergers and
acquisitions, restrictions on asset dispositions, limitations on liens and
limitations on the incurrence of additional indebtedness and various other
covenants that are customary for credit facilities of this type.
Under the terms of the PT-FI Credit Agreement, events of default include
failure to pay principal and interest when due, failure to comply with the
covenants set forth in the PT-FI Credit Agreement, cross-default to certain
other indebtedness, a bankruptcy filing on either a voluntary or involuntary
basis and the failure of FTX to own directly or indirectly such number of
shares of voting stock of PT-FI as is needed to effectively control its policy
and direction. However, a number of the events of default under the PT-FI
Credit Agreement also relate to FTX and its other subsidiaries as well as to
PT-FI and may occur independently of actions taken or not taken by PT-FI. As
of December 31, 1993, PT-FI was in compliance with the terms of the PT-FI
Credit Agreement.
DESCRIPTION OF FCX PREFERRED STOCK
AND SPECIAL PREFERENCE STOCK
Step-Up Convertible Preferred Stock
As of December 31, 1993, FCX had outstanding 700,000 shares of Step-Up
Convertible Preferred Stock, par value $0.10 per share. The Step-Up
Convertible Preferred Stock is represented by depositary shares, each of which
represents 0.05 shares of such stock. The Step-Up Convertible Preferred Stock
ranks, as to payment of dividends and distribution upon liquidation, pari
passu with Special Preference Stock (as defined below) and Gold-Denominated
Preferred Stock (as defined below) of FCX and senior to the Class A and Class
B Common Stock of FCX.
The depositary shares have a liquidation preference of $25.00 per share
(equivalent to $500.00 per share of Step-Up Convertible Preferred Stock) and
are convertible at the option of the holder at any time, unless previously
redeemed, into approximately 0.826 shares of Class A Common Stock (equivalent
to a conversion price of $30.28 per share of Class A Common Stock), subject to
adjustment in certain circumstances. Dividends on the Step-Up Convertible
Preferred Stock are cumulative and are payable quarterly in an amount
equivalent to $1.25 per annum per depositary share through August 1, 1996 and
thereafter in an amount equivalent to $1.75 per annum per depositary share
until redemption or conversion.
The depositary shares are not redeemable prior to August 1, 1996.
Thereafter and prior to August 1, 1999, the depositary shares are redeemable
at the option of FCX, in whole or in part, for such number of shares of Class
A Common Stock as are issuable at a conversion rate of approximately 0.826
shares of Class A Common Stock for each depositary share, subject to
adjustment in certain circumstances. FCX may exercise this option only if the
trading prices of the Class A Common Stock as measured for a specified number
of trading days prior to public notice of the redemption have exceeded $38.44
per share, subject to adjustment in certain circumstances. On and after
August 1, 1999, the depositary shares are redeemable, in whole or in part, at
the option of FCX, at a redemption price of $25.00 per depositary share plus
accrued and unpaid dividends. FCX may, at its option, subject to certain
exceptions, pay the redemption price in cash, Class A Common Stock or any
combination thereof.
The Step-Up Convertible Preferred Stock has limited voting rights
triggered by the failure of FCX to pay dividends in an amount equal to six
full quarterly dividends or by the proposed amendment to the Certificate of
Incorporation of FCX so as to adversely affect the rights of holders of
Step-Up Convertible Preferred Stock. Voting rights are not triggered upon
amendment to the Certificate of Incorporation to authorize other series of
stock of FCX ranking on a parity with or junior to the Step-Up Convertible
Preferred Stock as to dividends or rights upon liquidation.
Special Preference Stock
As of December 31, 1993, FCX had outstanding 26,400,000 shares of 7%
Convertible Exchangeable Special Preference Stock, par value $0.10 per share
(the "Special Preference Stock"), a series of Special Stock. The Special
Preference Stock is represented by depositary shares, each of which represents
2 16/17 shares of Special Preference Stock. The Special Preference Stock is
redeemable at the option of FCX, in whole or in part, at prices declining to
$25.00 per depositary share, commencing on August 1, 1995. The Special
Preference Stock ranks, as to payment of dividends and distributions upon
liquidation, pari passu with the Step-Up Convertible Preferred Stock and the
Gold-Denominated Preferred Stock and prior to the Class A and Class B Common
Stock. Holders of shares of Special Preference Stock will be entitled to
receive cumulative cash dividends at an annual rate equivalent to $0.595 per
share ($1.75 per depositary share) when and as and if declared by the Board of
Directors of FCX, which dividends are payable quarterly. After full
cumulative dividends on Special Preference Stock for all past and current
quarterly dividend periods, have been paid in full, the Special Preference
Stock will not be entitled to participate with the Class A and Class B Common
Stock in any further distributions by FCX (except upon liquidation,
dissolution or winding up of FCX). In the event of any such liquidation,
dissolution or winding up, after payment or provision for payment of the debts
and other liabilities of FCX, the holders of Special Preference Stock will be
entitled to receive out of the remaining net assets of FCX $8.50 per share
($25.00 per depositary share) in cash plus accrued and unpaid dividends before
any distribution is made or set apart for the holders of the Class A and Class
B Common Stock or any other stock of FCX ranking junior to the Special
Preference Stock as to dividends or distribution of assets upon liquidation,
dissolution or winding up of the affairs of FCX.
Each depositary share representing Special Preference Stock is
convertible at the option of the holder at any time, unless previously
redeemed, into approximately 1.009 shares of Class A Common Stock (equivalent
to a conversion price of $24.77 per share of Class A Common Stock), subject to
adjustment in certain circumstances. The depositary shares are exchangeable
in whole at the option of FCX on any quarterly dividend payment date,
commencing August 1, 1994, for FCX's 7% Convertible Subordinated Debentures
due 2007 (the "Debentures") at a rate of $25.00 principal amount of Debentures
for each depositary share. The Debentures, if issued, will be convertible at
the option of the holder at any time, unless previously redeemed, into Class A
Common Stock at the conversion price for depositary shares for which the
Debentures have previously been exchanged, subject to adjustments in certain
circumstances.
The Special Preference Stock has limited voting rights triggered by the
failure of FCX to pay dividends in an amount equal to six full quarterly
dividends or by FCX's proposed amendment to its Certificate of Incorporation
so as to adversely affect the rights of holders of Special Preference Stock.
Voting rights are not triggered upon amendment to the Certificate of
Incorporation to authorize other series of stock of FCX, whether ranking
senior to, on a parity with or junior to the Special Preference Stock as to
dividends or rights upon liquidation.
Gold-Denominated Preferred Stock
As of December 31, 1993, FCX had outstanding 300,000 shares of
Gold-Denominated Preferred Stock (referred to herein as "Series I") and on
January 21, 1994 FCX issued 215,279 shares of Gold-Denominated Preferred
Stock, Series II (collectively, "Gold-Denominated Preferred Stock"). The
Gold-Denominated Preferred Stock is represented by depositary shares, each of
which represents 0.05 shares of such stock. The Gold-Denominated Preferred
Stock ranks, as to the payment of dividends and distribution upon liquidation
pari passu with the Special Preference Stock and the Step-Up Convertible
Preferred Stock and senior to FCX's Class A and Class B Common Stock.
The depositary shares have a liquidation preference equal to the dollar
equivalent value of 0.10 ounces of gold per depositary share plus accrued and
unpaid dividends. Dividends on the Gold-Denominated Preferred Stock are
cumulative and are payable quarterly, in the case of Gold-Denominated
Preferred Stock, Series I, in an amount equal to the dollar equivalent value
of 0.000875 ounces of gold per depositary share per quarter, and, in the case
of Gold-Denominated Preferred Stock, Series II, commencing May 1, 1994 in an
amount equal to the dollar equivalent value of 0.0008125 ounces of gold per
depositary share per quarter.
The depositary shares are subject to mandatory redemption, out of funds
legally available therefor, on August 1, 2003 and on February 1, 2006,
respectively, at an amount equal to the dollar equivalent value of 0.10 ounces
of gold per depositary share plus accrued and unpaid dividends. The
depositary shares are not subject to redemption at the option of FCX, except
in limited circumstances. FCX does not have the right to make any mandatory
or optional redemption of any depositary shares unless full cumulative
dividends for all past dividend periods shall have been paid or declared and
set aside for payment upon all depositary shares and all other outstanding
shares of stock of FCX ranking, as to dividends, on a parity with the
depositary shares. For purposes of this discussion, the "dollar equivalent
value" of a specified number of ounces of gold means that number of ounces
multiplied by a reference price determined by taking the average of the London
P.M. gold fixing price for an ounce of gold on a specified number of days
prior to the date of determination.
The Gold-Denominated Preferred Stock has limited voting rights triggered
by the failure of FCX to pay dividends in an amount equal to six full
quarterly dividends or by any amendment to FCX's Certificate of Incorporation
that would adversely affect the rights of holders of Gold-Denominated
Preferred Stock or create, authorize or issue any series or class of stock
ranking senior to the shares of Gold-Denominated Preferred Stock with respect
to dividends or distribution of assets upon liquidation, dissolution or
winding up of FCX. Voting rights are not triggered upon amendment to the
Certificate of Incorporation to authorize other series of stock of FCX ranking
on a parity with or junior to the Gold-Denominated Preferred Stock as to
dividends or rights upon liquidation, dissolution or winding up.
UNDERWRITING
The Underwriters named below have severally agreed to purchase from the
Issuer the following principal amounts of Guaranteed Notes:
UNDERWRITING
The Underwriters named below have severally agreed to purchase from the
Issuer the following principal amounts of Guaranteed Notes:
Principal Amount
Underwriters of Guaranteed Notes
------------ -------------------
CS First Boston Corporation..........................
Chase Securities, Inc................................
------------
Total............................................. $120,000,000
============
The Underwriting Agreement provides that the obligations of the
Underwriters are subject to certain conditions precedent, and that the
Underwriters will be obligated to purchase all of the Guaranteed Notes, if any
are purchased.
The Issuer has been advised by the Underwriters that the Underwriters
propose to offer all Guaranteed Notes to the public initially at the public
offering price set forth on the cover page of this Prospectus and to certain
dealers at such price less a concession of % of the principal amount per
Guaranteed Note; that the Underwriters and such dealers may allow a discount
of % of such principal amount on sales to certain other dealers; and that
after the initial public offering, the public offering price and concession
and discount may be changed by the Underwriters.
The Guaranteed Notes are a new issue of securities with no established
trading market. Each of the Underwriters has advised the Issuer that it
intends to act as a market maker for the Guaranteed Notes. However, the
Underwriters are not obligated to do so and any such market-making may be
discontinued at any time without notice. No assurance can be given as to the
liquidity of the trading market for the Guaranteed Notes.
Chase Securities, Inc. is an affiliate of The Chase Manhattan Bank
(National Association), which is agent bank for the AFIC Credit Agreement and
a co-agent for the FTX Credit Agreement.
The Issuer and FCX have jointly and severally agreed to indemnify the
Underwriters against certain liabilities, including civil liabilities under
the Securities Act of 1933, as amended (the"Securities Act"), and to
contribute to payments the Underwriters may be required to make in respect
thereof.
LEGAL MATTERS
The validity of the Guaranteed Notes will be passed upon by Davis Polk &
Wardwell. The tax matters under "Taxation" will be passed upon for the Issuer
and FCX by Miller & Chevalier, Chartered, tax counsel to the Issuer and FCX as
to matters of United States law, by Stibbe Simont Monahan Duhot, counsel to
the Issuer and FCX, as to matters of Netherlands law, and Drs. Siddharta &
Siddharta, a member firm of Coopers & Lybrand (International), tax advisors to
the Issuer and FCX as to matters of Indonesian law. Certain legal matters will
be passed upon for the Underwriters by Sullivan & Cromwell. Davis Polk &
Wardwell and Sullivan & Cromwell will rely upon the opinion of Stibbe Simont
Monahan Duhot as to all matters of Netherlands law.
EXPERTS
The audited financial statements of FCX and the audited balance sheet of
the Issuer included in this Prospectus and incorporated by reference to FCX's
Current Report on Form 8-K dated March 2, 1994 and the audited financial
statements of FCX incorporated in this Prospectus by reference to FCX's Annual
Report on Form 10-K for the year ended December 31, 1992, have been audited by
Arthur Andersen & Co., independent public accountants, as indicated in their
reports with respect thereto, and are included herein in reliance upon the
authority of said firm as experts in accounting and auditing in giving said
reports.
The audited financial statements of Rio Tinto Minera, S.A. as of and for
the year ended December 31, 1992 incorporated in this Prospectus by reference
to FCX's Current Report on Form 8-K dated April 13, 1993, as amended on August
5, 1993, have been audited by Coopers & Lybrand, S.A. as indicated in their
Report of the Auditors with respect thereto and are incorporated herein in
reliance upon the authority of said firm as experts in accounting and auditing
in giving said report.
PT-FI's reserves as of December 31, for the years 1989 through 1993
included herein and incorporated herein by reference have been verified by
Independent Mining Consultants, Inc., and such reserve information has been
included herein in reliance upon the authority of said firm as experts in
mining, geology and reserve determinations.
ADDITIONAL INFORMATION
This Prospectus constitutes a part of a Registration Statement filed by
the Issuer and FCX with the Commission in compliance with United States
federal securities laws. This Prospectus omits certain of the information
contained in the Registration Statement in accordance with the rules and
regulations of the Commission. Reference is hereby made to the Registration
Statement and related exhibits for further information with respect to the
Issuer, FCX and the Guaranteed Notes. In addition, the Issuer and FCX, in
compliance with applicable state securities laws, have made certain required
filings. Statements contained herein concerning the provisions of any document
are not necessarily complete and, in each instance, reference is made to the
copy of such document filed as an exhibit to the Registration Statement or
otherwise filed with the Commission. Each such statement is qualified in its
entirety by such reference.
AVAILABLE INFORMATION
FCX is subject to the informational requirements of the Exchange Act,
and in accordance therewith files reports and other information with the
Commission. Reports, proxy statements and other information filed by FCX with
the Commission can be inspected and copied at the public reference facilities
maintained by the Commission at Room 1024, 450 Fifth Street, N.W., Washington,
D.C. 20549 or at its Regional Offices located at Suite 1400, Northwestern
Atrium Center, 500 West Madison, Chicago, Illinois 60661 and 13th Floor, 7
World Trade Center, New York, New York 10007, and copies of such material can
be obtained from the Public Reference Section of the Commission at 450 Fifth
Street, N.W., Washington, D.C. 20549, at prescribed rates. Certain securities
of FCX are listed on the New York Stock Exchange (the "NYSE") and on The
Australian Stock Exchange. Reports, proxy statements and other information
concerning FCX can be inspected at the offices of the NYSE, 20 Broad Street,
New York, New York 10005.
The Issuer is a special purpose entity, is a wholly owned subsidiary of
FCX and is not engaged in any business operations independent of FCX. In view
of the FCX Guaranty, the Issuer does not intend to provide separate reports to
holders of the Guaranteed Notes.
INDEX TO FINANCIAL STATEMENTS
Page
----
P.T. ALatieF Freeport Finance Company B.V. (Audited)
Report of Independent Public Accountants . . . . . . . . . . . . . F-2
Balance Sheet as of February 3, 1994 and Note to Balance Sheet F-3
Freeport-McMoRan Copper & Gold Inc. Financial Statements (Audited):
Report of Independent Public Accountants . . . . . . . . . . . . . F-4
Balance Sheets as of December 31, 1992 and 1993. . . . . . . . . . F-5
Statements of Income for the years ended December 31, 1991,
1992 and 1993. . . . . . . . . . . . . . . . . . . . . . . . . . F-6
Statements of Cash Flow for the years ended December 31, 1991,
1992 and 1993 . . . . . . . . . . . . . . . . . . . . .. . . . . F-7
Statements of Stockholders' Equity for the years ended
December 31, 1991, 1992 and 1993 . . . . . . . . . . . . . . . . F-8
Notes to Financial Statements . . . . . . . . . . . . . . . . . . F-9
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To P.T. ALatieF Freeport Finance Company B.V.:
We have audited the accompanying balance sheet of P.T. ALatieF Freeport
Finance Company B.V. (a Netherlands corporation) as of February 3, 1994. This
balance sheet is the responsibility of the Company's management. Our
responsibility is to express an opinion on this balance sheet based on our
audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the balance sheet is free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the balance sheet. An audit also
includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our
opinion.
In our opinion, the balance sheet referred to above presents fairly, in
all material respects, the financial position of P.T. ALatieF Freeport Finance
Company B.V. as of February 3, 1994 in conformity with generally accepted
accounting principles.
ARTHUR ANDERSEN & CO.
New Orleans, Louisiana,
February 10, 1994
P.T. ALATIEF FREEPORT FINANCE COMPANY B.V.
BALANCE SHEET
February 3, 1994
Cash $20,510
=======
Common stock, issued and outstanding 40 shares $20,510
=======
Note to Balance Sheet
Basis of Presentation
P.T. ALatieF Freeport Finance Company B.V. (the "Issuer") is a wholly
owned subsidiary of Freeport-McMoRan Copper & Gold Inc. ("FCX"). The Issuer
was organized to issue notes and lend the net proceeds thereof to P.T. ALatieF
Freeport Infrastructure Corporation and one or more affiliated entities which
will use the proceeds of such loan to purchase infrastructure assets from P.T.
Freeport Indonesia Company, a subsidiary of FCX.
The Issuer was formed on February 3, 1994 with a capital contribution
from FCX of 40,000 Dutch Guilders. The Issuer's authorized capital amounts to
200,000 Dutch Guilders and is divided into 200 shares with a par value of
1,000 Dutch Guilders. The accompanying balance sheet has been converted to
United States dollars using the exchange rate on the date of formation.
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Stockholders and Board of Directors of
Freeport-McMoRan Copper & Gold Inc.:
We have audited the accompanying balance sheets of Freeport-McMoRan
Copper & Gold Inc. (the "Company"), a Delaware corporation, as of December 31,
1993 and 1992, and the related statements of income, cash flow and
stockholders' equity for each of the three years in the period ended December
31, 1993. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of the Company as of
December 31, 1993 and 1992 and the results of its operations and its cash flow
for each of the three years in the period ended December 31, 1993 in
conformity with generally accepted accounting principles.
As discussed in Notes 9 and 1 to the financial statements, effective
January 1, 1991, the Company changed its method of accounting for
postretirement benefits other than pensions and effective January 1, 1993,
changed its method of accounting for periodic scheduled maintenance costs,
deferred charges, and costs of management information systems.
ARTHUR ANDERSEN & CO.
New Orleans, Louisiana,
January 25, 1994
FREEPORT-MCMORAN COPPER & GOLD INC.
BALANCE SHEETS
December 31,
------------------------
1992 1993
----------- ----------
(amounts in thousands)
ASSETS
Current assets:
Cash and short-term investments $ 371,842 $ 13,798
Accounts receivable:
Customers 130,587 122,527
Other 20,249 66,202
Inventories:
Products 13,911 58,247
Materials and supplies 118,347 153,681
Prepaid expenses and other 6,178 13,787
---------- ---------
Total current assets 661,114 428,242
---------- ---------
Property, plant and equipment 1,443,939 2,172,222
Less accumulated depreciation and amortization 450,527 525,619
--------- ---------
Net property, plant and equipment 993,412 1,646,603
--------- ---------
Other assets 39,479 41,808
--------- ---------
Total assets $1,694,005 $2,116,653
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued liabilities $ 88,876 $ 218,083
Current portion of long-term debt and
short-term borrowings 78,571 48,791
Accrued income and other taxes 1,129 20,865
--------- ---------
Total current liabilities 168,576 287,739
Long-term debt, less current portion 645,012 211,868
Accrued post-retirement benefits and other liabilities 15,558 188,165
Deferred income taxes 196,953 201,553
Minority interest 21,449 46,781
Mandatory redeemable gold-denominated preferred stock -- 232,620
Stockholders' equity:
Special preference stock 224,400 224,400
Step-Up preferred stock -- 350,000
Class A common stock, par value $.10 5,318 5,802
Class B common stock, par value $.10 14,213 14,213
Capital in excess of par value of common stock 353,697 334,166
Cumulative foreign translation adjustment -- (10,012)
Retained earnings 48,829 29,358
--------- ---------
646,457 947,927
--------- ----------
Total liabilities and stockholders' equity $1,694,005 $2,116,653
========== ==========
The accompanying notes are an integral part of these financial statements.
FREEPORT-MCMORAN COPPER & GOLD INC.
STATEMENTS OF INCOME
Years Ended December 31,
----------------------------
1991 1992 1993
-------- -------- --------
(amounts in thousands,
except per share amounts)
Revenues $467,522 $714,315 $925,932
Cost of sales:
Site production and delivery 204,353 308,948 567,148
Depreciation and amortization 38,397 48,272 67,906
-------- -------- --------
Total cost of sales 242,750 357,220 635,054
Exploration expenses 6,502 12,185 33,748
Provision for restructuring charges -- -- 20,795
General and administrative expenses 40,550 68,481 81,399
-------- -------- --------
Total costs and expenses 289,802 437,886 770,996
-------- -------- --------
Operating income 177,720 276,429 154,936
Interest expense, net (21,451) (18,897) (15,327)
Other income (expense), net 3,477 7,162 (2,216)
-------- -------- --------
Income before income taxes and minority
interest 159,746 264,694 137,393
Provision for income taxes (45,585) (103,726) (67,589)
Minority interest (12,199) (31,075) (9,134)
-------- -------- --------
Income before changes in accounting principle 101,962 129,893 60,670
Cumulative effect of changes in accounting
principle, net of taxes and minority interest (5,803) -- (9,854)
-------- -------- --------
Net income 96,159 129,893 50,816
Preferred dividends -- (7,025) (28,954)
-------- -------- --------
Net income applicable to common stock $ 96,159 $122,868 $ 21,862
======== ======== ========
Net income per share of common stock:
Before changes in accounting principle $.56 $.66 $.16
Cumulative effect of changes in accounting
principle (.03) -- (.05)
---- ---- ----
$.53 $.66 $.11
==== ==== ====
Average common shares outstanding 182,130 187,343 197,929
======== ======== ========
Dividends per common share $.55 $.60 $.60
==== ==== ====
The accompanying notes are an integral part of these financial statements.
FREEPORT-MCMORAN COPPER & GOLD INC.
STATEMENTS OF CASH FLOW
Years Ended December 31,
----------------------------
1991 1992 1993
-------- -------- --------
(amounts in thousands)
Cash flow from operating activities:
Net income $ 96,159 $129,893 $ 50,816
Adjustments to reconcile net income to net
cash provided by operating activities:
Cumulative effect of changes in accounting
principle 5,803 -- 9,854
Depreciation and amortization 38,397 48,272 67,906
Provision for restructuring charges,
net of payments -- -- 4,623
Deferred income taxes 17,052 52,154 8,512
Amortization of discount on zero coupon
exchangeable notes 9,162 17,297 10,844
Minority interest's share of net income 12,199 31,075 9,134
(Increase) decrease in working capital,
net of effect of acquisition:
Amount due from FTX (20,000) 20,000 --
Accounts receivable (24,647) (77,448) (16,904)
Inventories (50,086) (10,644) (36,669)
Prepaid expenses and other (939) (4,157) (10,503)
Accounts payable and accrued liabilities (794) 44,035 32,792
Accrued income and other taxes (9,988) 1,129 19,736
Other 1,554 963 8,404
-------- -------- --------
Net cash provided by operating activities 73,872 252,569 158,545
-------- -------- --------
Cash flow from investing activities:
Capital expenditures (239,954) (367,842) (453,122)
Purchase of indirect interest in PT-FI -- (211,892) --
Acquisition of RTM, net of cash acquired -- -- (10,390)
-------- -------- --------
Net cash used in investing activities (239,954) (579,734) (463,512)
-------- -------- --------
Cash flow from financing activities:
Cash dividends paid:
Common stock (100,171) (111,365) (118,575)
Preferred stock -- (4,407) (22,981)
Minority interest (8,945) (15,643) (19,143)
Conversion of zero coupon exchangeable notes -- (7,848) --
Proceeds from debt 103,000 153,000 397,971
Repayment of debt (10,000) -- (931,439)
Net proceeds from infrastructure financing -- -- 80,000
Net proceeds from sale of:
Step-Up preferred stock -- -- 340,700
Gold-denominated preferred stock -- -- 220,390
Class A common stock -- 174,142 --
Special preference stock -- 217,867 --
Subsidiary interest -- 212,485 --
Zero coupon exchangeable notes 218,560 -- --
-------- -------- --------
Net cash provided by (used in) financing
activities 202,444 618,231 (53,077)
-------- -------- --------
Net increase (decrease) in cash and
short-term investments 36,362 291,066 (358,044)
Cash and short-term investments at
beginning of year 44,414 80,776 371,842
-------- -------- --------
Cash and short-term investments at end of year $ 80,776 $371,842 $ 13,798
======== ======== ========
Interest paid $ 32,482 $ 22,581 $ 29,122
======== ======== ========
Income taxes paid $ 38,521 $ 50,029 $ 39,314
======== ======== ========
The accompanying notes, which include information in Notes 1, 2, 3, and 7
regarding noncash transactions, are an integral part of these financial
statements.
FREEPORT-MCMORAN COPPER & GOLD INC.
STATEMENTS OF STOCKHOLDERS' EQUITY
Years Ended December 31,
----------------------------
1991 1992 1993
-------- -------- --------
(amounts in thousands)
Special Preference Stock:
Balance at beginning of year $ -- $ -- $224,400
Sale of shares to the public -- 224,400 --
-------- -------- --------
Balance at end of year -- 224,400 224,400
-------- -------- --------
Step-Up Preferred Stock:
Sale of shares to the public -- -- 350,000
-------- -------- --------
Class A common stock:
Balance at beginning of year 2,000 2,000 5,318
Two-for-one stock split -- 2,000 --
Sale of shares to the public -- 863 --
Conversion of zero coupon exchangeable notes -- 455 484
-------- -------- --------
Balance at end of year 2,000 5,318 5,802
-------- -------- --------
Class B common stock:
Balance at beginning of year 7,106 7,106 14,213
Two-for-one stock split -- 7,107 --
-------- -------- --------
Balance at end of year 7,106 14,213 14,213
-------- -------- --------
Capital in excess of par value of common stock:
Balance at beginning of year 167,451 163,439 353,697
Issuance cost of Mandatory Redeemable Gold-
Denominated and Step-Up Preferred Stock -- -- (21,530)
Sale of Class A and Special Preference Stock -- 166,746 --
Conversion of zero coupon exchangeable notes -- 69,945 79,241
Two-for-one stock split -- (9,107) --
Cash dividends on common stock (4,012) (37,326) (65,587)
Dividends on preferred stocks -- -- (11,655)
-------- -------- --------
Balance at end of year 163,439 353,697 334,166
-------- -------- --------
Cumulative foreign translation adjustment:
Current year adjustment -- -- (10,012)
-------- -------- --------
Retained earnings:
Balance at beginning of year -- -- 48,829
Net income 96,159 129,893 50,816
Cash dividends on common stock (96,159) (74,039) (52,988)
Dividends on preferred stocks -- (7,025) (17,299)
-------- -------- --------
Balance at end of year -- 48,829 29,358
-------- -------- --------
Total stockholders' equity $172,545 $646,457 $947,927
======== ======== ========
The accompanying notes are an integral part of these financial statements.
FREEPORT-MCMORAN COPPER & GOLD INC.
NOTES TO FINANCIAL STATEMENTS
1. Summary of Significant Accounting Policies
Basis of Presentation. The consolidated financial statements of
Freeport-McMoRan Copper & Gold Inc. ("FCX" or the "Company") include its
majority-owned subsidiaries, including P.T. Freeport Indonesia Company
("PT-FI") and Rio Tinto Minera, S.A. ("RTM"). Reclassifications were made to
prior year financial statements to conform to the 1993 presentation. All
significant intercompany transactions have been eliminated.
Cash and Short-Term Investments. The Company considers highly liquid
investments purchased with a maturity of three months or less to be cash
equivalents. PT-FI and RTM cash is not available to FCX until cash dividends
are paid to FCX. At December 31, 1993, PT-FI's net assets totaled $184.3
million, including $24.6 million of retained earnings. On January 5, 1994,
PT-FI declared a $42.1 million dividend of which $36.1 million was due to FCX.
At December 31, 1993, RTM's net assets totaled $40.2 million. RTM is not
expected to pay a dividend to FCX in the near future.
Inventories. Inventories are generally stated at the lower of cost or
market. PT-FI uses the average cost method and RTM uses the first-in,
first-out (FIFO) cost method.
Property, Plant and Equipment. Property, plant and equipment is carried
at cost. Mineral exploration costs are expensed as incurred, except in the
year the property is deemed to contain a viable mineral deposit, in which case
they are capitalized. Development costs, which include interest incurred
during the construction and development period, are capitalized. Expenditures
for replacements and improvements are capitalized. Depreciation expense for
mining and milling operations is determined using the unit-of-production
method based on estimates of recoverable reserves. Other assets, including
RTM's smelter, are depreciated on a straight-line basis over estimated useful
lives of 15 to 20 years for buildings and 3 to 25 years for machinery and
equipment.
Hedging. PT-FI has a price protection program for virtually all of its
estimated copper sales to be priced in 1994 at an average floor price of $.90
per pound, while allowing full benefit from prices above that amount. The cost
of this program ($6.0 million at December 31, 1993) is included in product
inventories and will be amortized during 1994. Based on an average 1994
forward market price of approximately $.82 per pound of copper (December 31,
1993 forward prices per London Metal Exchange, "LME"), the market value of
these contracts is approximately $56 million. The contracts are with a
diversified group of financially strong counterparties.
RTM has forward contracts for approximately 61% of its estimated 1994
gold production at $383.80 per ounce and 38% of its estimated 1995 gold
production at $394.80 per ounce. RTM has also hedged approximately 53% and
38% of its estimated 1994 and 1995 silver production at $4.70 and $4.80 per
ounce, respectively. Based on a market price of $390.65 per ounce of gold and
$5.12 per ounce of silver (December 31, 1993 price per LME), these contracts
are in a loss position of approximately $2 million. Additionally, RTM has a
policy of eliminating significant exposure to copper price fluctuations by
hedging purchases of concentrate at its smelter through the use of forward
contracts. At December 31, 1993, RTM sold forward approximately 4.2 million
pounds of its concentrate inventory at approximately $.78 per pound of copper.
Concentrate Sales. Revenues associated with PT-FI's sales of metal
concentrates are recorded net of royalties, treatment costs, and amortization
of the cost of its price protection program. PT-FI's concentrate sales
agreements provide for provisional billings based on world metals prices,
primarily the LME, with actual settlement generally based on appropriate
future metals prices. Revenues, recorded initially using provisional prices,
are adjusted using current prices. At December 31, 1993, copper sales
totaling 213.4 million pounds remained to be contractually priced at various
times in 1994. As a result of PT-FI's price protection program, these pounds
are recorded at an average price of $.90 per pound. Gold sales are priced
according to individual contract terms.
Foreign Translation Adjustment. The functional currency for RTM is the
Spanish peseta. RTM's assets and liabilities are translated to U.S. dollars
using the exchange rate in effect at the balance sheet date. The cumulative
results of the translation adjustment are recorded as a separate component of
stockholders' equity. Results of operations are translated using the average
exchange rates during the period. Gains and losses resulting from foreign
currency transactions, which were not material, are included in net income.
Changes in Accounting Principle. During 1993, the Company adopted the
following changes to accounting policies:
Periodic Scheduled Maintenance Costs. Costs related to periodic
scheduled maintenance (turnarounds) were previously capitalized when
incurred and amortized generally over six months to two years. Effective
January 1, 1993, the method of accounting was changed to expense these
costs when incurred.
Deferred Charges. The accounting for deferred charges was changed to
provide for deferral of only those costs that directly relate to the
acquisition, construction, and development of assets and to the issuance
of debt and related instruments. Previously, certain other costs that
benefitted future periods were amortized over the periods benefitted.
Management Information Systems. Costs of management information
systems ("MIS") equipment and software that have a material impact on
periodic measurement of net income are capitalized and amortized over
their estimated productive lives. Other MIS costs, including equipment
and purchased software that involve relatively immaterial amounts
(currently individual expenditures of less than $.5 million) and short
estimated productive lives (currently less than three years) are charged
to expense when incurred. During 1993, approximately $3.5 million of
equipment and purchased software was charged to expense. Previously, most
expenditures for MIS equipment and purchased software were capitalized.
The accounting for MIS costs was changed to recognize the rapid rate of
technology change in MIS which results in short productive lives of
equipment and software and a need for continuing investments.
The changes in accounting policy were adopted to improve the
measurement of operating results by reporting cash expenditures as
expenses when incurred unless they are directly related to long-lived
asset additions. In addition, the administrative costs of accounting for
assets will be reduced by not capitalizing and amortizing relatively
insignificant expenditures that do not have a material effect on measuring
periodic net income.
If these changes in accounting principle had not been adopted, 1993
income before changes in accounting principle would not have been
materially different from the amount reported. If the changes in
accounting principle had been applied in prior years, 1992 and 1991 net
income would not have been materially different from amounts reported.
Restructuring Charges. FCX recognized expense of $20.8 million during
1993 for restructuring the administrative organization (including
primarily personnel related costs and a write-off of excess office
facilities) of Freeport-McMoRan Inc. ("FTX"), the parent company of FCX,
the cost to downsize PT-FI's computing and MIS structure, and a write-off
of costs associated with PT-FI's previous credit agreement.
See Management's Discussion and Analysis of Financial Condition and Results
of Operations for information about a reclassification of restructuring
charges from those previously reported resulting from views expressed by
the Securities and Exchange Commission staff.
2. Ownership in PT-FI
In January 1991, the Government of Indonesia (the "Indonesian
Government") increased its ownership in PT-FI from 8.9% to 10% by purchasing
2,242 PT-FI shares owned by FCX for $18.1 million. FCX withholds 40% of PT-FI
dividends on all Indonesian Government-owned shares until the non-interest
bearing receivable ($2.2 million at December 31, 1993) is satisfied.
In December 1991, FCX exchanged 21,300 shares of PT-FI common stock for a
$212.5 million subordinated promissory note from PT-FI, reducing FCX's
ownership in PT-FI to approximately 89% with the remaining 11% being owned by
the Indonesian Government. Interest on the note is due quarterly at a rate
equal to the effective rate under PT-FI's amended credit agreement, and
principal is payable in twenty equal, quarterly installments beginning January
2000. If interest or principal is in arrears, PT-FI cannot pay dividends on
its common stock.
In December 1991, PT-FI and the Indonesian Government signed a new
contract of work (the "New COW") which has a 30-year term with two 10-year
extensions permitted. Under the New COW, FCX pays the Indonesian Government a
royalty of 1.5% to 3.5% on the value of copper sold, net of delivery costs and
treatment and refining charges, and a 1% royalty on the sales value of gold
and silver ($9.5 million in 1993, $15.7 million in 1992, and $10.5 million in
1991). The New COW required FCX to increase the ownership by Indonesian
entities in PT-FI to 20%, which was achieved through the sale of 10% (21,300
shares) of PT-FI common stock to an entity owned by Indonesian investors on
December 31, 1991.
In December 1992, FCX purchased 49% (10.5 million shares) of the capital
stock of the publicly traded Indonesian entity which owned the 10% of PT-FI
sold in 1991. In December 1993, PT-FI issued 8,321 shares of its stock to FCX
in exchange for the conversion of certain notes (Note 7). FCX's direct
ownership in PT-FI totaled 80.8% and 80.0% at December 31, 1993 and 1992,
respectively. In 1994, PT-FI issued an additional 6,169 shares of its stock
to FCX for conversion of the remaining notes, increasing FCX's direct
ownership in PT-FI to 81.28%.
Each transaction discussed above used the fair market value of FCX Class
A common stock at the time of the agreements as the basis to calculate the
purchase and sale prices.
3. Acquisition of RTM
In March 1993, FCX acquired a 65% interest in RTM, which operates a
copper smelter and a gold mine with an estimated remaining life of fewer than
four years, by investing approximately $50 million, excluding transaction
costs, to be used by RTM for working capital requirements and capital
expenditures, including funding a portion of the costs of the expansion of its
smelter production capacity from its current 150,000 metric tons of metal per
year to 180,000 metric tons of metal per year by mid-1995. In December 1993,
RTM redeemed the remaining 35% interest for approximately $19 million.
Selected balance sheet information reflecting the allocation of the purchase
price to the assets and liabilities acquired is as follows (in thousands):
Current assets $101,454
Current liabilities (158,445)
Property, plant and equipment, net 277,170
Other assets 5,358
Long-term debt (38,941)
Accrued postretirement benefits and other liabilities (176,206)
--------
Net cash investment $ 10,390
========
Unaudited pro forma data giving effect to the purchase of RTM as if it
had been acquired on January 1 of each year is as follows:
Years Ended December 31,
-----------------------
1992 1993
----------- ----------
Revenues (000s) $1,176,612 $1,024,097
Operating income (000s) 267,951 152,484
Net income before changes in accounting principle
(000s) 96,760 22,578
Net income per share .52 .11
The pro forma results are not necessarily indicative of the actual
results that would have been achieved nor are they indicative of future
results.
4. Redeemable Preferred Stock
In August 1993, FCX sold publicly 6.0 million depositary shares
representing 300,000 shares of its Gold-Denominated Preferred Stock. Each
depositary share has a cumulative quarterly cash dividend equal to the value
of 0.000875 ounces of gold and is subject to mandatory cash redemption in
August 2003 for the value of 0.1 ounces of gold. The depositary shares are
recorded at their offering price and are being reflected as a hedge of future
gold sales for accounting purposes. The net proceeds from this offering
($220.4 million) were loaned to PT-FI in the form of a Gold Production Payment
Loan, requiring quarterly production payments of 6,176 ounces of refined gold
bullion or the dollar equivalent thereof. Based on the December 31, 1993
closing market price, these depositary shares had a market value of $258.0
million.
In January 1994, FCX sold publicly 4.3 million depositary shares
representing 215,279 shares of its Gold-Denominated Preferred Stock, Series
II. Each depositary share has a cumulative quarterly cash dividend equal to
the value of 0.0008125 ounces of gold and is subject to mandatory cash
redemption in February 2006 for the value of 0.1 ounces of gold. The net
proceeds from this offering ($158.5 million) were loaned to PT-FI under terms
similar to the Gold Production Payment Loan discussed above.
5. Stockholder's Equity
FCX has 312.0 million authorized shares of capital stock consisting of
110.0 million of Special stock, 200.0 million of Class B common stock, and 2.0
million of Preferred stock.
Special and Preferred Stock. At December 31, 1993, there were 84.4
million shares of Special stock issued and outstanding, 58.0 million as Class
A common stock and 26.4 million as Special Preference Stock.
In July 1992, FCX sold publicly 8.6 million shares of its Class A common
stock and 9.0 million depositary shares. Each depositary share represents
2-16/17 shares of its 7% Convertible Exchangeable Special Preference Stock
("Special Preference Stock"), has a cumulative annual cash dividend of $1.75
(payable quarterly) and a $25 liquidation preference, and is convertible at
the option of the holder into approximately 1.009 shares of FCX Class A common
stock (equivalent to a conversion price of $24.77 per share of FCX Class A
common stock). Beginning August 1, 1995, FCX may redeem these depositary
shares for cash at $26.225 per share (declining ratably to $25 per share in
March 2002) plus accrued and unpaid dividends. A portion of the proceeds were
used to purchase the 49% interest in the publicly traded Indonesian entity
which owned a 10% interest in PT-FI and $145.7 million, net of $4.3 million of
expenses, was loaned to PT-FI in January 1993, in exchange for an 8.235%
Convertible Subordinated Debenture due August 1, 2007.
In July 1993, FCX sold publicly 14.0 million depositary shares
representing 700,000 shares of its Step-Up Convertible Preferred Stock
("Step-Up Preferred Stock"). Each depositary share has a cumulative annual
cash dividend of $1.25 through August 1, 1996 and thereafter $1.75 (payable
quarterly) and a $25 liquidation preference, and is convertible at the option
of the holder into approximately 0.826 shares of FCX Class A common stock
(equivalent to a conversion price of $30.28 per share of FCX Class A common
stock). From August 1, 1996 and prior to August 1, 1999, FCX may redeem these
depositary shares for approximately 0.826 shares of FCX Class A common stock
per depositary share if the market price of FCX Class A common stock exceeds
certain specified levels. Thereafter, FCX may redeem these depositary shares
at $25 per share (payable in FCX Class A common stock, cash or a combination
of both, at FCX's option) plus accrued and unpaid dividends. The net proceeds
from this offering ($341.3 million) were loaned to PT-FI in the form of a
Step-Up Perpetual Convertible Subordinated Debenture bearing interest at the
rate of 5.88% per annum through August 1, 1996 and 8.235% thereafter on the
unpaid principal amount.
6. Income Taxes
FCX records income taxes pursuant to Statement of Financial Accounting
Standards No. 109. Substantially all temporary differences relate to
property, plant and equipment. FCX has provided a valuation allowance for all
tax credit carryforwards ($29.5 million) as these would only be utilized
should FCX be required to pay regular U.S. tax, which FCX views as unlikely
because Indonesian taxes exceed U.S. taxes. In addition, RTM, which is
subject to a separate tax jurisdiction (Spain), has net operating loss
carryforwards totaling approximately $108 million ($91 million
pre-acquisition) which expire from 1994 to 1998. FCX has provided a valuation
allowance for the full amount of these carryforwards as RTM has not generated
taxable income in recent years.
The provision for income taxes consists of the following:
Years Ended December 31,
----------------------------
1991 1992 1993
-------- -------- --------
(amounts in thousands)
Current income taxes:
Indonesian $ 20,198 $ 45,996 $54,994
United States 3,178 5,376 3,933
State 150 200 150
-------- -------- --------
23,526 51,572 59,077
-------- -------- --------
Deferred income taxes:
Indonesian 43,240 52,771 4,600
Adjustment for change in rates under New COW (26,465) -- --
United States 277 (617) --
-------- -------- --------
17,052 52,154 4,600
-------- -------- --------
Provision for income taxes $ 40,578 $103,726 $ 63,677
======== ======== ========
Reconciliations of the differences between income taxes computed at the
contractual Indonesian tax rate and income taxes recorded are as follows:
Years Ended December 31,
---------------------------------------------------
1991 1992 1993
---------------- ------------------ ---------------
Percent Percent Percent
of Income of Income of Income
Before Before Before
Income Income Income
Amount Taxes Amount Taxes Amount Taxes
------ --------- ------ --------- ------ ------
(dollar amounts in thousands)
Income taxes computed
at contractual
Indonesian rate $62,342 42% $ 92,643 35% $42,656 35%
Indonesian tax withheld
on:
Dividend payments -- -- 11,732 4 19,765 16
Interest payments -- -- -- -- 4,170 3
Increase (decrease)
attributable to:
Adjustment for change
in rates under
New COW (26,465) (18) -- -- -- --
Intercompany interest
expense -- -- -- -- (18,645) (15)
RTM net loss -- -- -- -- 5,500 5
United States tax 3,370 2 5,302 2 4,083 3
Other, net 1,331 1 (5,951) (2) 6,148 5
------- -- -------- -- ------- --
Provision for income
taxes $40,578 27% $103,726 39% $63,677 52%
======= == ======== == ======= ==
7. Long-term Debt
December 31,
-------------------------
1992 1993
---------- ---------
(amounts in thousands)
PT-FI revolver, average rate 5.1% in 1992 and
4.4% in 1993 $550,000 $ 13,000
Zero coupon exchangeable notes 173,583 102,039
ALatieF joint venture bank loan (Note 10) -- 60,000
Note payable to FTX, average rate 4.2% -- 12,270
RTM gold and silver denominated loans, average
rate 1.3% -- 39,284
RTM bank loan -- 2,374
RTM short-term borrowings, average rate 11% -- 31,692
-------- --------
723,583 260,659
Less current portion and short-term borrowings 78,571 48,791
-------- --------
$645,012 $211,868
======== ========
PT-FI amended its $550.0 million credit agreement in June 1993. The
amended credit agreement (the "Credit Agreement"), guaranteed by FCX and FTX,
is structured as a three-year revolving line of credit followed by a 3 1/2
year reducing revolver. The Credit Agreement is part of an $800.0 million
committed credit facility available to FTX and its subsidiaries including
PT-FI, and is subject to a borrowing base, redetermined annually by the banks,
which establishes maximum consolidated debt for FTX and its subsidiaries,
including PT-FI. PT-FI's limit under the facility is $550.0 million subject
to the borrowing base discussed above. Interest is variable and commitment
fees are payable at 0.38% per annum on the average daily unused commitment.
The Credit Agreement provides for working capital requirements, specified
coverage of fixed charges, and restrictions on other borrowings. PT-FI
assigned its existing and future sales contracts and pledged its rights under
the New COW and its accounts receivables and other assets as security for its
borrowings under the Credit Agreement. As of December 31, 1993, $547.5
million was available under the current borrowing base and $412.0 million of
borrowings were unused under the credit facility. To the extent FTX and its
other subsidiaries incur additional debt, the amount available to PT-FI under
the Credit Agreement may be reduced.
In July 1991, FCX sold $1.035 billion face amount of subordinated Zero
Coupon Exchangeable Notes (the "Zero Coupon Notes"). The net proceeds were
loaned to PT-FI under similar terms. The remaining Zero Coupon Notes
outstanding were redeemed in January 1994. Zero Coupon Notes with a face
amount of $386.0 million, $322.6 million and $326.4 million were presented for
exchange in 1994, 1993, and 1992, respectively, for which FCX issued 5.8
million, 4.8 million, and 4.5 million shares of Class A common stock, and the
Company paid $.3 million in 1994 and $7.9 million in 1992. As a result of the
issuance by FCX of its Class A common stock, PT-FI issued 14,490 shares of its
stock to FCX. Had the Company called the Zero Coupon Notes for redemption on
January 1, 1993, net income would have been $.10 per common share for 1993.
In 1993, FCX borrowed funds from FTX for the acquisition of RTM and $12.3
million was outstanding at December 31, 1993. Interest accrues at a rate
equal to the effective rate under the Credit Agreement and was $.2 million in
1993.
RTM's gold and silver loans are payable with 107,800 ounces of gold
(9,200 ounces payable quarterly) and 953,100 ounces of silver (105,900 ounces
payable quarterly), and are carried at the market price of gold ($331.70 per
ounce) and silver ($3.70 per ounce) at the date of FCX's acquisition. The
loans are accounted for as a hedge. Interest is calculated on the outstanding
ounces at the current prices on the date of payment. Based on the December
31, 1993 LME quotes for gold and silver, the market value of this debt was
approximately $47 million.
RTM also has several short-term credit facilities with banks. The stated
rates of interest on these loans range from 3.7% to 13%. RTM has pledged
certain of its assets as security for these loans.
The minimum principal payments for debt scheduled for each of the five
succeeding years based on the amounts outstanding at December 31, 1993,
assuming the terms of the Credit Agreement are not extended and the note to
FTX is repaid by borrowing from the Credit Agreement, are $48.8 million in
1994, $18.8 million in 1995, $15.0 million in 1996, $13.5 million in 1997, and
$55.2 million in 1998.
The Company has an interest rate exchange agreement resulting in a fixed
rate of 8.3% on $85.7 million of financing at December 31, 1993, reducing
$14.3 million annually through December 1999. Based on market conditions at
December 31, 1993, unwinding this interest swap would cost an estimated $8.3
million.
Capitalized interest totaled $24.5 million in 1993, $24.0 million in
1992, and $18.3 million in 1991.
8. Major Customers
Historically, most of PT-FI's sales have been made under long-term
contracts. The following table details the percentage of total product sold by
PT-FI to its customers:
Years Ended December 31,
--------------------------
1991 1992 1993
------- -------- -------
Long-term contracts
Japanese companies 36% 34% 44%
Swiss firm 17 13 13
German firm 11 7 7
Other 12 12 35
Spot sales 24 34 1
The contract with a group of Japanese companies extends through December
31, 2000, whereas the contracts with the Swiss and German firms extend through
December 31, 1995 and 1994, respectively. Certain terms of these long-term
contracts are negotiated annually. There are several other long-term
agreements in place, each accounting for less than 10% of 1993 sales. During
1993, PT-FI supplied RTM with approximately 90,000 metric tons of copper
concentrate and is expected to supply approximately 150,000 metric tons in
1994, providing for approximately 20% and 33%, respectively, of RTM's
requirements in those years. Beginning in 1996, PT-FI is expected to provide
RTM with approximately one-half of its copper concentrate requirements.
RTM's customers are located primarily in Spain and European Union
countries, none of which accounted for over 10% of the Company's total
revenues.
9. Transactions with FTX and Employee Benefits
Management Services Agreement. FTX furnishes general executive,
administrative, financial, accounting, legal, and certain other services to
the Company under a management services agreement terminable by either party
on December 31 in any year, upon six months written notice. These costs,
which include related overhead, are non-interest bearing, reimbursed monthly
and totaled $49.0 million in 1993 (excluding $10.7 million of restructuring
costs), $44.9 million in 1992, and $33.4 million in 1991.
Pension Plans. Substantially all the employees seconded to the Company
from FTX are covered by FTX's defined benefit plan for salaried employees. The
accumulated benefits and plan assets are not determined separately from FTX
and amounts allocated to FCX under this plan have not been material. As of
December 31, 1993, FTX's accumulated benefit obligation under the plan was
fully funded.
PT-FI has a defined benefit plan covering substantially all of its
Indonesian national employees which is funded through cash payments to
retirees at the date of retirement. Benefits are based on years of service
and level of compensation. It is anticipated that in order to comply with new
Indonesian pension laws, certain amendments to the plan will be made in 1994
which will affect future benefits provided and funding requirements. These
amendments are not expected to have a material effect on the financial
statements. The actuarial present value of the accumulated benefit
obligation, determined by the projected credit method, was fully accrued at
December 31, 1993, and amounted to $6.0 million. The projected benefit
obligation at December 31, 1993, was $11.9 million assuming a discount rate of
11% and an annual increase in future compensation levels of 9%. The pension
expense for each of the three years in the period ended December 31, 1993, was
not material.
RTM has a contractual obligation to supplement the amounts paid to
retired employees. Based on an assumed discount rate of 8%, the liability
accrued for such payments totaled $79.4 million at December 31, 1993 ($76.6
million for retirees and $2.8 million for current employees). Since the
initial acquisition, RTM has recorded expense of $5.2 million compared with
cash payments of $8.0 million. This obligation is unfunded.
Other Postretirement Benefits. FTX provides certain health care and life
insurance benefits for retired employees, including employees seconded to FCX.
Effective January 1, 1991, FCX adopted Statement of Financial Accounting
Standards No. 106 ("FAS 106") requiring current accrual for postretirement
benefits other than pensions, recording an $11.4 million charge as the
cumulative effect of the accounting change. The FAS 106 expense totaled $1.1
million in 1993 ($.2 million for service cost and $.9 million in interest for
prior period services), $1.3 million in 1992 ($.3 million for service cost and
$1.0 million in interest for prior period services), and $1.3 million in 1991
($.4 million for service cost and $.9 million in interest for prior period
services). Summary information of the plan is as follows:
December 31,
-------- --------
1992 1993
-------- --------
(amounts in thousands)
Actuarial present value of accumulated
postretirement obligation:
Retirees $ 8,604 $ 9,953
Fully eligible active plan participants 2,077 1,312
Other active plan participants 1,981 1,747
-------- --------
Total accumulated postretirement obligation 12,662 13,012
Unrecognized net loss (575) (668)
-------- --------
Accrued postretirement benefit cost $ 12,087 $ 12,344
======== ========
In determining the FAS 106 amounts, FTX used an initial health care cost
trend rate of 11.5% for 1993 (12% for 1992), decreasing 1/2% per year until
reaching 6%. A 1% increase in the trend rate would increase the FAS 106
amounts by approximately 10%. The discount rate used was 7% in 1993 and 8.5%
in 1992. FCX anticipates funding these costs, in addition to the annual cash
costs, over the expected life of its mineral reserves. FTX has the right to
modify or terminate these benefits.
10. Commitments and Contingencies.
Environmental. PT-FI believes it is in compliance with all applicable
Indonesian environmental laws, rules and regulations. Based on current
Indonesian environmental regulations, eventual mine closure and reclamation
costs, at the mine in Irian Jaya, is not expected to be material.
RTM's capital expenditures for 1994 are expected to include approximately
$18 million to modify its sulphuric acid plants, including expanding their
capacity, to comply with certain environmental standards in Spain.
Additionally, at December 31, 1993, the Company had an accrual of $10.3
million related to RTM's impending mine closure and the eventual closure of
its smelter.
Long-Term Contracts and Operating Leases. At December 31, 1993, RTM had
purchase commitments totaling $25.6 million related to the expansion of its
smelter. In addition, it had commitments to purchase concentrate from third
parties (excluding PT-FI) of 305,000 metric tons in 1994, 295,000 metric tons
in 1995, 260,000 metric tons in 1996, 140,000 metric tons in 1997, and a total
of 580,000 metric tons from 1998-2002, at then market prices.
FCX's minimum annual contractual charges under noncancellable long-term
contracts and operating leases which expire during the period 1994 to 2000,
totals $35.4 million, with $11.8 million in 1994, $8.3 million in 1995, $6.1
million in 1996, $4.2 million in 1997 and $3.8 million in 1998. Total rental
expense under long-term contracts and operating leases amounted to $15.4
million, $3.9 million, and $3.3 million in 1993, 1992, and 1991, respectively.
Infrastructure Assets Sales. During 1993, the Company entered into a
joint venture agreement with P.T. ALatieF Nusakarya Corporation ("ALatieF"),
an Indonesian investor, which provides for the sale of certain portions of the
to-be-constructed infrastructure assets and certain existing assets by PT-FI
to a joint venture or ventures (the "ALatieF Joint Venture") owned one-third
by PT-FI and two-thirds by ALatieF for total consideration of $270.0 million.
The acquired assets will be made available to PT-FI and its employees and
designees under arrangements which will provide the ALatieF Joint Venture with
a guaranteed minimum rate of return on its investment. Funding of the ALatieF
Joint Venture is expected to be provided by $90.0 million in equity
contributions from the ALatieF Joint Venture partners and $180.0 million in
debt financing, which is expected to be guaranteed by PT-FI, FCX or both. The
sale of the first group of assets to the ALatieF Joint Venture was completed
in December 1993 for a price of $90.0 million. The sale was partially financed
with a $60.0 million medium term loan facility which is guaranteed by PT-FI
(Note 7). The variable rate loan has a 5% per year amortization with a
balloon payment after five years. The ALatieF Joint Venture is consolidated
and no gain or loss was recorded on the sale. The sales which are anticipated
for 1994 and later are subject to the execution of definitive agreements and
certain Indonesian Government approvals.
In December 1993, PT-FI announced the execution of a Letter of Intent
with Duke Energy Corp. ("Duke Energy"), a wholly owned affiliate of Duke
Power Company, and PowerLink Corporation ("PowerLink"), a subsidiary of
Northstar Energy Corporation, pursuant to which PT-FI would sell its existing
and to-be-constructed power generation and transmission assets and certain
other power-related assets to a joint venture (the "Power Joint Venture")
whose ownership consists of Duke Energy (30%), PowerLink (30%), PT-FI (30%)
and an Indonesian investor (10%). The total value of the transaction is
estimated at $200 million and is expected to be concluded in two phases. The
first sale, representing the existing assets, is expected to exceed $100
million and to occur in mid-1994. The final sale, representing the
to-be-constructed expansion-related assets, is expected to occur during the
first half of 1995. Under the agreement, the Power Joint Venture will own
these assets and be responsible for providing the electrical power services
required by PT-FI at its mining, milling and support operations in Irian Jaya,
Indonesia, including the power services required for the expansion of ore
throughput to 115,000 metric tons of ore milled per day. The transaction is
subject to the execution of definitive agreements between PT-FI and the Power
Joint Venture, financing, and certain Indonesian Government approvals.
PT-FI is proceeding with plans to sell other non-operating assets under
terms whereby the purchaser will operate the assets and provide services to
PT-FI and its employees and designees.
11. Mineral Reserves (Unaudited)
The Company's estimated proved and probable mineral reserves were as
follows:
<TABLE>
<CAPTION>
Average Ore Grade Per Ton Recoverable* Content
----------------------------------------- --------------------------------
Year End Ore Copper Gold Silver Copper Gold Silver
- -------- ------------- ------- --------------- ---------------- --------- ---------- ---------
(Metric Tons) (%) (Grams) (Ounce) (Grams) (Ounce) (billions (millions (millions
of lbs.) of ozs.) of ozs.)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PT-FI
1989 256,400,000 1.64 1.24 .040 5.23 .168 8.3 8.1 27.2
1990 445,741,000 1.59 1.71 .055 4.60 .148 13.9 19.5 34.7
1991 768,045,000 1.45 1.66 .053 3.86 .124 21.8 32.4 50.0
1992 733,173,000 1.47 1.72 .055 3.87 .124 20.9 32.1 44.7
1993 1,074,100,000 1.31 1.47 .047 4.04 .130 26.8 39.1 76.7
RTM
1993 12,700,000 -- 1.03 .033 50.45 1.622 -- 0.4 8.5
</TABLE>
- --------------
* Recoverable production and reserves are used synonymously with payable
production and reserves.
FREEPORT-MCMORAN COPPER & GOLD INC.
NOTES TO FINANCIAL STATEMENTS (concluded)
12. Summarized Quarterly Financial Information (Unaudited)
Net Income (Loss) Net Income
Operating Applicable to (Loss)
Revenues Income(Loss) Common Stock Per Share
--------------------------------------------------------
(amounts in thousands, except per share amounts)
1993
1st Quarter (a)(b)(c) $133,515 $ 25,454 ($5,160) $(.03)
2nd Quarter (a)(c) 215,033 (18,463) (21,524) (.11)
3rd Quarter (a) 261,504 59,462 19,188 .10
4th Quarter 315,880 88,483 29,358 .15
-------- -------- --------
$925,932 $154,936 $ 21,862 .11
======== ======== ========
1992
1st Quarter $106,749 $ 35,212 $ 17,312 $.10
2nd Quarter 241,684 109,261 49,716 .27
3rd Quarter 157,114 58,658 23,379 .12
4th Quarter 208,768 73,298 32,461 .17
-------- -------- --------
$714,315 $276,429 $122,868 .66
======== ======== ========
a. The quarterly results have been restated to reflect the cumulative
effect of the changes in accounting principle (Note 1) and the RTM
investment on a fully consolidated basis. FCX previously reported
this investment using the equity method of accounting because FCX
anticipated reducing its interest below 50% within one year of the
initial investment in RTM. FCX is now considering alternative forms
of financing.
b. Includes a $9.9 million charge ($.05 per share), net of taxes and
minority interest, for the cumulative effect of the changes in
accounting principle.
c. Includes restructuring charges of $3.4 million ($1.9 million to net
income or $.01 per share) and $17.4 million ($9.6 million to net
income or $.05 per share) during the first and second quarters,
respectively. The second quarter includes nonrecurring charges totaling
$16.3 million ($9.0 million to net income or $.05 per share).
No dealer, salesman, or other person has been authorized to give any
information or to make any representation not contained in this Prospectus
and, if given or made, such information or representation must not be relied
upon as having been authorized by the Issuer, FCX or any Underwriter. This
Prospectus does not constitute an offer to sell or a solicitation of an offer
to buy any of the securities offered hereby in any jurisdiction to any person
to whom it is unlawful to make such offer in such jurisdiction. Neither the
delivery of this Prospectus nor any sale made hereunder shall, under any
circumstances, create any implication that the information herein is correct
as of any time subsequent to the date hereof or that there has been no change
in the affairs of the Issuer or FCX since such date.
TABLE OF CONTENTS
Page
----
Incorporation of Documents by Reference........................... 2
Enforcement of Civil Liabilities.................................. 2
Prospectus Summary................................................ 3
Special Considerations............................................ 12
Use of Proceeds................................................... 15
FCX Capitalization................................................ 16
Management's Discussion and Analysis of Financial Condition and
Results of Operations........................................... 17
Business of FCX................................................... 24
Business of the Issuer............................................ 33
Management of FCX................................................. 37
Relationship of the FCX Group with the FTX Group.................. 40
Description of the Guaranteed Notes............................... 42
Taxation.......................................................... 57
Description of Certain Indebtedness............................... 59
Description of FCX Preferred Stock and Special Preference Stock... 62
Underwriting...................................................... 64
Legal Matters..................................................... 64
Experts........................................................... 65
Additional Information............................................ 65
Available Information............................................. 65
Index to Financial Statements..................................... F-1
P.T. ALatieF Freeport
Finance Company B.V.
$120,000,000
% Senior Notes Due 2001
Unconditionally Guaranteed by
Freeport-McMoRan
Copper & Gold Inc.
--------------------
P R O S P E C T U S
--------------------
CS First Boston
Chase Securities, Inc.
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution
The following table sets forth an itemized statement of certain expenses
expected to be incurred in connection with the issuance and distribution of
the securities being registered, other than underwriting discounts:
Registration Fee.................................. $41,380
NASD Filing Fee................................... 12,500
Printing and Engraving Fees....................... *
Rating Agency Fees................................ *
Legal Fees and Expenses........................... *
Accounting Fees and Expenses...................... *
Blue Sky Fees and Expenses........................ *
Trustee's Fees and Expenses....................... *
Miscellaneous..................................... *
--------
Total............................................. $ *
--------
--------
All fees are estimated, except SEC and NASD Fees.
- -------------
* To be filed by amendment.
Item 15. Indemnification of Directors and Officers
Section 145 of the General Corporation Law of Delaware empowers FCX, to
the extent permitted by its Certificate of Incorporation, to indemnify,
subject to the standards therein prescribed, any person in connection with any
action, suit or proceeding brought or threatened by reason of the fact that
such person is or was a director, officer, employee or agent of FCX or is or
was serving as such with respect to another corporation or other entity at the
request of FCX. Article XXV of the By-Laws of FCX and Article NINTH of the
Certificate of Incorporation of FCX provide that each person who was or is
made a party to (or is threatened to be made a party to) or is otherwise
involved in any action, suit or proceeding by reason of the fact that such
person is or was a director, officer, employee or agent of FCX shall be
indemnified and held harmless by FCX to the fullest extent authorized by the
General Corporation Law of Delaware against all expenses, liability and loss
(including, without limitation, attorneys' fees, judgments, fines and amounts
paid in settlement) reasonably incurred by such person in connection
therewith. The rights conferred by Article XXV and Article NINTH, as the case
may be, are contractual rights and include the right to be paid by FCX the
expenses incurred in defending such action, suit or proceeding in advance of
the final disposition thereof.
Article NINTH of the Certificate of Incorporation of FCX provides that
the directors of FCX will not be personally liable to FCX or its stockholders
for monetary damages resulting from breaches of their fiduciary duty as
directors except (a) for any breach of the duty of loyalty to FCX or its
stockholders, (b) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (c) under Section 174 of
the General Corporation Law of Delaware, which makes directors liable for
unlawful dividends or unlawful stock repurchases or redemptions or (d) for
transactions from which directors derive improper personal benefit.
FCX has an insurance policy insuring FCX and its directors and officers
against certain liabilities, including liabilities under the Securities Act of
1933.
Item 16. Exhibits
Exhibit No. Description
----------- -----------
1.01 --Form of Underwriting Agreement.*
4.01 --Form of Indenture (including the form
of the Guaranteed Note) among the Issuer, FCX
and Chemical Bank, as Trustee.
5.01 --Opinion of Davis Polk & Wardwell with
respect to the legality of the Guaranteed Notes.*
5.02 --Opinion of Stibbe Simont Monahan Duhot
with respect to the legality of the Guaranteed
Notes.*
10.01 --Credit Agreement, dated as of December
15, 1993, among AFIC, each of the banks that is,
or may from time to time become, party thereto,
and The Chase Manhattan Bank (National
Association), as Agent.
10.02 --Credit Agreement, dated as of June 1,
1993, among PT-FI, FTX, FCX, each of the banks
that is party thereto, Morgan Guaranty Trust
Company of New York and Chemical Bank, as Agent.
12.01 --Statement re: Computation of the Ratio
of Earnings to Fixed Charges (FCX).
23.01 --Consent of Arthur Andersen & Co.
23.02 --Consent of Coopers & Lybrand, S.A.+
23.03 --Consent of Davis Polk & Wardwell (see
Exhibit 5.01).*
23.04 --Consent of Miller & Chevalier,
Chartered.*
23.05 --Consent of Independent Mining
Consultants, Inc.+
23.06 --Consent of Drs. Siddharta & Siddharta,
a member firm of Coopers & Lybrand
(International).+
23.07 --Consent of Stibbe Simont Monahan
Duhot.+
24.01 --Powers of Attorney.+
25.01 --Statement of Eligibility of Trustee.+
- ------------------
+ Previously filed.
* To be filed by amendment.
Item 17. Undertakings.
FCX hereby undertakes that, for purposes of determining any liability
under the Securities Act of 1933, each filing of its annual report pursuant to
Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (and, where
applicable, each filing of an employee benefit plan's annual report pursuant
to Section 15(d) of the Securities Exchange Act of 1934) that is incorporated
by reference in the registration statement shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the Registrants pursuant to the foregoing provisions or otherwise, the
Registrants have been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrants of expenses incurred or paid by a director, officer or controlling
person of the Registrants in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrants will, unless
in the opinion of their respective counsel the matter has been settled by
controlling precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by any of them is against public policy
as expressed in the Act and will be governed by the final adjudication of such
issue.
Each of the undersigned Registrants hereby undertakes that:
(1) For purposes of determining any liability under the Securities
Act of 1933, the information omitted from the form of prospectus filed as
part of this Registration Statement in reliance upon Rule 430A and
contained in a form of prospectus filed by the Registrants pursuant to
Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed
to be part of this Registration Statement as of the time it was declared
effective.
(2) For the purpose of determining any liability under the
Securities Act of 1933, each post-effective amendment that contains a form
of prospectus shall be deemed to be a new Registration Statement relating
to the securities offered therein, and the offering of such securities at
that time shall be deemed to be the initial bona fide offering thereof.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, P.T.
ALatieF Freeport Finance Company B.V. certifies that it has reasonable grounds
to believe that it meets all of the requirements for filing on Form S-3, and
has duly caused this Registration Statement and any amendments thereto to be
signed on its behalf by the undersigned, thereunto duly authorized, in the
City of New Orleans, State of Louisiana, on the 14th day of February, 1994.
P.T. ALATIEF FREEPORT
FINANCE COMPANY B.V.
By /s/ Rene L. Latiolais
----------------------------
Rene L. Latiolais
Managing Director
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement and any amendments thereto have been signed by the
following persons in the capacities indicated on the 14th day of February,
1994:
Signature Title
--------- -----
/s/ Rene L. Latiolais
--------------------- Managing Director
Rene L. Latiolais (Principal Executive Officer)
*
--------------------- Managing Director
Robert M. Wohleber (Principal Financial Officer and
Principal Accounting Officer)
*
--------------------- Managing Director
John G. Amato
*
--------------------- Managing Director
Henry A. Miller
/s/ Michael C. Kilanowski, Jr.
------------------------------ Authorized U.S. Representative
Michael C. Kilanowski, Jr.
/s/ Rene L. Latiolais
*By------------------------------
Rene L. Latiolais
(Attorney-in-fact pursuant to powers
of attorney which are filed as Exhibits
to this Registration Statement
and any amendments thereto)
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933,
Freeport-McMoRan Copper & Gold Inc. certifies that it has reasonable grounds
to believe that it meets all of the requirements for filing on Form S-3 and
has duly caused this Registration Statement and any amendments thereto to be
signed on its behalf by the undersigned, thereunto duly authorized, in the
City of New Orleans, State of Louisiana, on the 14th day of February, 1994.
FREEPORT-MCMORAN COPPER & GOLD INC.
By: /s/ James R. Moffett
-------------------------------
James R. Moffett
Chairman of the Board and Director
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement and any amendments thereto have been signed below by
the following persons in the capacities indicated on the 14th day of February,
1994:
Signature Title
--------- -----
/s/ James R. Moffett Chairman of the Board
------------------------ and Director
James R. Moffett
* President, Chief Executive Officer
------------------------ and Director
George A. Mealey (Principal Executive Officer)
*
------------------------ Director
Leland O. Erdahl
*
------------------------ Director
Ronald Grossman
*
------------------------ Director
Rene L. Latiolais
*
------------------------ Director
Wolfgang F. Siegel
*
------------------------ Director
Elwin E. Smith
*
------------------------ Director
Eiji Umene
*
------------------------ Controller
C. Donald Whitmire (Principal Accounting Officer)
*
------------------------ Vice President
Stephen M. Jones (Principal Financial Officer)
*By: /s/ James R. Moffett
------------------------
James R. Moffett
(Attorney-in-fact pursuant to powers
of attorney which are filed as
Exhibits to this Registration
Statement and any amendments thereto)
APPENDIX A
A chart showing ownership structure of the Issuer, PT-FI, AFIC and
Infrastructure Affiliate, and in particular:
(i) 81.28% direct equity ownership of PT-FI by FCX; (ii) 100% equity
ownership of the Issuer by FCX and the Guaranty of the Issuer's Guaranteed
Notes by FCX; (iii) 49% equity ownership of P.T. Indocopper Investama
Corporation by FCX; (iv) 9.36% equity ownership of PT-FI by P.T.
Indocopper Investama Corporation; (v) 9.36% equity ownership of PT-FI by
the Indonesian Government; (vi) 33.3% equity ownership of AFIC and
Infrastructure Affiliates by PT-FI and Master Services Agreements between
PT-FI and AFIC, and between PT-FI and Infrastructure Affiliates; (vii)
66.7% equity ownership of AFIC and Infrastucture Affiliates by ALatieF and
(viii) $120 million loan from the Issuer to AFIC and Infrastructure
Affiliates.
APPENDIX B
Map showing location of PT-FI's Contract of Work Area and principal
ore bodies.
EXHIBIT INDEX
Exhibit Sequential
No. Description Page No.
- ------- ----------- ----------
1.01 --Form of Underwriting Agreement.*
4.01 --Form of Indenture (including the form of the Guaranteed
Note) among the Issuer, FCX and Chemical Bank, as
Trustee.
5.01 --Opinion of Davis Polk & Wardwell with respect to the
legality of the Guaranteed Notes.*
5.02 --Opinion of Stibbe Simont Monahan Duhot with respect to
the legality of the Guaranteed Notes.*
10.01 --Credit Agreement, dated as of December 15, 1993, among
AFIC, each of the banks that is, or may from time to time
become, party thereto, and The Chase Manhattan Bank
(National Association), as Agent.
10.02 --Credit Agreement, dated as of June 1, 1993, among PT-FI,
FTX, FCX, each of the banks that is party thereto, Morgan
Guaranty Trust Company of New York and Chemical Bank, as
Agent.
12.01 --Statement re: Computation of the Ratio of Earnings to
Fixed Charges (FCX).
23.01 --Consent of Arthur Andersen & Co.
23.02 --Consent of Coopers & Lybrand, S.A.+
23.03 --Consent of Davis Polk & Wardwell (see Exhibit 5.01).*
23.04 --Consent of Miller & Chevalier, Chartered.*
23.05 --Consent of Independent Mining Consultants, Inc.+
23.06 --Consent of Drs. Siddharta & Siddharta, a member firm of
Coopers & Lybrand (International).+
23.07 --Consent of Stibbe Simont Monahan Duhot.+
24.01 --Powers of Attorney.+
25.01 --Statement of Eligibility of Trustee.+
- --------------------
+ Previously filed.
* To be filed by amendment.
========================================================
P.T. ALATIEF FREEPORT FINANCE COMPANY B.V., Issuer,
FREEPORT-McMoRan COPPER & GOLD INC., Guarantor
and
CHEMICAL BANK, Trustee
INDENTURE
Dated as of March __, 1994
____________
========================================================
TABLE OF CONTENTS
Page
PARTIES . . . . . . . . . . . . . . . . . . . . 1
RECITALS . . . . . . . . . . . . . . . . . . . 1
Authorization of Indenture . . . . . . . . . . 1
Form of Face of Security . . . . . . . . 1
Form of Reverse of Security . . . . . . . 3
Form of Trustee's Certificate
of Authentication . . . . . . . . . . . 10
Form of FCX Guarantee . . . . . . . . . . 11
ARTICLE ONE
DEFINITIONS
SECTION 1.1 Certain Terms Defined . . . . . 14
Additional Amounts . . . . . . 14
Affiliate . . . . . . . . . . 14
AFIC . . . . . . . . . . . . . 15
AFIC Credit Agreement . . . . 15
Announcement . . . . . . . . . 15
Asset Disposition . . . . . . 15
Asset Disposition Offer . . . 15
Asset Disposition Offer Amount 16
Authorized Signatory . . . . . 16
Board of Commissioners . . . . 16
Board of Directors . . . . . . 16
Board Resolution . . . . . . . 16
Business Day . . . . . . . . . 16
Capital Lease Obligations . . 16
Capital Stock . . . . . . . . 16
Change of Control . . . . . . 16
Commission . . . . . . . . . . 16
Commodity Price Protection
Agreement . . . . . . . . . 16
Company Order . . . . . . . . 16
Corporate Trust Office . . . . 17
Currency Exchange Protection
Agreement . . . . . . . . . 17
Debt . . . . . . . . . . . . . 17
Default . . . . . . . . . . . 18
EIP Assets . . . . . . . . . . 18
EIP Purchase Notice . . . . . 18
Event of Default . . . . . . . 18
Exchange Act . . . . . . . . 18
Existing Master Services
Agreement . . . . . . . . . 18
FCX . . . . . . . . . . . . . 18
FCX Guarantee . . . . . . . . 18
FTX . . . . . . . . . . . . . 19
FTX Credit Agreement . . . . . 19
Guarantee . . . . . . . . . . 19
Guarantor . . . . . . . . . . 19
Holder, Holder of Securities,
Securityholder . . . . . . . 19
Indebtedness . . . . . . . . . 19
Indenture . . . . . . . . . . 19
Indonesian Government . . . . 19
Infrastructure Affiliate . . 19
Insolvency Law . . . . . . . 20
Interest Rate Protection
Agreement . . . . . . . . . 20
issue . . . . . . . . . . . . 20
Issuer . . . . . . . . . . . . 20
Lien . . . . . . . . . . . . . 20
Majority-Owned Subsidiary . . 20
Master Services Agreement . . 20
Net Proceeds . . . . . . . . . 20
Non-Recourse Debt . . . . . . 21
Offer to Purchase . . . . . . 22
Officers' Certificate . . . . 22
Opinion of Counsel . . . . . . 22
Outstanding . . . . . . . . . 22
Permitted Investments . . . . 23
Person . . . . . . . . . . . . 23
Preferred Stock . . . . . . . 23
PT-FI . . . . . . . . . . . . 23
PT-FI Credit Agreement . . . . 23
PT-FI Note . . . . . . . . . . 23
Purchase Date . . . . . . . . 24
Purchase Event . . . . . . . . 24
Rating Agency . . . . . . . . 24
Rating Category . . . . . . . 24
Rating Decline . . . . . . . . 24
Redeemable Stock . . . . . . . 24
Redemption Date . . . . . . . 24
Redemption Price . . . . . . . 25
Responsible Officer . . . . . 25
Sale/Leaseback Transaction . . 25
Securities Act . . . . . . . . 25
Security or Securities . . . . 25
Security Registrar . . . . . . 25
Senior Debt . . . . . . . . . 25
Significant Subsidiary . . . . 25
Stated Maturity . . . . . . . 25
Subsidiary . . . . . . . . . . 26
Transferee Subsidiary . . . . 26
Trust Indenture Act of 1939 . 26
Trustee . . . . . . . . . . . 26
Underlying Additional Amount . 26
Underlying Note . . . . . . . 26
Undeveloped Mining Assets . . 26
U.S. Government Obligations . 27
Voting Stock . . . . . . . . . 27
ARTICLE TWO
ISSUE, EXECUTION,
FORM AND REGISTRATION
OF SECURITIES
SECTION 2.1 Authentication and Delivery
of Securities . . . . . . . . . 27
SECTION 2.2 Execution of Securities . . . . . 27
SECTION 2.3 Certificate of Authentication . . 28
SECTION 2.4 Form, Denomination and Date of
Securities; Payments of Interest 28
SECTION 2.5 Registration, Transfer
and Exchange . . . . . . . . . 29
SECTION 2.6 Mutilated, Defaced, Destroyed,
Lost and Stolen Securities . . 30
SECTION 2.7 Cancellation of Securities;
Disposition Thereof . . . . . . 31
SECTION 2.8 Temporary Securities . . . . . . 32
ARTICLE THREE
COVENANTS OF THE ISSUER
SECTION 3.1 Payment of Principal
and Interest . . . . . . . . . 32
SECTION 3.2 Offices for Payments, etc. . . . 32
SECTION 3.3 Appointment to Fill a Vacancy
in Office of Trustee . . . . . 33
SECTION 3.4 Paying Agents . . . . . . . . . . 33
SECTION 3.5 Written Statement to Trustee . . 34
SECTION 3.6 Corporate Existence . . . . . . . 35
SECTION 3.7 Payment of Taxes and Other Claims 35
SECTION 3.8 Additional Amounts . . . . . . . 35
SECTION 3.9 Initial Application of Proceeds . 38
SECTION 3.10 Subsequent Application of Proceeds 38
SECTION 3.11 Limitation on Other Business
Activities . . . . . . . . . . 39
SECTION 3.12 Maintenance of Title . . . . . . 40
SECTION 3.13 Performance, Enforcement and Amendment
of PT-FI Note and Underlying Notes 40
SECTION 3.14 Limitation on Liens . . . . . . . 40
ARTICLE FOUR
SECURITYHOLDERS' LISTS AND REPORTS BY THE
ISSUER AND THE TRUSTEE
SECTION 4.1 Issuer and FCX to Furnish Trustee
Information as to Names and
Addresses of Securityholders . 40
SECTION 4.2 Preservation and Disclosure
of Securityholders' Lists . . . 41
SECTION 4.3 Reports by the Issuer . . . . . . 42
SECTION 4.4 Reports by the Trustee . . . . . 42
ARTICLE FIVE
REMEDIES OF THE TRUSTEE AND SECURITYHOLDERS
ON EVENT OF DEFAULT
SECTION 5.1 Event of Default Defined;
Acceleration of Maturity;
Waiver of Default . . . . . . . 44
SECTION 5.2 Collection of Indebtedness by
Trustee; Trustee May Prove Debt 48
SECTION 5.3 Application of Proceeds . . . . . 50
SECTION 5.4 Suits for Enforcement . . . . . . 50
SECTION 5.5 Restoration of Rights on
Abandonment of Proceedings . . 51
SECTION 5.6 Limitations on Suits by
Securityholders . . . . . . . . 51
SECTION 5.7 Unconditional Right of Securityholders
to Receive Principal,
Premium and Interest, and
Additional Amounts, if any,
and to
Institute Certain Suits . . . . 52
SECTION 5.8 Powers and Remedies Cumulative;
Delay or Omission Not Waiver
of Default . . . . . . . . . . 52
SECTION 5.9 Control by Securityholders . . . 53
SECTION 5.10 Waiver of Past Defaults . . . . . 53
SECTION 5.11 Trustee to Give Notice
of Default, But May Withhold
in Certain Circumstances . . . 53
SECTION 5.12 Right of Court to Require Filing
of Undertaking to Pay Costs . . 54
SECTION 5.13 Waiver of Stay or Extension Laws 54
ARTICLE SIX
CONCERNING THE TRUSTEE
SECTION 6.1 Duties and Responsibilities of the
Trustee; During Default;
Prior to Default . . . . . . . 55
SECTION 6.2 Certain Rights of the Trustee . . 56
SECTION 6.3 Trustee Not Responsible
for Recitals, Disposition
of Securities or Application
of Proceeds Thereof . . . . . . 57
SECTION 6.4 Trustee and Agents May Hold
Securities; Collections, etc. . 58
SECTION 6.5 Moneys Held by Trustee . . . . . 58
SECTION 6.6 Compensation and Indemnification
of Trustee and Its Prior Claim 58
SECTION 6.7 Right of Trustee to Rely on
Officers' Certificate, etc. . . 59
SECTION 6.8 Persons Eligible for
Appointment as Trustee . . . . 59
SECTION 6.9 Resignation and Removal;
Appointment of Successor
Trustee . . . . . . . . . . . . 60
SECTION 6.10 Acceptance of Appointment by
Successor Trustee . . . . . . . 61
SECTION 6.11 Merger, Conversion, Consolidation
or Succession to Business
of Trustee . . . . . . . . . . 62
SECTION 6.12 Preferential Collection of
Claims Against the Issuer . . . 63
ARTICLE SEVEN
CONCERNING THE SECURITYHOLDERS
SECTION 7.1 Evidence of Action Taken by
Securityholders . . . . . . . . 63
SECTION 7.2 Proof of Execution of Instruments
and of Holding of Securities . 63
SECTION 7.3 Holders to Be Treated as Owners . 64
SECTION 7.4 Securities Owned by Issuer
Deemed Not Outstanding . . . . 64
SECTION 7.5 Right of Revocation of
Action Taken . . . . . . . . . 65
SECTION 7.6 Record Date for Consents
and Waivers . . . . . . . . . . 65
ARTICLE EIGHT
SUPPLEMENTAL INDENTURES
SECTION 8.1 Supplemental Indentures Without
Consent of Securityholders . . 66
SECTION 8.2 Supplemental Indentures With
Consent of Securityholders . . 67
SECTION 8.3 Effect of Supplemental Indenture 69
SECTION 8.4 Documents to Be Given to Trustee 69
SECTION 8.5 Notation on Securities
in Respect of Supplemental
Indentures . . . . . . . . . . 69
ARTICLE NINE
CONSOLIDATION, MERGER, SALE OR CONVEYANCE
SECTION 9.1 Covenant of the Issuer Not to
Merge, Consolidate, Sell or
Convey Property Except Under
Certain Conditions . . . . . . 70
SECTION 9.2 Successor Corporation of Partnership
Substituted . . . . . . . . . . 70
SECTION 9.3 Assumption by FCX . . . . . . . . 71
SECTION 9.4 Opinion of Counsel to Trustee . . 72
ARTICLE TEN
SATISFACTION AND DISCHARGE OF INDENTURE;
UNCLAIMED MONEYS
SECTION 10.1 Satisfaction and Discharge
of Indenture . . . . . . . . . 72
SECTION 10.2 Application by Trustee of
Funds Deposited for
Payment of Securities . . . . . 77
SECTION 10.3 Repayment of Moneys Held
by Paying Agent . . . . . . . . 77
SECTION 10.4 Return of Moneys Held by
Trustee and Paying Agent
Unclaimed for Two Years . . . . 78
SECTION 10.5 Indemnity for U.S Government
Obligations . . . . . . . . . . 78
ARTICLE ELEVEN
MISCELLANEOUS PROVISIONS
SECTION 11.1 Partners, Incorporators,
Stockholders, Officers and
Directors of Issuer Exempt
from Individual Liability . . . 78
SECTION 11.2 Provisions of Indenture for
the Sole Benefit of Parties
and Securityholders . . . . . . 79
SECTION 11.3 Successors and Assigns of
Issuer and FCX Bound
by Indenture . . . . . . . . . 79
SECTION 11.4 Notices and Demands on Issuer, FCX,
Trustee and Securityholders . . 79
SECTION 11.5 Officers' Certificates
and Opinions of Counsel;
Statements to Be
Contained Therein . . . . . . . 80
SECTION 11.6 Payments Due on Saturdays,
Sundays and Legal Holidays . . 81
SECTION 11.7 Conflict of Any Provision
of Indenture with Trust
Indenture Act of 1939 . . . . . 81
SECTION 11.8 New York Law to Govern . . . . . 82
SECTION 11.9 Counterparts . . . . . . . . . . 82
SECTION 11.10 Effect of Headings . . . . . . 82
SECTION 11.11 Submission to Jurisdiction . . 82
ARTICLE TWELVE
REDEMPTION OF SECURITIES
SECTION 12.1 Right of Optional Redemption; Prices 83
SECTION 12.2 Notice of Redemption;
Partial Redemptions . . . . . . 83
SECTION 12.3 Payment of Securities Called
for Redemption . . . . . . . . 84
SECTION 12.4 Exclusion of Certain Securities
from Eligibility for Selection
for Redemption . . . . . . . . 85
SECTION 12.5 Optional Redemption Due to Changes
in Tax Treatment . . . . . . . 85
ARTICLE THIRTEEN
FCX GUARANTEE OF SECURITIES
SECTION 13.1 Unconditional Guarantee . . . . . 86
SECTION 13.2 Execution of the FCX Guarantee . 88
ARTICLE FOURTEEN
COVENANTS OF FCX
SECTION 14.1 Covenant Not to Merge,
Consolidate, Sell or
Convey Property Except
Under Certain Conditions . . . 88
SECTION 14.2 Successor Corporation or Partnership
Substituted . . . . . . . . . . 89
SECTION 14.3 Written Statement to Trustee . . 90
SECTION 14.4 Limitation on Liens . . . . . . . 90
SECTION 14.5 Transactions with Affiliates . . 90
SECTION 14.6 Certain Sales of Assets . . . . . 91
SECTION 14.7 Change of Control . . . . . . . 96
SECTION 14.8 Reports by FCX . . . . . . . . . 99
SECTION 14.9 Issuer Covenants . . . . . . . . 99
TESTIMONIUM . . . . . . . . . . . . . . . 100
SIGNATURES . . . . . . . . . . . . . . . 100
ACKNOWLEDGMENTS . . . . . . . . . . . . . . . . 101
ANNEX I Form of PT-FI Note . . . . . . . I-1
ANNEX II Form of Underlying Note . . . . . II-1
ANNEX III Form of Legal Opinion . . . . . III-1
CROSS REFERENCE SHEET(1)
________________
Between
Provisions of Trust Indenture Act of 1939 and
Indenture to be dated as of March __, 1994 among P.T.
ALatieF Freeport Finance Company B.V., Freeport-McMoRan
Copper & Gold Inc., and Chemical Bank, as Trustee:
Section of the Act Section of Indenture
310(a)(1) and (2)................ 6.8
310(a)(3) and (4)................ Inapplicable
310(b)........................... 6.9(a), (b) and (d)
310(c)........................... Inapplicable
311(a)........................... 6.12(a) and (c)(1)
and (2)
311(b)........................... 6.12(b)
311(c)........................... Inapplicable
312(a)........................... 4.1 and 4.2(a)
312(b)........................... 4.2(a) and (b)(i) and
(ii)
312(c)........................... 4.2(c)
313(a)........................... 4.4(a)(i), (ii),
(iii), (iv), (v) and (vi)
313(a)(5)........................ Inapplicable
313(b)(1)........................ Inapplicable
313(b)(2)........................ 4.4
313(c)........................... 4.4
313(d)........................... 4.4
314(a)........................... 4.3, 3.5, 14.3
314(b)........................... Inapplicable
314(c)(1) and (2)................ 11.5
314(c)(3)........................ Inapplicable
314(d)........................... Inapplicable
314(e)........................... 11.5
314(f)........................... Inapplicable
315(a), (c) and (d).............. 6.1
315(b)........................... 5.11
315(e)........................... 5.12
316(a)(1)........................ 5.9
316(a)(2)........................ Not required
316(a) (last sentence)........... 7.4
316(b)........................... 5.7
317(a)........................... 5.2
317(b)........................... 3.2(a) and (b)
318(a)........................... 11.7
- ------------
(1) This Cross Reference Sheet is not part of the
Indenture.
THIS INDENTURE, dated as of March __, 1994
among P.T. ALatieF Freeport Finance Company B.V., a
Netherlands corporation (the "Issuer"), Freeport-McMoRan
Copper & Gold Inc. ("FCX"), a Delaware corporation, as
Guarantor, and Chemical Bank, a New York corporation
(the "Trustee"),
W I T N E S S E T H :
WHEREAS, the Issuer has duly authorized the
issue of its ___% Guaranteed Senior Notes due 2001 (the
"Securities");
WHEREAS, the Issuer has duly authorized the
execution and delivery of this Indenture to provide,
among other things, for the authentication, delivery and
administration of the Securities;
WHEREAS, FCX has duly authorized the execution
and delivery of the FCX Guarantee and this Indenture;
WHEREAS, the Securities, the Trustee's
certificate of authentication and the FCX Guarantee
shall be in substantially the following forms,
respectively:
(FORM OF FACE OF SECURITY)
No. $
P.T. ALatieF Freeport Finance Company B.V.
___% Guaranteed Senior Note due 2001
P.T. ALatieF Freeport Finance Company B.V., a
Netherlands corporation (the "Issuer"), for value
received hereby promises to pay to or registered
assigns the principal sum of Dollars at the
Issuer's office or agency for said purpose in the
Borough of Manhattan, The City of New York on
________ __, 2001, in such coin or currency of the
United States of America as at the time of payment shall
be legal tender for the payment of public and private
debts, and to pay interest, semi-annually on
__________ __ and _________ __ of each year, commencing
with __________ __, 1994, on said principal sum in like
coin or currency at the rate of __% per annum at said
office or agency from _____________, 1994 or from the
most recent interest payment date to which interest on
the Securities has been paid or duly provided for, until
payment of said principal sum has been made or duly
provided for. The interest so payable on any
________ __ or ___________ __ will, except as otherwise
provided in the Indenture referred to on the reverse
hereof, be paid to the Person in whose name this
Security is registered at the close of business on the
_________ __ or ___________ __ preceding such
____________ __ or _________ __, whether or not such day
is a business day; provided that interest may be paid,
at the option of the Issuer, by mailing a check therefor
payable to the registered holder entitled thereto at his
last address as it appears on the Security register.
Interest on this Security will be calculated on
the basis of a 360-day year, consisting of twelve 30-day
months.
Reference is made to the further provisions set
forth on the reverse hereof.
Such further provisions shall for all purposes
have the same effect as though fully set forth at this
place.
This Security shall not be valid or obligatory
until the certificate of authentication hereon shall
have been duly signed by the Trustee acting under the
Indenture.
IN WITNESS WHEREOF, the Issuer has caused this
instrument to be duly executed under its corporate seal.
P.T. ALatieF FREEPORT
FINANCE COMPANY B.V.
Dated:
By ________________________
Name:
Title:
(FORM OF REVERSE OF SECURITY)
P.T. ALatieF FREEPORT FINANCE COMPANY B.V.
___% Guaranteed Senior Note due 2001
This Security is one of a duly authorized issue
of debt securities of the Issuer designated as its __%
Guaranteed Senior Notes due 2001 (the "Securities"),
limited to the aggregate principal amount of
$120,000,000 (except as otherwise provided in the
Indenture mentioned below), issued or to be issued
pursuant to an indenture dated as of March __, 1994 (the
"Indenture"), duly executed and delivered by the Issuer
and Freeport-McMoRan Copper & Gold Inc. ("FCX"), as
Guarantor, to Chemical Bank, Trustee (herein called the
"Trustee"). The terms of the Securities include those
stated in the Indenture. Reference is hereby made to
the Indenture and all indentures supplemental thereto
for a description of the rights, limitations of rights,
obligations, duties and immunities thereunder of the
Trustee, the Issuer, FCX, and the Holders (the words
"Holders" or "Holder" meaning the registered holders or
registered holder) of the Securities. Terms used herein
which are defined in the Indenture have the meanings
assigned to them in the Indenture.
In case an Event of Default, as defined in the
Indenture, shall have occurred and be continuing, the
principal of, plus premium, if any, Additional Amounts,
if any, and accrued and unpaid interest, if any, through
the date of the declaration of acceleration on, all the
Securities, may be declared due and payable in the
manner and with the effect, and subject to the
conditions, provided in the Indenture. The Indenture
provides that in certain events such declaration and its
consequences may be waived by the Holders of a majority
in aggregate principal amount of the Securities then
outstanding and that, prior to any such declaration,
such Holders may waive any past default under the
Indenture and its consequences except a default in the
payment of principal of or premium, if any, Additional
Amounts, if any, or interest on any of the Securities
and except a default in respect of certain covenants or
other provisions of the Indenture which may not be
modified without the consent of each Holder of an
outstanding Security. Any such consent or waiver by the
Holder of this Security (unless revoked as provided in
the Indenture) shall be conclusive and binding upon such
Holder and upon all future Holders and owners of this
Security and any Security which may be issued in
exchange or substitution hereof or upon registration of
transfer hereof, whether or not any notation thereof is
made upon this Security or such other Securities.
Securityholders may not enforce the Indenture or the
Securities except as provided in the Indenture.
The Indenture permits the Issuer, FCX and the
Trustee, with the consent of the Holders of not less
than a majority in aggregate principal amount of the
Securities at the time outstanding, evidenced as in the
Indenture provided, to execute supplemental indentures
adding any provisions to or changing in any manner or
eliminating any of the provisions of the Indenture or of
any supplemental indenture or modifying in any manner
the rights of the Holders of the Securities; provided,
that no such supplemental indenture shall: (a) change
the stated maturity of the principal of, or any install-
ment of interest on, any Security, or alter the princi-
pal amount thereof, or alter the rate or extend the time
of payment of interest thereon, or any premium payable
upon the redemption thereof or any Additional Amounts
(as hereinafter defined) payable thereon, or change the
place of payment where, or the coin or currency in
which, any principal, premium, or interest or Additional
Amount is payable, or reduce or alter the method of
computation of any amount payable on redemption or
repayment thereof (or the time at which any such
redemption may be made), or impair or affect the right
of any Securityholder to institute suit for the payment
thereof, in each case without the consent of the Holder
of each Security so affected; (b) reduce the percentage
of principal amount of Securities necessary to consent
to any such supplemental indenture, or reduce the
percentage of principal amount of Securities necessary
to consent to waive any past default under the Indenture
to less than a majority, or modify any of the provisions
of Section 8.2 or Section 5.10 of the Indenture except
to increase any such percentage or to provide that
certain other provisions of the Indenture cannot be
modified or waived, without the consent of the Holder of
each Security so affected; (c) following the mailing of
an offer in connection with an Asset Disposition Offer
or the occurrence of a Purchase Event, modify the
Indenture's provisions with respect to such offer in a
manner adverse to any Holder affected thereby, without
the consent of such Holder; or (d) change in any manner
adverse to the interests of the Holders of any
Securities the terms and conditions of the obligations
of FCX pursuant to the FCX Guarantee, without the
consent of the Holder of each Security so affected.
The Indenture contains a provision allowing FCX
to directly assume, by a supplemental indenture, the due
and punctual payment of the principal of, premium, if
any, Additional Amounts, if any, and interest on all the
Securities, and the performance of certain covenants of
the Indenture on the part of the Issuer to be performed
or observed.
The Securities do not have the benefit of any
sinking fund obligation.
No reference herein to the Indenture and no
provision of this Security or of the Indenture shall
alter or impair the obligation of the Issuer, which is
absolute and unconditional, to pay the principal of and
premium, if any, and interest, and Additional Amounts,
if any, on this Security at the place, times, and rate,
and in the currency, herein prescribed.
The Securities are issuable only as registered
Securities without coupons in denominations of $1,000
and any integral multiple of $1,000.
At the office or agency of the Issuer referred
to on the face hereof and in the manner and subject to
the limitations provided in the Indenture, Securities
may be exchanged for a like aggregate principal amount
of Securities of other authorized denominations.
Upon due presentment for registration of
transfer of this Security at the above-mentioned office
or agency of the Issuer, a new Security or Securities of
other authorized denominations, for a like aggregate
principal amount, will be issued to the transferee as
provided in the Indenture. No service charge shall be
made for any such transfer, but the Issuer may require
payment of a sum sufficient to cover any tax, assessment
or other governmental charge that may be imposed in
relation thereto.
In the Indenture, the Issuer has agreed that
any amounts to be paid by the Issuer with respect to
each Security shall be paid without deduction or
withholding for any and all present and future taxes,
levies, imposts or other governmental charges whatsoever
imposed, assessed, levied or collected by or for the
account of the United States, The Netherlands or
Indonesia or any political subdivision or taxing
authority thereof or therein or, if deduction or
withholding of any such taxes, levies, imposts or other
governmental charges shall at any time be required by
the United States, The Netherlands or Indonesia or any
such subdivision or authority, the Issuer will (subject
to compliance by the Holder or beneficial owner of such
Security with any relevant administrative requirements)
pay such additional amount in respect of principal,
premium, if any, and interest ("Additional Amounts") as
may be necessary in order that the net amounts paid to
the Holder of such Security or the Trustee under the
Indenture, as the case may be, after such deduction or
withholding, shall equal the respective amounts of
principal, premium, if any, and interest, as specified
in the Security, to which such Holder or the Trustee is
entitled; provided, that the foregoing shall not apply
to (a) any tax, assessment or other governmental charge
imposed by the United States or any political or taxing
authority thereof or therein which would not have been
imposed but for (i) the existence of any present or
former connection between such holder (or between a
fiduciary, settlor, beneficiary, member or shareholder
of, or possessor of a power over, such holder, if such
holder is an estate, trust, partnership or corporation)
and the United States, including, without limitation,
such holder (or such fiduciary, settlor, beneficiary,
member, shareholder or possessor) being or having been a
citizen or resident thereof or being or having been
present or engaged in a trade or business therein or
having had a permanent establishment therein, (ii) such
holder's past or present status as a personal holding
company, foreign personal holding company or controlled
foreign corporation with respect to the United States or
as a corporation which accumulates earnings to avoid
United States federal income tax or (iii) such holder's
past or present status as the actual or constructive
owner of 10% or more of the total combined voting power
of all classes of stock entitled to vote of FCX or
certain affiliates of FCX; (b) any tax, assessment or
other governmental charge imposed by The Netherlands or
any political subdivision or taxing authority thereof or
therein which would not have been imposed but for the
existence of any present or former connection between
such holder (or between a fiduciary, settlor,
beneficiary, member or shareholder of, or possessor of a
power over, such holder, if such holder is an estate,
trust, partnership or corporation) and The Netherlands,
including, without limitation, such holder (or such
fiduciary, settlor, beneficiary, member, shareholder or
possessor) being or having been a citizen, resident or
deemed resident thereof or being or having been present
or engaged in a trade or business therein or having had
a permanent establishment therein; (c) any tax,
assessment or other governmental charge imposed by
Indonesia or any political subdivision or taxing
authority thereof or therein which would not have been
imposed but for the existence of any present or former
connection between such holder (or between a fiduciary,
settlor, beneficiary, member or shareholder of, or
possessor of a power over, such holder, if such holder
is an estate, trust, partnership or corporation) and
Indonesia, including, without limitation, such holder
(or such fiduciary, settlor, beneficiary, member,
shareholder or possessor) being or having been a citizen
or resident thereof or being or having been present or
engaged in a trade or business therein or having had a
permanent establishment therein; (d) any tax, assessment
or other governmental charge that would not have been
imposed but for the presentation of a Security for
payment on a date more than 15 days after the date on
which such payment became due and payable or the date on
which payment thereof is duly provided for, whichever
occurs later; (e) any estate, inheritance, gift, sales,
transfer, personal property or similar tax, assessment
or other governmental charge; (f) any tax, assessment or
other governmental charge which is payable otherwise
than by withholding from payments of the principal of or
interest on a Security; (g) any tax, assessment or other
governmental charge which would not have been imposed
but for the failure of the holder to comply with
certification, information or other reporting
requirements concerning the nationality, residence,
identity or connections of the holder or beneficial
owner of such Security (i) with the United States, if
the tax, assessment or governmental charge is imposed by
the United States or any political subdivision or taxing
authority thereof or therein, (ii) with The Netherlands,
if the tax, assessment or governmental charge is imposed
by The Netherlands or any political subdivision or
taxing authority thereof or therein, and (iii) with
Indonesia, if the tax, assessment or governmental charge
is imposed by Indonesia or any political subdivision or
taxing authority thereof or therein, if in each case
such compliance is required by statute or by regulation
of the respective taxing authority to establish
entitlement from such tax, assessment or other
governmental charge; or (h) any combination of items
(a), (b), (c), (d), (e), (f) and (g); nor shall
Additional Amounts be paid to any Holder who is a
fiduciary or partnership or other than the sole
beneficial owner of the Securities to the extent the
beneficiary or settlor with respect to such fiduciary or
a member of such partnership or a beneficial owner of
the Securities would not have been entitled to payment
of Additional Amounts had such beneficiary, settlor,
member or beneficial owner been the Holder of the
Security.
Except as set forth in the following paragraph,
the Securities may not be redeemed prior to
_________ __, 1999. After __________ __, 1999 the
Securities may be redeemed at the option of the Issuer
as a whole, or from time to time in part, on any date
prior to maturity, upon mailing a notice of such
redemption not less than 30 nor more than 60 days prior
to the date fixed for redemption to the Holders of
Securities to be redeemed, all as provided in the
Indenture, at a redemption price of __% of the principal
amount thereof, if redeemed during the twelve-month
period beginning _________ __, 1999 and at 100% of the
principal amount thereof if redeemed on or after
_________, 2000 together in each case with accrued
interest to the date fixed for redemption; provided,
that if the date fixed for redemption is a __________ __
or ____________ __, then the interest payable on such
date shall be paid to the Holder of record on the next
preceding ___________ __ or __________ __.
If, as the result of any statutory or
regulatory changes generally affecting United States,
Netherlands or Indonesian withholding taxes, which
change is adopted on or after ___________ __, 1994 (or,
if such change is with respect to tax imposed with
respect to payments from the jurisdiction in which a
successor corporation to PT-FI, AFIC, any Infrastructure
Affiliate or the Issuer is incorporated, such later date
on which such successor corporation becomes a successor
corporation), it is determined by the Issuer that (i)
the Issuer would be required, pursuant to Section 3.8 of
the Indenture, to pay Additional Amounts in respect of
principal, premium, if any, and interest on the
Securities on the next succeeding date for the payment
thereof, or (ii) PT-FI, AFIC or any Infrastructure
Affiliate would be required to pay Underlying Additional
Amounts in respect of the PT-FI Note or an Underlying
Note, as the case may be, in excess of amounts required
to be paid by PT-FI, AFIC or such Infrastructure
Affiliate on the date of issuance of such PT-FI Note or
Underlying Note, the Issuer may, at its option, redeem
the Securities in whole, but not in part, at any time at
a redemption price equal to 100% of the principal amount
thereof plus accrued interest (if any) to the date fixed
for redemption; provided, that (1) no notice of such
redemption may be given earlier than 90 days prior to
the earliest date on which the Issuer would be required
to pay such Additional Amounts, or PT-FI, AFIC or any
Infrastructure Affiliate would be required to pay such
Underlying Additional Amounts, were a payment in respect
of the Securities, the PT-FI Note or the Underlying
Notes, as the case may be, then due, and (2) at the time
such notice of redemption is given, such obligation to
pay such Additional Amounts and such Underlying
Additional Amounts remains in effect. Immediately prior
to the mailing of any notice of redemption pursuant to
this paragraph, the Issuer will deliver to the Trustee
(i) a certificate stating that the Issuer is entitled to
effect such redemption and setting forth a statement of
facts showing that the conditions precedent to the right
of the Issuer so to redeem have occurred, and (ii) an
opinion of independent legal counsel of recognized
standing to the effect that the Issuer has or will
become obligated to pay such Additional Amounts or that
PT-FI, AFIC or any Infrastructure Affiliate, as the case
may be, has or will become obligated to pay such
Underlying Additional Amounts, in each case as a result
of such change.
Subject to payment by the Issuer of a sum
sufficient to pay the amount due on redemption, interest
on this Security (or portion hereof if this Security is
redeemed in part) shall cease to accrue upon the date
duly fixed for redemption of this Security (or portion
hereof if this Security is redeemed in part).
In the event of redemption or purchase under
the circumstances required by the Indenture or this
Security in part only, a new Security or Securities for
the unredeemed or unpurchased portion hereof will be
issued in the name of the Holder hereof upon the
cancellation hereof.
The Indenture provides that, subject to certain
conditions, upon the occurrence of a Change of Control
followed by a Rating Decline within the period of 60
days following the first public announcement of the
circumstances giving rise to that Change of Control,
each Holder shall have the right to require FCX to
purchase all or any part of such Holder's Securities, in
integral multiples of $1,000, on the Purchase Date (as
defined in the Indenture) at a purchase price in cash
equal to 101% of the principal amount thereof plus
accrued and unpaid interest, if any, to the Purchase
Date, on the terms and conditions set forth in the
Indenture.
The Indenture contains certain covenants
requiring FCX to make an offer to purchase Securities
with certain net proceeds from certain sales of assets.
Prior to due presentment of this Security for
registration of transfer, the Issuer, FCX, the Trustee,
and any agent of the Issuer, FCX, or the Trustee, may
deem and treat the registered Holder hereof as the
absolute owner of this Security (whether or not this
Security shall be overdue and notwithstanding any
notation of ownership or other writing hereon, for the
purpose of receiving payment of, or on account of, the
principal hereof and premium, if any, interest and
Additional Amounts, if any, hereon and for all other
purposes, and neither the Issuer, FCX, nor the Trustee
nor any agent of the Issuer, FCX, or the Trustee shall
be affected by any notice to the contrary.
No recourse shall be had for the payment of the
principal of, premium, if any, interest on, or
Additional Amounts, if any, on this Security or the FCX
Guarantee, for any claim based hereon, or otherwise in
respect hereof, or based on or in respect of the
Indenture or any indenture supplemental thereto, against
any incorporator, shareholder, officer or director, as
such, past, present or future, of the Issuer, FCX, or
any successor corporation, either directly or through
the Issuer, FCX, or any successor corporation, whether
by virtue of any constitution, statute or rule of law or
by the enforcement of any assessment or penalty or
otherwise, all such liability being, by the acceptance
hereof and as part of the consideration for the issue
hereof, expressly waived and released; provided, that
nothing in this paragraph shall limit recourse against
FCX in respect of the FCX Guarantee or a waiver of any
rights which by law cannot be waived. The waiver and
release are part of the consideration for the issue of
the Securities.
The Indenture and this Security shall be
governed by and construed in accordance with the laws of
the State of New York.
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Security
purchased in its entirety by the Issuer pursuant to
Section 14.6 or Section 14.7 of the Indenture, check the
box: ( )
If you want to elect to have only a part of
this Security purchased by the Issuer pursuant to
Section 14.6 or Section 14.7 of the Indenture, state the
amount ($1,000 or any integral multiple of $1,000): $______
Dated: Your Signature:
(Sign exactly as name appears
on the other side of this Security)
Signature Guarantee:
(Signature must be guaranteed by
a member firm of the New York
Stock Exchange or a commercial
bank or trust company)
(FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION)
This is one of the Securities described in the
within-mentioned Indenture.
Chemical Bank, as Trustee
By:_______________________
Authorized Officer
(FORM OF FCX GUARANTEE)
GUARANTEE
OF
FREEPORT-McMoRan
COPPER & GOLD INC.
For value received, Freeport-McMoRan Copper &
Gold Inc., a Delaware corporation ("FCX"), hereby
unconditionally guarantees to the Holder of the
Security, issued under the Indenture referred to
therein, upon which this FCX Guarantee is endorsed and
to the Trustee referred to in said Indenture, the due
and punctual payment of the principal of, premium, if
any, interest and Additional Amounts, if any, on said
Security, when and as the same shall become due and
payable, whether at the Stated Maturity, by
acceleration, call for redemption, purchase or
otherwise, according to the terms thereof and of the
Indenture referred to therein. FCX hereby agrees that
its obligations hereunder shall be absolute and
unconditional, irrespective of, and shall not be
affected by, any invalidity, irregularity or
unenforceability of said Security or said Indenture, any
failure to enforce the provisions of said Security or
said Indenture, any waiver, modification or indulgence
granted to P.T. ALatieF Freeport Finance Company B.V.
(the "Issuer") with respect thereto, by the Holder of
said Security or the Trustee under said Indenture, or
any other circumstance which may otherwise constitute a
legal or equitable discharge of a surety or guarantor;
provided, that, notwithstanding the foregoing, no such
waiver, modification or indulgence shall, without the
consent of FCX, increase the principal amount of,
premium, if any, or Additional Amounts, if any, on, said
Security or increase the interest rate thereon except as
provided in the Security. FCX hereby waives diligence,
presentment, demand of payment, filing of claims with a
court in the event of merger or bankruptcy of the
Issuer, any right to require a proceeding first against
the Issuer, protest or notice with respect to said
Security or the indebtedness evidenced thereby and all
demands whatsoever, and covenants that this FCX
Guarantee will not be discharged except by payment in
full of the principal of, premium, if any, and interest
and Additional Amounts, if any, on said Security. This
FCX Guarantee constitutes a guaranty of payment and not
of collection.
FCX further agrees that, if at any time all or
any part of any payment theretofore made by the Issuer
to the Holder of said Security is or must be rescinded
or returned by such Holder for any reason whatsoever
(including, without limitation, the insolvency,
bankruptcy or reorganization of the Issuer), the
Issuer's obligations under said Security shall, for the
purposes of this FCX Guarantee, to the extent that such
payment is or must be rescinded or returned, be deemed
to have continued in existence, notwithstanding such
payment to the Holder, and this FCX Guarantee shall
continue to be effective or be reinstated, as the case
may be, as to such obligations, all as though such
payment to the Holder had not been made.
FCX shall be subrogated to all rights of the
Holder of said Security against the Issuer in respect of
any amounts paid by FCX pursuant to the provisions of
this FCX Guarantee; provided, however, that FCX shall
not be entitled to enforce, or to receive any payments
arising out of or based upon, such right of subrogation
until the principal of, premium, if any, interest and
Additional Amounts, if any, on all Securities issued
under said Indenture shall have been paid in full in
accordance with the terms of the Indenture and of the
Securities.
No set-off, counterclaim, reduction or
diminution of an obligation, or any defense of any kind
or nature which FCX has or may have against the Issuer
or the Trustee or any Holder of a Security shall be
available hereunder to FCX or any assignee or successor
of FCX against the Trustee or any Holder of a Security;
provided, that FCX shall not be prevented from asserting
against the Issuer or the Trustee or any Holder of a
Security in a separate action any claim, action, cause
of action or demand that FCX shall have, whether or not
arising out of this FCX Guarantee. Notwithstanding the
foregoing, FCX shall have the right to assert any
compulsory counterclaim against any Holder of a Security
or the Trustee in any proceeding whether or not arising
out of this FCX Guarantee.
If at any time there occurs a Change of Control
followed by a Rating Decline (as defined in the
Indenture) with respect to FCX within the period of 60
days following the first public announcement of the
circumstances giving rise to that Change of Control,
each Holder of Securities will have the right, at such
Holder's option, to require FCX to purchase all or any
part of such Holder's Securities, in integral multiples
of $1,000, on the Purchase Date at a purchase price in
cash equal to 101% of the principal amount thereof plus
accrued and unpaid interest, if any, to the Purchase
Date, on the terms and conditions set forth in the
Indenture.
The Indenture contains certain covenants
requiring FCX to make an offer to purchase Securities
with certain net proceeds from certain sales of assets.
This FCX Guarantee shall not be valid or become
obligatory for any purpose until the certificate of
authentication on the Security upon which this FCX
Guarantee is endorsed shall have been signed manually by
the Trustee under the Indenture referred to in said
Security.
This FCX Guarantee shall be deemed to be a
contract made under the laws of the State of New York,
and for all purposes shall be governed by and construed
in accordance with the laws of such State, except as may
otherwise be required by mandatory provisions of law.
All terms used in this FCX Guarantee and not
defined herein, which are defined in the Indenture,
shall have the meanings assigned to them in the
Indenture.
IN WITNESS WHEREOF, FCX has caused this FCX
Guarantee to be duly executed by the facsimile signature
of one of its Authorized Signatories, as defined in the
Indenture, or its duly authorized attorney.
FREEPORT-McMoRan
COPPER & GOLD INC.
By_________________________
Name:
Title:
AND WHEREAS, all things necessary to make the
Securities, when executed by the Issuer and
authenticated and delivered by the Trustee as in this
Indenture provided, the valid, binding and legal
obligations of the Issuer, and to constitute this
Indenture a valid indenture and agreement according to
its terms, have been done;
NOW, THEREFORE:
In consideration of the premises and the
purchases of the Securities by the Holders thereof, the
Issuer, FCX and the Trustee mutually covenant and agree
for the equal and proportionate benefit of the
respective Holders from time to time of the Securities
as follows:
ARTICLE ONE
DEFINITIONS
SECTION 1.1 Certain Terms Defined. The
following terms (except as otherwise expressly provided
or unless the context otherwise clearly requires) for
all purposes of this Indenture and of any indenture
supplemental hereto shall have the respective meanings
specified in this Section. All other terms used in this
Indenture which are defined in the Trust Indenture Act
of 1939 or the definitions of which in the Securities
Act are referred to in the Trust Indenture Act of 1939
(except as herein otherwise expressly provided or unless
the context otherwise requires), shall have the meanings
assigned to such terms in the Trust Indenture Act of
1939 and in the Securities Act as in force at the date
of this Indenture. All accounting terms used herein and
not expressly defined shall have the meanings given to
them in accordance with generally accepted accounting
principles, and the term "generally accepted accounting
principles" shall mean generally accepted accounting
principles in the United States which are in effect on
the date or time of any determination. The words
"herein", "hereof" and "hereunder" and other words of
similar import refer to this Indenture as a whole and
not to any particular Article, Section or other
subdivision. The terms defined in this Article include
the plural as well as the singular.
"Additional Amounts" has the meaning set forth
in Section 3.8.
"Affiliate" of any specified person means (i)
any other person which, directly or indirectly, is in
control of, is controlled by or is under common control
with such specified person or (ii) any other person who
is a director or officer (A) of such specified person,
(B) of any Subsidiary of such specified person or (C) of
any person described in clause (i) above. For purposes
of this definition, control of a person means the power,
direct or indirect, to direct or cause the direction of
the management and policies of such person whether by
contract or otherwise and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
Notwithstanding the foregoing, no bank (or trustee or
security agent therefor) party to the AFIC Credit
Agreement, the PT-FI Credit Agreement or the FTX Credit
Agreement, or any amendment to or replacement of any of
the foregoing, shall be deemed to be an "Affiliate" by
virtue of compliance with the requirements of any of the
foregoing agreements, amendments or replacements,
including the granting of the Liens provided for
therein.
"AFIC" means P.T. ALatieF Freeport
Infrastructure Corporation, an Indonesian limited
liability company.
"AFIC Credit Agreement" means the Credit
Agreement, dated as of December 15, 1993, among AFIC,
The Chase Manhattan Bank (National Association), as
Agent, and the banks named therein.
"Announcement" shall have the meaning set forth
in the definition of "Purchase Event" herein.
"Asset Disposition" means, with respect to any
person, any sale, transfer, conveyance, lease or other
disposition (including, without limitation, by way of
merger or consolidation, spin-off, or sale of shares of
Capital Stock in any Subsidiary of such person, but
excluding any Sale/Leaseback Transaction) that is
entered into and completed after the date of the
Indenture to any person (other than to FCX, PT-FI or the
Issuer) of (i) any assets (other than EIP Assets or
Undeveloped Mining Assets) of such person or (ii) any
shares of Capital Stock of such person's Subsidiaries
(other than a Subsidiary substantially all of whose
assets are EIP Assets, Undeveloped Mining Assets or
both), which, in either case, results in Net Proceeds of
$10,000,000 or more. For purposes of this definition,
the term Asset Disposition shall not include (i) any
sale, transfer, conveyance, lease or other disposition
of assets and properties of the Issuer or FCX governed
by Sections 9.1 and 14.1 of this Indenture or (ii) the
granting of any Lien unless and until the property
subject to such Lien is sold by or on behalf of the
person secured thereby or such person takes possession
of such property in satisfaction of debt.
"Asset Disposition Offer" has the meaning set
forth in Section 14.6(a)(ii)(b).
"Asset Disposition Offer Amount" has the
meaning set forth in Section 14.6(a)(ii)(b).
"Authorized Signatory" means any of the
chairman of the board, Managing Director of the Board,
the president, any vice president, the treasurer or any
assistant treasurer or the secretary or any assistant
secretary of any Person.
"Board of Commissioners" means the Board of
Commissioners of PT-FI or any committee thereof duly
authorized to act on behalf of such Board.
"Board of Directors" of any Person other than
PT-FI means the Board of Directors of such Person or any
committee of such Board duly authorized to act on its
behalf.
"Board Resolution" of any Person means a copy
of one or more resolutions, certified by the secretary
or an assistant secretary of such Person to have been
duly adopted or consented to by the Board of Directors
(or Board of Commissioners, as the case may be) of such
Person and to be in full force and effect, and delivered
to the Trustee.
"Business Day" means a day which in the City
and State of New York is neither Saturday, Sunday, a
legal holiday nor a day on which banking institutions
and trust companies are authorized by law or regulation
or executive order to close.
"Capital Lease Obligations" of a Person means
any obligation which is required to be classified and
accounted for as a capital lease on a balance sheet of
such person prepared in accordance with generally
accepted accounting principles.
"Capital Stock" means any and all shares,
interests, rights to purchase, warrants, options,
participations or other equivalents of or interest in
(however designated) corporate stock, including any
Preferred Stock.
"Change of Control" has the meaning set forth
in Section 14.7(g)(ii).
"Commission" means the Securities and Exchange
Commission.
"Commodity Price Protection Agreement" of any
Person means any forward contract, commodity swap,
commodity option or other financial agreement or
arrangement designed to protect against fluctuations in
commodity prices.
"Company Order" means a written statement,
request or order or the Issuer or FCX which is signed in
such company's name by the chairman of the Board of
Directors, the president, any executive vice president,
any senior vice president or any vice president of the
Issuer or FCX.
"Corporate Trust Office" means the office of
the Trustee at which the corporate trust business of the
Trustee shall, at any particular time, be principally
administered, which office is, at the date as of which
this Indenture is dated, located at 450 West 33rd
Street, New York, New York 10001.
"Currency Exchange Protection Agreement" of any
Person means any forward foreign exchange agreement,
currency swap, currency option or other financial
agreement or arrangement designed to protect against
fluctuations in currency exchange rates.
"Debt" of any Person means, without
duplication,
(i) the principal of and premium (if any) in
respect of (A) indebtedness of such person for
money borrowed and (B) indebtedness evidenced by
notes, debentures, bonds or other similar
instruments for the payment of which such person is
responsible or liable;
(ii) all Capital Lease Obligations of such
person;
(iii) all obligations of such person issued or
assumed as the deferred (for 180 days or more)
purchase price of property, all conditional sale
obligations of such person and all obligations of
such person under any title retention agreement
(but excluding trade accounts payable arising in
the ordinary course of business);
(iv) all obligations of such person for the
reimbursement of any obligor on any letter of
credit, banker's acceptance or similar credit
transaction (other than obligations with respect to
letters of credit securing obligations (other than
obligations described in (i) through (iii) above)
entered into in the ordinary course of business of
such person to the extent such letters of credit
are not drawn upon or, if and to the extent drawn
upon, such drawing is reimbursed no later than the
third Business Day following receipt by such person
of a demand for reimbursement following payment on
the letter of credit);
(v) the amount of all obligations of such
person with respect to the redemption, repayment or
other purchase of any Redeemable Stock (but
excluding any accrued dividends);
(vi) all obligations of the type referred to in
clauses (i) through (v) of other persons and all
dividends of other persons for the payment of
which, in either case, such person is responsible
or liable, directly or indirectly, as obligor,
guarantor or otherwise, including by means of any
Guarantee; and
(vii) all obligations of the type referred to in
clauses (i) through (vi) of other persons secured
by any Lien on any property or asset of such person
(whether or not such obligation is assumed by such
person), the amount of such obligation being deemed
to be the lesser of the value of such property or
assets or the amount of the obligation so secured.
"Default" means any event which is, or after
notice or passage of time or both would be, an Event of
Default.
"EIP Assets" means the commercial, residential,
educational, retail, medical, recreational,
environmental and other infrastructure facilities
(including without limitation power, water and waste
disposal systems, an industrial park, small business
development facilities, port, marine, logistics and
related assets under construction, airport, flood
control or road facilities, hotel or other guest
facilities and other general infrastructure facilities),
constructed or to be constructed in connection with or
to support the mining and milling operations of PT-FI in
Irian Jaya, Indonesia; provided that the mining and
milling production facilities of PT-FI in Irian Jaya,
Indonesia shall not constitute EIP Assets.
"EIP Purchase Notice" has the meaning assigned
to it in Section 3.10.
"Event of Default" means any event or condition
specified as such in Section 5.1.
"Exchange Act" means the Securities Exchange
Act of 1934, as amended.
"Existing Master Services Agreement" means the
Master Services Agreement, dated December 15, 1993,
between PT-FI and AFIC.
"FCX" means Freeport-McMoRan Copper & Gold
Inc., a Delaware corporation, and, subject to Sections
14.1 and 14.2, its successors and assigns.
"FCX Guarantee" means the guarantee of FCX
endorsed on a Security authenticated and delivered
pursuant to this Indenture.
"FTX" means Freeport-McMoRan Inc., a Delaware
corporation.
"FTX Credit Agreement" means the Amended and
Restated Credit Agreement, dated as of June 1, 1993,
among FTX, Freeport McMoRan Resource Partners, Limited
Partnership, certain banks from time to time parties
thereto and Chemical Bank, as agent.
"Guarantee" means any obligation, contingent or
otherwise, of any person directly or indirectly
guaranteeing any Debt of any Person and any obligation,
direct or indirect, contingent or otherwise, of such
person (i) to purchase or pay (or advance or supply
funds for the purchase or payment of) such Debt of such
person (whether arising by virtue of partnership
arrangements, or by agreement to keep-well, to purchase
assets, goods, securities or services, to take-or-pay,
or to maintain financial statement conditions or
otherwise) or (ii) entered into for purposes of assuring
in any other manner the obligee of such Debt of the
payment thereof or to protect such obligee against loss
in respect thereof (in whole or in part); provided,
however, that the term Guarantee shall not include
endorsements for collection or deposit in the ordinary
course of business. The term "Guarantee" used as a verb
has a corresponding meaning.
"Guarantor" means FCX as guarantor under the
FCX Guarantee.
"Holder", "Holder of Securities",
"Securityholder" or other similar terms mean in the case
of any Security, the Person in whose name such Security
is registered in the Security register kept by the
Issuer for that purpose in accordance with the terms
hereof.
"Indebtedness" of any Person means, without
duplication, all obligations of such person under any
Debt, Interest Rate Protection Agreement, Currency
Exchange Protection Agreement or Commodity Price
Protection Agreement.
"Indenture" means this instrument as originally
executed and delivered or, if amended or supplemented as
herein provided, as so amended or supplemented.
"Indonesian Government" means the Government of
the Republic of Indonesia.
"Infrastructure Affiliate" means a company
organized under the laws of Indonesia solely for the
purpose of owning and operating EIP Assets that, due to
applicable requirements of Indonesian law, may not be
owned by AFIC, and having similar equity ownership and
capital structure as AFIC.
"Insolvency Law" means any Netherlands,
Indonesian, United States (Federal or State), or other
applicable bankruptcy, insolvency, reorganization or
similar law in any applicable jurisdiction.
"Interest Rate Protection Agreement" means any
interest rate swap agreement, interest rate cap
agreement or other financial agreement or arrangement
designed to protect against fluctuations in interest
rates, including any agreement which exchanges a fixed
rate interest obligation for a floating rate interest
obligation.
"issue" means issue, assume, guarantee, incur
or otherwise become liable for; provided, however, that
any Debt or Capital Stock of a person existing at the
time such person becomes a Subsidiary (whether by
merger, consolidation, acquisition or otherwise) shall
be deemed to be issued by such Subsidiary at the time it
becomes a Subsidiary.
"Issuer" means P.T. ALatieF Freeport Finance
Company B.V., a Netherlands corporation, and, subject to
Article Nine, its successors and assigns.
"Lien" means any mortgage, deed of trust,
pledge, charge, security interest, assignment,
encumbrance, conditional sale or other title retention
agreement.
"Majority-Owned Subsidiary" of a Person means a
Subsidiary of which more than 50% of the total voting
power of shares of Capital Stock or other interests
(including partnership interests) entitled (without
regard to the occurrence of any contingency) to vote in
the election of directors, managers or trustees thereof
is at the time owned or controlled, directly or
indirectly, by such Person, and any partnership of which
more than 50% of the partnership interests are owned,
directly or indirectly, by such Person.
"Master Services Agreement" means an agreement
between PT-FI and AFIC or an Infrastructure Affiliate
pursuant to which PT-FI will compensate AFIC or such
Infrastructure Affiliate for the use and occupancy of
the EIP Assets purchased by such entity.
"Net Proceeds" from an Asset Disposition means:
(A) cash payments received (including any cash
payments received by way of deferred payment of
principal pursuant to a note or installment
receivable or otherwise, but only as and when
received and also including any cash received upon
sale or disposition of such note or receivable or
upon sale or other disposition of other non-cash
proceeds, but excluding any consideration received
in the form of assumption by the acquiring person
of Debt or other obligations relating to such
properties or assets or received in any other non-
cash form) therefrom; and
(B) (i) in the case of an Asset Disposition
(other than an Asset Disposition described in
clauses (ii) or (iii) below) the aggregate fair
market value of any non-cash assets received as
consideration for such Asset Disposition, but only
to the extent that such non-cash assets are then
distributed by FCX as a dividend or other
distribution to its stockholders, (ii) in the case
of an Asset Disposition constituting a spin-off or
other distribution to stockholders of FCX, the
aggregate fair market value on the date of such
Asset Disposition of any non-cash assets that are
distributed by FCX as a dividend or other
distribution to its stockholders as part of such
Asset Disposition and (iii) in the case of an Asset
Disposition pursuant to which FCX sells or
otherwise conveys any non-cash assets to any of its
stockholders (other than pursuant to a pro rata
distribution to all of its stockholders) as
consideration for the purchase by FCX of any of its
Capital Stock from such stockholders, the aggregate
fair market value of the Capital Stock purchased,
provided that in each such case, fair market value
shall be determined in good faith by the Board of
Directors of FCX and such determination shall be
conclusive; and, provided, further, that, in the
case of each of subclauses (i), (ii) and (iii) of
this clause (B), any such Net Proceeds shall be
deemed to have been received, in respect of any
Asset Disposition, at the time when FCX distributes
or otherwise sells or conveys such non-cash assets
to its stockholders;
in each case, net of all expenses, commissions and other
fees or obligations incurred, all taxes required to be
accrued and reasonable reserves for the after-tax cost
of any indemnification (including environmental
indemnification) payments and in each case net of all
payments made on any Debt which is secured by any assets
subject to such Asset Disposition, in accordance with
the terms of any Lien upon or other security agreement
of any kind with respect to such assets, or which must
by its terms, or in order to obtain a necessary consent
to such Asset Disposition, or by applicable law be
repaid out of the proceeds from such Asset Disposition,
and net of all distributions and other payments required
to be made to minority interest holders in Subsidiaries
or joint ventures as a result of such Asset Disposition.
"Non-Recourse Debt" means any Debt issued
pursuant to any agreement or instrument which limits the
liability of the borrower to the collateral securing
such Debt, so long as such collateral does not include
any assets within or constituting a part of Contract
Area Block A (as defined in the Contract of Work dated
December 30, 1991 between the Republic of Indonesia and
PT-FI).
"Offer to Purchase" means an offer by the
Issuer to purchase Securities in accordance with the
provisions of Sections 14.6 or 14.7.
"Officers' Certificate" means a certificate
signed by the chairman of the board or the president or
any vice president (whether or not designated by a
number or numbers or a word or words added before or
after the title "Vice President") and by the treasurer
or any assistant treasurer or the secretary or any
assistant secretary of the Issuer or FCX, as applicable,
and delivered to the Trustee. Each such certificate
shall include the statements provided for in Section
11.5, if and to the extent required hereby.
"Opinion of Counsel" means an opinion in
writing signed by legal counsel who may be an employee
of or counsel to the Issuer or FCX, as applicable, or
who may be other counsel satisfactory to the Trustee.
Each such opinion shall include the statements provided
for in Section 11.5, if and to the extent required
hereby.
"Outstanding", when used with reference to
Securities, shall, subject to the provisions of Section
7.4, mean, as of any particular time, all Securities
authenticated and delivered by the Trustee under this
Indenture, except
(a) Securities theretofore cancelled by the
Trustee or delivered to the Trustee for
cancellation;
(b) Securities, or portions thereof, for the
payment or redemption of which moneys in the
necessary amount shall have been deposited in trust
with the Trustee or with any paying agent (other
than the Issuer) or shall have been set aside,
segregated and held in trust by the Issuer (if the
Issuer shall act as its own paying agent), provided
that if such Securities are to be redeemed prior to
the Stated Maturity thereof, notice of such
redemption shall have been given as herein
provided, or provision satisfactory to the Trustee
shall have been made for giving such notice; and
(c) Securities in substitution for which other
Securities shall have been authenticated and
delivered, or which shall have been paid, pursuant
to the terms of Section 2.6 (unless proof
satisfactory to the Trustee is presented that any
of such Securities is held by a Person in whose
hands such Security is a legal, valid and binding
obligation of the Issuer).
"Permitted Investments" means (i) interest
bearing deposit accounts in United States national or
state banks having a combined capital and surplus of not
less than $100,000,000 and a Moody's Bank Credit Report
Service short-term deposit rating of P-1; (ii) bankers'
acceptances drawn on and accepted by commercial banks
having a combined capital and surplus of not less than
$100,000,000 and a Moody's Bank Credit Report Service
short-term deposit rating of P-1; (iii) obligations of
the United States of America or any agency or
instrumentality of the United States of America; (iv)
commercial or finance company paper which is rated A-1
by Standard & Poor's Corporation or P-1 by Moody's
Investors Service; (v) corporate debt securities rated
A-1 by Standard & Poor's Corporation or P-1 by Moody's
Investors Service; (vi) purchase agreements with banking
or financial institutions having a combined capital and
surplus of not less than $100,000,000 and a Moody's Bank
Credit Report Service short-term deposit rating of P-1
with respect to any of the foregoing obligations or
securities; and (vii) money market funds with assets of
at least $1,000,000,000 and portfolio guidelines
consistent with the foregoing obligations and
securities. Such investments shall have maturity dates,
or shall be subject to redemption by the holder at the
option of the holder, prior to the date which is one
year from the date of purchase of such investment.
"Person" means any individual, corporation,
partnership, joint venture, trust, unincorporated
organization or government or any agency or political
subdivision thereof.
"Preferred Stock", as applied to the Capital
Stock of any corporation, means Capital Stock of any
class or classes (however designated) which is preferred
as to the payment of dividends, or as to the
distribution of assets upon any voluntary or involuntary
liquidation or dissolution of such corporation, over
shares of Capital Stock of any other class of such
corporation.
"PT-FI" means P.T. Freeport Indonesia Company,
a limited liability company organized under the laws of
Indonesia and also domesticated in Delaware, and its
successors and assigns.
"PT-FI Credit Agreement" means the Amended
Credit Agreement, dated as of June 1, 1993, among PT-FI,
FTX, FCX, certain banks from time to time parties
thereto, Morgan Guaranty Trust Company of New York, as
trustee for certain purposes of such agreement, and
Chemical Bank, as agent.
"PT-FI Note" means the note to be issued by PT-
FI to the Issuer pursuant to Section 3.9, such note to
be in substantially the form set forth in Annex I
hereto.
"Purchase Date" means, in connection with a
Purchase Event or an Asset Disposition Offer, the
purchase date (which shall not be earlier than 30 days
or later than 60 days from the date a notice of a
Purchase Event or an Asset Disposition Offer is mailed).
"Purchase Event" means the occurrence of a
Change of Control followed by a Rating Decline within
the period of 60 days following the first public
announcement of the circumstances giving rise to that
Change of Control (the "Announcement") (which period
shall be extended if during such 60 days either both
Rating Agencies shall have placed FCX on credit watch or
one of the Rating Agencies shall have placed FCX on
credit watch and the other Rating Agency shall have made
the determination described in the definition of Rating
Decline, until such time as it can be determined that
there has been a Rating Decline).
"Rating Agency" means Standard & Poor's Rating
Group and its successors ("S&P") and Moody's Investors
Service, Inc. and its successors ("Moody's"), or, if S&P
and Moody's both shall not make a rating of the
Securities publicly available, a nationally recognized
statistical rating agency or agencies, as the case may
be, selected by FCX which shall be substituted for S&P
or Moody's or both, as the case may be.
"Rating Category" means each major rating
category symbolized by (x) in the case of S&P, AAA, AA,
A, BBB, BB, B, CCC, CC and C and each such Rating
Category shall include pluses or minuses ("gradations")
modifying such capital letters; (y) in the case of
Moody's, Aaa, Aa, A, Baa, Ba, B, Caa, Ca and C and each
such Rating Category shall include added numerals such
as 1, 2 or 3 ("gradations") modifying such letters; and
(2) with respect to any other Rating Agency, comparable
or equivalent symbols.
"Rating Decline" shall be deemed to have
occurred if the Securities shall be rated by each of the
Rating Agencies at a rating which is lower than the
rating of the Securities by such Rating Agency on the
day before the Announcement by more than one gradation
(whether or not within the same Rating Category).
"Redeemable Stock" means any Capital Stock that
by its terms or otherwise is required to be redeemed on
or prior to the first anniversary of the Stated Maturity
of the Securities or is redeemable at the option of the
holder thereof at any time on or prior to the first
anniversary of the Stated Maturity of the Securities.
"Redemption Date", when used with respect to
any Security to be redeemed, means the date fixed for
such redemption by or pursuant to this Indenture.
"Redemption Price", when used with respect to
any Security to be redeemed, means the price at which it
is to be redeemed pursuant to this Indenture.
"Responsible Officer", when used with respect
to the Trustee means the Chairman of the Board of
Directors, the President, the Secretary, the Treasurer,
or any other officer of the Trustee customarily
performing corporate trust functions.
"Sale/Leaseback Transaction" means an
arrangement relating to property now owned or hereafter
acquired whereby a Person transfers such property to
another Person and the transferor leases it from such
Person.
"Securities Act" means the Securities Act of
1933, as amended.
"Security" or "Securities" has the meaning
stated in the first recital of this Indenture and more
particularly means any securities authenticated and
delivered under this Indenture.
"Security Registrar" means the Trustee or any
successor Security Registrar appointed by the Issuer.
"Senior Debt" of any Person means any Debt of
such Person unless, in the instrument creating or
evidencing the same or pursuant to which the same is
outstanding, it is provided that such obligations are
subordinated in right of payment to the Securities;
provided, however, that Senior Debt shall not be deemed
to include (1) any obligation of such Person to any
Subsidiary, (2) any liability for Federal, state, local
or other taxes owed or owing by such Person or (3) any
accounts payable or other liability to trade creditors
arising in the ordinary course of business (including
Guarantees thereof or instruments evidencing such
liabilities).
"Significant Subsidiary" means any Subsidiary
of FCX which at the time of determination either (A) had
assets which, as of the date of FCX's most recent
quarterly consolidated balance sheet, constituted at
least 5% of FCX's total assets on a consolidated basis
as of such date, or (B) had revenues for the 12-month
period ending on the date of FCX's most recent quarterly
consolidated statement of income which constituted at
least 5% of FCX's total revenues on a consolidated basis
for such period.
"Stated Maturity" means, with respect to any
security, the date specified in such security as the
fixed date on which the principal of such security is
due and payable, including pursuant to any mandatory
redemption provision (but excluding any provision
providing for the purchase of such security at the
option of the holder thereof upon the happening of any
contingency unless such contingency has occurred).
"Subsidiary" of a Person means any corporation,
association, partnership or other business entity of
which more than 50% of the total voting power of shares
of Capital Stock or other interests (including
partnership interests) entitled (without regard to the
occurrence of any contingency) to vote in the election
of directors, managers or trustees thereof is at the
time owned or controlled, directly or indirectly, by
such Person or any of its Subsidiaries, and any
partnership of which more than 50% of the partnership
interests are owned, directly or indirectly, by such
Person or any of its Subsidiaries.
"Transferee Subsidiary" means any Subsidiary of
FCX to which PT-FI has transferred, after the date
hereof, plant, property and equipment with an aggregate
net book value on the date of transfer in excess of
$10,000,000.
"Trust Indenture Act of 1939" (except as
otherwise provided in Sections 8.1 and 8.2) means the
Trust Indenture Act of 1939 as in force at the date as
of which this Indenture was originally executed.
"Trustee" means the entity identified as
"Trustee" in the first paragraph hereof and, subject to
the provisions of Article Six, shall also include any
successor trustee.
"Underlying Additional Amount" means payment to
the Issuer by PT-FI, AFIC or an Infrastructure Affiliate
of such amounts as may be necessary so that every net
payment of principal of, or interest on, the PT-FI Note
or any Underlying Note, as the case may be, after
deduction or withholding for or on account of any
present or future tax, assessment or other governmental
charge imposed upon the holder of the PT-FI Note or any
Underlying Note by reason of the making of such payment
or deemed payment by the United States, The Netherlands
and Indonesia or any political subdivision or taxing
authority of or in any of them, will not be less than
the amount provided for in the PT-FI Note or such
Underlying Note, as the case may be.
"Underlying Note" means a note to be issued by
AFIC or an Infrastructure Affiliate to the Issuer
pursuant to Section 3.10, each such note to be in
substantially the form set forth in Annex II.
"Undeveloped Mining Assets" means the rights to
explore for, mine, process, store and transport minerals
and any assets or facilities used in connection with
such rights or the exercise thereof; provided that the
term "Undeveloped Mining Assets" shall not include
(i) any such rights with respect to Contract Area
Block A (as defined in the Contract of Work dated
December 30, 1991 between the Republic of Indonesia and
PT-FI), (ii) any assets or facilities used in connection
with mining or processing on Contract Area Block A or
(iii) any such rights, assets or facilities to the
extent acquired or developed with the proceeds of an
Asset Disposition.
"U.S. Government Obligations" means direct
obligations (or certificates representing an ownership
interest in such obligations) of the United States of
America (including any agency or instrumentality
thereof) for the payment of which the full faith and
credit of the United States of America is pledged and
which are not callable at the issuer's option.
"Voting Stock" of a corporation means all
classes of Capital Stock of such corporation then
outstanding and normally entitled to vote in the
election of directors.
ARTICLE TWO
ISSUE, EXECUTION, FORM AND
REGISTRATION OF SECURITIES
SECTION 2.1 Authentication and Delivery of
Securities. Upon the execution and delivery of this
Indenture, or from time to time thereafter, Securities
in an aggregate principal amount not in excess of the
amount specified in the form of Security hereinabove
recited (except as otherwise provided in Sections 2.5,
2.6, 2.8, 8.5, 12.3, 14.6(d) and 14.7(f)) may be
executed by the Issuer and upon endorsement thereon of
the FCX Guarantee, delivered to the Trustee for
authentication and the Trustee shall thereupon
authenticate and deliver such Securities to or upon the
order of the Issuer (contained in an Company Order),
without any further action by the Issuer.
SECTION 2.2 Execution of Securities. The
Securities shall be signed on behalf of the Issuer by
any of its Managing Directors. Such signature may be
the manual or facsimile signature of the present or any
future such officer. Typographical and other minor
errors or defects in any such reproduction of any such
signature shall not affect the validity or
enforceability of any Security which has been duly
authenticated and delivered by the Trustee.
In case any officer of the Issuer who shall
have signed any of the Securities shall cease to be such
officer before the Security so signed shall be
authenticated and delivered by the Trustee or disposed
of by the Issuer, such Security nevertheless may be
authenticated and delivered or disposed of as though the
Person who signed such Security had not ceased to be
such officer of the Issuer; and any Security may be
signed on behalf of the Issuer by such Person as, at the
actual date of the execution of such Security, shall be
the proper officer of the Issuer, although at the date
of the execution and delivery of this Indenture any such
Person was not such officer.
SECTION 2.3 Certificate of Authentication.
Only such Securities as shall bear thereon a certificate
of authentication substantially in the form herein
before recited, executed by the Trustee by manual
signature of one of its authorized officers, shall be
entitled to the benefits of this Indenture or be valid
or obligatory for any purpose. Such certificate by the
Trustee upon any Security executed by the Issuer on
which the FCX Guarantee executed by FCX is endorsed
shall be conclusive evidence that the Security so
authenticated has been duly authenticated and delivered
hereunder and that the Holder is entitled to the
benefits of this Indenture.
SECTION 2.4 Form, Denomination and Date of
Securities; Payments of Interest. The Securities, the
FCX Guarantee and the Trustee's certificate of
authentication shall be substantially in the respective
forms recited above. The Securities shall be issuable
in registered form in denominations of $1,000 or
integral multiples thereof. The Securities shall be
numbered, lettered or otherwise distinguished in such
manner or in accordance with such plans as the chairman
or the officers of the Issuer executing the same may
determine with the approval of the Trustee, as evidenced
by the execution and authentication thereof.
Any of the Securities may be issued with
appropriate insertions, omissions, substitutions and
variations, and may have imprinted or otherwise
reproduced thereon such legend or legends, not
inconsistent with the provisions of this Indenture, as
may be required to comply with any law or with any rules
or regulations pursuant thereto, or with the rules of
any securities market in which the Securities are
admitted to trading, or to conform to general usage.
Each Security shall be dated the date of its
authentication and shall mature on __________ ___, 2001.
The Securities shall bear interest from such dates, and
such interest shall be payable on the dates and payable
at the rate specified on the face of the form of the
Security recited above.
The Person in whose name any Security is
registered at the close of business on any record date
with respect to any interest payment date shall be
entitled to receive the interest, if any, payable on
such interest payment date notwithstanding any transfer
or exchange of such Security subsequent to the record
date and prior to such interest payment date, except in
the case of any such transfer or exchange if and to the
extent the Issuer shall default in the payment of the
interest due on such interest payment date, in which
case such defaulted interest shall then cease to be
payable to the Holder on such record date by virtue of
having been such Holder and shall be paid to the Persons
in whose names Outstanding Securities are registered at
the close of business on a subsequent record date (which
shall be not less than five Business Days prior to the
date of payment of such defaulted interest) established
by notice given by mail by or on behalf of the Issuer to
the Holders of Securities not less than 15 days
preceding such subsequent record date. The term "record
date" as used with respect to any interest payment date
(except a date for payment of defaulted interest) for
the Securities shall mean the close of business on the
_________ __ or ____________ __ preceding such interest
payment date, whether or not such day is a Business Day.
SECTION 2.5 Registration, Transfer and
Exchange. The Issuer will cause to be kept at the
office or agency to be maintained for the purpose as
provided in Section 3.2 a register in which, subject to
such reasonable regulations as it may prescribe, it will
register, and will register the transfer of, Securities
as in this Article provided. Such register shall be in
written form in the English language or in any other
form capable of being converted into such form within a
reasonable time. At all reasonable times such register
shall be open for inspection by the Trustee.
Any Security or Securities may be exchanged for
a Security or Securities of other authorized
denominations in an equal aggregate principal amount
with the FCX Guarantee endorsed thereon. Securities to
be exchanged shall be surrendered at the office or
agency to be maintained by the Issuer for the purpose as
provided in Section 3.2, and the Issuer shall execute
and the Trustee shall authenticate and deliver in
exchange therefor the Security or Securities which the
Securityholder making the exchange shall be entitled to
receive, bearing numbers not contemporaneously
outstanding with the FCX Guarantee endorsed thereon.
Upon due presentation for registration of
transfer of any Security at any such office or agency,
the Issuer shall execute and the Trustee shall
authenticate and deliver in the name of the transferee
or transferees a new Security or Securities in
authorized denominations for a like aggregate principal
amount with the FCX Guarantee endorsed thereon.
All Securities presented for registration of
transfer, exchange, redemption, purchase or payment
shall (if so required by the Issuer or the Trustee) be
duly endorsed by, or be accompanied by a written
instrument or instruments of transfer in form
satisfactory to the Issuer and the Trustee duly executed
by, the Holder or his attorney duly authorized in
writing.
The Issuer may require payment of a sum
sufficient to cover any tax or other governmental charge
that may be imposed in connection with any exchange or
registration of transfer of Securities. No service
charge shall be made for any such transaction.
The Issuer shall not be required to exchange or
register a transfer of (a) any Securities for a period
of 15 days next preceding the first mailing of notice of
redemption of Securities to be redeemed, or (b) any
Securities selected, called or being called for
redemption except, in the case of any Security where
notice has been given that such Security is to be
redeemed in part, the portion thereof not so to be
redeemed.
All Securities issued upon any transfer or
exchange of Securities shall be valid obligations of the
Issuer, evidencing the same debt, and entitled to the
same benefits under this Indenture, as the Securities
surrendered upon such transfer or exchange.
SECTION 2.6 Mutilated, Defaced, Destroyed,
Lost and Stolen Securities. In case any temporary or
definitive Security shall become mutilated, defaced or
be apparently destroyed, lost or stolen, the Issuer in
its discretion may execute, and upon the written request
of any officer of the Issuer, the Trustee shall
authenticate and deliver, a new Security with the FCX
Guarantee endorsed thereon, bearing a number not
contemporaneously outstanding in exchange and
substitution for the mutilated or defaced Security, or
in lieu of and substitution for the Security so
apparently destroyed, lost or stolen. In every case the
applicant for a substitute Security shall furnish to the
Issuer and to the Trustee and any agent of the Issuer or
the Trustee such security or indemnity as may be
required by them to indemnify and defend and to save
each of them and FCX harmless and, in every case of
destruction, loss or theft, evidence to their
satisfaction of the apparent destruction, loss or theft
of such Security and of the ownership thereof. In the
case of a mutilated or defaced Security, the applicant
for a substitute Security shall surrender such mutilated
or defaced Security to the Trustee.
Upon the issuance of any substitute Security,
the Issuer may require the payment of a sum sufficient
to cover any tax or other governmental charge that may
be imposed in relation thereto and any other expenses
(including the fees and expenses of the Trustee)
connected therewith. In case any Security which has
matured or is about to mature, or has been called for
redemption in full, shall become mutilated or defaced or
be apparently destroyed, lost or stolen, the Issuer may,
instead of issuing a substitute Security, with the
Holder's consent, pay or authorize the payment of the
same (without surrender thereof except in the case of a
mutilated or defaced Security), if the applicant for
such payment shall furnish to the Issuer and to the
Trustee and any agent of the Issuer or the Trustee such
security or indemnity as any of them or FCX may require
to save each of them harmless from all risks, however
remote, and, in every case of apparent destruction, loss
or theft, the applicant shall also furnish to the Issuer
and the Trustee and any agent of the Issuer or the
Trustee evidence to their satisfaction of the apparent
destruction, loss or theft of such Security and of the
ownership thereof.
Every substitute Security issued pursuant to
the provisions of this Section by virtue of the fact
that any Security is apparently destroyed, lost or
stolen shall constitute an additional contractual
obligation of the Issuer and FCX, whether or not the
apparently destroyed, lost or stolen Security shall be
at any time enforceable by anyone and shall be entitled
to all the benefits of (but shall be subject to all the
limitations of rights set forth in) this Indenture
equally and proportionately with any and all other
Securities duly authenticated and delivered hereunder.
All Securities shall be held and owned upon the express
condition that, to the extent permitted by law, the
foregoing provisions are exclusive with respect to the
replacement or payment of mutilated, defaced, or
apparently destroyed, lost or stolen Securities and
shall preclude any and all other rights or remedies
notwithstanding any law or statute existing or hereafter
enacted to the contrary with respect to the replacement
or payment of negotiable instruments or other securities
without their surrender.
SECTION 2.7 Cancellation of Securities;
Disposition Thereof. All Securities surrendered for
payment, redemption, purchase, registration of transfer
or exchange, if surrendered to the Issuer or any agent
of the Issuer or the Trustee, shall be delivered to the
Trustee for cancellation or, if surrendered to the
Trustee, shall be cancelled by it; and no Securities
shall be issued in lieu thereof except as expressly
permitted by any of the provisions of this Indenture.
The Trustee shall dispose of cancelled Securities held
by it and deliver a certificate of disposition to the
Issuer unless the Issuer shall direct that cancelled
Securities be returned to it. If the Issuer shall
acquire any of the Securities, such acquisition shall
not operate as a redemption or satisfaction of the
indebtedness represented by such Securities unless and
until the same are delivered to the Trustee for
cancellation.
SECTION 2.8 Temporary Securities. Pending the
preparation of definitive Securities, the Issuer may
execute and the Trustee shall authenticate and deliver
temporary Securities (printed, lithographed, typewritten
or otherwise reproduced, in each case in form
satisfactory to the Trustee) with the FCX Guarantee
endorsed thereon. Temporary Securities shall be
issuable as registered Securities without coupons, of
any authorized denomination, and substantially in the
form of the definitive Securities but with such
omissions, insertions and variations as may be
appropriate for temporary Securities, all as may be
determined by the Issuer with the concurrence of the
Trustee. Temporary Securities may contain such
reference to any provisions of this Indenture as may be
appropriate. Every temporary Security shall be executed
by the Issuer and be authenticated by the Trustee upon
the same conditions and in substantially the same
manner, and with like effect, as the definitive
Securities. Without unreasonable delay the Issuer shall
execute and shall furnish definitive Securities with the
FCX Guarantee endorsed thereon and thereupon temporary
Securities may be surrendered in exchange therefor
without charge at the office or agency to be maintained
by the Issuer for the purpose pursuant to Section 3.2,
and the Trustee shall authenticate and deliver in
exchange for such temporary Securities a like aggregate
principal amount of definitive Securities of authorized
denominations with the FCX Guarantee endorsed thereon.
Until so exchanged the temporary Securities shall be
entitled to the same benefits under this Indenture as
definitive Securities.
ARTICLE THREE
COVENANTS OF THE ISSUER
SECTION 3.1 Payment of Principal and Interest.
The Issuer covenants and agrees that it will duly and
punctually pay or cause to be paid in U.S. dollars the
principal of, and interest on, each of the Securities at
the place or places, at the respective times and in the
manner provided in the Securities and this Indenture.
Each installment of interest on the Securities may be
paid by mailing checks for such interest payable to or
upon the written order of the Holders of Securities
entitled thereto as they shall appear on the registry
books of the Issuer.
SECTION 3.2 Offices for Payments, etc. So
long as any of the Securities remain Outstanding, the
Issuer will maintain in the Borough of Manhattan, The
City of New York, the following: (a) an office or agency
where the Securities may be presented for payment, (b)
an office or agency where the Securities may be
presented for registration of transfer and for exchange
as in this Indenture provided and (c) an office or
agency where notices and demands to or upon the Issuer
in respect of the Securities or of this Indenture may be
served. The Issuer will give to the Trustee prompt
written notice of the location of any such office or
agency and of any change of location thereof. The
Issuer hereby initially designates the Corporate Trust
Office of the Trustee as the office or agency for each
such purpose. In case the Issuer shall fail to maintain
any such office or agency or shall fail to give such
notice of the location or of any change in the location
thereof, presentations and demands may be made and
notices may be served at the Corporate Trust Office.
The Issuer will cause to be kept a register at
the office of the Security Registrar in which, subject
to such reasonable regulations as it may prescribe, the
Issuer will provide for the registration of Securities
and of transfers of Securities. The Trustee is hereby
initially appointed Security Registrar for the purpose
of registering Securities and transferring Securities as
herein provided.
The Issuer may from time to time designate one
or more additional offices or agencies where the
Securities may be presented for payment, where the
Securities may be presented for exchange as provided in
this Indenture and where the Securities may be presented
for registration of transfer as in this Indenture
provided, and the Issuer may from time to time rescind
any such designation, as the Issuer may deem desirable
or expedient; provided, however, that no such
designation or rescission shall in any manner relieve
the Issuer of its obligation to maintain the agencies
provided for in the first paragraph of this Section.
The Issuer will give to the Trustee prompt written
notice of any such designation or rescission thereof.
SECTION 3.3 Appointment to Fill a Vacancy in
Office of Trustee. The Issuer, whenever necessary to
avoid or fill a vacancy in the office of Trustee, will
appoint, in the manner provided in Section 6.9, a
Trustee, so that there shall at all times be a Trustee
hereunder.
SECTION 3.4 Paying Agents. Whenever the
Issuer shall appoint a paying agent other than the
Trustee, it will cause such paying agent to execute and
deliver to the Trustee an instrument in which such agent
shall agree with the Trustee, subject to the provisions
of this Section,
(a) that it will hold all sums received by it
as such agent for the payment of the principal of
or interest on the Securities (whether such sums
have been paid to it by the Issuer or by any other
obligor on the Securities) in trust for the benefit
of the Holders of the Securities or of the Trustee,
and
(b) that it will give the Trustee prompt
notice of any failure by the Issuer (or by any
other obligor on the Securities) to make any
payment of the principal of or interest on the
Securities when the same shall be due and payable,
and
(c) that it will at any time during the
continuance of any such failure, upon the written
request of the Trustee, forthwith pay to the
Trustee all sums so held in trust by such paying
agent.
The Issuer will, at least one Business Day
prior to each due date of the principal of or interest
on the Securities, deposit with the paying agent a sum
sufficient to pay such principal or interest, and
(unless such paying agent is the Trustee) the Issuer
will promptly notify the Trustee of any failure to take
such action.
If the Issuer shall act as its own paying
agent, it will, on or before each due date of the
principal of or interest on the Securities, set aside,
segregate and hold in trust for the benefit of the
Holders of the Securities a sum sufficient to pay such
principal or interest so becoming due until such sums
shall be paid to such Persons or otherwise disposed of
as herein provided. The Issuer will promptly notify the
Trustee of any failure to take such action.
Anything in this Section to the contrary
notwithstanding, the Issuer may at any time, for the
purpose of obtaining a satisfaction and discharge of
this Indenture or for any other reason, pay or cause to
be paid to the Trustee all sums held in trust by the
Issuer or any paying agent hereunder, as required by
this Section, such sums to be held by the Trustee upon
the trusts herein contained.
Anything in this Section to the contrary
notwithstanding, the agreement to hold sums in trust as
provided in this Section is subject to the provisions of
Sections 10.3 and 10.4.
SECTION 3.5 Written Statement to Trustee. The
Issuer will deliver to the Trustee on or before March 1
in each year (beginning with March 1, 1995) a brief
certificate (which need not comply with Section 11.5)
from the Issuer signed by its principal executive
officer, principal financial officer or principal
accounting officer stating that in the course of the
performance by the signer of his duties as an officer of
the Issuer, he would normally have knowledge of any
Default or non-compliance by the Issuer in the
performance or fulfillment of any covenant, agreement or
condition of the Issuer, contained in this Indenture,
stating whether or not he has knowledge of any such
Default or non-compliance and, if so, specifying each
such Default or non-compliance of which the signer has
knowledge and the nature thereof.
SECTION 3.6 Corporate Existence. Subject to
Article Nine, the Issuer will do or cause to be done all
things necessary to preserve and keep in full force and
effect its corporate existence, rights and franchises;
provided that the Issuer shall not be required to
preserve its corporate existence or any such right or
franchise if the Issuer shall determine that the
preservation thereof is no longer desirable in the
conduct of its business and that the loss thereof is not
disadvantageous in any material respect to the Holders
of the Securities.
SECTION 3.7 Payment of Taxes and Other Claims.
The Issuer will pay or discharge or cause to be paid or
discharged, before the same shall become delinquent,
(1) taxes, assessments and governmental charges levied
or imposed upon the Issuer or upon the income, profits
or property of the Issuer, and (2) all lawful claims for
labor, materials and supplies which, if unpaid, might by
law become a Lien upon the property of the Issuer;
provided, however, that the Issuer shall not be required
to pay or discharge or cause to be paid or discharged
any such tax, assessment, charge or claim whose amount,
applicability or validity is being contested in good
faith in appropriate proceedings.
SECTION 3.8 Additional Amounts. The Issuer
hereby agrees that any amounts to be paid by the Issuer
with respect to each Security shall be paid without
deduction or withholding for any and all present and
future tax, assessment or other governmental charge
imposed upon such Holder by reason of the making of such
payment or deemed payment by or for the account of the
United States, The Netherlands or Indonesia or any
political subdivision or taxing authority thereof or
therein or, if deduction or withholding of any such tax,
assessment or other governmental charge shall at any
time be required by the United States, The Netherlands
or Indonesia or any such subdivision or authority, the
Issuer will (subject to compliance by the Holder or
beneficial owner of such Security with any relevant
administrative requirements) pay such additional amounts
in respect of principal, premium, if any, and interest
("Additional Amounts") as may be necessary in order that
the net amounts paid to the Holder of such Security or
the Trustee, as the case may be, after such deduction or
withholding, shall equal the respective amounts of
principal, premium, if any, and interest, as specified
in the Security, to which such Holder or the Trustee is
entitled; provided, however, that payments for or on
account of the following shall be excluded from the
above definition of "Additional Amounts":
(a) any tax assessment or other governmental
charge imposed by the United States or any
political or taxing authority thereof or therein
which would not have been imposed but for (i) the
existence of any present or former connection
between such Holder (or between a fiduciary,
settlor, beneficiary, member or shareholder of, or
possessor of a power over, such Holder, if such
Holder is an estate, trust, partnership or
corporation) and the United States, including,
without limitation, such Holder (or such fiduciary,
settlor, beneficiary, member, shareholder or
possessor) being or having been a citizen or
resident thereof or being or having been present or
engaged in a trade or business therein or having
had a permanent establishment therein, (ii) such
Holder's past or present status as a personal
holding company, foreign personal holding company
or controlled foreign corporation with respect to
the United States or as a corporation which
accumulates earnings to avoid United States federal
income tax or (iii) such Holder's past or present
status as the actual or constructive owner of 10%
or more of the total combined voting power of all
classes of stock entitled to vote of FCX or certain
affiliates of FCX;
(b) any tax, assessment or other governmental
charge imposed by The Netherlands or any political
subdivision or taxing authority thereof or therein
which would not have been imposed but for the
existence of any present or former connection
between such Holder (or between a fiduciary,
settlor, beneficiary, member or shareholder of, or
possessor of a power over, such Holder, if such
Holder is an estate, trust, partnership or
corporation) and The Netherlands, including,
without limitation, such Holder (or such fiduciary,
settlor, beneficiary, member, shareholder or
possessor) being or having been a citizen, resident
or deemed resident thereof or being or having been
present or engaged in a trade or business therein
or having had a permanent establishment therein;
(c) any tax, assessment or other governmental
charge imposed by Indonesia or any political
subdivision or taxing authority thereof or therein
which would not have been imposed but for the
existence of any present or former connection
between such Holder (or between a fiduciary,
settlor, beneficiary, member or shareholder of, or
possessor of a power over, such Holder, if such
Holder is an estate, trust, partnership or
corporation) and Indonesia including, without
limitation, such Holder (or such fiduciary,
settlor, beneficiary, member, shareholder or
possessor) being or having been a citizen or
resident thereof or being or having been present or
engaged in a trade or business therein or having
had a permanent establishment therein;
(d) any tax, assessment or other governmental
charge that would not have been imposed but for the
presentation of a Security for payment on a date
more than 15 days after the date on which such
payment became due and payable or the date on which
payment thereof is duly provided for, whichever
occurs later;
(e) any estate, inheritance, gift, sales,
transfer, personal property or similar tax,
assessment or other governmental charge;
(f) any tax, assessment or other governmental
charge which is payable otherwise than by
withholding from payments of the principal of or
interest on a Security;
(g) any tax, assessment or other governmental
charge which would not have been imposed but for
the failure of the Holder to comply with
certification, information or other reporting
requirements concerning the nationality, residence,
identity or connections of the Holder or beneficial
owner of such Security (i) with the United States,
if the tax, assessment or governmental charge is
imposed by the United States or any political
subdivision or taxing authority thereof or therein,
(ii) with The Netherlands, if the tax, assessment
or governmental charge is imposed by The
Netherlands or any political subdivision or taxing
authority thereof or therein, and (iii) with
Indonesia, if the tax, assessment or governmental
charge is imposed by Indonesia or any political
subdivision or taxing authority thereof or therein,
if in each case such compliance is required by
statute or by regulation of the respective taxing
authority to establish entitlement from such tax,
assessment or other governmental charge; or
(h) any combination of items (a), (b), (c),
(d), (e), (f) and (g);
nor shall Additional Amounts be paid to any Holder who
is a fiduciary or partnership or other than the sole
beneficial owner of the Securities to the extent the
beneficiary or settlor with respect to such fiduciary or
a member of such partnership or a beneficial owner of
the Securities would not have been entitled to payment
of Additional Amounts had such beneficiary, settlor,
member or beneficial owner been the Holder of the
Security.
Whenever in this Indenture there is mentioned,
in any context, the payment of the principal of or any
premium or interest on, or in respect of, any Security,
such mention shall be deemed to include mention of the
payment of Additional Amounts provided for in this
Section to the extent that, in such context, Additional
Amounts are, were or would be payable in respect thereof
pursuant to the provisions of this Section and express
mention of the payment of Additional Amounts (if
applicable) in any provisions hereof shall not be
construed as excluding Additional Amounts in those
provisions hereof where such express mention is not
made.
At least 10 days prior to each date on which
payment of principal and any premium or interest is to
be made, if there has been any change with respect to
the matters set forth in the below-mentioned Officers'
Certificate, the Issuer will furnish the Trustee and the
Issuer's principal paying agent or paying agents, if
other than the Trustee, with an Officers' Certificate
instructing the Trustee and such paying agent or paying
agents whether such payment of principal of any premium
or interest on the Securities shall be made to Holders
of Securities without withholding for or on account of
any tax, assessment or other governmental charge. If
any such withholding shall be required, then such
Officers' Certificate shall specify by country the
amount, if any, required to be withheld on such payments
to such Holders of Securities and the Issuer or FCX, as
the case may be, will pay to the Trustee or such paying
agent or paying agents the Additional Amounts required
by this Section. The Issuer and FCX shall indemnify the
Trustee and any paying agent for, and to hold them
harmless against, any loss, liability or expense
reasonably incurred without negligence or bad faith on
their part arising out of or in connection with actions
taken or omitted by any of them in reliance on any
Officers' Certificate furnished pursuant to this
Section.
SECTION 3.9 Initial Application of Proceeds.
The Issuer covenants and agrees that, immediately
following the receipt by the Issuer of the proceeds from
the sale of the Securities, it will lend such proceeds
in their entirety to PT-FI; provided, however, that it
shall be a condition to the Issuer's obligation to make
such loan that PT-FI shall simultaneously deliver to the
Issuer the PT-FI Note, in substantially the form set
forth in Annex I to this Indenture, in aggregate
principal amount equal to $____ and duly executed by PT-
FI.
SECTION 3.10 Subsequent Application of
Proceeds. (a) Upon receipt by the Issuer from time to
time of written notice from AFIC or an Infrastructure
Affiliate, setting forth (i) the EIP Assets to be
purchased by AFIC or such Infrastructure Affiliate, as
the case may be, (ii) the aggregate purchase price for
such EIP Assets, (iii) the U.S. dollar amount to be
borrowed by AFIC or such Infrastructure Affiliate, as
the case may be, and (iv) the proposed date of such
purchase (an "EIP Purchase Notice"), the Issuer
covenants and agrees that it will (A) require PT-FI to
repay all or a portion of the outstanding principal
amount of the PT-FI Note in an amount equal to the U.S.
dollar amount specified in such EIP Purchase Notice, on
the purchase date specified therein, and
(B) simultaneously cause the amount so repaid by PT-FI
to be lent to AFIC or such Infrastructure Affiliate, as
the case may be; provided, however, that it shall be a
condition to the Issuer's obligation to make each loan
to AFIC or any Infrastructure Affiliate that (1) PT-FI
shall have repaid the PT-FI Note to the extent required
by the Issuer; and (2) AFIC or such Infrastructure
Affiliate shall simultaneously deliver (i) to the
Issuer, an Underlying Note, in substantially the form
set forth in Annex II to this Indenture, in aggregate
principal amount equal to the U.S. dollar amount
specified in the related EIP Purchase Notice and duly
executed by AFIC or such Infrastructure Affiliate (or,
if AFIC or such Infrastructure Affiliate shall have
previously delivered an Underlying Note to the Issuer,
an appropriate entry shall be made in Schedule A to such
Underlying Note evidencing an increase in aggregate
principal amount of such Underlying Note equal to the
U.S. dollar amount specified in the related EIP Purchase
Notice); and (ii) to the Issuer and the Trustee,
opinions, dated the date of such delivery, of Indonesian
counsel to AFIC or such Infrastructure Affiliate and of
United States counsel to AFIC or such Infrastructure
Affiliate, substantially to the effect set forth in
Annex III to this Indenture. The aggregate amount
outstanding at any one time under all Underlying Notes
delivered in accordance with the terms hereof shall not
exceed $____________.
(b) The Issuer may, at its election, require
AFIC or an Infrastructure Affiliate to repay all or a
portion of an Underlying Note if, within 60 days of
receipt of the proceeds of such repayment, the amount
repaid is (i) used by the Issuer to redeem or repurchase
Securities in accordance with the provisions of this
Indenture or (ii) loaned by the Issuer to PT-FI, AFIC or
an Infrastructure Affiliate; provided, that, in
connection with any such loan, (A) in the case of PT-FI,
the change in aggregate principal amount of the PT-FI
Note is reflected in Schedule A to such PT-FI Note, in
accordance with the terms thereof, or (B) in the case of
AFIC or such Infrastructure Affiliate, AFIC or such
Infrastructure Affiliate executes and delivers a note in
substantially the form of an Underlying Note (or, if
AFIC or such Infrastructure Affiliate shall have
previously delivered an Underlying Note to the Issuer,
an appropriate entry shall be made in Schedule A to such
Underlying Note evidencing the change in aggregate
principal amount of such Underlying Note) and, in any
such case, legal opinions in substantially the same form
as those required by Section 3.10(a) are received by the
Issuer and the Trustee from counsel to PT-FI, AFIC or
such Infrastructure Affiliate.
SECTION 3.11 Limitation on Other Business
Activities. The Issuer shall not engage in any
business, service or other activity other than the
issuance and sale of the Securities, making the proceeds
thereof available to AFIC, PT-FI or an Infrastructure
Affiliate in accordance with the terms of this
Indenture, enforcing its rights under the PT-FI Note and
the Underlying Notes and taking such other actions as
are called for by this Indenture.
SECTION 3.12 Maintenance of Title. The Issuer
shall take, or cause to be taken, all action required or
desirable to maintain good and valid title to the PT-FI
Note and any Underlying Notes.
SECTION 3.13 Performance, Enforcement and
Amendment of PT-FI Note and Underlying Notes. (a) The
Issuer will at all times diligently and expeditiously
enforce all rights and obligations under the PT-FI Note
and any Underlying Note, and maintain the PT-FI Note and
any Underlying Note in full force and effect (except to
the extent of an expiration by its terms), all in
accordance with the terms thereof.
(b) The Issuer will not amend, modify,
supplement, terminate or waive any provision of, or
exercise any election or right of approval, or permit or
suffer to occur any of the foregoing, under the PT-FI
Note and any Underlying Note unless the Issuer shall
have given the Trustee prior written notice of such
amendment, modification, supplement, termination or
waiver together with a description of the reason(s) for
and effect thereof and the effect of such amendment,
modification, supplement, termination, waiver, election,
permission or sufferance is not adverse to the Issuer or
the Securityholders.
(c) The Issuer shall not consent to any
amendment, waiver or termination of the Master Services
Agreement unless such amendment, waiver or termination
satisfies the requirements of Section __ of the Master
Services Agreement.
SECTION 3.14 Limitation on Liens. The Issuer
shall not create, incur, assume or suffer to exist any
Lien upon any of its assets, including without
limitation the PT-FI Note and any Underlying Notes.
ARTICLE FOUR
SECURITYHOLDERS' LISTS AND
REPORTS BY THE ISSUER AND THE TRUSTEE
SECTION 4.1 Issuer and FCX to Furnish Trustee
Information as to Names and Addresses of
Securityholders. The Issuer and FCX each covenants and
agrees that it will furnish or cause to be furnished to
the Trustee a list in such form as the Trustee may
reasonably require of the names and addresses of the
Holders of the Securities:
(a) semiannually and not more than 15 days
after each __ and __, and
(b) at such other times as the Trustee may
request in writing, within 30 days after receipt by
the Issuer of any such request as of a date not
more than 15 days prior to the time such
information is furnished,
provided that if and so long as the Trustee shall be the
Security Registrar, such list shall not be required to
be furnished.
SECTION 4.2 Preservation and Disclosure of
Securityholders' Lists. (a) The Trustee shall
preserve, in as current a form as is reasonably
practicable, all information as to the names and
addresses of the Holders of Securities contained in the
most recent list furnished to it as provided in Section
4.1 or maintained by the Trustee in its capacity as
Security Registrar, if so acting. The Trustee may
destroy any list furnished to it as provided in Section
4.1 upon receipt of a new list so furnished.
(b) In case three or more Holders of
Securities (hereinafter referred to as "applicants")
apply in writing to the Trustee and furnish to the
Trustee reasonable proof that each such applicant has
owned a Security for a period of at least six months
preceding the date of such application, and such
application states that the applicants desire to
communicate with other Holders of Securities with
respect to their rights under this Indenture or under
such Securities and it is accompanied by a copy of the
form of proxy or other communication which such
applicants propose to transmit, then the Trustee shall,
within five Business Days after the receipt of such
application, at its election, either
(i) afford to such applicants access to the
information preserved at the time by the Trustee in
accordance with the provisions of subsection (a) of
this Section, or
(ii) inform such applicants as to the
approximate number of such Holders of Securities
whose names and addresses appear in the information
preserved at the time by the Trustee, in accordance
with the provisions of subsection (a) of this
Section, and as to the approximate cost of mailing
to such Securityholders the form of proxy or other
communication, if any, specified in such
application.
If the Trustee shall elect not to afford to
such applicants access to such information, the Trustee
shall, upon the written request of such applicants, mail
to each Securityholder whose name and address appears in
the information preserved at the time by the Trustee in
accordance with the provisions of subsection (a) of this
Section a copy of the form of proxy or other
communication which is specified in such request, with
reasonable promptness after a tender to the Trustee of
the material to be mailed and of payment, or provision
for the payment, of the reasonable expenses of mailing,
unless within five days after such tender, the Trustee
shall mail to such applicants and file with the
Commission, together with a copy of the material to be
mailed, a written statement to the effect that, in the
opinion of the Trustee, such mailing would be contrary
to the best interests of the Holders of Securities or
would be in violation of applicable law. Such written
statement shall specify the basis of such opinion. If
said Commission, after opportunity for a hearing upon
the objections specified in the written statement so
filed, shall enter an order refusing to sustain any of
such objections or if, after the entry of an order
sustaining one or more of such objections, said
Commission shall find, after notice and opportunity for
hearing, that all the objections so sustained have been
met, and shall enter an order so declaring, the Trustee
shall mail copies of such material to all such
Securityholders with reasonable promptness after the
entry of such order and the renewal of such tender;
otherwise the Trustee shall be relieved of any
obligation or duty to such applicants respecting their
application.
(c) Each and every Holder of the Securities,
by receiving and holding the same, agrees with the
Issuer and the Trustee that neither the Issuer nor the
Trustee nor any agent of the Issuer or the Trustee shall
be held accountable by reason of the disclosure of any
such information as to the names and addresses of the
Holders of Securities in accordance with the provisions
of subsection (b) of this Section, regardless of the
source from which such information was derived, and that
the Trustee shall not be held accountable by reason of
mailing any material pursuant to a request made under
said subsection (b).
SECTION 4.3 Reports by the Issuer. The Issuer
covenants that it will file with the Trustee, within 15
days after the Issuer is required to file the same with
the Commission, copies of the annual reports and of the
information, documents, and other reports which the
Issuer may be required to file with the Commission
pursuant to Section 13 or Section 15(d) of the Exchange
Act.
SECTION 4.4 Reports by the Trustee. (a)
Within 60 days after (November 15) of each year
commencing with the first (November 15) following the
issuance of the Securities, the Trustee shall transmit
by mail to all Holders, as provided in Subsection (c) of
this Section, a brief report dated as of such (November
15) with respect to any of the following events which
may have occurred during the twelve months preceding the
date of such report (but if no such event has occurred
within such period, no report need be transmitted):
(i) any change to its eligibility under
Section 6.8 and its qualification under Section
310(b) of the Trust Indenture Act of 1939;
(ii) the creation of or any material change to
a relationship specified in Section 310(b)(1)
through 310(b)(10) of the Trust Indenture Act of
1939;
(iii) the character and amount of any advances
(and if the Trustee elects so to state, the
circumstances surrounding the making thereof) made
by the Trustee (as such) which remain unpaid on the
date of such report and for the reimbursement of
which it claims or may claim a lien or charge,
prior to that of the Securities, on any property or
funds held or collected by it as Trustee, except
that the Trustee shall not be required (but may
elect) to report such advances if such advances so
remaining unpaid aggregate not more than 1/2 of 1%
of the principal amount of the Securities
outstanding on the date of such report;
(iv) any change to the amount, interest rate,
and maturity date of all other indebtedness owing
by the Issuer (or by any other obligor on the
Securities) to the Trustee in its individual
capacity on the date of such report, with a brief
description of any property held as collateral
security therefor, except an indebtedness based
upon a creditor relationship arising in any manner
described in Section 311(b)(2), (3), (4) or (6) of
the Trust Indenture Act of 1939;
(v) any change to the property and funds, if
any, physically in the possession of the Trustee
(as such) on the date of such report;
(vi) any additional issue of securities which
the Trustee has not previously reported; and
(vii) any action taken by the Trustee in the
performance of its duties under this Indenture
which it has not previously reported and which in
its opinion materially affects the Securities,
except action in respect of a default, notice of
which has been or is to be withheld by it in
accordance with the provisions of Section 5.11.
(b) The Trustee shall transmit to the
Securityholders, as provided in subsection (c) of this
Section, a brief report with respect to the character
and amount of any advances (and if the Trustee elects so
to state, the circumstances surrounding the making
thereof) made by the Trustee as such since the date of
the last report transmitted pursuant to the provisions
of subsection (a) of this Section (or if no such report
has yet been so transmitted, since the date of this
Indenture) for the reimbursement of which it claims or
may claim a lien or charge prior to that of the
Securities on property or funds held or collected by it
as Trustee and which it has not previously reported
pursuant to this subsection (b), except that the Trustee
shall not be required (but may elect) to report such
advances if such advances remaining unpaid at any time
aggregate 10% or less of the principal amount of
Securities outstanding at such time, such report to be
transmitted within 90 days after such time.
(c) Reports pursuant to this Section shall be
transmitted by mail to all registered Holders of
Securities, as the names and addresses of such Holders
appear upon the registry books of the Issuer.
(d) A copy of each such report shall, at the
time of such transmission to Securityholders, be
furnished to the Issuer and be filed by the Trustee with
each stock exchange upon which the Securities are listed
and also with the Commission. The Issuer agrees to
notify the Trustee when and as the Securities become
admitted to trading on any national securities exchange.
ARTICLE FIVE
REMEDIES OF THE TRUSTEE AND
SECURITYHOLDERS ON EVENT OF DEFAULT
SECTION 5.1 Event of Default Defined;
Acceleration of Maturity; Waiver of Default. In case
one or more of the following Events of Default (whatever
the reason for such Event of Default and whether it
shall be voluntary or involuntary or be effected by
operation of law or pursuant to any judgment, decree or
order of any court or any order, rule or regulation of
any administrative or governmental body) shall have
occurred and be continuing, that is to say:
(a) default in the payment of all or any part
of the principal of any of the Securities as and
when the same shall become due and payable either
at maturity, by declaration, upon redemption,
pursuant to an Offer to Purchase or otherwise; or
(b) default in the payment of any instalment
of interest or any Additional Amounts upon any of
the Securities as and when the same shall become
due and payable, and continuance of such default
for a period of 30 days; or
(c) failure on the part of the Issuer or FCX
to comply with the covenants contained in Sections
9.1 and 14.1, respectively; or
(d) failure on the part of the Issuer or FCX
duly to observe or perform any of the other
covenants or agreements on the part of the Issuer
or FCX contained in the Securities or in this
Indenture, but only if such failure continues for a
period of 60 days after the date on which written
notice specifying such failure, stating that such
notice is a "Notice of Default" hereunder and
demanding that the Issuer or FCX, as applicable,
remedy the same, shall have been given by
registered or certified mail, return receipt
requested, to the Issuer and FCX by the Trustee, or
to the Issuer and FCX and the Trustee by the
Holders of at least 25% in aggregate principal
amount of the Outstanding Securities; or
(e) the entry by a court having jurisdiction
in the premises of (A) a decree or order for relief
in respect of the Issuer, FCX, AFIC, any
Infrastructure Affiliate, PT-FI or any Significant
Subsidiary in an involuntary case or proceeding
under any applicable Insolvency Law or (B) a decree
or order adjudging the Issuer, FCX, AFIC, any
Infrastructure Affiliate, PT-FI or any Significant
Subsidiary a bankrupt or insolvent under an
applicable Insolvency Law, or appointing a
custodian, receiver, liquidator, assignee, trustee,
sequestrator or other similar official of the
Issuer, FCX, AFIC, any Infrastructure Affiliate,
PT-FI or any Significant Subsidiary or of any
substantial part of the property of the Issuer,
FCX, AFIC, any Infrastructure Affiliate, PT-FI or
any Significant Subsidiary, or ordering the winding
up or liquidation of the affairs of the Issuer,
FCX, AFIC, any Infrastructure Affiliate, PT-FI or
any Significant Subsidiary, and the continuance of
any such decree or order for relief or any such
other decree or order unstayed and in effect for a
period of 60 consecutive days; or
(f) the commencement by the Issuer, FCX, AFIC,
any Infrastructure Affiliate, PT-FI or any
Significant Subsidiary of a voluntary case or
proceeding under any applicable Insolvency Law or
of any other case or proceeding to be adjudicated a
bankrupt or insolvent, or the consent by the
Issuer, FCX, AFIC, any Infrastructure Affiliate,
PT-FI or any Significant Subsidiary to the entry of
a decree or order for relief in respect of the
Issuer, FCX, AFIC, any Infrastructure Affiliate,
PT-FI or any Significant Subsidiary in an
involuntary case or proceeding under any applicable
Insolvency Law or to the commencement of any
bankruptcy or insolvency case or proceeding against
the Issuer, FCX, AFIC, any Infrastructure
Affiliate, PT-FI or any Significant
Subsidiary, or the filing by the Issuer, FCX, AFIC,
any Infrastructure Affiliate, PT-FI or any
Significant Subsidiary of a petition or answer or
consent seeking reorganization or relief under any
applicable Insolvency Law, or the consent by the
Issuer, FCX, AFIC, any Infrastructure Affiliate,
PT-FI or any Significant Subsidiary to the filing
of such petition or to the appointment of or taking
possession by a custodian, receiver, liquidator,
assignee, trustee, sequestrator or similar official
of the Issuer, FCX, AFIC, any Infrastructure
Affiliate, PT-FI or any Significant
Subsidiary, or of any substantial part of the
property of the Issuer, FCX, AFIC, any
Infrastructure Affiliate, PT-FI or any Significant
Subsidiary, or the making by the Issuer, FCX, AFIC,
any Infrastructure Affiliate, PT-FI or any
Significant Subsidiary of an assignment for the
benefit of creditors, or the admission by the
Issuer, FCX, AFIC, any Infrastructure Affiliate,
PT-FI or any Significant Subsidiary in writing of
its inability to pay its debts generally as they
become due, or the taking of corporate action
(which shall involve the passing of one or more
resolutions of the Board of Directors or the Board
of Commissioners, as the case may be, or a
committee thereof) by the Issuer, FCX, AFIC, any
Infrastructure Affiliate, PT-FI or any Significant
Subsidiary in furtherance of any such action; or
(g) the acceleration of the maturity or non-
payment within any applicable grace period after
final maturity of any Indebtedness of the Issuer,
FCX, AFIC, any Infrastructure Affiliate, PT-FI or
any Significant Subsidiary in a principal amount
exceeding $20,000,000 or the equivalent thereof in
any other currency or composite currency if, in the
case of an acceleration, such acceleration has not
been rescinded or annulled within a period of 30
days; provided, however, that this clause (g) shall
not apply to Non-Recourse Debt or Debt described in
clause (v) of the definition of Debt herein; or
(h) the rendering of one or more judgments or
decrees for the payment of money in an aggregate
equal to or in excess of $20,000,000 (calculated
net of any insurance coverage that the insurer has
irrevocably acknowledged to the Issuer, FCX, AFIC,
any Infrastructure Affiliate, PT-FI or any
Significant Subsidiary as covering such judgment in
whole or in part) against the Issuer, FCX, AFIC,
any Infrastructure Affiliate, PT-FI or any
Significant Subsidiary and either (A) an
enforcement proceeding has been commenced by any
creditor upon such judgment or decree or (B) there
is a period of 60 days after any such judgment or
decree becomes final and nonappealable during which
such judgment or decree is not vacated, discharged,
stayed or bonded pending appeal or the execution
thereof stayed; or
(i) The FCX Guarantee shall cease for any
reason to be in full force and effect or FCX shall
assert that the FCX Guarantee is not in full force
and effect,
then, and in each and every such case, unless the
principal of all of the Securities shall have already
become due and payable, either the Trustee or the
Holders of not less than 25% in aggregate principal
amount of the Securities then Outstanding hereunder, by
notice in writing to the Issuer or FCX (and to the
Trustee if given by Securityholders), may declare the
entire principal, plus accrued and unpaid interest, if
any, and Additional Amounts, if any, through the date of
the declaration of acceleration of all the Securities,
to be due and payable immediately, and upon any such
declaration the same shall become immediately due and
payable. This provision, however, is subject to the
condition that if, at any time after the principal of
the Securities shall have been so declared due and
payable, and before any judgment or decree for the
payment of the moneys due shall have been obtained or
entered as hereinafter provided, the Issuer or FCX shall
pay or shall deposit with the Trustee a sum sufficient
to pay all matured installments of interest and
Additional Amounts, if any, upon all the Securities and
the principal of any and all Securities which shall have
become due otherwise than by acceleration (with interest
upon such principal and, to the extent that payment of
such interest is enforceable under applicable law, on
overdue installments of interest, and Additional
Amounts, if any, at the same rate as the rate of
interest specified in the Securities, to the date of
such payment or deposit) and such amount as shall be
sufficient to cover reasonable compensation to the
Trustee and each predecessor Trustee, their respective
agents, attorneys and counsel, and all other expenses
and liabilities incurred, and all advances made, by the
Trustee and each predecessor Trustee except as a result
of negligence or bad faith, and if any and all Events of
Default under this Indenture, other than the non-payment
of the principal of Securities which shall have become
due by acceleration, shall have been cured, waived or
otherwise remedied as provided herein--then and in every
such case the Holders of a majority in aggregate
principal amount of the Securities then Outstanding, by
written notice to the Issuer and FCX and to the Trustee,
may waive all defaults and rescind and annul such
declaration and its consequences, but no such waiver or
rescission and annulment shall extend to or shall affect
any subsequent Default or shall impair any right
consequent thereon.
SECTION 5.2 Collection of Indebtedness by
Trustee; Trustee May Prove Debt. The Issuer covenants
that (a) in case Default shall be made in the payment of
any instalment of interest or any Additional Amounts on
any of the Securities when such interest or Additional
Amounts shall have become due and payable and such
Default shall have continued for a period of 30 days or
(b) in case Default shall be made in the payment of all
or any part of the principal of any of the Securities
when the same shall have become due and payable, whether
upon maturity or upon any redemption or by declaration
or otherwise, then upon demand of the Trustee, the
Issuer will pay to the Trustee for the benefit of the
Holders of the Securities the whole amount that then
shall have become due and payable on all such Securities
for principal, Additional Amounts, if any, or interest,
as the case may be (with interest to the date of such
payment upon the overdue principal and, to the extent
that payment of such interest is enforceable under
applicable law, on overdue installments of interest and
Additional Amounts, if any, at the same rate as the rate
of interest specified in the Securities); and in
addition thereto, such further amount as shall be
sufficient to cover the costs and expenses of
collection, including reasonable compensation to the
Trustee and each predecessor Trustee, their respective
agents, attorneys and counsel, and any expenses and
liabilities incurred, and all advances made, by the
Trustee and each predecessor Trustee except as a result
of its negligence or bad faith.
Until such demand is made by the Trustee, the
Issuer may pay the principal of and interest on the
Securities and Additional Amounts, if any, to the
registered Holders, whether or not the Securities are
overdue.
Without limiting the rights of the Trustee
under the FCX Guarantee, in case the Issuer shall fail
forthwith to pay such amounts upon such demand, the
Trustee, in its own name and as trustee of an express
trust, shall be entitled and empowered to institute any
action or proceedings at law or in equity for the
collection of the sums so due and unpaid, and may
prosecute any such action or proceedings to judgment or
final decree, and may enforce any such judgment or final
decree against the Issuer or any other obligor upon the
Securities and collect in the manner provided by law out
of the property of the Issuer or any other obligor upon
the Securities, wherever situated the moneys adjudged or
decreed to be payable.
In case of any judicial proceeding relating to
the Issuer, FCX or any other obligor upon the
Securities, or the property or creditors of the Issuer,
FCX or any such obligor, the Trustee shall be entitled
and empowered, by intervention in such proceeding or
otherwise, to take any and all actions authorized under
the Trust Indenture Act of 1939 in order to have claims
of the Holders and the Trustee allowed in any such
proceeding.
The Trustee shall be authorized to collect and
receive any moneys or other property payable or
deliverable on any such claims, and to distribute all
amounts received with respect to the claims of the
Securityholders and of the Trustee on their behalf, and
any trustee, receiver, or liquidator, custodian or other
similar official is hereby authorized by each of the
Securityholders to make payments to the Trustee, and, in
the event that the Trustee shall consent to the making
of payments directly to the Securityholders, to pay to
the Trustee such amounts as shall be sufficient to cover
reasonable compensation to the Trustee, each predecessor
Trustee and their respective agents, attorneys and
counsel, and all other expenses and liabilities
incurred, and all advances made, by the Trustee and each
predecessor Trustee except as a result of negligence or
bad faith and all other amounts due to the Trustee or
any predecessor Trustee pursuant to Section 6.6.
Nothing herein contained shall be deemed to
authorize the Trustee to authorize or consent to or vote
for or accept or adopt on behalf of any Securityholder
any plan of reorganization, arrangement, adjustment or
composition affecting the Securities or the rights of
any Holder thereof, or to authorize the Trustee to vote
in respect of the claim of any Securityholder in any
such proceeding except, as aforesaid, to vote for the
election of a trustee in bankruptcy or similar Person.
All rights of action and of asserting claims
under this Indenture, or under any of the Securities,
may be prosecuted and enforced by the Trustee without
the possession of any of the Securities or the
production thereof on any trial or other proceedings
relative thereto, and any such action or proceedings
instituted by the Trustee shall be brought in its own
name as trustee of an express trust, and any recovery of
judgment, subject to the payment of the expenses,
disbursements and compensation of the Trustee, each
predecessor Trustee and their respective agents and
attorneys, shall be for the ratable benefit of the
Holders of the Securities.
In any proceedings brought by the Trustee (and
also any proceedings involving the interpretation of any
provision of this Indenture to which the Trustee shall
be a party) the Trustee shall be held to represent all
the Holders of the Securities in respect of which such
action was taken, and it shall not be necessary to make
any Holders of the Securities parties to any such
proceedings.
SECTION 5.3 Application of Proceeds. Any
moneys collected by the Trustee pursuant to this Article
shall be applied in the following order at the date or
dates fixed by the Trustee and, in case of the
distribution of such moneys on account of principal or
interest, upon presentation of the several Securities
and stamping (or otherwise noting) thereon the payment,
or issuing Securities in reduced principal amounts in
exchange for the presented Securities if only partially
paid, or upon surrender thereof if fully paid:
FIRST: To the payment of costs and expenses
including any and all amounts due the Trustee under
Section 6.6;
SECOND: In case the principal of the
Securities shall not have become and be then due
and payable, to the payment of interest in default
in the order of the maturity of the installments of
such interest, and Additional Amounts, if any, with
interest (to the extent that such interest has been
collected by the Trustee) upon the overdue
installments of interest at the same rate as the
rate of interest specified in the Securities, such
payments to be made ratably to the Persons entitled
thereto, without discrimination or preference;
THIRD: In case the principal of the Securities
shall have become and shall be then due and
payable, to the payment of the whole amount then
owing and unpaid upon all the Securities for
principal and interest, with interest upon the
overdue principal, and Additional Amounts, if any,
and (to the extent that such interest has been
collected by the Trustee) upon overdue installments
of interest at the same rate as the rate of
interest specified in the Securities; and in case
such moneys shall be insufficient to pay in full
the whole amount so due and unpaid upon the
Securities, then to the payment of such principal
and interest and Additional Amounts, if any,
without preference or priority of principal over
interest, or of interest over principal, or of any
instalment of interest over any other instalment of
interest, or of interest over the Additional
Amounts, or of Additional Amounts over interest or
of any Security over any other Security, ratably to
the aggregate of such principal and accrued and
unpaid interest; and
FOURTH: To the payment of the remainder, if
any, to the Issuer or any other Person lawfully
entitled thereto.
SECTION 5.4 Suits for Enforcement. In case an
Event of Default has occurred, has not been waived and
is continuing, the Trustee may in its discretion proceed
to protect and enforce the rights vested in it by this
Indenture by such appropriate judicial proceedings as
the Trustee shall deem most effectual to protect and
enforce any of such rights, either at law or in equity
or in bankruptcy or otherwise, whether for the specific
enforcement of any covenant or agreement contained in
this Indenture or in aid of the exercise of any power
granted in this Indenture or to enforce any other legal
or equitable right vested in the Trustee by this
Indenture or by law.
SECTION 5.5 Restoration of Rights on
Abandonment of Proceedings. In case the Trustee or any
Securityholder shall have proceeded to enforce any right
under this Indenture and such proceedings shall have
been discontinued or abandoned for any reason, or shall
have been determined adversely to the Trustee or to such
Securityholder, then and in every such case, subject to
any determination in such proceeding, the Issuer, the
Trustee and the Securityholders shall be restored
severally and respectively to their former positions and
rights hereunder, and thereafter all rights, remedies
and powers of the Issuer, the Trustee and the
Securityholders shall continue as though no such
proceedings had been taken.
SECTION 5.6 Limitations on Suits by
Securityholders. No Holder of any Security shall have
any right by virtue or by availing of any provision of
this Indenture to institute any action or proceeding,
judicial or otherwise, at law or in equity or in
bankruptcy or otherwise upon or under or with respect to
this Indenture, or for the appointment of a trustee,
receiver, liquidator, custodian or other similar
official or for any other remedy hereunder, unless such
Holder previously shall have given to the Trustee
written notice of a continuing Event of Default as
hereinbefore provided, and unless also the Holders of
not less than 25% in aggregate principal amount of the
Securities then Outstanding shall have made written
request upon the Trustee to institute such action or
proceedings in its own name as trustee hereunder and
shall have offered to the Trustee such reasonable
indemnity as it may require against the costs, expenses
and liabilities to be incurred therein or thereby and
the Trustee for 60 days after its receipt of such
notice, request and offer of indemnity shall have failed
to institute any such action or proceedings and no
direction inconsistent with such written request shall
have been given to the Trustee pursuant to Section 5.9;
it being understood and intended, and being expressly
covenanted by the taker and Holder of every Security
with every other taker and Holder of the Securities and
the Trustee, that no one or more Holders of Securities
shall have any right in any manner whatever by virtue or
by availing of any provision of this Indenture to
affect, disturb or prejudice the rights of any other
Holder of Securities, or to obtain or seek to obtain
priority over or preference to any other such Holder or
to enforce any right under this Indenture, except in the
manner herein provided and for the equal, ratable and
common benefit of all Holders of Securities. For the
protection and enforcement of the provisions of this
Section, each and every Securityholder and the Trustee
shall be entitled to such relief as can be given either
at law or in equity.
SECTION 5.7 Unconditional Right of
Securityholders to Receive Principal, Premium and
Interest, and Additional Amounts, if any, and to
Institute Certain Suits. Notwithstanding any other
provision in this Indenture and any provision of any
Security, the right of any Holder of any Security to
receive payment of the principal of, premium, if any,
Additional Amounts, if any, and interest on such
Security and any interest in respect of a Default in the
payment of any such amounts, on or after the respective
due dates expressed in such Security or Redemption Dates
or Purchase Dates prescribed for therein, or to
institute suit for the enforcement of any such payment
rights on or after such respective dates, shall not be
impaired or affected without the consent of such Holder.
SECTION 5.8 Powers and Remedies Cumulative;
Delay or Omission Not Waiver of Default. Except as
provided in Section 2.6 and 5.6, no right or remedy
herein conferred upon or reserved to the Trustee or to
the Securityholders is intended to be exclusive of any
other right or remedy, and every right and remedy shall,
to the extent permitted by law, be cumulative and in
addition to every other right and remedy given hereunder
or now or hereafter existing at law or in equity or
otherwise. The assertion or employment of any right or
remedy hereunder, or otherwise, shall not prevent the
concurrent assertion or employment of any other
appropriate right or remedy.
No delay or omission of the Trustee or of any
Holder of any of the Securities to exercise any right or
power accruing upon any Event of Default occurring and
continuing as aforesaid shall impair any such right or
power or shall be construed to be a waiver of any such
Event of Default or an acquiescence therein; and,
subject to Section 5.6, every power and remedy given by
this Indenture or by law to the Trustee or to the
Securityholders may be exercised from time to time, and
as often as shall be deemed expedient, by the Trustee or
by the Securityholders, as the case may be.
SECTION 5.9 Control by Securityholders. The
Holders of a majority in aggregate principal amount of
the Securities at the time Outstanding shall have the
right to direct the time, method, and place of
conducting any proceeding for any remedy available to
the Trustee, or exercising any trust or power conferred
on the Trustee by this Indenture; provided that such
direction shall not be otherwise than in accordance with
law and the provisions of this Indenture and provided
further that (subject to the provisions of Section 6.1)
the Trustee shall have the right to decline to follow
any such direction if the Trustee, being advised by
counsel, shall determine that the action or proceeding
so directed may expose the Trustee to personal liability
or if the Trustee in good faith by its board of
directors or the executive committee thereof shall so
determine that the actions or forbearances specified in
or pursuant to such direction would be unduly
prejudicial to the interests of Holders of the
Securities not joining in the giving of said direction,
it being understood that (subject to Section 6.1) the
Trustee shall have no duty to ascertain whether or not
such actions or forbearances are unduly prejudicial to
such Holders.
Nothing in this Indenture shall impair the
right of the Trustee in its discretion to take any
action deemed proper by the Trustee and which is not
inconsistent with such direction by Securityholders.
SECTION 5.10 Waiver of Past Defaults. Prior
to the declaration of the maturity of the Securities as
provided in Section 5.1, the Holders of a majority in
aggregate principal amount of the Securities at the time
Outstanding may on behalf of the Holders of all the
Securities waive any past Default or Event of Default
hereunder and its consequences, except a Default in
respect of a covenant or provision hereof which cannot
be modified or amended without the consent of the Holder
of each Security affected (including, without
limitation, the provisions with respect to payment of
principal of and interest on such Security).
Upon any such waiver, such Default shall cease
to exist and be deemed to have been cured and not to
have occurred, and any Event of Default arising
therefrom shall be deemed to have been cured, and not to
have occurred for every purpose of this Indenture; but
no such waiver shall extend to any subsequent or other
Default or Event of Default or impair any right
consequent thereon.
SECTION 5.11 Trustee to Give Notice of
Default, But May Withhold in Certain Circumstances. The
Trustee shall, at the Issuer's expense, transmit to the
Holders of Securities, as the names and addresses of
such Holders appear on the registry books, notice by
mail of all defaults known to the Trustee, such notice
to be transmitted within 90 days after the occurrence
thereof, unless such defaults shall have been cured
before the giving of such notice (the term "default" or
"defaults" for the purposes of this Section being hereby
defined to mean any event or condition which is, or with
notice or lapse of time or both would become, an Event
of Default); provided that, except in the case of
default in the payment of the principal of or interest
or any Additional Amounts on any of the Securities, the
Trustee shall be protected in withholding such notice if
and so long as the Board of Directors, the executive
committee, or a trust committee of directors or trustees
and/or Responsible Officers of the Trustee in good faith
determine that the withholding of such notice is in the
interest of the Securityholders.
SECTION 5.12 Right of Court to Require Filing
of Undertaking to Pay Costs. All parties to this
Indenture agree, and each Holder of any Security by his
acceptance thereof shall be deemed to have agreed, that
any court may in its discretion require, in any suit for
the enforcement of any right or remedy under this
Indenture or in any suit against the Trustee for any
action taken, suffered or omitted by it as Trustee, the
filing by any party litigant in such suit other than the
Trustee of an undertaking to pay the costs of such suit,
and that such court may in its discretion assess
reasonable costs, including reasonable attorneys' fees,
against any party litigant in such suit including the
Trustee, having due regard to the merits and good faith
of the claims or defenses made by such party litigant;
but the provisions of this Section shall not apply to
any suit instituted by the Trustee, to any suit
instituted by any Securityholder or group of
Securityholders holding in the aggregate more than 10%
in aggregate principal amount of the Securities
outstanding, or to any suit instituted by any
Securityholder for the enforcement of the payment of the
principal of, premium, if any, Additional Amounts, if
any, or interest on any Security.
SECTION 5.13 Waiver of Stay or Extension Laws.
The Issuer and FCX each covenants (to the extent that
each of them may lawfully do so) that it will not at any
time insist upon, or plead, or in any manner whatsoever
claim or take the benefit or advantage of, any stay or
extension law wherever enacted, now or at any time
hereafter in force, which may affect the covenants or
the performance of this Indenture; and the Issuer and
FCX (to the extent that each of them may lawfully do so)
each hereby expressly waives all benefit or advantage of
any such law and covenants that it will not hinder,
delay or impede the execution of any power herein
granted to the Trustee, but will suffer and permit the
execution of every such power as though no such law had
been enacted.
ARTICLE SIX
CONCERNING THE TRUSTEE
SECTION 6.1 Duties and Responsibilities of the
Trustee; During Default; Prior to Default. The Trustee,
prior to the occurrence of an Event of Default and after
the curing or waiving of all Events of Default which may
have occurred, undertakes to perform such duties and
only such duties as are specifically set forth in this
Indenture. In case an Event of Default has occurred
(which has not been cured or waived) the Trustee shall
exercise such of the rights and powers vested in it by
this Indenture, and use the same degree of care and
skill in their exercise, as a prudent man would exercise
or use under the circumstances in the conduct of his own
affairs.
No provision of this Indenture shall be
construed to relieve the Trustee from liability for its
own negligent action, its own negligent failure to act
or its own willful misconduct, except that
(a) prior to the occurrence of an Event of
Default and after the curing or waiving of all such
Events of Default which may have occurred:
(i) the duties and obligations of the
Trustee shall be determined solely by the
express provisions of this Indenture, and the
Trustee shall not be liable except for the
performance of such duties and obligations as
are specifically set forth in this Indenture,
and no implied covenants or obligations shall
be read into this Indenture against the
Trustee; and
(ii) in the absence of bad faith on the
part of the Trustee, the Trustee may
conclusively rely, as to the truth of the
statements and the correctness of the opinions
expressed therein, upon any statements,
certificates or opinions furnished to the
Trustee and conforming to the requirements of
this Indenture; but in the case of any such
statements, certificates or opinions which by
any provision hereof are specifically required
to be furnished to the Trustee, the Trustee
shall be under a duty to examine the same to
determine whether or not they conform to the
requirements of this Indenture;
(b) the Trustee shall not be liable for any
error of judgment made in good faith by a
Responsible Officer or Responsible Officers of the
Trustee, unless it shall be proved that the Trustee
was negligent in ascertaining the pertinent facts;
and
(c) the Trustee shall not be liable with
respect to any action taken or omitted to be taken
by it in good faith in accordance with the
direction of Holders pursuant to Section 5.9
relating to the time, method and place of
conducting any proceeding for any remedy available
to the Trustee, or exercising any trust or power
conferred upon the Trustee, under this Indenture.
None of the provisions contained in this
Indenture shall require the Trustee to expend or risk
its own funds or otherwise incur personal financial
liability in the performance of any of its duties or in
the exercise of any of its rights or powers, if there
shall be reasonable ground for believing that the
repayment of such funds or adequate indemnity from the
Issuer or FCX against such liability is not reasonably
assured to it.
SECTION 6.2 Certain Rights of the Trustee.
Subject to Section 6.1:
(a) the Trustee may rely and shall be
protected in acting or refraining from acting upon
any resolution, Officers' Certificate or any other
certificate, statement, instrument, opinion,
report, notice, request, direction, consent, order,
bond, debenture, note, coupon, security or other
paper or document believed by it to be genuine and
to have been signed or presented by the proper
party or parties;
(b) any request, direction, order or demand of
the Issuer or FCX mentioned herein shall be
sufficiently evidenced by an Officers' Certificate
(unless other evidence in respect thereof be herein
specifically prescribed); and any resolution of the
Board of Directors may be evidenced to the Trustee
by a copy thereof certified by the Secretary or an
Assistant Secretary of the Issuer;
(c) the Trustee may consult with counsel and
any advice or Opinion of Counsel shall be full and
complete authorization and protection in respect of
any action taken, suffered or omitted to be taken
by it hereunder in good faith and in accordance
with such advice or Opinion of Counsel;
(d) the Trustee shall be under no obligation
to exercise any of the trusts or powers vested in
it by this Indenture at the request, order or
direction of any of the Securityholders pursuant to
the provisions of this Indenture, unless such
Securityholders shall have offered to the Trustee
reasonable security or indemnity against the costs,
expenses and liabilities which might be incurred
therein or thereby;
(e) the Trustee shall not be liable for any
action taken, suffered or omitted by it in good
faith and believed by it to be authorized or within
the discretion, rights or powers conferred upon it
by this Indenture;
(f) prior to the occurrence of an Event of
Default hereunder and after the curing or waiver of
all Events of Default, the Trustee shall not be
bound to make any investigation into the facts or
matters stated in any resolution, certificate,
statement, instrument, opinion, report, notice,
request, consent, order, approval, appraisal, bond,
debenture, note, coupon, security, or other paper
or document unless requested in writing so to do by
the Holders of not less than a majority in
aggregate principal amount of the Securities then
Outstanding, but during an Event of Default or upon
reasonable grounds prior to such Event of Default
the Trustee, in its discretion, may make such
further inquiries or investigation into such facts
or matters as it may see fit, and, if the Trustee
shall determine to make such inquiry or
investigation, it shall be entitled to examine the
books, records and premises of the Issuer or FCX
personally or by agent or attorney; provided that,
if the payment within a reasonable time to the
Trustee of the costs, expenses or liabilities
likely to be incurred by it in the making of such
investigation is, in the opinion of the Trustee,
not reasonably assured to the Trustee by the
security afforded to it by the terms of this
Indenture, the Trustee may require reasonable
indemnity against such expenses or liabilities as a
condition to proceeding; the reasonable expenses of
every such examination shall be paid by the Issuer
or, if paid by the Trustee or any predecessor
trustee, shall be repaid by the Issuer upon demand;
and
(g) the Trustee may execute any of the trusts
or powers hereunder or perform any duties hereunder
either directly or by or through agents or
attorneys not regularly in its employ and the
Trustee shall not be responsible for any misconduct
or negligence on the part of any such agent or
attorney appointed with due care by it hereunder.
SECTION 6.3 Trustee Not Responsible for
Recitals, Disposition of Securities or Application of
Proceeds Thereof. The recitals contained herein and in
the Securities, except the Trustee's certificates of
authentication, shall be taken as the statements of the
Issuer, and the Trustee assumes no responsibility for
the correctness of the same. The Trustee makes no
representation as to the validity or sufficiency of this
Indenture or of the Securities. The Trustee shall not
be accountable for the use or application by the Issuer
of any of the Securities or of the proceeds thereof.
The Trustee shall not be charged with knowledge of the
existence of a Purchase Event, an Asset Disposition or
of any default or Event of Default under Section 5.1(d),
(h), (i) or (j) or of the identity of any Infrastructure
Affiliate or Significant Subsidiary unless either (a) a
Responsible Officer of the Trustee assigned to its
Corporate Trust Office shall have actual acknowledge
thereof, or (b) the Trustee shall have received written
notice thereof in accordance with Section 11.4 from the
Issuer, any Holder or FCX.
SECTION 6.4 Trustee and Agents May Hold
Securities; Collections, etc. The Trustee or any agent
of the Issuer or the Trustee, in its individual or any
other capacity, may become the owner or pledgee of
Securities with the same rights it would have if it were
not the Trustee or such agent and, subject to Section
6.12, if operative, may otherwise deal with the Issuer
and receive, collect, hold and retain collections from
the Issuer with the same rights it would have if it were
not the Trustee or such agent.
SECTION 6.5 Moneys Held by Trustee. Subject
to the provisions of Section 10.4 hereof, all moneys
received by the Trustee shall, until used or applied as
herein provided, be held in trust for the purposes for
which they were received, but need not be segregated
from other funds except to the extent required by
mandatory provisions of law. Neither the Trustee nor
any agent of the Issuer or the Trustee shall be under
any liability for interest on any moneys received by it
hereunder.
SECTION 6.6 Compensation and Indemnification
of Trustee and Its Prior Claim. The Issuer and FCX,
jointly and severally, covenant and agree to pay to the
Trustee from time to time, and the Trustee shall be
entitled to, reasonable compensation (which shall not be
limited by any provision of law in regard to the
compensation of a trustee of an express trust) and the
Issuer and FCX, jointly and severally, covenant and
agree to pay or reimburse the Trustee and each
predecessor Trustee upon its request for all reasonable
expenses, disbursements and advances incurred or made by
or on behalf of it in accordance with any of the
provisions of this Indenture (including the reasonable
compensation and the expenses and disbursements of its
counsel and of all agents and other Persons not
regularly in its employ) except any such expense,
disbursement or advance as may arise from its negligence
or bad faith. The Issuer and FCX, jointly and
severally, also covenant to indemnify the Trustee and
each predecessor Trustee for, and to hold it harmless
against, any loss, liability or expense incurred without
negligence or bad faith on its part, arising out of or
in connection with the acceptance or administration of
this Indenture or the trusts hereunder and its duties
hereunder, including but not limited to the costs and
expenses of defending itself against or investigating
any claim or liability in connection with the exercise
or performance of any of its powers or duties hereunder.
The obligations of the Issuer and FCX under this Section
to compensate and indemnify the Trustee and each
predecessor Trustee and to pay or reimburse the Trustee
and each predecessor Trustee for expenses, disbursements
and advances shall constitute additional Debt hereunder
and shall survive the satisfaction and discharge of this
Indenture. Such additional Debt shall be a senior claim
to that of the Securities upon all property and funds
held or collected by the Trustee as such, except funds
held in trust for the payment of principal of, premium,
if any, Additional Amounts, if any, or interest on
particular Securities, and the Securities are hereby
subordinated to such senior claim. When the Trustee
incurs expenses or renders services in connection with
an Event of Default specified in Section 5.1 or in
connection with Article Five hereof, the expenses
(including the reasonable fees and expenses of its
counsel) and the compensation for the services in
connection therewith are intended to constitute expenses
of administration under any bankruptcy law.
SECTION 6.7 Right of Trustee to Rely on
Officers' Certificate, etc. Subject to Sections 6.1 and
6.2, whenever in the administration of the trusts of
this Indenture the Trustee shall deem it necessary or
desirable that a matter be proved or established prior
to taking or suffering or omitting any action hereunder,
such matter (unless other evidence in respect thereof be
herein specifically prescribed) may, in the absence of
negligence or bad faith on the part of the Trustee, be
deemed to be conclusively proved and established by an
Officers' Certificate of the Issuer or FCX delivered to
the Trustee, and such certificate, in the absence of
negligence or bad faith on the part of the Trustee,
shall be full warrant to the Trustee for any action
taken, suffered or omitted by it under the provisions of
this Indenture upon the faith thereof.
SECTION 6.8 Persons Eligible for Appointment
as Trustee. The Trustee hereunder shall at all times be
a corporation organized and doing business under the
laws of the United States of America or of any State or
the District of Columbia having a combined capital and
surplus of at least $50,000,000, and which is authorized
under such laws to exercise corporate trust powers and
is subject to supervision or examination by Federal,
State or District of Columbia authority. Such
corporation shall have its principal place of business
in The City of New York if there be such a corporation
in such location willing to act upon reasonable and
customary terms and conditions. If such corporation
publishes reports of condition at least annually,
pursuant to law or to the requirements of the aforesaid
supervising or examining authority, then for the
purposes of this Section, the combined capital and
surplus of such corporation shall be deemed to be its
combined capital and surplus as set forth in its most
recent report of condition so published. In case at any
time the Trustee shall cease to be eligible in
accordance with the provisions of this Section, the
Trustee shall resign immediately in the manner and with
the effect specified in Section 6.9.
The provisions of this Section 6.8 are in
furtherance of and subject to Section 310(a) of the
Trust Indenture Act of 1939.
SECTION 6.9 Resignation and Removal;
Appointment of Successor Trustee. (a) The Trustee may
at any time resign by giving written notice of
resignation to the Issuer. Upon receiving such notice
of resignation, the Issuer shall promptly appoint a
successor trustee by written instrument in duplicate,
executed by authority of the Board of Directors, one
copy of which instrument shall be delivered to the
resigning Trustee and one copy to the successor trustee.
If no successor trustee shall have been so appointed and
have accepted appointment within 30 days after the
giving of such notice of resignation, the resigning
trustee may petition any court of competent jurisdiction
for the appointment of a successor trustee, or any
Securityholder who has been a bona fide Holder of a
Security or Securities for at least six months may,
subject to the provisions of Section 5.12, on behalf of
himself and all others similarly situated, petition any
such court for the appointment of a successor trustee.
Such court may thereupon, after such notice, if any, as
it may deem proper and prescribe, appoint a successor
trustee.
(b) In case at any time any of the following
shall occur:
(i) the Trustee shall fail to comply with the
provisions of Section 310(b) of the Trust Indenture
Act of 1939 after written request therefor by the
Issuer or by any Securityholder who has been a bona
fide Holder of a Security or Securities for at
least six months; or
(ii) the Trustee shall cease to be eligible in
accordance with the provisions of Section 6.8 or
Section 3.10(a) of the Trust Indenture Act of 1939
and shall fail to resign after written request
therefor by the Issuer or by any such
Securityholder; or
(iii) the Trustee shall become incapable of
acting, or shall be adjudged a bankrupt or
insolvent, or a receiver or liquidator of the
Trustee or of its property shall be appointed, or
any public officer shall take charge or control of
the Trustee or of its property or affairs for the
purpose of rehabilitation, conservation or
liquidation;
then, in any such case, the Issuer may remove the
Trustee and appoint a successor trustee by written
instrument, in duplicate, executed by order of the Board
of Directors of the Issuer, one copy of which instrument
shall be delivered to the Trustee so removed and one
copy to the successor trustee, or, subject to the
provisions of Section 5.12, any Securityholder who has
been a bona fide Holder of a Security or Securities for
at least six months may on behalf of himself and all
others similarly situated, petition any court of
competent jurisdiction for the removal of the Trustee
and the appointment of a successor trustee. Such court
may thereupon, after such notice, if any, as it may deem
proper and prescribe, remove the Trustee and appoint a
successor trustee.
(c) The Holders of a majority in aggregate
principal amount of the Securities at the time
outstanding may at any time remove the Trustee and
appoint a successor trustee by delivering to the Trustee
so removed, to the successor trustee so appointed and to
the Issuer the evidence provided for in Section 7.1 of
the action in that regard taken by the Securityholders.
(d) Any resignation or removal of the Trustee
and any appointment of a successor trustee pursuant to
any of the provisions of this Section 6.9 shall become
effective upon acceptance of appointment by the
successor trustee as provided in Section 6.10.
(e) The Issuer shall give notice of each
resignation and each removal of the Trustee and each
appointment of a successor trustee by mailing written
notice of such an event by first-class mail, postage
prepaid, to the Holders of Securities as their names and
addresses appear in the Security register. Each notice
shall include the name of the successor trustee and the
address of its principal corporate trust office.
SECTION 6.10 Acceptance of Appointment by
Successor Trustee. Any successor trustee appointed as
provided in Section 6.9 shall execute and deliver to the
Issuer and to its predecessor trustee an instrument
accepting such appointment hereunder, and thereupon the
resignation or removal of the predecessor trustee shall
become effective and such successor trustee, without any
further act, deed or conveyance, shall become vested
with all rights, powers, duties and obligations of its
predecessor hereunder, with like effect as if originally
named as trustee herein; but, nevertheless, on the
written request of the Issuer or of the successor
trustee, upon payment of its charges then unpaid, the
trustee ceasing to act shall, subject to Section 10.4,
pay over to the successor trustee all moneys at the time
held by it hereunder and shall execute and deliver an
instrument transferring to such successor trustee all
such rights, powers, duties and obligations. Upon
request of any such successor trustee, the Issuer shall
execute any and all instruments in writing for more
fully and certainly vesting in and confirming to such
successor trustee all such rights and powers. Any
trustee ceasing to act as such shall, nevertheless,
retain a prior claim upon all property or funds held or
collected by it to secure any amounts then due to it
pursuant to the provisions of Section 6.6.
No successor trustee shall accept appointment
as provided in this Section 6.10 unless at the time of
such acceptance such successor trustee shall be
qualified under the provisions of Section 310(b) of the
Trust Indenture Act of 1939 and eligible under the
provisions of Section 6.8 and Section 310(a) of the
Trust Indenture Act of 1939.
Upon acceptance of appointment by a successor
trustee as provided in this Section 6.10, the Issuer
shall mail notice thereof by first-class mail to the
Holders of Securities at their last addresses as they
shall appear in the Security register. If the
acceptance of appointment is substantially
contemporaneous with the resignation, then the notice
called for by the preceding sentence may be combined
with the notice called for by Section 6.9. If the
Issuer fails to mail such notice within 10 days after
acceptance of appointment by the successor trustee, the
successor trustee shall cause such notice to be mailed
at the expense of the Issuer.
SECTION 6.11 Merger, Conversion, Consolidation
or Succession to Business of Trustee. Any corporation
into which the Trustee may be merged or converted or
with which it may be consolidated, or any corporation
resulting from any merger, conversion or consolidation
to which the Trustee shall be a party, or any
corporation succeeding to all or substantially all of
the corporate trust business of the Trustee, shall be
the successor of the Trustee hereunder, provided that
such corporation shall be qualified under the provisions
of Section 310(b) of the Trust Indenture Act of 1939 and
eligible under the provisions of Section 6.8 and Section
310(a) of the Trust Indenture Act of 1939, without the
execution or filing of any paper or any further act on
the part of any of the parties hereto, anything herein
to the contrary notwithstanding.
In case at the time such successor to the
Trustee shall succeed to the trusts created by this
Indenture any of the Securities shall have been
authenticated but not delivered, any such successor to
the Trustee may adopt the certificate of authentication
of any predecessor Trustee and deliver such Securities
so authenticated; and, in case at that time any of the
Securities shall not have been authenticated, any
successor to the Trustee may authenticate such
Securities either in the name of any predecessor
hereunder or in the name of the successor trustee; and
in all such cases such certificate shall have the full
force which it is anywhere in the Securities or in this
Indenture provided that the certificate of the Trustee
shall have; provided, that the right to adopt the
certificate of authentication of any predecessor Trustee
or to authenticate Securities in the name of any
predecessor Trustee shall apply only to its successor or
successors by merger, conversion, consolidation or
succession to business of Trustee.
SECTION 6.12 Preferential Collection of Claims
Against the Issuer. If and when the Trustee shall be or
become a creditor of the Issuer (or any other obligor
upon the Securities), the Trustee shall be subject to
the provisions of the Trust Indenture Act regarding the
collection of claims against the Issuer (or any such
other obligor).
ARTICLE SEVEN
CONCERNING THE SECURITYHOLDERS
SECTION 7.1 Evidence of Action Taken by
Securityholders. Any request, demand, authorization,
direction, notice, consent, waiver or other action
provided by this Indenture to be given or taken by
Securityholders may be embodied in and evidenced by one
or more instruments of substantially similar tenor
signed by such Securityholders in person or by agent
duly appointed in writing; and, except as herein
otherwise expressly provided, such action shall become
effective when such instrument or instruments are
delivered to the Trustee. Proof of execution of any
such instrument or of a writing appointing any such
agent shall be sufficient for any purpose of this
Indenture and (subject to Sections 6.1 and 6.2)
conclusive in favor of the Trustee, the Issuer and FCX,
if made in the manner provided in this Article.
SECTION 7.2 Proof of Execution of Instruments
and of Holding of Securities. Subject to Sections 6.1
and 6.2, the fact and date of the execution of any
instrument by any Securityholder or his agent or proxy,
or the authority of such an agent or proxy to execute
such an instrument may be proved (a) by the affidavit of
a witness of such execution, or (b) by a certificate of
a notary public (or other officer authorized by law to
take acknowledgments of deeds) as to such execution, or
(c) in accordance with such reasonable rules and
regulations as may be prescribed by the Trustee or in
such manner as shall be satisfactory to the Trustee.
The holding of Securities shall be proved by the
Security register or by a certificate of the Security
Registrar thereof.
SECTION 7.3 Holders to be Treated as Owners.
Prior to due presentment of a Security for registration
of transfer, the Issuer, FCX, the Trustee and any agent
of the Issuer, FCX or the Trustee may deem and treat the
Person in whose name any Security shall be registered
upon the Security register as the absolute owner of such
Security (whether or not such Security shall be overdue
and notwithstanding any notation of ownership or other
writing thereon) for the purpose of receiving payment of
or on account of the principal of and, subject to the
provisions of this Indenture, premium, if any,
Additional Amounts, if any, and interest on such
Security and for all other purposes; and neither the
Issuer, FCX nor the Trustee nor any agent of the Issuer,
FCX or the Trustee shall be affected by any notice to
the contrary. All such payments so made to any such
Person, or upon his order, shall be valid, and, to the
extent of the sum or sums so paid, effectual to satisfy
and discharge the liability for moneys payable upon any
such Security.
SECTION 7.4 Securities Owned by Issuer Deemed
Not Outstanding. In determining whether the Holders of
the requisite aggregate principal amount of Outstanding
Securities have concurred in any direction, consent or
waiver under this Indenture, Securities which are owned
by the Issuer or any other obligor on the Securities or
by any Person directly or indirectly controlling or
controlled by or under direct or indirect common control
with the Issuer or any other obligor on the Securities
shall be disregarded and deemed not to be Outstanding
for the purpose of any such determination, except that
for the purpose of determining whether the Trustee shall
be protected in relying on any such direction, consent
or waiver only Securities which the Trustee knows are so
owned shall be so disregarded. Securities so owned
which have been pledged in good faith may be regarded as
Outstanding if the pledgee establishes to the
satisfaction of the Trustee the pledgee's right so to
act with respect to such Securities and that the pledgee
is not the Issuer or any other obligor upon the
Securities or any Person directly or indirectly
controlling or controlled by or under direct or indirect
common control with the Issuer or any other obligor on
the Securities. In case of a dispute as to such right,
the advice of counsel shall be full protection in
respect of any decision made by the Trustee in
accordance with such advice. Upon request of the
Trustee, the Issuer shall furnish to the Trustee
promptly an Officers' Certificate listing and
identifying all Securities, if any, known by the Issuer
to be owned or held by or for the account of any of the
above-described Persons; and, subject to Sections 6.1
and 6.2, the Trustee shall be entitled to accept such
Officers' Certificate as conclusive evidence of the
facts therein set forth and of the fact that all
Securities not listed therein are Outstanding for the
purpose of any such determination.
SECTION 7.5 Right of Revocation of Action
Taken. At any time prior to (but not after) the
evidencing to the Trustee, as provided in Section 7.1,
of the taking of any action by the Holders of the
percentage in aggregate principal amount of the
Securities specified in this Indenture in connection
with such action, any Holder of a Security the serial
number of which is shown by the evidence to be included
among the serial numbers of the Securities the Holders
of which have consented to such action may, by filing
written notice at the Corporate Trust Office and upon
proof of holding as provided in this Article, revoke
such action so far as concerns such Security. Except as
aforesaid any such action taken by the Holder of any
Security shall be conclusive and binding upon such
Holder and upon all future Holders and owners of such
Security and of any Securities issued in exchange or
substitution therefor or on registration or transfer
thereof, irrespective of whether or not any notation in
regard thereto is made upon any such Security. Any
action taken by the Holders of the percentage in
aggregate principal amount of the Securities specified
in this Indenture in connection with such action shall
be conclusively binding upon the Issuer, the Trustee and
the Holders of all the Securities.
SECTION 7.6 Record Date for Consents and
Waivers. The Issuer may, but shall not be obligated to,
direct the Trustee to establish a record date for the
purpose of determining the Persons entitled to (i) waive
any past default with respect to the Securities in
accordance with Section 5.10, (ii) consent to any
supplemental indenture in accordance with Section 8.2 or
(iii) waive compliance with any term, condition or
provision of any covenant hereunder (if this Indenture
should expressly provide for such waiver). If a record
date is fixed, the Holders of Securities on such record
date, or their duly designated proxies, and any such
Persons, shall be entitled to waive any such past
Default, consent to any such supplemental indenture or
waive compliance with any such term, condition or
provision, whether or not such Holder remains a Holder
after such record date; provided, however, that unless
such waiver or consent is obtained from the Holders, or
duly designated proxies, of the requisite principal
amount of Outstanding Securities prior to the date which
is the 90th day after such record date, any such waiver
or consent previously given shall automatically and
without further action by any Holder be cancelled and of
no further effect.
ARTICLE EIGHT
SUPPLEMENTAL INDENTURES
SECTION 8.1 Supplemental Indentures Without
Consent of Securityholders. The Issuer and FCX when
authorized by a resolution of their Boards of Directors,
and the Trustee may from time to time and at any time
enter into an indenture or indentures supplemental
hereto (which shall conform to the provisions of the
Trust Indenture Act of 1939 as in force at the date of
the execution thereof) for one or more of the following
purposes:
(a) to evidence the succession of another
corporation or partnership to the Issuer or FCX or
successive successions, and the assumption by the
successor corporation or partnership of the
respective covenants, agreements and obligations of
the Issuer or FCX as applicable, under this
Indenture or any supplemental indenture;
(b) to add to the covenants of the Issuer or
FCX such further covenants, restrictions,
conditions or provisions or to surrender any right,
power or option conferred by this Indenture on the
Issuer or FCX as the respective Boards of Directors
and the Trustee shall consider to be for the
protection or benefit of the Holders of Securities,
and to make the occurrence, or the occurrence and
continuance, of a Default in any such additional
covenants, restrictions, conditions or provisions
an Event of Default permitting the enforcement of
all or any of the several remedies provided in this
Indenture as herein set forth; provided, that in
respect of any such additional covenant,
restriction, condition or provision such
supplemental indenture may provide for a particular
period of grace after default (which period may be
shorter or longer than that allowed in the case of
other defaults) or may provide for an immediate
enforcement upon such an Event of Default or may
limit the remedies available to the Trustee upon
such an Event of Default or may limit the right of
the Holders of a majority in aggregate principal
amount of the Securities to waive such an Event of
Default;
(c) to cure any ambiguity or to correct or
supplement any provision contained herein or in any
supplemental indenture which may be defective or
inconsistent with any other provision contained
herein or in any supplemental indenture; provided,
that no action under this clause (c) shall
adversely affect the interests of the
Securityholders;
(d) to make such other provisions in regard to
matters or questions arising under this Indenture
or under any supplemental indenture as said Boards
of Directors may deem necessary or desirable,
provided that no action under this clause (d) shall
adversely affect the interests of the Holders;
(e) to provide for uncertificated Securities
in addition to certificated Securities, so long as
such uncertificated Securities are in registered
form for United States Federal income tax purposes;
(f) to make any change to comply with any
requirement of the Commission in connection with
the qualification of the Indenture under the Trust
Indenture Act of 1939, as amended;
(g) to evidence and provide for the acceptance
of appointment hereunder by a successor trustee; or
(h) to allow FCX to directly assume, pursuant
to Section 9.3, the due and punctual payment of the
principal of, premium, if any, and interest, and
Additional Amounts, if any, on all the Securities,
and the performance of the covenants in the
Indenture on the part of the Issuer to be performed
or observed.
The Trustee is hereby authorized to join in the
execution of any such supplemental indenture, to make
any further appropriate agreements and stipulations
which may be therein contained and to accept the
conveyance, transfer, assignment, mortgage or pledge of
any property thereunder, but the Trustee shall not be
obligated to enter into any such supplemental indenture
which affects the Trustee's own rights, duties,
immunities or liabilities under this Indenture or
otherwise.
Any supplemental indenture authorized by the
provisions of this Section may be executed without the
consent of the Holders of any of the Securities at the
time Outstanding, notwithstanding any of the provisions
of Section 8.2.
SECTION 8.2 Supplemental Indentures With
Consent of Securityholders. With the consent (evidenced
as provided in Article Seven) of the Holders of not less
than a majority in aggregate principal amount of the
Securities at the time Outstanding, the Issuer and FCX,
when authorized by a resolution of their Boards of
Directors, and the Trustee may, from time to time and at
any time, enter into an indenture or indentures
supplemental hereto (which shall conform to the
provisions of the Trust Indenture Act of 1939 as in
force at the date of execution thereof) for the purpose
of adding any provisions to or changing in any manner or
eliminating any of the provisions of this Indenture or
of any supplemental indenture or of modifying in any
manner the rights of the Holders of the Securities;
provided, that no such supplemental indenture shall (a)
change the stated maturity of the principal of, or any
installment of interest on, any Security, or alter the
principal amount thereof, or alter the rate or extend
the time of payment of interest thereon, or any premium
payable upon the redemption thereof or any Additional
Amounts payable thereon, or change the place of payment
where, or the coin or currency in which, any principal,
premium, interest or any Additional Amounts are payable,
or reduce or alter the method of computation of any
amount payable on redemption or repayment thereof (or
the time at which any such redemption may be made), or
impair or affect the right of any Securityholder to
institute suit for the payment thereof, in each case,
without the consent of the Holder of each Security so
affected, (b) reduce the aforesaid percentage of
principal amount of Securities the consent of the
Holders of which is required for any such supplemental
indenture to less than a majority, or reduce the
percentage of Securities necessary to consent to waive
any past Default under this Indenture to less than a
majority, or modify any of the provisions of this
Section or Section 5.10, except to increase any such
percentage or to provide that certain other provisions
of this Indenture cannot be modified or waived, in each
case, without the consent of the Holder of each Security
so affected, (c) following the mailing of an offer in
connection with an Asset Disposition Offer or the
occurrence of a Purchase Event, modify the Indenture's
provisions with respect to such offer in a manner
adverse to such Holder without the consent of the Holder
of each Security so affected or (d) change in any manner
adverse to the interests of the Holders of any
Securities the terms and conditions of the obligations
of FCX pursuant to the FCX Guarantee without the consent
of the Holder of each Security so affected.
Upon the request of the Issuer and FCX,
accompanied by copies of resolutions of the Board of
Directors of each of the Issuer and FCX (which
resolutions may provide general terms or parameters for
such action and may provide that the specific terms of
such action may be determined in accordance with or
pursuant to a Company Order) certified by the Secretary
or an Assistant Secretary of the Issuer and FCX
authorizing the execution of any such supplemental
indenture, and upon the filing with the Trustee of
evidence of the consent of Securityholders and other
documents, if any, required by Section 7.1 the Trustee
shall join with the Issuer and FCX in the execution of
such supplemental indenture unless such supplemental
indenture affects the Trustee's own rights, duties,
immunities or liabilities under this Indenture or
otherwise, in which case the Trustee may in its
discretion, but shall not be obligated to, enter into
such supplemental indenture.
It shall not be necessary for the consent of
the Securityholders under this Section to approve the
particular form of any proposed supplemental indenture,
but it shall be sufficient if such consent shall approve
the substance thereof.
Promptly after the execution by the Issuer,
FCX, and the Trustee of any supplemental indenture
pursuant to the provisions of this Section, the Issuer
shall mail a notice thereof by first-class mail to the
Holders of Securities at their addresses as they shall
appear on the registry books of the Issuer, setting
forth in general terms the substance of such
supplemental indenture. Any failure of the Issuer to
mail such notice, or any defect therein, shall not,
however, in any way impair or affect the validity of any
such supplemental indenture.
SECTION 8.3 Effect of Supplemental Indenture.
Upon the execution of any supplemental indenture
pursuant to the provisions hereof, this Indenture shall
be and be deemed to be modified and amended in
accordance therewith and the respective rights,
limitations of rights, obligations, duties and
immunities under this Indenture of the Trustee, the
Issuer, FCX, and the Holders of Securities shall
thereafter be determined, exercised and enforced
hereunder subject in all respects to such modifications
and amendments, and all the terms and conditions of any
such supplemental indenture shall be and be deemed to be
part of the terms and conditions of this Indenture for
any and all purposes.
SECTION 8.4 Documents to Be Given to Trustee.
The Trustee, subject to the provisions of Sections 6.1
and 6.2, may receive an Officers' Certificate and an
Opinion of Counsel as conclusive evidence that any such
supplemental indenture complies with the applicable
provisions of this Indenture.
SECTION 8.5 Notation on Securities in Respect
of Supplemental Indentures. Securities authenticated
and delivered after the execution of any supplemental
indenture pursuant to the provisions of this Article may
bear a notation in form approved by the Trustee as to
any matter provided for by such supplemental indenture.
If the Issuer or the Trustee shall so determine, new
Securities so modified as to conform, in the opinion of
the Trustee and the Board of Directors of the Issuer and
FCX, to any modification of this Indenture contained in
any such supplemental indenture may be prepared by the
Issuer, authenticated by the Trustee and delivered in
exchange for the Securities then Outstanding.
ARTICLE NINE
CONSOLIDATION, MERGER, SALE OR CONVEYANCE
SECTION 9.1 Covenant of the Issuer Not to
Merge, Consolidate, Sell or Convey Property Except Under
Certain Conditions. The Issuer may not merge with or
into or consolidate with any Person or sell, convey,
transfer, lease or otherwise dispose of all or
substantially all of its assets to any Person and the
Issuer shall not permit any Person to consolidate with
or merge into the Issuer or sell, convey, transfer,
lease or otherwise dispose of all or substantially all
of its assets to the Issuer, unless (i) either the
Issuer (in the case of a merger) shall be the continuing
corporation, or the successor corporation or the Person
which acquires by sale, transfer, lease or conveyance
all or substantially all of the assets of the Issuer
shall be a corporation or partnership organized under
the laws of the United States of America or any State
thereof or the District of Columbia, or under the laws
of The Netherlands, and shall expressly assume, by
supplemental indenture, in form satisfactory to the
Trustee, executed and delivered to the Trustee by such
corporation or partnership pursuant to Article Eight
hereof, all of the obligations of the Issuer pursuant to
this Indenture and the Securities; (ii) immediately
after giving effect to such merger, consolidation, sale,
transfer, lease or conveyance (and treating any Debt
which becomes an obligation of, or any Lien which
applies to any assets of, the resulting, surviving or
transferee Corporation or partnership or any Subsidiary
of the Issuer as a result of such transaction as having
been incurred by such Corporation or partnership or such
Subsidiary at the time of such transaction) the Issuer
or such successor Corporation or partnership that
acquired all or substantially all of the assets of the
Issuer, as the case may be, shall not be in Default in
the performance of any such covenant or condition and no
Event of Default, and no event which, after notice or
lapse of time or both, would become an Event of Default,
shall have occurred and be continuing and (iii) the
Issuer and FCX has each delivered to the Trustee an
Officers' Certificate and an Opinion of Counsel, each
stating that such consolidation, merger, conveyance,
transfer or lease and, if a supplemental indenture is
required in connection with such transaction, such
supplemental indenture, complies with this Article and
that all conditions precedent herein provided for
relating to such transaction have been complied with.
SECTION 9.2 Successor Corporation or
Partnership Substituted. In case of any such
consolidation, merger, sale, transfer, lease or
conveyance, and following such an assumption by the
successor corporation or partnership, such successor
corporation or partnership shall succeed to and be
substituted for the Issuer, with the same effect as if
it had been named herein. When the successor
corporation assumes all obligations of the Issuer
hereunder, all obligations and covenants of the Issuer
hereunder or under the Securities shall terminate.
Such successor corporation or partnership may
cause to be signed, and may issue either in its own name
or in the name of the Issuer prior to such succession
any or all of the Securities issuable hereunder which
theretofore shall not have been signed by the Issuer and
delivered to the Trustee; and, upon the order of such
successor corporation or partnership, instead of the
Issuer, and subject to all the terms, conditions and
limitations in this Indenture prescribed, the Trustee
shall authenticate and shall deliver any Securities
which previously shall have been signed and delivered by
the officers of the Issuer to the Trustee for
authentication, and any Securities which such successor
corporation or partnership thereafter shall cause to be
signed and delivered to the Trustee for that purpose.
All of the Securities so issued shall in all respects
have the same legal rank and benefit under this
Indenture as the Securities theretofore or thereafter
issued in accordance with the terms of this Indenture as
though all of such Securities had been issued at the
date of the execution hereof.
In case of any such consolidation, merger,
sale, transfer, lease or conveyance such changes in
phraseology and form (but not in substance) may be made
in the Securities thereafter to be issued as may be
appropriate.
In the event of any sale, transfer or
conveyance (other than a conveyance by way of lease)
covered by this Section 9.2 the Issuer (or any successor
corporation or partnership which shall theretofore have
become such in the manner described in this Article)
shall be discharged from all obligations and covenants
under this Indenture and the Securities and may be
liquidated and dissolved.
SECTION 9.3 Assumption by FCX.
Notwithstanding anything in this Article Nine to the
contrary, FCX may at any time directly assume, by an
indenture supplemental hereto, the due and punctual
payment of the principal of, premium, if any, interest
and Additional Amounts, if any, on all the Securities
and the performance of every covenant of this Indenture
on the part of the Issuer to be performed or observed
(other than Section 3.11, which shall thereupon be of no
further effect) and upon any such assumption under this
Section 9.3, FCX shall succeed to and be substituted for
and may exercise every right and power of the Issuer
under this Indenture with the same effect as if FCX had
been named as the Issuer herein and the Issuer shall be
released from all of its (obligations hereunder and
under) the Securities; provided, that the covenants that
were applicable to FCX as a guarantor under this
Indenture prior to such assumption shall continue to be
applicable to FCX after such assumption. No such
assumption shall be permitted unless FCX has delivered
to the Trustee an Officers' Certificate and an Opinion
of Counsel for FCX, each stating that such assumption
and supplemental indenture comply with this Article.
SECTION 9.4 Opinion of Counsel to Trustee.
The Trustee, subject to the provisions of Sections 6.1
and 6.2, may receive an Opinion of Counsel prepared in
accordance with Section 11.5 as conclusive evidence that
any such consolidation, merger, sale, transfer, lease or
conveyance, and any such assumption, and any such
liquidation or dissolution, complies with the applicable
provisions of this Indenture.
ARTICLE TEN
SATISFACTION AND DISCHARGE
OF INDENTURE; UNCLAIMED MONEYS
SECTION 10.1 Satisfaction and Discharge of
Indenture. (A) If at any time (a) the Issuer shall
have paid or caused to be paid the principal of,
premium, if any, Additional Amounts, if any, and
interest on all the Securities Outstanding hereunder
(other than any Securities which shall have been
destroyed, lost or stolen and which shall have been
replaced or paid as provided in Section 2.6), as and
when the same shall have become due and payable, or (b)
the Issuer shall have delivered to the Trustee for
cancellation all Securities theretofore authenticated
(other than any Securities which shall have been
destroyed, lost or stolen and which shall have been
replaced or paid as provided in Section 2.6) or (c)
provided that FCX has theretofore assumed the
obligations of the Issuer under the Indenture and the
Securities as provided in Section 9.3, where the exact
amount of principal of and interest, and Additional
Amounts, if any, due on which can be determined at the
time of making the deposit referred to in clause (ii)
below, (i) all the Securities not theretofore delivered
to the Trustee for cancellation (x) shall have become
due and payable, or (y) are by their terms to become due
and payable within one year or are to be called for
redemption within one year under arrangements
satisfactory to the Trustee for the giving of notice of
redemption, and (ii) the Issuer shall have irrevocably
deposited or caused to be deposited with the Trustee as
trust funds the entire amount in cash (other than moneys
repaid by the Trustee or any paying agent to the Issuer
in accordance with Section 10.4) or direct obligations
of the United States of America, backed by its full
faith and credit ("U.S. Government Obligations"),
maturing as to principal and interest at such times and
in such amounts as will insure the availability of cash
not later than one day before the due date of payments
in respect of the Securities, or a combination thereof,
sufficient (without investment of such cash or
reinvestment of any interest or proceeds from such U.S.
Government Obligations) in the opinion of a nationally
recognized firm of independent public accountants
expressed in a written certification thereof delivered
to the Trustee, to pay the principal of, premium, if
any, Additional Amounts, if any, and interest on all
Securities on each date that such principal, premium, if
any, Additional Amounts, if any, or interest is due and
payable; and if, in any such case, the Issuer or FCX
shall also pay or cause to be paid all other sums
payable hereunder by the Issuer, then this Indenture and
the Guarantee shall cease to be of further effect
(except as to (i) rights of registration of transfer and
exchange of Securities, and the Issuer's right of
optional redemption, if any, (ii) substitution of
apparently mutilated, defaced, destroyed, lost or stolen
Securities, (iii) rights of the Holders of Securities to
receive from the property so deposited payments of
principal thereof, premium, if any, and interest and any
Additional Amounts upon the original stated due dates
therefor (but not upon acceleration) or the Redemption
Date therefor, as the case may be, (iv) the rights,
obligations and immunities of the Trustee hereunder,
including any right to compensation, reimbursement of
expenses and indemnification under Section 6.6, (v) the
rights of the Holders of Securities as beneficiaries
hereof with respect to the property so deposited with
the Trustee payable to all or any of them and (vi) the
obligations of the Issuer under Sections 3.2, 3.3 and
3.4, Article Eight (solely insofar as it relates to the
surviving rights and obligations with respect to the
Securities), Article Ten and Article Twelve, and the
Trustee, on demand of the Issuer accompanied by an
Officers' Certificate and an Opinion of Counsel stating
that the provisions of this Section have been complied
with and at the cost and expense of the Issuer, shall
execute proper instruments acknowledging such
satisfaction of and discharging this Indenture;
provided, that the rights of Holders of the Securities
to receive amounts in respect of principal of and
interest, and Additional Amounts, if any, on the
Securities held by them shall not be delayed longer than
required by then-applicable mandatory rules or policies
of any securities exchange upon which the Securities are
listed. In addition, in connection with the
satisfaction and discharge pursuant to clause (c)(i)(y)
above, the Trustee shall give notice to the Holders of
Securities of such satisfaction and discharge. The
Issuer agrees to reimburse the Trustee for any costs or
expenses thereafter reasonably and properly incurred and
to compensate the Trustee for any services thereafter
reasonably and properly rendered by the Trustee in
connection with this Indenture or the Securities.
Notwithstanding the satisfaction and discharge
of this Indenture, the obligations of the Issuer and FCX
to the Trustee under Section 6.6 shall survive.
(B) In addition to discharge of the Indenture
pursuant to Section 10.1(A), the Issuer shall be deemed
to have paid and discharged the entire indebtedness on
all Securities Outstanding on the 91st day after the
date of the deposit referred to in clause 10.1(B)(a)
below, and the provisions of this Indenture with respect
to the Securities shall no longer be in effect (except
as to (i) rights of registration of transfer and
exchange of Securities and the Issuer's right of
optional redemption, if any, (ii) substitution of
mutilated, defaced, destroyed, lost or stolen
Securities, (iii) rights of Holders of Securities to
receive from the property so deposited payments of
principal thereof and interest thereon and any
Additional Amounts, upon the original stated due dates
therefor (but not upon acceleration) or the Redemption
Date therefor, as the case may be, (iv) the rights,
obligations, duties and immunities of the Trustee
hereunder, including any right to compensation, expenses
and indemnification under Section 6.6, (v) the rights of
the Holders of Securities as beneficiaries hereof with
respect to the property so deposited with the Trustee
payable to all or any of them and (vi) the obligations
of the Issuer and the rights of the Holders of the
Securities under Sections 3.2, 3.3 and 3.4, Article
Eight (solely insofar as it relates to the surviving
rights and obligations with respect to the Securities),
Article Ten and Article Twelve) ("defeasance"), and the
Trustee, at the expense of the Issuer, shall at the
Issuer's request, execute proper instruments
acknowledging the same, if
(a) provided that FCX has theretofore assumed
the obligations of the Issuer under the Indenture
and the Securities as provided in Section 9.3, with
reference to this provision the Issuer has
irrevocably deposited or caused to be irrevocably
deposited with the Trustee as trust funds in trust
for the purpose of making the following payments,
specifically pledged as security for, and dedicated
solely to, the benefit of the Holders of the
Securities, (i) cash in an amount, or (ii) U.S.
Government Obligations, maturing as to principal
and interest at such times and in such amounts as
will insure the availability of cash or (iii) a
combination thereof, sufficient, in the opinion of
a nationally recognized firm of independent public
accountants expressed in a written certification
thereof delivered to the Trustee, to pay the
principal of, premium, if any, Additional Amounts,
if any, and interest on all Securities on the date
of maturity thereof or on a specified date prior to
their maturity, if such date is one upon which the
Securities may be optionally redeemed in accordance
with their terms and if the Issuer or FCX has made
arrangements with the Trustee satisfactory to the
Trustee for the optional redemption of all of the
Securities on such specified date;
(b) no Event of Default or event which with
notice or lapse of time or both would become an
Event of Default with respect to the Securities
shall have occurred and be continuing on the date
of such deposit or, insofar as subsections 5.1(e)
and (f) are concerned, at any time during the
period ending on and including the 91st day after
the date of such deposit (it being understood that
this condition shall not be deemed satisfied until
the expiration of such period);
(c) such defeasance shall not cause the
Trustee to have a conflicting interest for purposes
of the Trust Indenture Act of 1939 with respect to
any securities of the Issuer;
(d) such defeasance shall not result in a
breach or violation of, or constitute a Default
under, this Indenture or any Securities or any
other agreement or instrument to which the Issuer
or FCX is a party or by which it is bound;
(e) the Issuer has delivered to the Trustee
an Opinion of Counsel (i) to the effect that (x)
the Issuer has received from or there has been
published by the Internal Revenue Service a ruling
or (y) since the date of the Indenture there has
been a change in applicable federal income tax law,
in either case to the effect that, and based
thereon such Opinion of Counsel shall confirm that,
the Holders of the Securities will not recognize
income, gain or loss for Federal income tax
purposes as a result of such deposit, defeasance
and discharge and will be subject to Federal income
tax on the same amounts, in the same manner and at
the same times as would have been the case if such
deposit, defeasance and discharge had not occurred,
and (ii) to the effect that the trust arising from
such deposit shall not constitute an "investment
company" or an entity "controlled" by an
"investment company" as such terms are defined in
the Investment Company Act of 1940, as amended; and
(f) the Issuer has paid or caused to be paid
all other sums payable hereunder by the Issuer and
the Issuer has delivered to the Trustee an
Officers' Certificate and an Opinion of Counsel,
each stating that all conditions precedent provided
for relating to the defeasance contemplated by this
provision have been complied with.
(C) The Issuer and FCX shall each be released
from its obligations with respect to the Securities
("Defeasable Covenants") arising under Sections 3.9,
3.10, 3.13, 3.14, 9.1, 14.1, 14.2, 14.4, 14.5, 14.6,
14.7, 14.8 and 14.9 of this Indenture on the 91st day
after the date of the deposit referred to in 10.1(C)(a)
below (hereinafter, "covenant defeasance"); provided,
that FCX has theretofore assumed the obligations of the
Issuer under this Indenture and the Securities in
accordance with Section 9.3. For this purpose, such
covenant defeasance means that, with respect to the
Outstanding Securities, the Issuer and FCX may omit to
comply with and shall have no liability in respect of
any term, condition or limitation set forth in Sections
3.9, 3.10, 3.13, 3.14, 9.1, 14.1, 14.2, 14.4, 14.5, 14.6,
14.7, 14.8 and 14.9 of this Indenture whether directly
or indirectly by reason of any reference elsewhere
herein to such provision or by reason of any reference
in such provision to any other provision herein or in
any other document and such omission to comply shall not
constitute an Event of Default under Section 5.1, but
the remainder of this Indenture and such Securities
shall be unaffected thereby. The following shall be the
conditions to application of this subsection (C) of this
Section 10.1:
(a) With reference to this provision the
Issuer or FCX has irrevocably deposited or caused
to be irrevocably deposited with the Trustee as
trust funds in trust for the purpose of making the
following payments, specifically pledged as
security for, and dedicated solely to, the benefit
of the Holders of the Securities, (i) cash in an
amount, or (ii) U.S. Government Obligations
maturing as to principal and interest at such times
and in such amounts as will insure the availability
of cash or (iii) a combination thereof, sufficient,
in the opinion of a nationally recognized firm of
independent public accountants expressed in a
written certification thereof delivered to the
Trustee, to pay the principal of, premium, if any,
and interest, and Additional Amounts, if any, on
all Securities on the date of maturity thereof or
on a specified date prior to their maturity, if
such date is one upon which the Securities may be
optionally redeemed in accordance with their terms
and if the Issuer or FCX has made arrangements with
the Trustee satisfactory to the Trustee for the
optional redemption of all of the Securities on
such specified date;
(b) no Event of Default (other than in
respect of a Defeasable Covenant) or event which
with notice or lapse of time or both would become
such an Event of Default with respect to the
Securities shall have occurred and be continuing on
the date of such deposit or insofar as subsections
5.1(e) and (f) are concerned, at any time during
the period ending on and including the 91st day
after the date of such deposit (it being understood
that this condition shall not be deemed satisfied
until the expiration of such period);
(c) such covenant defeasance shall not cause
the Trustee to have a conflicting interest for
purposes of the Trust Indenture Act of 1939 with
respect to any securities of the Issuer;
(d) such covenant defeasance shall not result
in a breach or violation of, or constitute a
default under, this Indenture or any Securities or
any other agreement or instrument to which the
Issuer or the Guarantor is a party or by which it
is bound;
(e) the Issuer shall have delivered to the
Trustee an Opinion of Counsel (i) to the effect
that the Holders of the Securities will not
recognize income, gain or loss for Federal income
tax purposes as a result of such covenant
defeasance and will be subject to Federal income
tax on the same amounts, in the same manner and at
the same times as would have been the case if such
covenant defeasance had not occurred, and (ii) to
the effect that the trust arising from such deposit
shall not constitute an "investment company" or an
entity "controlled" by an "investment company" as
such terms are defined in the Investment Company
Act of 1940, as amended; and
(f) the Issuer has paid or caused to be paid
all other sums then payable hereunder by the Issuer
and the Issuer shall have delivered to the Trustee
an Officers' Certificate and an Opinion of Counsel,
each stating that all conditions precedent provided
for relating to the covenant defeasance
contemplated by this provision have been complied
with.
SECTION 10.2 Application by Trustee of Funds
Deposited for Payment of Securities. Subject to Section
10.4 all moneys and securities deposited with the
Trustee pursuant to Section 10.1 shall be held in trust
and applied by it to the payment, either directly or
through any paying agent (including the Issuer acting as
its own paying agent), to the Holders of the particular
Securities for the payment or redemption of which such
moneys or securities have been deposited with the
Trustee, of all sums due and to become due thereon for
principal, premium, if any, Additional Amounts, if any,
and interest; but such moneys or securities need not be
segregated from other funds except to the extent
required by law.
SECTION 10.3 Repayment of Moneys Held by
Paying Agent. In connection with the satisfaction and
discharge of this Indenture, all moneys then held by any
paying agent under the provisions of this Indenture
shall, upon demand of the Issuer, be repaid to it or
paid to the Trustee and thereupon such paying agent
shall be released from all further liability with
respect to such moneys.
SECTION 10.4 Return of Moneys Held by Trustee
and Paying Agent Unclaimed for Two Years. Any moneys
deposited with or paid to the Trustee or any paying
agent for the payment of the principal of, premium, if
any, interest or Additional Amounts, if any, on any
Security and not applied but remaining unclaimed for two
years after the date upon which such principal, premium,
if any, interest or Additional Amounts, if any, shall
have become due and payable, shall, upon the written
request of the Issuer and unless otherwise required by
mandatory provisions of applicable escheat or abandoned
or unclaimed property law, be repaid to the Issuer by
the Trustee or such paying agent, and the Holder of the
Securities shall, unless otherwise required by mandatory
provisions of applicable escheat or abandoned or
unclaimed property laws, thereafter look only to the
Issuer for any payment which such Holder may be entitled
to collect, and all liability of the Trustee or any
paying agent with respect to such moneys shall thereupon
cease; provided, however, that the Trustee or such
paying agent, before being required to make any such
repayment with respect to moneys deposited with it for
any payment, shall at the expense of the Issuer, mail by
first-class mail to Holders of such Securities at their
addresses as they shall appear on the Security register,
notice, that such moneys remain and that, after a date
specified therein, which shall not be less than 30 days
from the date of such mailing, any unclaimed balance of
such money then remaining will be repaid to the Issuer.
SECTION 10.5 Indemnity for U.S. Government
Obligations. The Issuer and FCX, jointly and severally,
shall pay and indemnify the Trustee against any tax, fee
or other charge imposed on or assessed against the U.S.
Government Obligations deposited pursuant to Section
10.1 or the principal or interest received in respect of
such obligations.
ARTICLE ELEVEN
MISCELLANEOUS PROVISIONS
SECTION 11.1 Partners, Incorporators,
Stockholders, Officers and Directors of Issuer Exempt
from Individual Liability. Except with respect to the
FCX Guarantee and Article Thirteen hereof, no recourse
under or upon any obligation, covenant or agreement
contained in this Indenture, or in any Security, or
because of any indebtedness evidenced thereby, shall be
had against any incorporator, as such, or against any
past, present or future stockholder, officer or
director, as such, of the Issuer or of any partner of
the Issuer or of any successor, either directly or
through the Issuer or any successor, under any rule of
law, statute or constitutional provision or by the
enforcement of any assessment or by any legal or
equitable proceeding or otherwise, all such liability
being expressly waived and released by the acceptance of
the Securities by the Holders thereof and as part of the
consideration for the issue of the Securities.
SECTION 11.2 Provisions of Indenture for the
Sole Benefit of Parties and Securityholders. Nothing in
this Indenture or in the Securities, expressed or
implied, shall give or be construed to give to any
Person, other than the parties hereto and their
successors and the Holders of the Securities, any legal
or equitable right, remedy or claim under this Indenture
or under any covenant or provision herein contained, all
such covenants and provisions being for the sole benefit
of the parties hereto and their successors and the
Holders of the Securities.
SECTION 11.3 Successors and Assigns of Issuer
and FCX Bound by Indenture. Except as provided in
Section 9.3, all covenants and agreements in this
Indenture by the Issuer or FCX shall bind their
respective successors and assigns (whether by merger,
consolidation or otherwise), whether so expressed or
not.
SECTION 11.4 Notices and Demands on Issuer,
FCX, Trustee and Securityholders. Any notice or demand
which by any provision of this Indenture is required or
permitted to be given or served by the Trustee or by the
Holders of Securities to or on the Issuer or FCX may be
given or served by being deposited postage prepaid,
first-class mail (except as otherwise specifically
provided herein) addressed (until another address of the
Issuer or FCX is filed by the Issuer or FCX with the
Trustee) to the Issuer, c/o Freeport-McMoRan Inc., or
FCX, c/o Freeport-McMoRan Inc., 1615 Poydras Street,
New Orleans, Louisiana 70112, Attention: Corporate
Secretary. Any notice, direction, request or demand
by the Issuer, FCX or any Securityholder to or upon
the Trustee shall be deemed to have been sufficiently
given or made, for all purposes, if given or made
at the Corporate Trust Office, Attention: Corporate
Trustee Administration Department.
Where this Indenture provides for notice to
Holders, such notice shall be sufficiently given (unless
otherwise herein expressly provided) if in writing and
mailed, first-class postage prepaid, to each Holder
entitled thereto, at his last address as it appears in
the Security register. In any case where notice to
Holders is given by mail, neither the failure to mail
such notice, nor any defect in any notice so mailed, to
any particular Holder shall affect the sufficiency of
such notice with respect to other Holders. Where this
Indenture provides for notice in any manner, such notice
may be waived in writing by the Person entitled to
receive such notice, either before or after the event,
and such waiver shall be the equivalent of such notice.
Waivers of notice by Holders shall be filed with the
Trustee, but such filing shall not be a condition
precedent to the validity of any action taken in
reliance upon such waiver.
In case, by reason of the suspension of or
irregularities in regular mail service, it shall be
impracticable to mail notice to the Issuer and
Securityholders when such notice is required to be given
pursuant to any provision of this Indenture, then any
manner of giving such notice as shall be satisfactory to
the Trustee shall be deemed to be a sufficient giving of
such notice.
SECTION 11.5 Officers' Certificates and
Opinions of Counsel; Statements to Be Contained Therein.
Upon any application or demand by the Issuer or FCX, as
applicable, to the Trustee to take any action under any
of the provisions of this Indenture, the Issuer or FCX,
as applicable, shall furnish to the Trustee an Officers'
Certificate stating that all conditions precedent
provided for in this Indenture relating to the proposed
action have been complied with and an Opinion of Counsel
stating that in the opinion of such counsel all such
conditions precedent have been complied with, except
that in the case of any such application or demand as to
which the furnishing of such documents is specifically
required by any provision of this Indenture relating to
such particular application or demand, no additional
certificate or opinion need be furnished.
Each certificate or opinion provided for in
this Indenture and delivered to the Trustee with respect
to compliance with a condition or covenant provided for
in this Indenture shall include (a) a statement that the
Person making such certificate or providing such opinion
has read such covenant or condition, (b) a brief
statement as to the nature and scope of the examination
or investigation upon which the statements or opinions
contained in such certificate or opinion are based, (c)
a statement that, in the opinion of such Person, he has
made such examination or investigation as is necessary
to enable him to express an informed opinion as to
whether or not such covenant or condition has been
complied with and (d) a statement as to whether or not,
in the opinion of such Person, such condition or
covenant has been complied with.
Any certificate, statement or opinion of an
officer of the Issuer or FCX, as applicable, may be
based, insofar as it relates to legal matters, upon a
certificate or opinion of or representations by counsel,
unless such officer knows that the certificate or
opinion or representations with respect to the matters
upon which his certificate, statement or opinion may be
based as aforesaid are erroneous, or in the exercise of
reasonable care should know that the same are erroneous.
Any certificate, statement or opinion of counsel may be
based, insofar as it relates to factual matters,
information with respect to which is in the possession
of the Issuer or FCX, as applicable, upon the
certificate, statement or opinion of or representations
by an officer or officers of the Issuer or FCX, as
applicable, unless such counsel knows that the
certificate, statement or opinion or representations
with respect to the matters upon which his certificate,
statement or opinion may be based as aforesaid are
erroneous, or in the exercise of reasonable care should
know that the same are erroneous.
Any certificate, statement or opinion of an
officer of the Issuer or FCX, as applicable, or of
counsel may be based, insofar as it relates to
accounting matters, upon a certificate or opinion of or
representations by an accountant or firm of accountants
in the employ of the Issuer or FCX, as applicable,
unless such officer or counsel, as the case may be,
knows that the certificate or opinion or representations
with respect to the accounting matters upon which his
certificate, statement or opinion may be based as
aforesaid are erroneous, or in the exercise of
reasonable care should know that the same are erroneous.
Any certificate or opinion of any independent
firm of public accountants filed with the Trustee shall
contain a statement that such firm is independent.
SECTION 11.6 Payments Due on Saturdays,
Sundays and Legal Holidays. If the date of maturity of
interest on or principal of the Securities or the date
fixed for redemption or repayment of any Security shall
not be a Business Day, then (notwithstanding any other
provision of this Indenture or of the Securities)
payment of interest or principal need not be made on
such date, but may be made on the next succeeding
Business Day with the same force and effect as if made
on the date of maturity or the date fixed for redemption
or repayment, and no interest shall accrue for the
period after such date.
SECTION 11.7 Conflict of Any Provision of
Indenture with Trust Indenture Act of 1939. If any
provision hereof limits, qualifies or conflicts with a
provision of the Trust Indenture Act of 1939 that is
required under such Act to be a part of and govern this
Indenture, the latter provision shall control. If any
provision of this Indenture modifies or excludes any
provision of the Trust Indenture Act of 1939 that may be
so modified or excluded, the latter provision shall be
deemed to apply to this Indenture as so modified or
excluded, as the case may be.
SECTION 11.8 New York Law to Govern. This
Indenture, the FCX Guarantee and each Security shall be
deemed to be a contract under the laws of the State of
New York, and for all purposes shall be construed in
accordance with the laws of said State, except that
matters relating to the authorization and execution by
the Issuer of this Indenture and the Securities and any
other matters required to be governed by the laws of The
Netherlands shall be governed by the laws of The
Netherlands.
SECTION 11.9 Counterparts. This Indenture may
be executed in any number of counterparts, each of which
shall be an original; but such counterparts shall
together constitute but one and the same instrument.
SECTION 11.10 Effect of Headings. The Article
and Section headings herein and the Table of Contents
are for convenience only and shall not affect the
construction hereof.
SECTION 11.11 Submission to Jurisdiction. The
Issuer agrees that any legal suit, action or proceeding
arising out of or relating to the Indenture, the
Securities or the FCX Guarantee may be instituted in any
state or federal court in the State and County of New
York, United States of America and to the extent it may
effectively do so, the Issuer hereby waives, and agrees
not to assert, by way of motion, as a defense or
otherwise, in any such suit, action or proceeding any
claim which it may now or hereafter have that it is not
personally subject to the jurisdiction of the above-
named courts, that the suit, action or proceeding is
brought in an inconvenient forum, that the venue of the
suit, action or proceeding is improper or that this
Indenture or the subject matter hereof may not be
enforced by such court, and irrevocably submits to the
jurisdiction of any such court in any such suit, action
or proceeding. The Issuer hereby designates CT
Corporation System as the Issuer's authorized agent to
accept and acknowledge on its behalf service of any and
all process which may be served in any such suit, action
or proceeding in any such court and agrees that service
of process upon said agent at its office at
1633 Broadway, New York, New York 10019 (or at such
other address in the Borough of Manhattan, The City of
New York, as such agent may designate by written notice
to the Issuer, FCX and the Trustee), and written notice
of said service to the Issuer, mailed or delivered to
it, at ( ), attention of
( ), shall be deemed in every respect effective
service of process upon the Issuer in any such suit,
action or proceeding and shall be taken and held to be
valid personal service upon the Issuer, whether or not
the Issuer shall then be doing, or at any time shall
have done, business within the State of New York, and
that any such service of process shall be of the same
force and validity as if service were made upon it
according to the laws governing the validity and
requirements of such service in such State, and waives
all claim of error by reason of any such service. Said
designation and appointment shall be irrevocable until
the Indenture shall have been satisfied and discharged
in accordance with Article 10 and until all amounts due
under Section 6.6 shall have been paid.
ARTICLE TWELVE
REDEMPTION OF SECURITIES
SECTION 12.1 Right of Optional Redemption;
Prices. Except as provided in Section 12.5, the
Securities may not be redeemed prior to ________ __,
1999. Thereafter, the Issuer at its option may redeem
all, or from time to time any part of, the Securities
upon payment of the Redemption Prices set forth in the
form of Security hereinabove recited, together with
accrued interest to the Redemption Date.
SECTION 12.2 Notice of Redemption; Partial
Redemptions. Notice of redemption to the Holders of
Securities to be redeemed as a whole or in part shall be
given by mailing notice of such redemption by first
class mail, postage prepaid, at least 30 days and not
more than 60 days prior to the date fixed for redemption
to such Holders of Securities at their last addresses as
they shall appear upon the Security Registry. Any
notice which is mailed in the manner herein provided
shall be conclusively presumed to have been duly given,
whether or not the Holder receives the notice. Failure
to give notice by mail, or any defect in the notice to
the Holder of any Security designated for redemption as
a whole or in part shall not affect the validity of the
proceedings for the redemption of any other Security.
The notice of redemption to each such Holder
shall specify the principal amount of each Security held
by such Holder to be redeemed, the Redemption Date, the
applicable Redemption Price, the place or places of
payment, that payment will be made upon presentation and
surrender of such Securities, that interest accrued to
the Redemption Date will be paid as specified in said
notice and that on and after said Redemption Date
interest thereon or on the portions thereof to be
redeemed will cease to accrue. In case any Security is
to be redeemed in part only, the notice of redemption
shall state the portion of the principal amount thereof
to be redeemed and shall state that on and after the
Redemption Date, upon surrender of such Security, a new
Security or Securities with the FCX Guarantee endorsed
thereon in principal amount equal to the unredeemed
portion thereof will be issued.
The notice of redemption of Securities to be
redeemed at the option of the Issuer shall be given by
the Issuer or, at the Issuer's request, by the Trustee
in the name and at the expense of the Issuer.
At least one Business Day prior to the
Redemption Date specified in the notice of redemption
given as provided in this Section, the Issuer will
deposit with the Trustee or with one or more paying
agents (or, if the Issuer is acting as its own paying
agent, set aside, segregate and hold in trust as
provided in Section 3.4) an amount of money sufficient
to redeem on the Redemption Date all the Securities so
called for redemption at the appropriate Redemption
Price, together with accrued interest to and including
the Redemption Date. If less than all the outstanding
Securities are to be redeemed, the Issuer will deliver
to the Trustee at least 70 days prior to the date fixed
for redemption an Officers' Certificate stating the
aggregate principal amount of Securities to be redeemed.
If less than all the Securities are to be
redeemed, the Trustee shall select, in such manner as it
shall deem appropriate and fair, Securities to be
redeemed in whole or in part. Securities may be
redeemed in part in multiples of $1,000 only. The
Trustee shall promptly notify the Issuer in writing of
the Securities selected for redemption and, in the case
of any Securities selected for partial redemption, the
principal amount thereof to be redeemed. For all
purposes of this Indenture, unless the context otherwise
requires, all provisions relating to the redemption of
Securities shall relate, in the case of any Security
redeemed or to be redeemed only in part, to the portion
of the principal amount of such Security which has been
or is to be redeemed.
SECTION 12.3 Payment of Securities Called for
Redemption. If notice of redemption has been given as
above provided, the Securities or portions of Securities
specified in such notice shall become due and payable on
the Redemption Date and at the place stated in such
notice at the applicable Redemption Price, together with
interest and Additional Amounts, if any, accrued to and
including the Redemption Date, and on and after said
Redemption Date (unless the Issuer shall default in the
payment of such Securities at the Redemption Price,
together with interest and Additional Amounts, if any,
accrued to said Redemption Date) interest on the
Securities or portions of Securities so called for
redemption shall cease to accrue and such Securities
shall cease from and after the Redemption Date to be
entitled to any benefit or security under this
Indenture, and the Holders thereof shall have no right
in respect of such Securities except the right to
receive the applicable Redemption Price thereof and
unpaid interest and Additional Amounts, if any, to and
including the Redemption Date. On presentation and
surrender of such Securities at a place of payment
specified in said notice, said Securities or the
specified portions thereof shall be paid and redeemed by
the Issuer at the applicable Redemption Price, together
with interest accrued thereon and Additional Amounts, if
any, to and including the Redemption Date; provided that
any payment of interest becoming due on or prior to the
Redemption Date shall be payable to the Holders of such
Securities registered as such on the relevant record
date subject to the terms and provisions of Section 2.4
hereof.
If any Security called for redemption shall not
be so paid upon surrender thereof for redemption, the
principal shall, until paid or duly provided for, bear
interest from the Redemption Date at the rate of
interest specified in such Security.
Upon presentation of any Security redeemed in
part only, the Issuer shall execute and the Trustee
shall authenticate and deliver to or on the order of the
Holder thereof, at the expense of the Issuer, a new
Security or Securities, with the FCX Guarantee endorsed
thereon, of authorized denominations, in principal
amount equal to the unredeemed portion of the Security
so presented.
SECTION 12.4 Exclusion of Certain Securities
from Eligibility for Selection for Redemption.
Securities shall be excluded from eligibility for
selection for redemption if they are identified by
registration and certificate number in a written
statement signed by an authorized officer of the Issuer
and delivered to the Trustee at least 40 days prior to
the last date on which notice of redemption may be given
as being owned of record and beneficially by, and not
pledged or hypothecated by, either (a) the Issuer or (b)
a Person specifically identified in such Officers'
Certificate as directly or indirectly controlling or
controlled by or under direct or indirect common control
with the Issuer.
SECTION 12.5 Optional Redemption Due to
Changes in Tax Treatment. If, as the result of any
statutory or regulatory changes generally affecting
United States, Netherlands or Indonesian withholding
taxes, which change is adopted on or after
_____________, 1994 (or, if such change is with respect
to tax imposed with respect to payments from the
jurisdiction in which a successor corporation to PT-FI,
AFIC, any Infrastructure Affiliate or the Issuer is
incorporated, such later date on which such successor
corporation becomes a successor corporation), it is
determined by the Issuer that (i) the Issuer would be
required, pursuant to Section 3.8 of the Indenture, to
pay Additional Amounts in respect of principal, premium,
if any, and interest on the Securities on the next
succeeding date for the payment thereof, or (ii) PT-FI,
AFIC or any Infrastructure Affiliate would be required
to pay Underlying Additional Amounts in respect of the
PT-FI Note or an Underlying Note, as the case may be, in
excess of amounts required to be paid by PT-FI, AFIC or
such Infrastructure Affiliate on the date of issuance of
such PT-FI Note or Underlying Note, the Issuer may, at
its option, redeem the Securities in whole, but not in
part, at any time at a Redemption Price equal to 100% of
the principal amount thereof plus accrued interest (if
any) to the date fixed for redemption; provided,
however, that (1) no notice of such redemption may be
given earlier than 90 days prior to the earliest date on
which the Issuer would be required to pay such
Additional Amounts, or PT-FI, AFIC or any Infrastructure
Affiliate would be required to pay such Underlying
Additional Amounts, were a payment in respect of the
Securities, the PT-FI Note or the Underlying Notes, as
the case may be, then due and (2) at the time such
notice of redemption is given, such obligation to pay
such Additional Amounts and such Underlying Additional
Amounts remains in effect. Immediately prior to the
mailing of any notice of redemption pursuant to this
Section, the Issuer shall deliver to the Trustee (i) a
certificate stating that the Issuer is entitled to
effect such redemption and setting forth a statement of
facts showing that the conditions precedent to the right
of the Issuer so to redeem have occurred, and (ii) an
opinion of independent legal counsel of recognized
standing to the effect that the Issuer has or will
become obligated to pay such Additional Amounts or that
PT-FI, AFIC or any Infrastructure Affiliate, as the case
may be, has or will become obligated to pay such
Underlying Additional Amounts, in each case as a result
of such change.
ARTICLE THIRTEEN
FCX GUARANTEE OF SECURITIES
SECTION 13.1 Unconditional Guarantee. FCX
hereby unconditionally guarantees to each Holder of a
Security authenticated and delivered by the Trustee, and
to the Trustee, the due and punctual payment of the
principal of, premium, if any, Additional Amounts, if
any, and interest on such Security, when and as the same
shall become due and payable, whether at the Stated
Maturity, by acceleration, call for redemption, purchase
or otherwise, in accordance with the terms of such
Security and of this Indenture. FCX hereby agrees that
its obligations hereunder shall be absolute and
unconditional, irrespective of, and shall be unaffected
by, any invalidity, irregularity or unenforceability of
any such Security or this Indenture, any failure to
enforce the provisions of any such Security or this
Indenture, any waiver, modification or indulgence
granted to the Issuer with respect thereto, by the
Holder of such Security or the Trustee, or any other
circumstances which may otherwise constitute a legal or
equitable discharge of a surety or guarantor; provided,
that, notwithstanding the foregoing, no such waiver,
modification or indulgence shall, without the consent of
FCX, increase the aggregate principal amount of the
Securities or the interest rate thereon except as
provided in the Security. FCX hereby waives diligence,
presentment, demand of payment, filing of claims with a
court in the event of merger or bankruptcy of the
Issuer, any right to require a proceeding first against
the Issuer, protest or notice with respect to any such
Security or the indebtedness evidenced thereby and all
demands whatsoever, and covenants that this FCX
Guarantee will not be discharged as to any such Security
except by payment in full of the principal of, premium,
if any, Additional Amounts, if any, and interest
thereon. The FCX Guarantee constitutes a guaranty of
payment and not of collection.
FCX further agrees that, if at any time all or
any part of any payment theretofore made by the Issuer
to the Holder of said Security is or must be rescinded
or returned by such Holder for any reason whatsoever
(including, without limitation, the insolvency,
bankruptcy or reorganization of the Issuer), the
Issuer's obligations under said Security shall, for the
purposes of the FCX Guarantee, to the extent that such
payment is or must be rescinded or returned, be deemed
to have continued in existence, notwithstanding such
payment to the Holder, and the FCX Guarantee shall
continue to be effective or be reinstated, as the case
may be, as to such obligations, all as though such
payment to the Holder had not been made.
FCX shall be subrogated to all rights of the
Holder of any Securities against the Issuer in respect
of any amounts paid to the Holder by FCX pursuant to the
provisions of the FCX Guarantee; provided, however, that
FCX shall not be entitled to enforce, or to receive any
payments arising out of or based upon, such right of
subrogation until the principal of and interest on all
Securities shall have been paid in full in accordance
with the terms hereof and of the Securities.
No set-off, counterclaim, reduction, or
diminution of an obligation, or any defense of any kind
or nature which FCX has or may have against the Issuer
or the Trustee or any Holder of a Security shall be
available hereunder to FCX or any assignee or successor
of FCX against the Trustee or any Holder of a Security;
provided, that FCX shall not be prevented from asserting
against the Issuer or the Trustee or any Holder of a
Security in a separate action any claim, action, cause
of action or demand that FCX shall have, whether or not
arising out of the FCX Guarantee. Notwithstanding the
foregoing, FCX shall have the right to assert any
compulsory counterclaim against any Holder of a Security
or the Trustee in any proceeding whether or not arising
out of the FCX Guarantee.
The FCX Guarantee set forth in this Section
shall not be valid or become obligatory for any purpose
with respect to a Security until the certificate of
authentication on such Security shall have been signed
by the Trustee.
SECTION 13.2 Execution of the FCX Guarantee.
FCX hereby agrees to execute the FCX Guarantee in
substantially the form set forth in this Indenture to be
endorsed on each Security authenticated and delivered by
the Trustee. Such FCX Guarantee shall be signed on
behalf of FCX by an Authorized Signatory of FCX or such
Authorized Signatory's duly authorized attorney, prior
to the authentication of the Security on which it is
endorsed, and the delivery of such Security by the
Trustee, after the authentication thereof hereunder,
shall constitute due delivery of such FCX Guarantee on
behalf of FCX. Such signature may be a manual or
facsimile signature and may be imprinted or otherwise
reproduced on the FCX Guarantee, and for that purpose
FCX may adopt and use the facsimile signature of any
such duly Authorized Signatory or attorney, and if any
such duly Authorized Signatory or attorney who shall
have signed the FCX Guarantee shall cease to be a duly
Authorized Signatory or attorney of FCX before the
Security on which such FCX Guarantee is endorsed shall
have been authenticated and delivered by the Trustee or
disposed of by the Issuer, such Security nevertheless
may be authenticated and delivered or disposed of as
though the duly Authorized Signatory or attorney who
signed such FCX Guarantee had not ceased to be a duly
Authorized Signatory or attorney of FCX. Typographical
and other minor errors or defects in any such
reproduction of any such signature shall not affect the
validity or enforceability of any FCX Guarantee endorsed
on a Security which has been duly authenticated and
delivered by the Trustee.
ARTICLE FOURTEEN
COVENANTS OF FCX
SECTION 14.1 Covenant Not to Merge,
Consolidate, Sell or Convey Property Except Under
Certain Conditions. FCX may not merge with or into or
consolidate with any Person or sell, convey, transfer,
lease or otherwise dispose of all or substantially all
of its assets to any Person and FCX shall not permit any
Person to consolidate with or merge into FCX or sell,
convey, lease or otherwise dispose of all or substan-
tially all of its assets to FCX, unless (i) either FCX
(in the case of a Merger) shall be the continuing
corporation, or the successor Corporation or the Person
which acquires by sale, lease or conveyance all or
substantially all of the assets of FCX shall be a
corporation or partnership organized and existing under
the laws of the United States of America or any State
thereof or the District of Columbia and shall expressly
assume, by supplemental indenture, in form satisfactory
to the Trustee, executed and delivered to the Trustee by
such corporation or partnership pursuant to Article
Eight hereof, all of the obligations of FCX pursuant to
this Indenture and the FCX Guarantee; (ii) immediately
after giving effect to such merger, consolidation, sale,
lease or conveyance (and treating any Debt which becomes
an obligation of, or any Lien which applies to any
assets of, the resulting, surviving or transferee Person
or any Subsidiary of FCX as a result of such transaction
having been incurred by such Person or such Subsidiary
at the time of such transaction) FCX or such successor
corporation or partnership that acquired (by sale,
conveyance, lease or otherwise) all or substantially all
of the assets of FCX, as the case may be, shall not be
in default in the performance of any such covenant or
condition and no Event of Default, and no event which,
after notice or lapse of time or both, would become an
Event of Default, shall have occurred and be continuing
and (iii) the Issuer and FCX has each delivered to the
Trustee an Officer's Certificate and an Opinion of
Counsel, each stating that such consolidation, merger,
sale, conveyance, transfer or lease and, if a
supplemental indenture is required in connection with
such transaction, such supplemental indenture, complies
with this Article and that all conditions precedent
herein provided for or relating to such transaction have
been complied with.
SECTION 14.2 Successor Corporation or
Partnership Substituted. In case of any such
consolidation, merger, sale, lease or conveyance, and
following such an assumption by the successor
corporation or partnership, such successor corporation
or partnership shall succeed to and be substituted for
FCX, with the same effect as if it had been named
herein.
Such successor corporation or partnership may
cause the FCX Guarantee to be endorsed, either in its
own name or in the name of FCX prior to such succession
on any or all of the Securities issuable hereunder which
theretofore shall not have the FCX Guarantee endorsed
thereon and delivered to the Trustee; and, upon the
order of such successor corporation or partnership,
instead of FCX, and subject to all the terms, conditions
and limitations in this Indenture prescribed, the
Trustee shall authenticate and shall deliver any
Securities bearing the FCX Guarantee which FCX
previously shall have been signed and delivered by an
Authorized Signatory of FCX endorsed thereon to the
Trustee for authentication, and any FCX Guarantees which
such successor corporation or partnership thereafter
shall cause to be signed and delivered to the Trustee
for that purpose. All of the FCX Guarantees so issued
shall in all respects have the same legal rank and
benefit under this Indenture as the FCX Guarantee
theretofore or thereafter issued in accordance with the
terms of this Indenture as though all of such FCX
Guarantees had been issued at the date of the execution
hereof.
In case of any such consolidation, merger,
sale, lease or conveyance such changes in phraseology
and form (but not in substance) may be made in the
Securities and the FCX Guarantee thereafter to be issued
as may be appropriate.
In the event of any such sale or conveyance
(other than a conveyance by way of lease) FCX or any
successor corporation or partnership which shall
theretofore have become such in the manner described in
this Article shall be discharged from all obligations
and covenants under this Indenture and the FCX Guarantee
and may be liquidated and dissolved.
SECTION 14.3 Written Statement to Trustee.
FCX will deliver to the Trustee on or before March 1 in
each year (beginning with March 1, 1995) a brief
certificate (which need not comply with Section 11.5)
from FCX signed by its principal executive officer,
principal financial officer or principal accounting
officer stating that in the course of the performance by
the signer of his duties as an officer of FCX, he would
normally have knowledge of any Default or non-compliance
by FCX in the performance or fulfillment of any
covenant, agreement or condition of FCX, contained in
this Indenture, stating whether or not he has knowledge
of any such default or non-compliance and, if so,
specifying each such default or non-compliance of which
the signer has knowledge and the nature thereof.
SECTION 14.4 Limitation on Liens. FCX shall
not create, incur, assume or suffer to exist any Lien
securing any Indebtedness upon any Capital Stock of the
Issuer or PT-FI that is owned by FCX or any of its
Subsidiaries unless contemporaneously therewith
effective provision is made to secure the Securities
equally and ratably (or if such Indebtedness is
subordinate in right of payment to the Securities, prior
to such Indebtedness) with such Indebtedness for so long
as such Indebtedness is so secured.
SECTION 14.5 Transactions with Affiliates.
FCX shall not, and shall not permit the Issuer, PT-FI or
any Transferee Subsidiary to enter into any transaction
or series of related transactions with any Affiliate of
FCX (other than FCX, PT-FI, the Issuer or any Majority-
Owned Subsidiary of any of FCX, the Issuer or PT-FI)
that involves aggregate consideration in excess of
$1,000,000 and that is not in the ordinary course of its
business and consistent with past practice between FCX,
the Issuer, PT-FI or such Transferee Subsidiary, on the
one hand, and its respective Affiliates, on the other
hand, unless the transaction or series of related
transactions is in writing and either (i) the Board of
Directors of FCX, or, as to any transaction involving
PT-FI and its Subsidiaries, the Board of Commissioners
of PT-FI, has adopted a resolution approving such
transaction as having terms which are no less favorable
to such Person than those that would have been obtained
in a comparable transaction by such Person with an
unrelated third Person or (ii) FCX, the Issuer, PT-FI or
such Transferee Subsidiary, as the case may be, delivers
to the Trustee on behalf of the Securityholders a
written opinion of a nationally recognized investment
banking firm stating that such transaction is fair to
FCX, the Issuer, PT-FI or such Transferee Subsidiary, as
the case may be, from a financial point of view. The
following transactions shall not be subject to this
Section: (1) transactions representing the pro rata
rights of Affiliates of FCX, the Issuer, PT-FI or any
Transferee Subsidiary as stockholders of FCX, the
Issuer, PT-FI or such Transferee Subsidiary, including
the right to receive pro rata dividends or other
distributions, (2) the entry into or performance of
obligations under any management or administrative
services arrangement or tax sharing or other similar
agreement or arrangement that is either consistent with
past practices of FCX, the Issuer, PT-FI or any
Transferee Subsidiary or is approved by the Board of
Directors of FCX as being in the best interests of FCX,
the Issuer, PT-FI or such Transferee Subsidiary, as the
case may be, (3) the sale, lease or other disposition of
EIP Assets, now existing or to be constructed, or
Undeveloped Mining Assets and all arrangements related
to the development, operation, use and financing of such
assets (other than any sale, lease or other disposition
to, or arrangement with, an entity which is an Affiliate
other than by virtue of FCX's interest therein);
provided, that the Board of Directors of FCX, or, as to
any transaction involving PT-FI and its Subsidiaries,
the Board of Commissioners of PT-FI, shall have approved
such transaction as being in the best interests of FCX
or PT-FI, as the case may be, (4) transactions between
FCX, the Issuer, PT-FI or such Transferee Subsidiary, or
any of their respective Subsidiaries, on the one hand,
and any employee of FCX, the Issuer, PT-FI or such
Transferee Subsidiary, or any of their respective
Subsidiaries, on the other hand, (5) the payment of
reasonable and customary fees to directors or
commissioners of the Issuer, FCX, PT-FI or such
Transferee Subsidiary and (6) any amendment to the
Existing Master Services Agreement or any related
agreement or arrangement involving any assets subject to
such agreement that is made at the request of the banks
party to the AFIC Credit Agreement.
SECTION 14.6 Certain Sales of Assets. (a) FCX
shall not, and shall not permit PT-FI or any Transferee
Subsidiary to, consummate any Asset Disposition other
than in the ordinary course of business, unless (i) FCX,
PT-FI or such Transferee Subsidiary, as the case may be,
receives consideration at the time of such Asset
Disposition at least equal to the fair market value, as
determined in good faith (including as to the value of
all non-cash consideration) by the Board of Directors of
FCX or, as to transactions involving PT-FI or a
Subsidiary of PT-FI, the Board of Commissioners of
PT-FI, whose determination shall be conclusive, of the
shares or assets subject to such Asset Disposition,
provided, that the requirements of this clause (i) will
not apply to an Asset Disposition constituting a spin-
off or other distribution to stockholders of FCX, PT-FI
or such Transferee Subsidiary or, in the case of
property subject to a Lien, to the sale of such property
in a commercially reasonable manner by or on behalf of
the person secured thereby or the taking possession of
such property by such person in satisfaction of debt;
and (ii) within the time period specified below, either:
(a) FCX, PT-FI or such Transferee Subsidiary applies the
Net Proceeds either: (1) to acquire Securities or to
repay any Senior Debt of FCX or any Debt of PT-FI (other
than Indebtedness owing to any Affiliate of FCX or PT-FI
but including any Indebtedness owing by PT-FI to AFIC
under the Existing Master Services Agreement) or such
Transferee Subsidiary or any Indebtedness secured by
such shares or assets sold or otherwise disposed of, or
(2) to commence to reinvest, either directly or through
a Majority-Owned Subsidiary of FCX, such Net Proceeds in
any natural resource business (including, without
limitation, the production, exploration, extraction,
development or refining of natural resources), whether
or not conducted by FCX or PT-FI as of the date of the
Indenture, and delivers to the Trustee an Officers'
Certificate outlining the amount of the Net Proceeds to
be used for the proposed reinvestment and the
approximate timing of such reinvestment; or (b) to the
extent FCX, PT-FI or such Transferee Subsidiary does not
apply (or commence to apply) all or any part of such Net
Proceeds in accordance with the immediately preceding
clause (a), FCX makes an offer (the "Asset Disposition
Offer") in accordance with applicable law to purchase a
principal amount of the Securities and any other Senior
Debt of FCX or any Debt of PT-FI or a Subsidiary thereof
(other than Indebtedness owed to any Affiliate of FCX or
PT-FI but including any Indebtedness owing by PT-FI to
AFIC under the Existing Master Services Agreement) which
is senior to or pari passu with the Securities and which
contains a covenant substantially similar to this
Section 14.6 equal to the amount of such Net Proceeds
which FCX, PT-FI or such Transferee Subsidiary have not
so applied (or commenced to apply in the case of clause
(ii)(a)(2) above) pursuant to clause (a) above (the
"Asset Disposition Offer Amount") at 100% of the
principal amount thereof plus accrued and unpaid
interest, if any, to the Purchase Date (the "Asset
Disposition Purchase Price") or 100% of accreted value
in the case of Indebtedness issued at a discount to its
face amount. Other than in the case of an Asset
Disposition of the type described in clause (B) of the
definition of Net Proceeds, the acquisition or repayment
must be completed, or such reinvestment must commence,
or such Asset Disposition Offer must be made, within 360
days after the later of the consummation of the Asset
Disposition or the receipt of the Net Proceeds therefrom
by FCX, PT-FI or a Transferee Subsidiary. In the case of
an Asset Disposition of the type described in clause (B)
of the definition of Net Proceeds, FCX, PT-FI or such
Transferee Subsidiary must complete an application of
the Net Proceeds under either clause (ii)(a)(1) or
(ii)(b) of this Section at or prior to the distribution,
spin-off, dividend or purchase covered by clause (B) of
the definition of Net Proceeds. Notwithstanding the
foregoing, the acquisition, reinvestment or Asset
Disposition Offer required by this Section need not be
made except to the extent that the aggregate cumulative
amount of Net Proceeds received by FCX, PT-FI and any
Transferee Subsidiary from all Asset Dispositions and
not previously applied as provided in either clauses (a)
or (b) of this Section exceeds $150,000,000. To the
extent the Asset Disposition Offer is not fully
subscribed, the remaining Net Proceeds may be used for
general corporate purposes, including without limitation
the payment of dividends. Pending the required
application of Net Proceeds, such Net Proceeds may only
be invested in Permitted Investments. If an Asset
Disposition Offer would otherwise be required to be made
and the amount of such Asset Disposition Offer would be
less than $20,000,000, FCX shall not be required to make
such offer until such time as the total amount of all
Asset Dispositions which have occurred and as to which
Asset Disposition Offers have not been made exceeds
$20,000,000.
(b) If required to make an Asset Disposition
Offer pursuant to Section 14.6(a), such offer must be
completed on a date (the "Purchase Date") not less than
30 nor more than 60 days after the date of commencement
of such offer. FCX, or, at the request of FCX, the
Trustee shall mail to all holders of record of the
Securities, a notice prepared by FCX setting forth the
information in clauses (1) through (7) of this
Section 14.6(b), in the manner provided in Section 11.4
of this Indenture. FCX shall also deliver a copy of
such notice to the Trustee prior to or promptly after
the mailing of such notice. Each such notice shall
state:
(1) that an Asset Disposition has occurred and
that such Holder may elect to have his Securities
purchased by FCX either in whole or in part
(subject to prorationing as hereinafter described
in the event that the Asset Disposition Offer is
oversubscribed), in multiples of $1,000 principal
amount thereof at the Asset Disposition Purchase
Price in cash;
(2) the Asset Disposition Purchase Price;
(3) the Purchase Date;
(4) that any Security not tendered or accepted
for payment will continue to accrue interest;
(5) the date by which the Asset Disposition
Offer must be accepted;
(6) that any Security accepted for payment
pursuant to the Asset Disposition Offer shall cease
to accrue interest after being purchased on the
Purchase Date; and
(7) that Holders of Securities will be entitled
to withdraw their election in the manner described.
The notice shall also include all instructions and
materials necessary to enable each Holder to tender
Securities pursuant to the Asset Disposition Offer and
shall contain information concerning the business of FCX
which FCX in good faith believes will enable such
Holders to make an informed decision (which at a minimum
will include (A) the most recently filed Annual Report
on Form 10-K (including audited consolidated financial
statements) of FCX, the most recent subsequently filed
Quarterly Report on Form 10-Q and any Current Report on
Form 8-K of FCX filed subsequent to such Quarterly
Report, other than Current Reports describing other
asset dispositions otherwise described in the offering
materials, (B) a description of material developments in
FCX's business subsequent to the date of the latest of
such reports, and (C) if material, appropriate pro forma
financial information). No failure by FCX or, at the
request of FCX, the Trustee, to give the foregoing
notice or any defect therein shall limit any
Securityholder's right to exercise a purchase right or
affect the validity of the proceedings for the purchase
of Securities.
(c) Not later than the date upon which written
notice of an Asset Disposition Offer is mailed or
delivered to the Trustee for mailing as provided in
Section 14.6(b), FCX shall deliver to the Trustee an
Officers' Certificate as to (A) the Asset Disposition
Offer Amount applicable to the Securities and to any
other Indebtedness pursuant to Section 14.6(a), (B) the
allocation of the Net Proceeds pursuant to which such
Asset Disposition Offer is being made and (C) the
compliance of such allocation with the provisions of
Section 14.6(a). Not later than one Business Day prior
to the Purchase Date, FCX shall irrevocably deposit with
the Trustee or with a paying agent (or, if the Issuer is
acting as its own paying agent, with the Issuer, to
segregate and hold in trust) in immediately available
funds an amount equal to the Change of Control Purchase
Price applicable to the Securities to be held for
payment in accordance with the provisions of this
Section 14.6. The Trustee or a paying agent (if any)
shall, on the Purchase Date, mail or deliver payment to
each Holder whose Security has been accepted for
purchase in the amount of the Change of Control Purchase
Price for the Securities being acquired from such
Holder. In the event that the aggregate Purchase Price
of the Securities delivered by FCX to the Trustee is
less than the Asset Disposition Offer Amount applicable
to the Securities, the Trustee or the paying agent (if
any) shall deliver the excess Net Proceeds to FCX
immediately after the Purchase Date.
(d) Holders electing to have a Security
purchased will be required to surrender the Security
with an appropriate form duly completed to the Trustee
or any paying agent at the address specified in the
notice at least one Business Day prior to the Purchase
Date. Holders will be entitled to withdraw their
election if the Trustee or paying agent (if any)
receives not later than the close of business on the
third Business Day prior to the Purchase Date a
telegram, telex, facsimile transmission or letter
setting forth the name of the Holder and a statement
that such Holder is withdrawing his election to have all
or a portion of his Securities purchased. If on the
Purchase Date, the aggregate principal amount of
Securities surrendered by Holders exceeds the Asset
Disposition Offer Amount applicable to the Securities,
FCX shall select the Securities to be purchased on a pro
rata basis (with such adjustments as may be deemed
appropriate by FCX so that only Securities in
denominations of $1,000 principal amount or multiples
thereof shall be purchased).
(e) Any Security which is to be purchased only
in part shall be surrendered at any office or agency of
FCX designated for that purpose by FCX pursuant to
Section 3.2 of this Indenture (with, if FCX or the
Trustee so requires, due endorsement by, or a written
instrument of transfer in form satisfactory to FCX and
the Trustee duly executed by, the Holder thereof or his
attorney duly authorized in writing), and FCX shall
execute, and the Trustee shall authenticate and deliver
to the Holder of such Security without service charge, a
new Security or Securities, with the FCX Guarantee
endorsed thereon, of any authorized denomination as
requested by such Holder in aggregate principal amount
equal to and in exchange for the unpurchased portion of
the Security so surrendered.
(f) At the time the Trustee delivers to FCX
Securities which are to be accepted for purchase, FCX
will also deliver an Officers' Certificate stating that
such Securities are to be accepted by FCX pursuant to
and in accordance with the terms of this Section 14.6
and that such Securities have been accepted for purchase
at the time the Trustee, directly or through an agent,
mails or delivers payment therefor to the surrendering
Holder.
(g) FCX will comply with Rule 14e-1 under the
Exchange Act and any other securities laws and
regulations thereunder to the extent such laws and
regulations are applicable to any Asset Disposition
Offer required to be made hereunder.
(h) In the event FCX is unable to purchase
Securities from Holders in an Asset Disposition Offer
because such purchase is prohibited by any provision of
applicable law, FCX need not make an Asset Disposition
Offer and shall deliver to the Trustee an Officers'
Certificate as to such prohibition. FCX, PT-FI or such
Transferee Subsidiary, as the case may be, shall then be
obligated to apply the Net Proceeds in accordance with
clause (a)(ii)(a) of this Section 14.6.
SECTION 14.7 Change of Control. (a) If a
Purchase Event occurs, then each Securityholder shall
have the right, at such Securityholder's option, to
require FCX to purchase, and upon the exercise of such
right FCX shall purchase, all or any part of such
Holder's Securities in integral multiples of $1,000 on
the Purchase Date, at a purchase price in cash equal to
101% of the principal amount thereof plus accrued and
unpaid interest, if to the Purchase Date (the
"Change of Control Purchase Price"), on the terms and
conditions set forth in this Section 14.7.
(b) Unless the Issuer shall have already
called for redemption all of the Outstanding Securities
pursuant to Article Twelve of this Indenture, on or
before the 30th day after the occurrence of a Purchase
Event, FCX or, at the request of FCX, the Trustee, shall
mail to all Holders of the Securities a notice (the
"Purchase Event Notice"), in the manner provided in
Section 11.4 of this Indenture, of the occurrence of the
Purchase Event and of the purchase right set forth
herein arising as a result thereof. FCX shall also
deliver a copy of the Purchase Event Notice to the
Trustee prior to or promptly after the mailing of such
Purchase Event Notice and cause a copy of the Purchase
Event Notice to be published in a newspaper of general
circulation in the Borough of Manhattan, The City of New
York promptly after such mailing. Each Purchase Event
Notice shall state:
(1) that a Purchase Event has occurred and
that such Holder may elect to have his Securities
purchased by FCX either in whole or in part, in
multiples of $1,000 principal amount at the Change
of Control Purchase Price in cash;
(2) the Purchase Date;
(3) the date by which the purchase right must
be exercised;
(4) the Change of Control Purchase Price; and
(5) a description of the procedure which a
Securityholder must follow to exercise a purchase
right, including a form of the irrevocable written
notice referred to in Section 14.7(c).
No failure by FCX or, at the request of FCX, the
Trustee, to give the Purchase Event Notice or any defect
therein shall limit any Securityholder's right to
exercise a purchase right or affect the validity of the
proceedings for the purchase of Securities.
(c) To exercise a purchase right, a
Securityholder shall deliver to the Trustee on or before
the 30th day after the date on which such Purchase Event
Notice was mailed (1) irrevocable written notice of the
Securityholder's exercise of such right, which notice
shall set forth the name of the Securityholder, the
amount of the Securities to be purchased, and a
statement that an election to exercise the purchase
right is being made hereby, and (2) the Securities with
respect to which the purchase right is being exercised,
duly endorsed for transfer to FCX; provided, that
Securities held by a securities depository may be
delivered in such other manner as may be agreed to by
such securities depository and FCX or the Trustee. Such
written notice by the Securityholder shall be
irrevocable. If the Purchase Date falls during the
period between the close of business on _________ __ or
________ __ in any year and the opening of business on
the following __________ __ or ________ __, and the
Securities have not been called for redemption on a
redemption date within such period (or on such
__________ __ or ________ __), any Securities delivered
to the Trustee to be purchased must be accompanied by
payment of an amount equal to the interest thereon, if
any, which the Holder thereof is to receive on such
_________ __ or ________ __, and, notwithstanding such
purchase, such interest payment will be made by FCX to
the Holder thereof on the next preceding _________ __ or
________ __.
(d) Not later than one Business Day prior to
the Purchase Date, FCX shall irrevocably deposit with
the Trustee or with a paying agent (or, if the Issuer is
acting as its own paying agent, with the Issuer, to
segregate and hold in trust) in immediately available
funds an amount equal to the Change of Control Purchase
Price applicable to the Securities to be held for
payment in accordance with the provisions of this
Section 14.7. The Trustee or a paying agent (if any)
shall, on the Purchase Date, mail or deliver payment to
each Holder whose Security has been accepted for
purchase in the amount of the Change of Control Purchase
Price for the Securities being acquired from such
Holder.
(e) If any Security surrendered for purchase
shall not be so paid on the Purchase Date, such Security
shall, until paid, continue to accrue interest, to the
extent permitted by applicable law from the Purchase
Date at the rate per annum specified on the face
thereof. FCX shall pay to the Holder of such Security
the accrued amounts arising under this Section 14.7(e)
at the same time that it pays the Change of Control
Purchase Price.
(f) Any Security which is to be purchased only
in part shall be surrendered at any office or agency of
FCX designated for that purpose by FCX pursuant to
Section 3.2 of this Indenture (with, if FCX or the
Trustee so requires, due endorsement by, or a written
instrument of transfer in form satisfactory to FCX and
the Trustee duly executed by, the Holder thereof or his
attorney duly authorized in writing), and FCX shall
execute, and the Trustee shall authenticate and deliver
to the Holder of such Security without service charge, a
new Security or Securities, with the FCX Guarantee
endorsed thereon, of any authorized denomination as
requested by such Holder in aggregate principal amount
equal to and in exchange for the unpurchased portion of
the Security so surrendered.
(g) At the time the Trustee delivers to FCX
Securities which are to be accepted for purchase, FCX
will also deliver an Officers' Certificate stating that
such Securities are to be accepted by FCX pursuant to
and in accordance with the terms of this Section 14.7
and that such Securities have been accepted for purchase
at the time the Trustee, directly or through an agent,
mails or delivers payment therefor to the surrendering
Holder.
(h) FCX will comply with Rule 14e-1 under the
Exchange Act and any other securities laws and
regulations thereunder to the extent such laws and
regulations are applicable to any purchase required to
be made hereunder.
(i) In the event FCX is unable to purchase
Securities from Holders hereunder because such purchase
is prohibited by any provision of applicable law, FCX
need not make an Offer to Purchase hereunder and shall
deliver to the Trustee an Officers' Certificate as to
such prohibition. FCX, PT-FI or such Transferee
Subsidiary, as the case may be, shall then be obligated
to apply the Net Proceeds in accordance with clause
(a)(ii)(a) of this Section 14.7.
(j) For purposes of this Section 14.7 only:
(i) the term "beneficial owner" shall be
determined in accordance with Rule 13d-3, as in
effect on the date of the execution of this
Indenture, promulgated by the Commission pursuant
to the Exchange Act; and
(ii) a "Change of Control" means the
occurrence of any of the following events:
(A) any "person" (as such term is used in
Sections 13(d) and 14(d) of the Exchange
Act)(other than FTX in respect of FCX and FCX
in respect of the Issuer), is or becomes the
beneficial owner (as defined above except that
a person shall be deemed to have "beneficial
ownership" of all shares that any such person
has the right to acquire, whether such right is
exercisable immediately or only after the
passage of time), directly or indirectly, of
more than 50% of the total voting power of the
Voting Stock of the Issuer or FCX;
(B) FCX ceases to own, directly or
indirectly, at least 50.1% of the outstanding
shares of the Capital Stock of PT-FI, or ceases
to have the right, by share ownership, contract
or otherwise, to elect at least one-half of the
members of the Board of Commissioners of PT-FI;
provided that no Change of Control shall be
deemed to have occurred upon a consolidation or
merger of PT-FI with or into FCX or into any
Subsidiary of FCX in which FCX's direct or
indirect percentage ownership interest equals
or exceeds FCX's direct or indirect percentage
ownership interest in PT-FI immediately prior
to such transaction; or
(C) any direct or indirect sale,
transfer, lease or conveyance, in one
transaction or in a series of related
transactions, of assets of PT-FI having a fair
market value (as determined in good faith by
the Board of Directors of FCX, which
determination shall be conclusive) in excess of
half of the aggregate fair market value
(determined as set forth above) of PT-FI's
assets as of the time of such sale, lease,
transfer or conveyance to any Person (other
than a direct or indirect Subsidiary of FCX in
which FCX's direct or indirect percentage
ownership interest equals or exceeds FCX's
direct or indirect percentage ownership
interest in PT-FI immediately prior to such
transaction) occurs.
SECTION 14.8 Reports by FCX. FCX will file
with the Trustee, within 15 days after FCX is required
to file the same with the Commission, copies of the
annual reports and of the information, documents, and
other reports which FCX may be required to file with the
Commission pursuant to Section 13 or Section 15(d) of
the Exchange Act and if FCX is not obligated to file
financial reports, documents or other reports with the
Commission pursuant to Section 13 or 15(d) of the
Exchange Act, FCX will file with the Commission and
furnish to the Trustee and the Holders of the Securities
the same financial reports, documents or other reports
as if FCX were so obligated.
SECTION 14.9 Issuer Covenants. FCX will
cause the Issuer to comply with all of its covenants
under this Indenture.
IN WITNESS WHEREOF, the parties hereto have
caused this Indenture to be duly executed, and their
respective corporate seals to be hereunto affixed and
attested, all as of March __, 1994.
P.T. ALatieF FREEPORT FINANCE
COMPANY B.V.
By______________________________
FREEPORT-McMoRan COPPER & GOLD
INC.
By______________________________
(CORPORATE SEAL)
Attest:
By______________________
Michael C. Kilanowski
Secretary
CHEMICAL BANK
as Trustee
By______________________
(CORPORATE SEAL)
Attest:
By______________________
)
) ss.:
THE NETHERLANDS )
On this __the day of March, 1994, before me
personally came ________________________, to me
personally known, who, being by me duly sworn, did
depose and say that he resides at
____________________________________________; that he is
a ____________________________________________ of P.T.
ALatieF Freeport Finance Company B.V., one of the
corporations described in and which executed the above
instrument; that he knows the corporate seal of said
corporation; that the seal affixed to said instrument is
such corporate seal; that it was so affixed by authority
of the Board of Directors of said corporation, and that
he signed his name thereto by like authority.
(NOTARIAL SEAL)
______________________________
Notary Public
STATE OF LOUISIANA )
) ss.:
PARISH OF NEW ORLEANS )
On this __the day of March, 1994, before me
personally came ________________________, to me
personally known, who, being by me duly sworn, did
depose and say that he resides at
____________________________________________; that he is
a ____________________________________________ of
Freeport-McMoran Copper & Gold Inc., one of the
corporations described in and which executed the above
instrument; that he knows the corporate seal of said
corporation; that the seal affixed to said instrument is
such corporate seal; that it was so affixed by authority
of the Board of Directors of said corporation, and that
he signed his name thereto by like authority.
(NOTARIAL SEAL)
______________________________
Notary Public
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On this __the day of March, 1994, before me
personally came ___________________, to me personally
known, who, being by me duly sworn, did depose and say
that he resides at
_____________________________________________________;
that he is a _____________ of Chemical Bank, one of the
corporations described in and which executed the above
instrument; that he knows the corporate seal of said
corporation; that the seal affixed to said instrument is
such corporate seal; that it was so affixed by authority
of the Board of Directors of said corporation, and that
he signed his name thereto by like authority.
(NOTARIAL SEAL)
______________________________
Notary Public
ANNEX I
Form of PT-FI Note
(FORM OF FACE OF PT-FI NOTE)
THIS NOTE HAS NOT BEEN AND WILL NOT BE
REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF
1933 (THE "SECURITIES ACT") OR ANY APPLICABLE SECURITIES
LAW OF ANY STATE OF THE UNITED STATES, AND THIS NOTE MAY
NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED UNLESS
REGISTERED THEREUNDER OR UNLESS AN EXEMPTION FROM SUCH
REGISTRATION IS AVAILABLE.
(ADD INDONESIAN/NETHERLANDS LEGEND?)
P.T. FREEPORT INDONESIA COMPANY
___% Note Due 2001
P.T. FREEPORT INDONESIA COMPANY, a limited
liability company organized under the laws of Indonesia
("PT-FI"), for value received, hereby promises to pay to
P.T. ALatieF Freeport Finance Company B.V., or
registered assigns, on ____________, 2001, upon
surrender hereof, the principal amount of this Note then
outstanding, as endorsed on Schedule A hereto, and to
pay interest from ________________ or from the most
recent Interest Payment Date to which interest has been
paid or duly provided for, semi-annually in arrears on
_____________ and ______________ in each year,
commencing _______________ (each an "Interest Payment
Date"), on the daily average of the principal amounts
outstanding during such interest period, as endorsed on
Schedule A hereto (such interest to be calculated on the
basis of a 360-day year, consisting of twelve 30-day
months) of ___% per annum annually, until payment of
said principal amount has been made or duly provided
for. The interest so payable on any ____________ or
_____________ will be paid to the person in whose name
this Note is registered at the close of business on the
______________ or _____________ preceding such
_________________ or _______________, whether or not
such day is a business day.
Reference is made to the provisions set forth under
Terms and Conditions of Note endorsed on the reverse
hereof. Such provisions shall for all purposes have the
same effect as though fully set forth at this place.
IN WITNESS WHEREOF, _________________________
has caused this Note to be duly executed under its
corporate seal.
Dated: , 199
P.T. Freeport Indonesia Company
(SEAL)
By: ________________________
Attest: ____________________
(FORM OF REVERSE OF PT-FI NOTE)
TERMS AND CONDITIONS OF NOTE
1. GENERAL. The principal amount of this Note
shall not exceed U.S. $ . Subject to this
limitation, the principal amount of the Note may be
increased or decreased at the option of the holder of
the Note (the "Holder") prior to __________, 2001, as
provided in Sections 6 and 7 below.
2. PAYMENTS AND PAYING AGENTS. (a) Subject to
applicable laws and regulations, the principal of and
interest (which term includes any Additional Amounts (as
hereinafter defined), unless the context otherwise
requires) on the Notes will be payable in United States
dollars to a U.S. dollar account (to be identified to
PT-FI by the Holder prior to the time such payment is
due) maintained by the Holder with a branch of Chemical
Bank located outside the Republic of Indonesia, and
payment of principal of the Note shall be made against
surrender of such Note at . If any day for
payment of principal or interest in respect of the Note
is not a day on which banks are open for business and
carrying out transactions in United States dollars (a
"business day") in New York City or the city in which
such account with Chemical Bank is maintained, the
Holder shall not be entitled to payment until the next
business day following such day in such place or to any
interest or other sums in respect of such postponed
payment.
(b) Payments in respect of the Note shall be
made in such coin or currency of the United States as at
the time of payment shall be legal tender for the
payment of public and private debts.
3. ADDITIONAL AMOUNTS. (a) PT-FI will pay to the
Holder such additional amounts as may be necessary in
order that every net payment of principal of, or
interest on, the Note, after deduction or withholding
for or on account of any present or future tax,
assessment or other governmental charge imposed upon
such Holder by reason of the making of such payment or
deemed payment by the United States, The Netherlands or
Indonesia or any political subdivision or taxing
authority of or in any of them, will not be less than
the amount that would have been received if no such tax
had been payable.
(b) PT-FI will pay to the Holder such
additional amounts as may be necessary in order that
every net payment by the Holder of principal of, or
interest on, the __% Guaranteed Senior Notes due 2001
issued by the Holder (the "B.V. Notes"), after deduction
or withholding for or on account of any present or
future tax, assessment or other governmental charge
imposed upon the holders of such B.V. Notes by reason of
the making of such payment or deemed payment by the
United States, The Netherlands or Indonesia or any
political subdivision or taxing authority of or in any
of them, will not be less than the amount that would
have been received if no such tax had been payable.
4. COVENANTS OF PT-FI. PT-FI agrees that
until payment in full of this Note:
4.01. Provision of Information. PT-FI will
deliver to the Holder promptly after PT-FI knows that
any Event of Default has occurred, a notice of such
Event of Default describing the same in reasonable
detail and, together with such notice or as soon
thereafter as possible, a description of the action that
PT-FI has taken and proposes to take with respect
thereto.
4.02. Maintenance of Existence. PT-FI will do
or cause to be done all things necessary to preserve and
keep in full force and effect its corporate existence,
rights and franchises; provided that PT-FI shall not be
required to preserve its corporate existence or any such
right or franchise if PT-FI shall determine that the
preservation thereof is no longer desirable in the
conduct of its business and that the loss thereof is not
disadvantageous in any material respect to the Holder.
4.03. Taxes. PT-FI will pay or discharge or
cause to be paid or discharged, before the same shall
become delinquent, (1) taxes, assessments and
governmental charges levied or imposed upon PT-FI or
upon the income, profits or property of PT-FI, and (2)
all lawful claims for labor, materials and supplies
which, if unpaid, might by law become a lien upon the
property of PT-FI; provided, however, that PT-FI shall
not be required to pay or discharge or cause to be paid
or discharged any such tax, assessment, charge or claim
whose amount, applicability or validity is being
contested in good faith by appropriate proceedings.
4.04. Compliance with Applicable Law; Etc.
PT-FI shall comply in all material respects with all
Applicable Laws and shall from time to time obtain and
renew, and shall comply with, all Governmental Approvals
as shall now or hereafter be necessary under Applicable
Laws. "Applicable Law" means all applicable
Governmental Approvals, laws, statutes, treaties, rules,
codes, ordinances, regulations, permits, certificates,
orders, decrees, injunctions, writs, interpretations,
licenses and permits of any Governmental Authority
(including without limitation those pertaining to
health, safety and the environment). "Governmental
Approval" shall mean any authorization, consent,
approval, license, lease, ruling, permit, certification,
exemption, agreement, filing for registration by or
with, or any other action whatsoever by or on behalf of,
any Governmental Authority. "Governmental Authority"
shall mean any governmental department, commission,
board, bureau, agency, regulatory authority,
instrumentality or judicial, legislative, executive or
administrative body of the United States, any state
therein or Indonesia (or any political subdivision of
any of the foregoing).
4.05. Use of Proceeds. PT-FI will use the
proceeds of this Note for general corporate purposes,
including funding of capital expenditures associated
with the expansion of its mining and milling activities
and the development of Infrastructure Assets.
"Infrastructure Assets" means the commercial,
residential, educational, retail, medical, recreational,
environmental and other infrastructure facilities
(including without limitation power, water and waste
disposal systems, an industrial park, small business
development facilities, port, marine logistics and
related assets under construction, airport, flood
control or road facilities, hotel or other gust
facilities and other general infrastructure facilities),
constructed or to be constructed in connection with or
to support the mining and milling operations of PT-FI in
Irian Jaya, Indonesia; provided that the mining and
milling production facilities of PT-FI in Irian Jaya,
Indonesia shall not constitute Infrastructure Assets.
5. REPAYMENT. (a) The Holder may require PT-FI
to repay the Notes prior to maturity in whole or in
part, together with accrued and unpaid interest to the
date fixed for such repayment upon delivery of a notice
as described in (b) below.
(b) Notice of intention to require the
repayment of the Note (or any portion thereof) shall be
in writing and shall set forth the amount (in U.S.
dollars) required to be repaid by PT-FI and the proposed
date of such repayment. Such notice having been given,
that portion of the Note so identified for repayment
shall become due and payable on the repayment date so
designated and shall be paid in the manner specified in
Section 2 above. Upon any such repayment the principal
amount of the Note outstanding shall be reduced by the
amount of such repayment and the principal amount so
reduced shall be endorsed on Schedule A hereto by an
authorized officer of PT-FI. Any unpaid interest which
shall have matured on or prior to the date of repayment
specified in such notice shall continue to be payable to
the Holder.
6. INCREASE OF PRINCIPAL. (a) The principal of
this Note shall not be increased prior to maturity
except in accordance with this Section 6.
(b) At the request of PT-FI, and upon delivery
to the Holder of a notice as described in (c) below, and
with the consent of the Holder, PT-FI may borrow
additional amounts from the Holder and the principal
amount of this Note shall be increased by the amount of
any such additional borrowings, provided that any such
additional borrowings shall be solely for the purposes
set forth in Section 4.05, and provided, further, that
the amount of principal of the Note outstanding at any
time shall not exceed $__________.
(c) Notice of intention to borrow additional
amounts and to increase the principal of this Note shall
be in writing and shall set forth the amount (in U.S.
dollars) of additional principal to be borrowed by PT-FI
and the proposed date of such borrowing. If the Holder,
upon receipt of such notice, lends such additional
amounts to PT-FI, the increase in the principal amount
of the Note outstanding shall be endorsed on Schedule A
hereto by an authorized officer of PT-FI.
7. EVENTS OF DEFAULT. In case one or more of the
following events (herein referred to as "Events of
Default") (whatever the reason for such Event of Default
and whether it shall be voluntary or involuntary or be
affected by operation of law or pursuant to any
judgment, decree or order of any court or any order,
rule or regulation of any administrative or governmental
body) shall have occurred and be continuing, that is to
say:
(a) default in the payment of all or any part
of the principal of the Note as and when the same
shall become due and payable either at maturity, by
declaration, upon a required repurchase, repayment
or otherwise; or
(b) default in the payment of any instalment
of interest or any Additional Amounts upon the Note
as and when the same shall become due and payable,
and continuance of such default for a period of 30
days; or
(c) failure on the part of PT-FI duly to
observe or perform any of the covenants or agree-
ments on the part of PT-FI contained herein
continued for a period of 60 days after the date on
which written notice specifying such failure,
stating that such notice is a "Notice of Default"
hereunder and demanding that PT-FI remedy the same,
shall have been given by registered or certified
mail, return receipt requested, to PT-FI by the
Holder; or
(d) the entry by a court having jurisdiction
in the premises of (A) a decree or order for relief
in respect of PT-FI, P.T. ALatieF Freeport
Infrastructure Corporation ("AFIC") or any
Infrastructure Affiliate (defined as a company
organized under the laws of Indonesia solely for
the purpose of owning and operating Infrastructure
Assets that, due to applicable requirements of
Indonesian law, may not be owned by AFIC and having
similar equity ownership and capital structure to
AFIC, or any Significant Subsidiary of PT-FI, AFIC
or any Infrastructure Affiliate in an involuntary
case or proceeding under any applicable Insolvency
Law or (B) a decree or order adjudging PT-FI, AFIC
or any Infrastructure Affiliate or any Significant
Subsidiary of PT-FI, AFIC or any Infrastructure
Affiliate bankrupt or insolvent under an applicable
Insolvency Law, or appointing a custodian,
receiver, liquidator, assignee, trustee,
sequestrator or other similar official of PT-FI,
AFIC or any Infrastructure Affiliate or any
Significant Subsidiary of PT-FI, AFIC or any
Infrastructure Affiliate or of any substantial part
of the property of PT-FI, AFIC or any
Infrastructure Affiliate or any Significant
Subsidiary of PT-FI, AFIC or any Infrastructure
Affiliate, or ordering the winding up or
liquidation of the affairs of PT-FI, AFIC or any
Infrastructure Affiliate or any Significant
Subsidiary of PT-FI, AFIC or any Infrastructure
Affiliate and the continuance of any such decree or
order for relief or any such other decree or order
unstayed and in effect for a period of 60
consecutive days; or
(e) the commencement by PT-FI, AFIC or any
Infrastructure Affiliate, or any Significant
Subsidiary of PT-FI, AFIC or any Infrastructure
Affiliate of a voluntary case or proceeding under
any applicable Insolvency Law or of any other case
or proceeding to be adjudicated a bankrupt or
insolvent, or the consent by PT-FI, AFIC or any
Infrastructure Affiliate or any Significant
Subsidiary of PT-FI, AFIC or any Infrastructure
Affiliate to the entry of a decree or order for
relief in respect of PT-FI, AFIC or any
Infrastructure Affiliate or any Significant
Subsidiary of PT-FI, AFIC or any Infrastructure
Affiliate in an involuntary case or proceeding
under any applicable Insolvency Law or to the
commencement of any bankruptcy or insolvency case
or proceeding against PT-FI, AFIC or any
Infrastructure Affiliate or any Significant
Subsidiary of PT-FI, AFIC or any Infrastructure
Affiliate, or the filing by PT-FI, AFIC or any
Infrastructure Affiliate or any Significant
Subsidiary of PT-FI, AFIC or any Infrastructure
Affiliate of a petition or answer or consent
seeking reorganization or relief under any
applicable Insolvency Law, or the consent by PT-FI,
AFIC or any Infrastructure Affiliate or any
Significant Subsidiary of PT-FI, AFIC or any
Infrastructure Affiliate to the filing of such
petition or to the appointment of or taking
possession by a custodian, receiver, liquidator,
assignee, trustee, sequestrator or similar official
of PT-FI, AFIC or any Infrastructure Affiliate or
any Significant Subsidiary of PT-FI, AFIC or any
Infrastructure Affiliate or of any substantial part
of the property of PT-FI, AFIC or any
Infrastructure Affiliate or any Significant
Subsidiary of PT-FI, AFIC or any Infrastructure
Affiliate or the making by PT-FI, AFIC or any
Infrastructure Affiliate or any Significant
Subsidiary of PT-FI, AFIC or any Infrastructure
Affiliate of an assignment for the benefit of
creditors, or the admission by PT-FI, AFIC or any
Infrastructure Affiliate or any Significant
Subsidiary of PT-FI, AFIC or any Infrastructure
Affiliate in writing of its inability to pay its
debts generally as they become due, or the taking
of corporate action (which shall involve the
passing of one or more resolutions of the Board of
Directors or a committee thereof) by PT-FI, AFIC or
any Infrastructure Affiliate or any Significant
Subsidiary of PT-FI, AFIC or any Infrastructure
Affiliate in furtherance of any such action; or
(f) default with respect to any Indebtedness
of PT-FI, AFIC or any Infrastructure Affiliate or
any Significant Subsidiary of PT-FI, AFIC or any
Infrastructure Affiliate in excess of $20,000,000
or the equivalent thereof in any other currency or
composite currency which default shall constitute a
failure to pay any portion of the principal of such
indebtedness when due and payable after the
expiration of any applicable grace period with
respect thereto or shall have resulted in such
indebtedness becoming or being declared due and
payable prior to the date on which it would
otherwise have become due and payable, without such
acceleration having been rescinded or annulled
within a period of 30 days; or
(g) one or more judgments or decrees for the
payment of money in an aggregate amount equal to or
in excess of $20,000,000 (calculated net of any
insurance coverage that the insurer has irrevocably
acknowledged to PT-FI, AFIC or any Infrastructure
Affiliate or any Significant Subsidiary of PT-FI,
AFIC or any Infrastructure Affiliate as covering
such judgment in whole or in part) shall be
rendered against PT-FI, AFIC or any Infrastructure
Affiliate or any Significant Subsidiary of PT-FI,
AFIC or any Infrastructure Affiliate and either (A)
an enforcement proceeding has been commenced by any
creditor upon such judgment or decree or (B) there
is a period of 60 days after any such judgment or
decree becomes final and nonappealable during which
such judgment or decree is not discharged, waived
or bonded pending appeal or the execution thereof
stayed;
then in each and every case, at the option of and upon
written notice to PT-FI by the Holder, this Note shall
mature and become due and payable upon the date that
such written notice is received by PT-FI unless prior to
such date all Events of Default in respect of the Note
shall have been cured. The amount payable in respect of
this Note upon default shall be the then-outstanding
principal amount hereof, as endorsed on Schedule A
hereto, together with accrued interest and Additional
Amounts, if any, to the date such payment is made. For
purposes of this Section 7, "Significant Subsidiary" of
PT-FI, AFIC or any Infrastructure Affiliate means any
Subsidiary of PT-FI, AFIC or any Infrastructure
Affiliate, as the case may be, which at the time of
determination either (A) had assets which, as of the
date of PT-FI's, AFIC's or any Infrastructure
Affiliate's most recent quarterly consolidated balance
sheet, constituted at least 5% of PT-FI's, AFIC's or any
Infrastructure Affiliate's total assets on a
consolidated basis as of such date, or (B) had revenues
for the 12-month period ending on the date of PT-FI's,
AFIC's or any Infrastructure Affiliate's most recent
quarterly consolidated statement of income which
constituted at least 5% of PT-FI's, AFIC's or any
Infrastructure Affiliate's total revenues on a
consolidated basis for such period. "Subsidiary" of a
person means any corporation, association, partnership
or other business entity of which more than 50% of the
total voting power of shares of capital stock or other
interests (including partnership interests) entitled
(without regard to the occurrence of any contingency) to
vote in the election of directors, managers or trustees
thereof is at the time owned or controlled, directly or
indirectly, by such person or any of its Subsidiaries,
and any partnership of which more than 50% of the
partnership interests are owned, directly or indirectly,
by such person or any of its Subsidiaries. "Insolvency
Law" means any Indonesian, United States (Federal or
State), or other applicable bankruptcy, insolvency,
reorganization or similar law in any applicable
jurisdiction.
8. REPLACEMENT OF NOTES. If the Note shall become
mutilated or defaced or be apparently destroyed, lost or
stolen, PT-FI shall deliver a new Note, on such terms as
PT-FI may require, in exchange and substitution for the
mutilated or defaced Note or in lieu of and in
substitution for the apparently destroyed, lost or
stolen Note. In every case of mutilation or defacement
or apparent destruction, loss or theft, the applicant
for a substitute Note shall furnish to PT-FI such
indemnity as PT-FI may require and evidence to its
satisfaction of the apparent destruction, loss or theft
of such Note and of the ownership thereof. In every
case of mutilation or defacement of a Note, the holder
shall surrender to PT-FI the Note so mutilated or
defaced. In addition, prior to the issuance of any
substitute Note, PT-FI may require the payment of a sum
sufficient to cover any tax or other governmental charge
that may be imposed in relation thereto and any other
expenses connected therewith. If any Note which has
matured or is about to mature shall become mutilated or
defaced or be apparently destroyed, lost or stolen, PT-
FI may pay or authorize payment of the same without
issuing a substitute Note.
9. CONSOLIDATION, MERGER OR SALE OF ASSETS.
PT-FI may not merge with or into or consolidate
with any other corporation or sell, convey, transfer,
lease or otherwise dispose of all or substantially all
of its assets to any individual, corporation,
partnership, joint venture, trust, unincorporated
organization or government or any agency or political
subdivision thereof (a "Person") and PT-FI shall not
permit any Person to consolidate with or merge into PT-
FI or sell, convey, transfer, lease or otherwise dispose
of all or substantially all of its assets to, PT-FI
unless (i) either PT-FI (in the case of a merger) shall
be the continuing corporation, or the successor
corporation or the Person which acquires by sale, lease
or conveyance all or substantially all of the assets of
PT-FI shall be a corporation or partnership organized
under the laws of the United States of America or any
State thereof or the District of Columbia, or under the
laws of the Republic of Indonesia, and shall expressly
assume all of the obligations of PT-FI pursuant to this
Note; (ii) immediately after giving effect to such
merger, consolidation, sale, lease or conveyance PT-FI
or such successor corporation or entity that acquired
all or substantially all of the assets of, PT-FI, as the
case may be, shall not be in default in the performance
of any such covenant or condition and no Event of
Default, and no event which, after notice or lapse of
time or both, would become an Event of Default, shall
have occurred and be continuing and (iii) PT-FI has
delivered to the Holder an Officer's Certificate and an
Opinion of Counsel, each stating that such
consolidation, merger, conveyance, transfer or lease
complies with this Section 9 and that all conditions
precedent herein provided for relating to such
transaction have been complied with.
10. MODIFICATIONS, AMENDMENTS AND WAIVERS. The
terms of the Note may not be amended by PT-FI without
the prior written consent of the Holder.
11. WARRANTY OF PT-FI. PT-FI hereby certifies and
warrants that all acts, conditions and things required
to be done and performed and to have happened precedent
to the creation and issuance of this Note and to
constitute the same the valid and legally binding
obligations of PT-FI enforceable in accordance with
their terms, have been done and performed and have
happened in due and strict compliance with all
applicable laws.
12. GOVERNING LAW. This Note shall be governed by
and construed in accordance with the law of New York.
13. DESCRIPTIVE HEADINGS. The descriptive headings
appearing in these Terms and Conditions are for
convenience of reference only and shall not alter, limit
or define the provisions hereof.
Schedule A
Signature of
Original Increase in Decrease in New Authorized
Principal Principal Principal Principal Officer of
Date Amount Amount Amount Amount Issuer
- ---- --------- ----------- ----------- --------- ------------
ANNEX II
Form of Underlying Note
(FORM OF FACE OF UNDERLYING NOTE)
THIS NOTE HAS NOT BEEN AND WILL NOT BE
REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF
1933 (THE "SECURITIES ACT") OR ANY APPLICABLE SECURITIES
LAW OF ANY STATE OF THE UNITED STATES, AND THIS NOTE MAY
NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED UNLESS
REGISTERED THEREUNDER OR UNLESS AN EXEMPTION FROM SUCH
REGISTRATION IS AVAILABLE.
(ADD INDONESIAN/NETHERLANDS LEGEND?)
(NAME OF ISSUER)
___% Note Due 2001
(NAME OF ISSUER), a limited liability company
organized under the laws of Indonesia (the "Issuer"),
for value received, hereby promises to pay to P.T.
ALatieF Freeport Finance Company B.V., or registered
assigns, on ____________, 2001, upon surrender hereof,
the principal amount of this Note then outstanding, as
endorsed on Schedule A hereto, and to pay interest from
________________ or from the most recent Interest
Payment Date to which interest has been paid or duly
provided for, semi-annually in arrears on _____________
and ______________ in each year, commencing
_______________ (each an "Interest Payment Date"), on
the daily average of the principal amounts outstanding
during such interest period, as endorsed on Schedule A
hereto (such interest to be calculated on the basis of a
360-day year, consisting of twelve 30-day months) of
___% per annum annually, until payment of said principal
amount has been made or duly provided for. The interest
so payable on any ____________ or _____________ will be
paid to the person in whose name this Note is registered
at the close of business on the ______________ or
_____________ preceding such _________________ or
_______________, whether or not such day is a business
day.
Reference is made to the provisions set forth under
Terms and Conditions of Note endorsed on the reverse
hereof. Such provisions shall for all purposes have the
same effect as though fully set forth at this place.
IN WITNESS WHEREOF, _______________________
has caused this Note to be duly executed under its
corporate seal.
Dated: , 199
_____________________________
(SEAL)
By: ________________________
Attest: ____________________
(FORM OF REVERSE OF UNDERLYING NOTE)
TERMS AND CONDITIONS OF NOTE
1. GENERAL. (a) The principal amount of this Note
shall not exceed U.S. $ ____________. Subject to this
limitation, the principal amount of the Note may be
increased or decreased at the option of the holder of
the Note (the "Holder") prior to __________, 2001, as
provided in Sections 6 and 7 below.
(b) The Note is secured by a pledge of the
Issuer's interest in the Master Services Agreement (the
"Master Services Agreement"), dated _____________,
between the Issuer and P.T. Freeport Indonesia Company
("PT-FI"), as provided in Section 3 below.
2. PAYMENTS AND PAYING AGENTS. (a) Subject to
applicable laws and regulations, the principal of and
interest (which term includes any Additional Amounts (as
hereinafter defined), unless the context otherwise
requires) on the Notes will be payable in United States
dollars to a U.S. dollar account (to be identified to
the Issuer by the Holder prior to the time such payment
is due) maintained by the Holder with a branch of
Chemical Bank located outside the Republic of Indonesia,
and payment of principal of the Note shall be made
against surrender of such Note at ____________. If any day
for payment of principal or interest in respect of the
Note is not a day on which banks are open for business
and carrying out transactions in United States dollars
(a "business day") in New York City or the city in which
such account with Chemical Bank is maintained, the
Holder shall not be entitled to payment until the next
business day following such day in such place or to any
interest or other sums in respect of such postponed
payment.
(b) Payments in respect of the Note shall be
made in such coin or currency of the United States as at
the time of payment shall be legal tender for the
payment of public and private debts.
3. SECURITY. To secure the prompt payment of the
principal of and interest on, and all other amounts due
with respect to, this Note and the performance and
observance by the Issuer of all the agreements,
covenants and provisions for the benefit of the Holder
contained herein, and for the uses and purposes and
subject to the terms and provisions hereof, and in
consideration of the premises and of the covenants
herein contained, and of the acceptance of the Note by
the Holder, the Issuer has granted, bargained, sold,
assigned, transferred, conveyed, mortgaged, pledged and
confirmed unto the Trustee under the Mortgage, dated the
date hereof and in substantially the form set forth in
Annex I hereto, its successors and assigns, for the
security and benefit of the Holder, a first priority
security interest in and first mortgage lien on all
estate, right, title and interest of the Issuer in, to
and under the Master Services Agreement, and all
payments thereunder, including all rights of the Issuer
to execute any election or option or to give notice,
consent, waiver, or approval under or in respect of the
Master Services Agreement as well as any rights, powers
or remedies on the part of the Issuer, whether arising
under the Master Services Agreement or by statute or at
law or in equity or otherwise arising out of any Event
of Default under the Master Services Agreement (the
"Mortgaged Property").
4. ADDITIONAL AMOUNTS. (a) The Issuer will pay
to the Holder such additional amounts as may be
necessary in order that every net payment of principal
of, or interest on, the Note, after deduction or
withholding for or on account of any present or future
tax, assessment or other governmental charge imposed
upon such Holder by reason of the making of such payment
or deemed payment by the United States, The Netherlands
or Indonesia or any political subdivision or taxing
authority of or in any of them, will not be less than
the amount that would have been received if no such tax
had been payable.
(b) The Issuer will pay to the Holder such
additional amounts as may be necessary in order that
every net payment by the Holder of principal of, or
interest on, the __% Guaranteed Senior Notes due 2001
issued by the Holder (the "B.V. Notes"), after deduction
or withholding for or on account of any present or
future tax, assessment or other governmental charge
imposed upon the holders of such B.V. Notes by reason of
the making of such payment or deemed payment by the
United States, The Netherlands or Indonesia or any
political subdivision or taxing authority of or in any
of them, will not be less than the amount that would
have been received if no such tax had been payable.
5. COVENANTS OF THE ISSUER. The Issuer
agrees that until payment in full of this Note:
5.01. Financial Statements and Other
Information. The Issuer will deliver to the Holder:
(a) as soon as available and in any event
within 60 days after the end of each quarterly
fiscal period of each of the first three quarters
of the fiscal year of the Issuer, statements of
income of the Issuer for such period and for the
period from the beginning of the respective fiscal
year to the end of such period, and the related
balance sheets as at the end of such period,
setting forth in each case in comparative form the
corresponding figures for the corresponding period
in the preceding fiscal year, if applicable, all in
accordance with GAAP, accompanied by a certificate
of a senior financial officer of the Issuer, which
certificate shall state that said financial
statements fairly present the financial condition
and results of operations, as the case may be, of
the Issuer in accordance with GAAP, consistently
applied, as at the end of, and for, such period
(subject to normal year-end audit adjustments);
(b) as soon as available and in any event
within 95 days after the end of each fiscal year of
the Issuer, statements of income and changes in
retained earnings and changes in cash flow of the
Issuer for such year and the related balance sheets
as at the end of such year, setting forth in each
case in comparative form the corresponding figures
for the preceding fiscal year, if applicable, all
in accordance with GAAP, and accompanied by an
opinion thereon of independent certified public
accountants of recognized international standing,
which opinion shall state that said financial
statements fairly present the financial condition
and results of operations of the Issuer as at the
end of, and for, such fiscal year;
(c) promptly following adoption thereof
pursuant to Article 4 of the Master Services
Agreement, a copy of each year's General Operating
Plan contemplated pursuant to such Article 4;
(d) promptly following any suspension or
proposed suspension by PT-FI of any AFIC Services
pursuant to Article 7 of the Master Services
Agreement, a notice of such suspension or proposed
suspension describing the affected AFIC Services
and the reasons, if any, given by PT-FI therefor,
together with copies of any written materials
furnished to the Issuer by PT-FI in connection with
such suspension or proposed suspension; and
(e) promptly after the Issuer knows that any
Event of Default has occurred, a notice of such
Event of Default describing the same in reasonable
detail and, together with such notice or as soon
thereafter as possible, a description of the action
that the Issuer has taken and proposes to take with
respect thereto.
The Issuer will furnish to the Holder, concurrently with
each set of financial statements pursuant to
paragraph (a) or (b) above, a certificate of a senior
financial officer of the Issuer to the effect that such
officer has reviewed, or caused to be reviewed by
individuals under his/her supervision, this Note and has
made, or has caused to be made under his/her
supervision, a review of the transactions contemplated
hereby and the condition of the Issuer and the Project,
and such review has not disclosed the existence of, nor
does such officer or any person under his/her
supervision have any knowledge of, the existence as at
the date of such certificate of any condition, event, or
circumstance that constitutes an Event of Default (in
each case, irrespective of the reason for the existence
thereof) or, if any such condition, event or
circumstance does exist as at such date, describing the
same in reasonable detail and describing the action that
the Issuer has taken and proposes to take with respect
thereto. "Project" means such Infrastructure Assets (as
defined in Section 5.07 below) and facilities, together
with all related and associated property and rights, now
owned or hereafter acquired by the Issuer pursuant to
each Purchase and Sale Agreement (as defined in
Section 5.08 below) or otherwise, together with such
other assets, properties or other rights now owned or
hereafter acquired necessary to or for, or relating to,
the performance of any or all services to be provided by
the Issuer in connection with such Infrastructure
Assets.
5.02. Maintenance of Existence. The Issuer
will do or cause to be done all things necessary to
preserve and keep in full force and effect its corporate
existence, rights and franchises; provided that the
Issuer shall not be required to preserve its corporate
existence or any such right or franchise if the Issuer
shall determine that the preservation thereof is no
longer desirable in the conduct of its business and that
the loss thereof is not disadvantageous in any material
respect to the Holder.
5.03. Taxes. The Issuer will pay or discharge
or cause to be paid or discharged, before the same shall
become delinquent, (1) taxes, assessments and
governmental charges levied or imposed upon the Issuer
or upon the income, profits or property of the Issuer,
and (2) all lawful claims for labor, materials and
supplies which, if unpaid, might by law become a lien
upon the property of the Issuer; provided, however, that
the Issuer shall not be required to pay or discharge or
cause to be paid or discharged any such tax, assessment,
charge or claim whose amount, applicability or validity
is being contested in good faith by appropriate
proceedings.
5.04. Maintenance of Title and Lien. The
Issuer shall take, or cause to be taken, all action
required or desirable to maintain good, legal and valid
title to the Mortgaged Property and shall maintain and
preserve the lien created by the Mortgage and the
priority thereof. The Issuer shall from time to time
execute or cause to be executed any and all further
instruments (including financing statements,
continuation statements and similar statements with
respect to the Mortgage) reasonably requested by the
Holder for such purposes. The Issuer shall promptly
discharge at the Issuer's cost and expense any lien on
the Mortgaged Property.
5.05. Limitation on Liens. The Issuer shall
not create, incur, assume or suffer to exist any lien
upon any of the Mortgaged Property.
5.06. Compliance with Applicable Law; Etc.
The Issuer shall comply in all material respects with
all Applicable Laws and shall from time to time obtain
and renew, and shall comply with, all Governmental
Approvals as shall now or hereafter be necessary under
Applicable Laws. "Applicable Law" means all applicable
Governmental Approvals, laws, statutes, treaties, rules,
codes, ordinances, regulations, permits, certificates,
orders, decrees, injunctions, writs, interpretations,
licenses and permits of any Governmental Authority
(including without limitation those pertaining to
health, safety and the environment). "Governmental
Approval" shall mean any authorization, consent,
approval, license, lease, ruling, permit, certification,
exemption, agreement, filing for registration by or
with, or any other action whatsoever by or on behalf of,
any Governmental Authority. "Governmental Authority"
shall mean any governmental department, commission,
board, bureau, agency, regulatory authority,
instrumentality or judicial, legislative, executive or
administrative body of the United States, any state
therein or Indonesia (or any political subdivision of
any of the foregoing).
5.07. Use of Proceeds. The Issuer will use
the proceeds of this Note solely to finance the
acquisition by the Issuer of a portion of the
Infrastructure Assets from time to time acquired by the
Issuer. "Infrastructure Assets" means the commercial,
residential, educational, retail, medical, recreational,
environmental and other infrastructure facilities
(including without limitation power, water and waste
disposal systems, an industrial park, small business
development facilities, port, marine logistics and
related assets under construction, airport, flood
control or road facilities, hotel or other guest
facilities and other general infrastructure facilities),
constructed or to be constructed in connection with or
to support the mining and milling operations of PT-FI in
Irian Jaya, Indonesia; provided that the mining and
milling production facilities of PT-FI in Irian Jaya,
Indonesia shall not constitute Infrastructure Assets.
5.08. Performance, Enforcement and Amendment
of Agreements.
(a) The Issuer will at all times perform and
observe in all material respects all of its covenants
and agreements under each Project Document, diligently
enforce all rights and obligations thereunder and
maintain each Project Document in full force and effect
(except to the extent of an expiration or modification
by its terms), all in accordance with the terms thereof.
"Project Documents" shall mean, collectively, each
Purchase and Sale Agreement to be entered into between
P.T. AlatieF Freeport Infrastructure Corporation
("AFIC") or an Infrastructure Affiliate and PT-FI (each,
a "Purchase and Sale Agreement") in substantially the
form of Exhibit F to the Credit Agreement, dated as of
December 15, 1993, among AFIC, the Chase Manhattan Bank
(National Association), as Agent, and the banks named
therein, the Master Services Agreement and the Joint
Venture Agreement dated March 11, 1993 between PT-FI and
P.T. ALatieF Nusakarya Corporation. "Infrastructure
Affiliate" means a company organized under the laws of
Indonesia solely for the purpose of owning and operating
Infrastructure Assets that, due to applicable
requirements of Indonesian law, may not be owned by AFIC
and having similar equity ownership and capital
structure to AFIC.
(b) The Issuer will not, amend, modify,
supplement, terminate or waive any provision of, or
exercise any election or right of approval, or permit or
suffer to occur any of the foregoing, under any Project
Document, its articles of association or any other
constituting document of the Issuer unless (i) such
amendment, modification, supplement or waiver relates
exclusively to the amount or method of computation of
the rate of return of P.T. ALatieF Nusakarya Corporation
or (ii) in any other case, the Issuer shall have given
the Holder prior written notice of such amendment,
modification, supplement, termination or waiver together
with a description of the reason(s) for and effect
thereof (except that no such prior notice or description
need be furnished for any amendment to the Exhibits to
the Master Services Agreement augmenting the scope of
AFIC Services and/or changing the qualitative standards
applicable to any AFIC Services pursuant to Section 5.1
of the Master Services Agreement and the Exhibits
thereto) and the effect of such amendment, modification,
supplement, termination or waiver is not adverse in any
material respect to the Issuer or the Holder. In
addition, the Issuer will not amend, waive or terminate
the Master Services Agreement unless the holders of a
majority in principal amount of the B.V. Notes consent
to such amendment, waiver or termination, or both of the
following conditions are satisfied: (i) such amendment,
waiver or termination does not reduce the amounts
payable by PT-FI to the Issuer for any period prior to
the stated maturity of the B.V. Notes to an amount less
than an amount sufficient to assure the payment of the
principal of, interest on and Additional Amounts with
respect to, this Note and (ii) such amendment, waiver or
termination does not in any other respect have a
material adverse effect on the holders of the B.V.
Notes.
6. REPAYMENT. (a) The Holder may require the
Issuer to repay the Notes prior to maturity in whole or
in part, together with accrued and unpaid interest to
the date fixed for such repayment upon delivery of a
notice as described in (b) below; provided, that such
repayment is required to enable the Holder to (i) repay,
in whole or in part, the B.V. Notes, (ii) fund a loan by
the Holder to PT-FI; provided that such loan shall be
made on the same terms as the PT-FI Note set out as an
Annex to the Indenture, dated ________, 1994, among the
Holder, Freeport-McMoRan Copper & Gold, Inc. ("FCX") and
Chemical Bank, or (iii) fund a loan by the Holder to an
Infrastructure Affiliate other than the Issuer in
connection with the purchase by such Infrastructure
Affiliate of Infrastructure Assets; provided that such
loan shall be made on the same terms as this Note.
(b) Notice of intention to require the
repayment of the Note (or any portion thereof) shall be
in writing and shall set forth the amount (in U.S.
dollars) required to be repaid by the Issuer and the
proposed date of such repayment. Such notice having been
given, that portion of the Note so identified for
repayment shall become due and payable on the repayment
date so designated and shall be paid in the manner
specified in Section 2 above. Upon any such repayment
the principal amount of the Note outstanding shall be
reduced by the amount of such repayment and the
principal amount so reduced shall be endorsed on
Schedule A hereto by an authorized officer of the
Issuer. Any unpaid interest which shall have matured on
or prior to the date of repayment specified in such
notice shall continue to be payable to the Holder.
7. INCREASE OF PRINCIPAL. (a) The principal of
this Note shall not be increased prior to maturity
except in accordance with this Section 7.
(b) At the request of the Issuer, and upon
delivery to the Holder of a notice as described in (c)
below, and with the consent of the Holder, the Issuer
may borrow additional amounts from the Holder and the
principal amount of this Note shall be increased by the
amount of any such additional borrowings, provided that
any such additional borrowings shall be solely for the
purposes set forth in Section 5.07, and provided,
further, that the amount of principal of the Note
outstanding at any time shall not exceed $ __________.
(c) Notice of intention to borrow additional
amounts and to increase the principal of this Note shall
be in writing and shall set forth the amount (in U.S.
dollars) of additional principal to be borrowed by the
Issuer and the proposed date of such borrowing. If the
Holder, upon receipt of such notice, lends such
additional amounts to the Issuer, the increase in the
principal amount of the Note outstanding shall be
endorsed on Schedule A hereto by an authorized officer
of the Issuer.
8. EVENTS OF DEFAULT. In case one or more of the
following events (herein referred to as "Events of
Default") (whatever the reason for such Event of Default
and whether it shall be voluntary or involuntary or be
affected by operation of law or pursuant to any
judgment, decree or order of any court or any order,
rule or regulation of any administrative or governmental
body) shall have occurred and be continuing, that is to
say:
(a) default in the payment of all or any part
of the principal of the Note as and when the same
shall become due and payable either at maturity, by
declaration, upon a required repurchase, repayment
or otherwise; or
(b) default in the payment of any instalment
of interest or any Additional Amounts upon the Note
as and when the same shall become due and payable,
and continuance of such default for a period of 30
days; or
(c) failure on the part of the Issuer duly to
observe or perform any of the covenants or agree-
ments on the part of the Issuer contained herein
continued for a period of 60 days after the date on
which written notice specifying such failure,
stating that such notice is a "Notice of Default"
hereunder and demanding that the Issuer remedy the
same, shall have been given by registered or
certified mail, return receipt requested, to the
Issuer by the Holder; or
(d) the entry by a court having jurisdiction
in the premises of (A) a decree or order for relief
in respect of the Issuer, PT-FI or any Significant
Subsidiary of PT-FI or the Issuer in an involuntary
case or proceeding under any applicable Insolvency
Law or (B) a decree or order adjudging the Issuer,
PT-FI or any Significant Subsidiary of PT-FI or the
Issuer a bankrupt or insolvent under an applicable
Insolvency Law, or appointing a custodian,
receiver, liquidator, assignee, trustee,
sequestrator or other similar official of the
Issuer, PT-FI or any Significant Subsidiary of
PT-FI or the Issuer or of any substantial part of
the property of the Issuer, PT-FI or any
Significant Subsidiary of PT-FI or the Issuer, or
ordering the winding up or liquidation of the
affairs of the Issuer, PT-FI or any Significant
Subsidiary of PT-FI or the Issuer, and the
continuance of any such decree or order for relief
or any such other decree or order unstayed and in
effect for a period of 60 consecutive days; or
(e) the commencement by the Issuer, PT-FI or
any Significant Subsidiary of PT-FI or the Issuer
of a voluntary case or proceeding under any
applicable Insolvency Law or of any other case or
proceeding to be adjudicated a bankrupt or
insolvent, or the consent by the Issuer, PT-FI or
any Significant Subsidiary of PT-FI or the Issuer
to the entry of a decree or order for relief in
respect of the Issuer, PT-FI or any Significant
Subsidiary of PT-FI or the Issuer in an involuntary
case or proceeding under any applicable Insolvency
Law or to the commencement of any bankruptcy or
insolvency case or proceeding against the Issuer,
PT-FI or any Significant Subsidiary of PT-FI or the
Issuer, or the filing by the Issuer, PT-FI or any
Significant Subsidiary of PT-FI or the Issuer of a
petition or answer or consent seeking
reorganization or relief under any applicable
Insolvency Law, or the consent by the Issuer, PT-FI
or any Significant Subsidiary of PT-FI or the
Issuer to the filing of such petition or to the
appointment of or taking possession by a custodian,
receiver, liquidator, assignee, trustee,
sequestrator or similar official of the Issuer, PT-
FI or any Significant Subsidiary of PT-FI or the
Issuer, or of any substantial part of the property
of the Issuer, PT-FI or any Significant Subsidiary
of PT-FI or the Issuer, or the making by the
Issuer, PT-FI or any Significant Subsidiary of
PT-FI or the Issuer of an assignment for the
benefit of creditors, or the admission by the
Issuer, PT-FI or any Significant Subsidiary of
PT-FI or the Issuer in writing of its inability to
pay its debts generally as they become due, or the
taking of corporate action (which shall involve the
passing of one or more resolutions of the Board of
Directors or a committee thereof) by the Issuer,
PT-FI or any Significant Subsidiary of PT-FI or the
Issuer in furtherance of any such action; or
(f) default with respect to any Indebtedness
of the Issuer, PT-FI or any Significant Subsidiary
of PT-FI or the Issuer in excess of $20,000,000 or
the equivalent thereof in any other currency or
composite currency which default shall constitute a
failure to pay any portion of the principal of such
indebtedness when due and payable after the
expiration of any applicable grace period with
respect thereto or shall have resulted in such
indebtedness becoming or being declared due and
payable prior to the date on which it would
otherwise have become due and payable, without such
acceleration having been rescinded or annulled
within a period of 30 days; or
(g) one or more judgments or decrees for the
payment of money in an aggregate equal to or in
excess of $20,000,000 (calculated net of any
insurance coverage that the insurer has irrevocably
acknowledged to the Issuer, PT-FI or any
Significant Subsidiary of PT-FI or the Issuer as
covering such judgment in whole or in part) shall
be rendered against the Issuer, PT-FI or any
Significant Subsidiary of PT-FI or the Issuer and
either (A) an enforcement proceeding has been
commenced by any creditor upon such judgment or
decree or (B) there is a period of 60 days after
any such judgment or decree becomes final and
nonappealable during which such judgment or decree
is not discharged, waived or bonded pending appeal
or the execution thereof stayed;
then in each and every case, at the option of and upon
written notice to the Issuer by the Holder, this Note
shall mature and become due and payable upon the date
that such written notice is received by the Issuer
unless prior to such date all Events of Default in
respect of the Note shall have been cured. The amount
payable in respect of this Note upon default shall be
the then-outstanding principal amount hereof, as
endorsed on Schedule A hereto, together with accrued
interest and Additional Amounts, if any, to the date
such payment is made. For purposes of this Section 8,
"Significant Subsidiary" of the Issuer or PT-FI means
any Subsidiary of the Issuer or PT-FI, as the case may
be, which at the time of determination either (A) had
assets which, as of the date of the Issuer's or PT-FI's
most recent quarterly consolidated balance sheet,
constituted at least 5% of the Issuer's or PT-FI's total
assets on a consolidated basis as of such date, or (B)
had revenues for the 12-month period ending on the date
of the Issuer's or PT-FI's most recent quarterly
consolidated statement of income which constituted at
least 5% of the Issuer's or PT-FI's total revenues on a
consolidated basis for such period. "Subsidiary" of a
person means any corporation, association, partnership
or other business entity of which more than 50% of the
total voting power of shares of capital stock or other
interests (including partnership interests) entitled
(without regard to the occurrence of any contingency) to
vote in the election of directors, managers or trustees
thereof is at the time owned or controlled, directly or
indirectly, by such person or any of its Subsidiaries,
and any partnership of which more than 50% of the
partnership interests are owned, directly or indirectly,
by such person or any of its Subsidiaries. "Insolvency
Law" means any Indonesian, United States (Federal or
State), or other applicable bankruptcy, insolvency,
reorganization or similar law in any applicable
jurisdiction.
9. REPLACEMENT OF NOTES. If the Note shall become
mutilated or defaced or be apparently destroyed, lost or
stolen, the Issuer shall deliver a new Note, on such
terms as the Issuer may require, in exchange and
substitution for the mutilated or defaced Note or in
lieu of and in substitution for the apparently
destroyed, lost or stolen Note. In every case of
mutilation or defacement or apparent destruction, loss
or theft, the applicant for a substitute Note shall
furnish to the Issuer such indemnity as the Issuer may
require and evidence to its satisfaction of the apparent
destruction, loss or theft of such Note and of the
ownership thereof. In every case of mutilation or
defacement of a Note, the holder shall surrender to the
Issuer the Note so mutilated or defaced. In addition,
prior to the issuance of any substitute Note, the Issuer
may require the payment of a sum sufficient to cover any
tax or other governmental charge that may be imposed in
relation thereto and any other expenses connected
therewith. If any Note which has matured or is about to
mature shall become mutilated or defaced or be
apparently destroyed, lost or stolen, the Issuer may pay
or authorize payment of the same without issuing a
substitute Note.
10. CONSOLIDATION, MERGER OR SALE OF ASSETS.
The Issuer may not merge with or into or
consolidate with any other corporation or sell, convey,
transfer, lease or otherwise dispose of all or
substantially all of its assets to any individual,
corporation, partnership, joint venture, trust,
unincorporated organization or government or any agency
or political subdivision thereof (a "Person") and the
Issuer shall not permit any Person to consolidate with
or merge into the Issuer or sell, convey, transfer,
lease or otherwise dispose of all or substantially all
of its assets to the Issuer, unless (i) either the
Issuer (in the case of a merger) shall be the continuing
corporation, or the successor corporation or the Person
which acquires by sale, lease or conveyance all or
substantially all of the assets of the Issuer shall be a
corporation or partnership organized under the laws of
the United States of America or any State thereof or the
District of Columbia, or under the laws of the Republic
of Indonesia, and shall expressly assume all of the
obligations of the Issuer pursuant to this Note; (ii)
immediately after giving effect to such merger,
consolidation, sale, lease or conveyance the Issuer or
such successor corporation or entity that acquired all
or substantially all of the assets of the Issuer, as the
case may be, shall not be in default in the performance
of any such covenant or condition and no Event of
Default, and no event which, after notice or lapse of
time or both, would become an Event of Default, shall
have occurred and be continuing and (iii) the Issuer has
delivered to the Holder an Officer's Certificate and an
Opinion of Counsel, each stating that such
consolidation, merger, conveyance, transfer or lease
complies with this Section and that all conditions
precedent herein provided for relating to such
transaction have been complied with.
11. MODIFICATIONS, AMENDMENTS AND WAIVERS. The
terms of the Note may not be amended by the Issuer
without the prior written consent of the Holder.
12. WARRANTY OF THE ISSUER. The Issuer hereby
certifies and warrants that all acts, conditions and
things required to be done and performed and to have
happened precedent to the creation and issuance of this
Note and to constitute the same the valid and legally
binding obligations of the Issuer enforceable in
accordance with their terms, have been done and
performed and have happened in due and strict compliance
with all applicable laws.
13. GOVERNING LAW. This Note shall be governed by
and construed in accordance with the law of New York.
14. DESCRIPTIVE HEADINGS. The descriptive headings
appearing in these Terms and Conditions are for
convenience of reference only and shall not alter, limit
or define the provisions hereof.
Schedule A
Signature of
Original Increase in Decrease in New Authorized
Principal Principal Principal Principal Officer of
Date Amount Amount Amount Amount Issuer
- ---- --------- ----------- ----------- --------- ------------
ANNEX III
Form of Opinion of Indonesian counsel to AFIC and
Infrastructure Affiliates:
(1) (AFIC -- Such Infrastructure Affiliate)
has been duly organized and is an existing
corporation in good standing under the laws of the
Republic of Indonesia.
(2) The Underlying Note being delivered by
(AFIC -- such Infrastructure Affiliate) has been
duly authorized, executed, issued and delivered and
constitutes the valid and legally binding
obligation of (AFIC -- such Infrastructure
Affiliate) enforceable in accordance with its
terms.
(3) All regulatory consents, authorizations,
approvals and filings required to be obtained or
made under the laws of Indonesia for the issuance,
sale and delivery of such Underlying Note to the
Issuer have been obtained or made.
(4) The issuance of such Underlying Note and
the sale thereof by (AFIC -- such Infrastructure
Affiliate) to the Issuer does not, and the
performance by (AFIC -- such Infrastructure
Affiliate) of its obligations under such Underlying
Note will not, (a) violate (AFIC's -- such
Infrastructure Affiliate's) (charter documents);
(b) result in a default under or breach of any loan
agreements to which (AFIC -- such Infrastructure
Affiliate) is a party or by which it is bound or
(c) violate any law of the Republic of Indonesia.
Form of Opinion of United States counsel to AFIC and
Infrastructure Affiliates:
(1) The Underlying Note being delivered by
(AFIC -- such Infrastructure Affiliate) has been
duly authorized, executed, issued and delivered and
constitutes the valid and legally binding
obligation of (AFIC -- such Infrastructure
Affiliate) enforceable in accordance with its
terms.
(2) All regulatory consents, authorizations,
approvals and filings required to be obtained or
made under the laws of the United States and the
State of New York for the issuance, sale and
delivery of such Underlying Note to the Issuer have
been obtained or made.
(3) The issuance of such Underlying Note and
the sale thereof by (AFIC -- such Infrastructure
Affiliate) to the Issuer does not, and the
performance by (AFIC -- such Infrastructure
Affiliate) of its obligations under such Underlying
Note will not, (a) result in a default under or
breach of any loan agreements to which (AFIC --
such Infrastructure Affiliate) is a party or by
which it is bound or (b) violate any law of the
United States or the State of New York.
Such counsel shall be entitled to rely as to all matters
of Indonesian law upon the opinion of Indonesian counsel
to the effect set forth in this Annex II.
EXECUTION COPY
*****************************************************************
P.T. ALATIEF FREEPORT INFRASTRUCTURE CORPORATION
----------
CREDIT AGREEMENT
Dated as of December 15, 1993
----------
THE CHASE MANHATTAN BANK (NATIONAL ASSOCIATION),
as Agent
*****************************************************************
TABLE OF CONTENTS
This Table of Contents is not part of the Agreement to
which it is attached but is inserted for convenience only.
Page
SECTION 1. DEFINITIONS AND ACCOUNTING MATTERS . . . . . . 1
1.01. Certain Defined Terms. . . . . . . . . . . . . . 1
1.02. Accounting Matters . . . . . . . . . . . . . . . 18
1.03. Other Definitional Provisions . . . . . . . . . 18
SECTION 2. THE COMMITMENTS . . . . . . . . . . . . . . . . 19
2.01. Loans . . . . . . . . . . . . . . . . . . . . . 19
2.02. Manner of Borrowing . . . . . . . . . . . . . . 19
2.03. Changes of Commitments . . . . . . . . . . . . . 20
2.04. Fees. . . . . . . . . . . . . . . . . . . . . . 20
2.05. Lending Offices. . . . . . . . . . . . . . . . . 20
2.06. Several Obligations; Remedies Independent . . . 20
2.07. Notes. . . . . . . . . . . . . . . . . . . . . . 21
SECTION 3. PAYMENTS OF PRINCIPAL AND INTEREST;
PREPAYMENTS . . . . . . . . . . . . . . . . . . 21
3.01. Repayment of Loans . . . . . . . . . . . . . . . 21
3.02. Interest . . . . . . . . . . . . . . . . . . . . 22
3.03. Post-Default Interest. . . . . . . . . . . . . . 22
3.04. Prepayments . . . . . . . . . . . . . . . . . . 22
SECTION 4. PAYMENTS; PRO RATA TREATMENT;
COMPUTATIONS; ETC. . . . . . . . . . . . . . . 23
4.01. Payments . . . . . . . . . . . . . . . . . . . . 23
4.02. Pro Rata Treatment . . . . . . . . . . . . . . . 24
4.03. Computations . . . . . . . . . . . . . . . . . . 24
4.04. Certain Notices . . . . . . . . . . . . . . . . 25
4.05. Non-Receipt of Funds by the Agent . . . . . . . 25
4.06. Sharing of Payments, Etc. . . . . . . . . . . . 26
SECTION 5. YIELD PROTECTION AND ILLEGALITY . . . . . . . . 27
5.01. Additional Costs . . . . . . . . . . . . . . . . 27
5.02. Alternative Interest Rate . . . . . . . . . . . 30
5.03. Illegality . . . . . . . . . . . . . . . . . . . 31
5.04. Compensation . . . . . . . . . . . . . . . . . . 31
5.05. HLT Classification . . . . . . . . . . . . . . . 32
5.06. Indonesian Taxes . . . . . . . . . . . . . . . . 32
5.07. Special Provisions Regarding Affected Banks . . 35
SECTION 6. CONDITIONS PRECEDENT. . . . . . . . . . . . . . 36
6.01. Loans . . . . . . . . . . . . . . . . . . . . . 36
6.02. Further Conditions to Loans . . . . . . . . . . 40
SECTION 7. REPRESENTATIONS AND WARRANTIES . . . . . . . . . 42
7.01. Corporate Existence . . . . . . . . . . . . . . 42
7.02. Corporate Action . . . . . . . . . . . . . . . . 42
7.03. Financial Condition . . . . . . . . . . . . . . 42
7.04. No Breach . . . . . . . . . . . . . . . . . . . 43
7.05. Litigation . . . . . . . . . . . . . . . . . . . 43
7.06. Governmental Approvals . . . . . . . . . . . . . 43
7.07. Nature of Business . . . . . . . . . . . . . . . 44
7.08. Title; Security Documents . . . . . . . . . . . 44
7.09. Subsidiaries . . . . . . . . . . . . . . . . . . 45
7.10. Shareholders; Shareholder Interests and Related
Matters . . . . . . . . . . . . . . . . . . . . 45
7.11. Conflicting Documents; Project Documents . . . . 45
7.12. Utility Services . . . . . . . . . . . . . . . . 46
7.13. Disclosure . . . . . . . . . . . . . . . . . . . 46
7.14. Use of Loans . . . . . . . . . . . . . . . . . . 46
7.15. Existing Credit Agreement Event . . . . . . . . 46
7.16. Performance of Services . . . . . . . . . . . . 47
7.17. Public Utility Holding Company Act. . . . . . . 47
7.18. Investment Company Act . . . . . . . . . . . . . 47
7.19. Hak Guna Bangunan Title . . . . . . . . . . . . 47
7.20. Employee Benefit Plans. . . . . . . . . . . . . 47
7.21. Environmental Compliance . . . . . . . . . . . . 47
SECTION 8. COVENANTS OF THE COMPANY . . . . . . . . . . . . 47
8.01. Financial Statements and Other Information . . . 47
8.02. Proceedings . . . . . . . . . . . . . . . . . . 50
8.03. Maintenance of Existence; Etc . . . . . . . . . 50
8.04. Insurance . . . . . . . . . . . . . . . . . . . 50
8.05. Taxes . . . . . . . . . . . . . . . . . . . . . 53
8.06. Books and Records . . . . . . . . . . . . . . . 53
8.07. Prohibition of Fundamental Changes . . . . . . . 53
8.08. Maintenance of Title and Lien . . . . . . . . . 55
8.09. Limitation on Liens . . . . . . . . . . . . . . 55
8.10. Indebtedness . . . . . . . . . . . . . . . . . . 56
8.11. Investments . . . . . . . . . . . . . . . . . . 58
8.12. Compliance with Applicable Law; Etc. . . . . . . 58
8.13. Dividend Payments . . . . . . . . . . . . . . . 58
8.14. Lines of Business . . . . . . . . . . . . . . . 59
8.15. Transactions with Affiliates . . . . . . . . . . 59
8.16. Use of Proceeds . . . . . . . . . . . . . . . . 59
8.17. Cash Flow Uses . . . . . . . . . . . . . . . . . 59
8.18. Project Construction; Maintenance . . . . . . . 60
8.19. Performance, Enforcement and Amendment of
Agreements . . . . . . . . . . . . . . . . . . . 60
8.20. Conflicting Documents . . . . . . . . . . . . . 61
8.21. Offering or Transfer of Interests in the
Company . . . . . . . . . . . . . . . . . . . . 61
8.22. Source of Interest . . . . . . . . . . . . . . . 62
8.23. HGB Title Application . . . . . . . . . . . . . 62
8.24. Employee Benefit Plans. . . . . . . . . . . . . 62
SECTION 9. EVENTS OF DEFAULT . . . . . . . . . . . . . . . 63
SECTION 10. THE AGENT. . . . . . . . . . . . . . . . . . . . 69
10.01. Appointment, Powers and Immunities . . . . . . . 69
10.02. Reliance by Agent . . . . . . . . . . . . . . . 70
10.03. Defaults . . . . . . . . . . . . . . . . . . . . 70
10.04. Rights as Banks . . . . . . . . . . . . . . . . 71
10.05. Indemnification . . . . . . . . . . . . . . . . 71
10.06. Non-Reliance on Agent and other Banks . . . . . 71
10.07. Failure to Act . . . . . . . . . . . . . . . . . 72
10.08. Resignation or Removal of Agent. . . . . . . . . 72
10.09. Change of Reference Banks . . . . . . . . . . . 72
SECTION 11. MISCELLANEOUS . . . . . . . . . . . . . . . . . 73
11.01. Waiver . . . . . . . . . . . . . . . . . . . . . 73
11.02. Notices . . . . . . . . . . . . . . . . . . . . 73
11.03. Expenses, Indemnification; Etc. . . . . . . . . 73
11.04. Amendments, Etc. . . . . . . . . . . . . . . . . 74
11.05. Successors and Assigns . . . . . . . . . . . . . 75
11.06. Assignments and Participations. . . . . . . . . 75
11.07. Survival . . . . . . . . . . . . . . . . . . . . 77
11.08. Captions . . . . . . . . . . . . . . . . . . . . 77
11.09. Counterparts . . . . . . . . . . . . . . . . . . 77
11.10. Governing Law; Submission to Jurisdiction;
Waiver of Jury Trial; Waiver of Certain Claims
and Defenses . . . . . . . . . . . . . . . . . . 77
11.11. Confidentiality . . . . . . . . . . . . . . . . 78
11.12. Judgment Currency . . . . . . . . . . . . . . . 79
11.13. Publication of Articles of Association. . . . . 79
EXHIBIT A Form of FI Guaranty
EXHIBIT B Form of FI Consent
EXHIBIT C-1 Form of BPN Confirmation
EXHIBIT C-2 Form of Ministry of Mines Consent
EXHIBIT D Form of Note
EXHIBIT E Form of Master Services Agreement
EXHIBIT F Form of Purchase and Sale Agreement
EXHIBIT G-1 Form of Security Deposit Agreement
EXHIBIT G-2 Form of Fiduciary Transfer
EXHIBIT G-3 Form of Fiduciary Power
EXHIBIT G-4 Form of Fiduciary Assignment
EXHIBIT G-5 Form of Surat Kuasa
EXHIBIT H Form of Opinion of United States Counsel to the
Company and FI
EXHIBIT I-1 Form of Opinion of Indonesian Counsel to the
Company
EXHIBIT I-2 Form of Opinion of Indonesian Counsel to FI
EXHIBIT J Form of Opinion of Indonesian Counsel to ALatieF
EXHIBIT K Form of Opinion of Counsel to FI
EXHIBIT L Form of Opinion of Indonesian Counsel to the Banks
EXHIBIT M Form of Opinion of United States Counsel to the
Banks
EXHIBIT N Form of Confidentiality Agreement
SCHEDULE I Applicable Lending Offices; Commitments
SCHEDULE II Litigation
SCHEDULE III Governmental Approvals
SCHEDULE IV (Not Used)
SCHEDULE V List of Initial Transfer Assets and Respective
Purchase Prices Therefor
This CREDIT AGREEMENT (this "Agreement"), dated as of
December 15, 1993, among P.T. ALATIEF FREEPORT INFRASTRUCTURE
CORPORATION, a corporation organized under the laws of Indonesia,
(the "Company"); each of the financial institutions or other
entities that is a signatory hereto as a "Bank" or that may from
time to time become party hereto pursuant to Section 11.06(b)
hereof in such capacity (each a "Bank" and, collectively, the
"Banks"); and THE CHASE MANHATTAN BANK (NATIONAL ASSOCIATION)
("Chase"), as agent for the Banks (in such capacity, the
"Agent").
W I T N E S S E T H :
WHEREAS, the Company has requested that the Banks make
term loans to it in order to partially finance the acquisition by
the Company from P.T. Freeport Indonesia Company, an Indonesian
limited liability company also domesticated in the State of
Delaware, United States of America ("FI"), of certain
infrastructure and infrastructure related assets forming part of
the Infrastructure Support Project (as defined below); and
WHEREAS, subject to the terms and conditions hereof,
the Banks are willing to make such loans to the Company.
NOW, THEREFORE, the parties hereto hereby agree as
follows:
SECTION 1. DEFINITIONS AND ACCOUNTING MATTERS.
1.01. Certain Defined Terms. As used herein, the
following terms shall have the following respective meanings:
"Additional Costs" shall have the meaning ascribed
thereto in Section 5.01(a) hereof.
"Affected Bank" shall have the meaning ascribed thereto
in Section 5.07 hereof.
"Affiliate" shall mean, as to any Person, any other
Person which directly or indirectly controls, or is under common
control with, or is controlled by, such Person and, if such
Person is an individual, any member of the immediate family
(including parents, spouse and children) of such individual and
any trust whose principal beneficiary is such individual or one
or more members of such immediate family and any Person who is
controlled by any such member or trust. As used in this
definition, "control" (including, with its correlative meanings,
"controlled by" and "under common control with") shall mean
possession, directly or indirectly, of power to direct or cause
the direction of management or policies (whether through
ownership of securities or partnership or other ownership
interests, by contract or otherwise), provided that, in any
event, any Person which owns directly or indirectly 25% or more
of the securities having ordinary voting power for the election
of directors or other governing body of a corporation or 25% or
more of the partnership or other ownership interests of any other
Person (other than as a limited partner of such other Person)
will be deemed to control such corporation or other Person.
Notwithstanding the foregoing, no individual shall be deemed to
be an Affiliate of a corporation solely by reason of his or her
being an officer or director of such corporation and a Person and
its Subsidiaries shall not be deemed to be Affiliates of each
other.
"Agency Letter" shall mean that certain letter
agreement dated as of the date hereof between Chase and the
Company.
"Agent" shall have the meaning ascribed thereto in the
caption hereof.
"Agreement" shall have the meaning ascribed thereto in
the caption hereof.
"ALatieF" shall mean P.T. ALatieF Nusakarya
Corporation, an Indonesian limited liability company.
"Applicable Assets" shall have the meaning ascribed
thereto in Section 6.02(c)(i) hereof.
"Applicable Law" shall mean all applicable Governmental
Approvals, laws, statutes, treaties, rules, codes, ordinances,
regulations, permits, certificates, orders, decrees, injunctions,
writs, interpretations, licenses and permits of any Governmental
Authority (including without limitation those pertaining to
health, safety and the environment).
"Applicable Lending Office" shall mean, for each Bank
and for each Loan, the office of such Bank (or of an affiliate of
such Bank) designated for such Loan on Schedule I hereto (or, in
the case of any Bank that may hereafter become party hereto, the
office of such Bank (or of an affiliate of such Bank) designated
for such Loan by such Bank at the time it becomes party hereto),
or such other office of any such Bank (or of an affiliate of such
Bank) as such Bank may from time to time specify to each of the
Agent and the Company as the office through which such Loan is to
be made and maintained.
"Applicable Margin" shall mean 2 % per annum.
"Authorized Officer" shall mean, with respect to any
Person, the President, the President Director, any Director, any
Vice President (however designated), Treasurer or Secretary of
such Person, in each case whose name and specimen signature
appear on a certificate of incumbency of such Person delivered to
the Agent (a) on the Closing Date or (b) at any time thereafter
but in all cases prior to the delivery by any such officer of any
certification, instrument or other document to the Agent or any
Secured Party pursuant to any Credit Document.
"Availability Period" shall mean, the period from (and
including) the Closing Date to (and including) the second
Quarterly Date thereafter.
"Bank" shall have the meaning ascribed thereto in the
caption hereof.
"Basle Accord" shall mean the proposals for a risk-
based capital framework described by the Basle Committee on
Banking Regulations and Supervisory Practices in its paper
entitled "International Convergence of Capital Measurement and
Capital Standards" dated July 1988.
"Book Value" shall mean, with respect to any property
or asset of FI and as of any date of determination, (a) if FI
shall account for such property or asset separately on its books,
the then current book value of such property or asset under GAAP
and (b) if FI shall not separately account for such property or
asset on its books, the then current depreciated, amortized
and/or depleted, as the case may be, capital cost allocable to
such property or asset pursuant to a methodology confirmed by an
internationally recognized firm of independent public accountants
acceptable to the Agent in a report satisfactory in form and
substance to the Agent.
"BPN" shall mean Badan Pertanahan Nasional, the
Indonesian office of agrarian affairs.
"BPN Confirmation" shall mean that certain letter from
BPN, acting for and on behalf of the Government of Indonesia, to
FI, dated as of September 2, 1993, and substantially in the form
of Exhibit C-1 hereto.
"Business Day" shall mean any day on which commercial
banks are not authorized or required to close in Hong Kong or
New York, New York and on which dealings in Dollar deposits are
carried out in the Singapore interbank market.
"Capital Lease Obligations" shall mean, as to any
Person, the obligations of such Person to pay rent or other
amounts under a lease of (or other agreement conveying the right
to use) real and/or personal property which obligations are
required to be classified and accounted for as a capital lease on
a balance sheet of such person under GAAP (including Statement of
Financial Accounting Standards No. 13 of the Financial Accounting
Standards Board) and, for purposes of this Agreement and each
other Credit Document, the amount of such obligations shall be
the capitalized amount thereof, determined in accordance with
GAAP (including such Statement No. 13).
"Cash Operating Costs" shall mean all reasonable and
necessary cash operating costs of the Company incurred in
connection with the ongoing operation, maintenance and repair of
the Project including, without limitation, taxes, employee
salaries and working capital requirements.
"Chase" shall have the meaning ascribed thereto in the
caption hereof.
"Closing Date" shall mean the date of this Agreement
specified in the caption hereof.
"Code" shall mean the Internal Revenue Code of 1986.
"Collateral" shall mean all rights, titles, interests
and properties now owned or held, and hereafter owned or held, by
the Company.
"Company" shall have the meaning ascribed thereto in
the caption hereof.
"Company Commonly Controlled Entity" shall mean a
Person that is under common control with the Company within the
meaning of Section 414(b), (c), (m) or (o) of the Code.
"Company Multiemployer Plan" shall mean a Company Plan
that is a multiemployer plan as defined in Section 4001(a)(3) of
ERISA.
"Company Plan" shall mean any Plan in respect of which
the Company or any Company Commonly Controlled Entity is an
"employer" as defined in Section 3(5) of ERISA.
"Company Services" shall mean, collectively, all
services to be performed by the Company under or pursuant to the
Master Services Agreement or under or pursuant to any other
contract, agreement, document or other arrangement referred to
therein or contemplated thereby.
"Commitment" shall mean, as to each Bank, the
obligation of such Bank to make Loans in an aggregate amount up
to but not exceeding the amount set forth for such Bank on
Schedule I hereto opposite the heading "Commitment" (as the same
may be reduced at any time or from time to time pursuant to
Section 2.03 hereof). The initial aggregate amount of the
"Commitments" of all Banks is $60,000,000.
"Commitment Fee" shall have the meaning ascribed
thereto in Section 2.04(a).
"Confidentiality Agreement" shall have the meaning
ascribed thereto in Section 11.11.
"Conflicting Document" shall mean any agreement,
document or other instrument which, either generally or in
specific contingencies, (a) would be breached by the performance
by the Company or FI of any of its obligations under any Major
Document or the Contract of Work, as applicable, (b) would be
breached by the exercise by the Company of its rights under any
Project Document or by the exercise by FI of its rights under the
Joint Venture Agreement or the Contract of Work, (c) would
preclude or impair the performance by the Company or FI of any of
its obligations under any Major Documents or the Contract of
Work, as applicable, (d) would preclude or impair the exercise by
the Company of its rights under any Project Document or the
exercise by FI of its rights under the Joint Venture Agreement or
the Contract of Work or (e) the execution, delivery or
performance of which would otherwise result in a default under
any Major Document or the Contract of Work, as applicable.
"Contract of Work" shall mean the Contract of Work made
December 30, 1991, between the Ministry of Mines of the
Government of Indonesia, acting for and on behalf of said
Government, and FI.
"Contract of Work Event" shall mean, at any time,
(a) any material default by FI in the performance of its
obligations under the Contract of Work which, at the time of
determination, is continuing, (b) the delivery by the Government
of Indonesia (or by any Person acting on its behalf) to FI of any
notice pursuant to Article 20 of the Contract of Work alleging
the occurrence of any material default by FI under the Contract
of Work which, at the time of determination, is continuing, (c)
any suspension or interruption of FI's mining and mineral
processing operations in Irian Jaya, Indonesia of the type
referred to in paragraph 3 of Article 3 of the Contract of Work
(but without regard to the duration of any such suspension or
interruption), (d) any material default by the Government of
Indonesia in the performance of its obligations under the
Contract of Work which could reasonably be expected to adversely
effect FI or the Company, (e) any suspension or prohibition
(whether de facto or de jure) by the Government of Indonesia of
exports or sales of gold or copper ores (whether or not
processed) from Indonesia applicable to FI which could reasonably
be expected to have a material adverse effect on the financial
condition of FI or (f) any act or omission by any Person that
could reasonably be expected to result in, cause or otherwise
give rise to a material adverse effect on any material rights of
FI under the Contract of Work.
"Credit Documents" shall mean, collectively, this
Agreement, the Notes, the Security Documents, the FI Guaranty,
the FI Consent and any Permitted Interest Rate Protection
Agreement.
"Default" shall mean an Event of Default or an event
which, with the giving of notice or the lapse of time or both,
would become an Event of Default.
"Default Interest Period" shall mean, in connection
with any default by the Company in the payment of any principal
of any Loan, such period (not to exceed three months) as the
Agent shall choose in its discretion, the first such period to
commence on and as of the date on which such principal becomes
due and each succeeding such period to commence immediately upon
the expiration of the immediately preceding such period.
"Dividend Payment" shall mean any dividend (in cash,
property or obligations) on, or any other payment or distribution
on account of, or the setting apart of money for a sinking or
other analogous fund for, the purchase, redemption, retirement or
other acquisition of, any shares of any class of stock of the
Company, but excluding dividends payable solely in shares of
common stock of the Company.
"Dollars" and "$" shall mean lawful money of the United
States.
"ERISA" shall mean the Employee Retirement Income
Security Act of 1974.
"Event of Default" shall have the meaning ascribed
thereto Section 9.
"Existing Credit Agreements" shall mean, collectively,
(a) that certain $800,000,000 Amended and Restated Credit
Agreement dated as of June 1, 1993, among FTX, FRP, certain banks
from time to time parties thereto and Chemical Bank, as agent,
and any other Persons from time to time party thereto, (b) that
certain $550,000,000 Amended Credit Agreement dated as of June 1,
1993, among FTX, FCX, FI, certain banks from time to time parties
thereto, Morgan Guaranty Trust Company of New York, as trustee
for certain purposes of such agreement, and Chemical Bank, as
agent and (c) any agreement, document or instrument constituting,
creating and/or evidencing any Indebtedness the proceeds of which
are applied directly or indirectly to repay or refinance any
Indebtedness created or existing pursuant to any agreement
referred to in (a) or (b) above or, if applicable, any
Indebtedness referred to in this clause (c).
"Existing Credit Agreement Event" shall mean, at any
time, (a) an event of default under any Existing Credit Agreement
or (b) any event, condition, circumstance or state of facts
(whether or not constituting a default or event of default) which
would, pursuant to the provisions of the FI Trust Agreement as
then in effect or any other then applicable trust, pledge,
security or similar agreement, document or instrument, result in
the loss of control by FI over the disposition of a material
portion of its revenues (taking into account the effect of any
applicable period of grace).
"Facility Fraction" shall mean, as of any date of
determination, a fraction the numerator of which shall be the
principal amount of Loans then outstanding (before giving effect
to any prepayment of Loans to be made on such date) and the
denominator of which shall be the aggregate principal amount of
all Loans and Other Acquisition Indebtedness then outstanding
(before giving effect to any prepayment of Loans and/or such
Other Acquisition Indebtedness to be made on such date).
"FCX" shall mean Freeport-McMoRan Copper & Gold Inc., a
Delaware corporation.
"FI" shall have the meaning ascribed thereto in the
first recital hereof.
"FI Amendment" shall have the meaning ascribed thereto
in Section 11.04(a) hereof.
"FI Commonly Controlled Entity" shall mean a Person
that is under common control with FI within the meaning of
Section 414(b), (c), (m) or (o) of the Code.
"FI Consent" shall mean the Acknowledgement and Consent
of FI dated as of the date hereof, and substantially in the form
of Exhibit B.
"FI Guaranty" shall mean the Guaranty Agreement dated
as of the date hereof between FI and the Agent, substantially in
the form of Exhibit A hereto.
"FI Multiemployer Plan" shall mean an FI Plan that is a
multiemployer plan as defined in Section 4001(a)(3) of ERISA.
"FI Plan" shall mean any Plan in respect of which FI or
any FI Commonly Controlled Entity is an "employer" as defined in
Section 3(5) of ERISA.
"FI Security Documents" shall mean, collectively, (a)
the FI Trust Agreement, (b) the Amended and Restated Pledge and
Assignment and General Assignment of Accounts Receivable dated as
of October 27, 1989, between FI and the FI Trustee, if then in
effect, (c) the Surat Kuasa (Power of Attorney) dated December
30, 1991, granted by FI to the FI Trustee, as amended by the
First Amendment thereto, (d) the Fiduciary Assignment of Accounts
Receivable (Penyerahan Hak Atas Tagihan) dated December 30, 1991,
granted by FI to the FI Trustee, as amended by the First
Amendment thereto, (e) the Power of Attorney to Establish
Fiduciary Transfer (Kuasa Untuk Memasang Penyerahan Hak Milik
Fidusia) dated December 31, 1991, granted by FI to the FI
Trustee, as amended by the First Amendment thereto and (f) the
Fiduciary Transfer (Penyerahan Hak Secara Fidusia) dated December
30, 1991, granted by FI to the FI Trustee, as amended by the
First Amendment thereto.
"FI Trust Agreement" shall mean the Trust Agreement,
dated as of May 15, 1970, between FI and the FI Trustee, as
amended by Amendments No. 1 through 7 thereto.
"FI Trustee" shall mean Morgan Guaranty Trust Company
of New York.
"Fiduciary Assignment" shall mean the Fiduciary
Assignment of Accounts Receivable (Penyerahan Hak Atas Tagihan)
dated as of the Closing Date granted by the Company to the Agent,
substantially in the form of Exhibit G-4 hereto.
"Fiduciary Power" shall mean the Power of Attorney to
Establish Fiduciary Transfer (Kuasa Untuk Memasang Penyerahan Hak
Milik Fidusia) dated the Closing Date granted by the Company to
the Agent, substantially in the form of Exhibit G-3 hereto.
"Fiduciary Transfer" shall mean the Fiduciary Transfer
of Assets (Penyerahan Hak Secara Fidusia) dated the Closing Date
granted by the Company to the Agent, substantially in the form of
Exhibit G-2 hereto.
"Final Maturity Date" shall mean the Quarterly Date
corresponding to the fifth anniversary of the Closing Date.
"FRP" shall mean Freeport McMoRan Resource Partners,
Limited Partnership, a Delaware limited partnership.
"FTX" shall mean Freeport-McMoRan Inc., a Delaware
corporation.
"GAAP" shall mean generally accepted account principles
in the United States applied on a consistent basis.
"Governmental Approval" shall mean any authorization,
consent, approval, license, lease, ruling, permit, certification,
exemption, agreement, filing for registration by or with, or any
other action whatsoever by or on behalf of, any Governmental
Authority.
"Governmental Authority" shall mean any governmental
department, commission, board, bureau, agency, regulatory
authority, instrumentality or judicial, legislative, executive or
administrative body of the United States, any state therein or
Indonesia (or any political subdivision of any of the foregoing).
"Guarantee" shall mean a guarantee, an endorsement, a
contingent agreement to purchase or to furnish funds for the
payment or maintenance of, or otherwise to be or become
contingently liable under or with respect to, the Indebtedness,
other obligations, net worth, working capital or earnings of any
other Person, or a guarantee of the payment of dividends or other
distributions upon the stock of any corporation, or an agreement
to purchase, sell or lease (as lessee or lessor) property,
products, materials, supplies or services primarily for the
purpose of enabling a debtor to make payment of his, her or its
obligations or an agreement to assure a creditor against loss,
but excluding endorsements for collection or deposit in the
ordinary course of business. The terms "Guarantee" and
"Guaranteed", when used as verbs, shall have correlative
meanings.
"Hypothec Power" shall mean a Power of Attorney to
Establish Registered Hypothec in such form as shall be reasonably
acceptable to each of the Agent and the Company.
"Indebtedness" shall mean, as to any Person: (a)
indebtedness created, issued or incurred by such Person for
borrowed money (whether by loan or the issuance and sale of debt
securities); (b) obligations of such Person to pay the deferred
purchase or acquisition price of property or services, other than
trade accounts payable (other than for borrowed money) arising,
and accrued expenses incurred, in the ordinary course of business
so long as such trade accounts payable are payable within 180
days of the date the respective goods are delivered or respective
services rendered and are not overdue; (c) Indebtedness of others
secured by a Lien on the property of such Person, whether or not
the respective Indebtedness so secured has been assumed by such
Person; (d) obligations of such Person in respect of letters of
credit or similar instruments issued or accepted by banks and
other financial institutions for the account of such Person
(irrespective of whether the obligation for which such letter of
credit or similar instrument is issued or accepted shall be that
of such Person or any other Person); (e) Capital Lease
Obligations of such Person; (f) Indebtedness of others Guaranteed
by such Person; (g) the unearned balance of any advance payment
received by such Person under any contract or agreement; (h) the
undischarged balance of any production payment owed or payable by
such Person; and (i) all obligations of such Person under any
agreement providing generally or under specific contingencies for
the transfer or mitigation of interest rate or commodity price
risks.
"Indonesia" shall mean the Republic of Indonesia.
"Indonesian Taxes" shall have the meaning ascribed
thereto in Section 5.06(a).
"Infrastructure Support Project" shall mean
substantially all of the infrastructure and infrastructure
related facilities and assets currently existing, or to be
constructed, supporting (but not directly used in) FI's mineral
extraction and processing operations in Irian Jaya, Indonesia,
including, without limitation, the Initial Transfer Assets.
"Initial Transfer Assets" shall mean those
Infrastructure Support Project assets listed on Schedule V hereto
to be transferred by FI to the Company.
"Interest Period" shall mean, with respect to any Loan,
(a) initially, the period commencing on (and including)
the date such Loan was made and ending on (but excluding)
the first Quarterly Date thereafter (unless such Loan is a
Quarterly Date Loan, in which case the initial Interest
Period therefor shall commence on (and include) the date
such Loan was made and shall end on (but exclude) the first
or second Quarterly Date thereafter (or, if there shall be
no numerically corresponding date in such subsequent month,
on the last day thereof), as the Company may select in
accordance with Section 2.02); and
(b) thereafter, the period commencing on (and
including) the expiration date of the immediately preceding
Interest Period and ending on (but excluding) the
numerically corresponding calendar day in the third or sixth
month thereafter (or, if there shall be no numerically
corresponding date in such subsequent month, on the last day
thereof), as the Company may select in accordance with
Section 4.04;
provided, however, that (i) no Interest Period may commence
before and end after any Principal Payment Date unless, after
giving effect thereto, the aggregate principal amount of Loans
having Interest Periods which end after such Principal Payment
Date shall be equal to or less than the aggregate principal
amount of Loans scheduled to be outstanding after giving effect
to the payments of principal required to be made on such
Principal Payment Date; (ii) any Interest Period which would end
on a day which is not a Business Day shall end on the immediately
preceding Business Day; and (iii) no Interest Period shall
commence prior to, and end after, the Final Maturity Date.
"Investment" in any Person shall mean (a) the
acquisition (whether for cash, property, services or securities
or otherwise) of capital stock, bonds, notes, debentures,
partnership or other ownership interests or other securities of
such Person; (b) any deposit with, or advance, loan or other
extension of credit to, such Person (other than any such advance,
loan or extension of credit representing receivables from FI
under the Master Services Agreement) or any Guarantee of, or
other contingent obligation with respect to, any Indebtedness or
other liability of such Person and (without duplication) any
amount committed to be advanced, lent or extended to such Person;
and (c) the acquisition of any similar property, right or
interest.
"Joint Venture Agreement" shall mean the Joint Venture
Agreement dated March 11, 1993, between FI and ALatieF.
"Lien" shall mean, with respect to any property or
asset, any mortgage, lien, pledge, charge, security interest or
encumbrance of any kind in respect of such property or asset.
For purposes of this Agreement, a Person shall be deemed to own
subject to Lien any asset which it has acquired or holds subject
to the interest of a vendor or lessor under any conditional sale
agreement, capital lease or other title retention agreement
relating to such asset.
"Loans" shall have the meaning ascribed thereto in
Section 2.01.
"Major Documents" shall mean, collectively, each Credit
Document and each Project Document.
"Majority Banks" shall mean, at any time, Banks having
at least 51% of the aggregate outstanding principal amount of the
Loans at such time; provided, that if no Loans are outstanding,
such term shall mean Banks having at least 51% of the aggregate
Commitments at such time.
"Master Services Agreement" shall mean the Master
Services Agreement dated as of the date hereof between the
Company and FI, substantially in the form of Exhibit E hereto.
"Master Services Proceeds Account" shall have the
meaning ascribed thereto in the Security Deposit Agreement.
"Material Adverse Effect" shall mean, as of any date of
determination, (a) a material adverse effect on (i) the material
property or assets of the Company or FI or the business,
operations, condition (financial or otherwise), liabilities or
capitalization of such Person, (ii) the ability of the Company or
FI to perform its obligations under any Major Document to which
it is party or, in the case of FI, the Contract of Work, (iii)
the ability of the Company to exercise any material right and/or
privilege under any Project Document, the BPN Confirmation, the
Ministry of Mines Consent or any other Project Governmental
Approval, (iv) the ability of FI to exercise any material right
or privilege under the Joint Venture Agreement, the Contract of
Work or any Project Governmental Approval, (v) the ability of the
Company or FI to comply with the terms and conditions of any
material Project Governmental Approval or, in the case of FI, the
Contract of Work, (vi) the validity or enforceability of any
Major Document, the BPN Confirmation, the Ministry of Mines
Consent, any other material Project Governmental Approval or the
Contract of Work or (vii) the validity or enforceability of the
Liens under any Security Document or (b) the occurrence of (i)
any rescission, repeal, termination, suspension of or materially
adverse amendment, supplement or condition to any material
Project Governmental Approval or the Contract of Work or (ii) the
issuance by any Governmental Authority of any order, judgment,
regulation or decision or the taking of any other action the
effect of which could reasonably be expected to result in a
Material Adverse Effect under clause (a) above.
"Milepost 50" shall mean milepost 50 on FI's road
between the towns of Amamapare and Tembagapura in Irian Jaya,
Indonesia.
"Ministry of Mines Consent" shall mean that certain
letter from the Indonesian Ministry of Mines, acting for and on
behalf of the Government of Indonesia, to FI dated as of
December, 1993, and substantially in the form of Exhibit C-2
hereto.
"Net Disposition Proceeds Balance" shall mean, as of
any date of determination, the excess of (a) the aggregate amount
of all proceeds received by the Company on or prior to such date
from sales of single family residential dwellings pursuant to
Section 8.07(b)(ii) over (b) the aggregate principal amount of
all Loans and Other Acquisition Indebtedness prepaid prior to
such date pursuant to Section 3.04(b)(v) hereof and any similar
provision contained in any document or agreement relating to such
Other Acquisition Indebtedness, as the case may be.
"Non-Essential Governmental Approval" shall mean, with
respect to any action or undertaking of any Person (including,
without limitation, the execution, delivery and performance by
such Person of any agreement or document) and as of any date of
determination, any Governmental Approval which is required under
Applicable Law to be obtained, made, given, filed or issued in
connection with such action or undertaking but which (a) is of a
routine and ministerial nature, (b) is not required under
Applicable Law to be obtained, made, given, filed or issued at or
prior to such date of determination and is customarily not
applied for or filed prior to the time required and (c) either
(i) when required, will be obtained, made, given, filed or issued
by the applicable Governmental Authority in the ordinary course
of business free from any condition or requirement compliance
with which could reasonably be expected to result in a Material
Adverse Effect or which cannot or will not be satisfied on or
prior to the time required under Applicable Law or (ii) the
denial or rejection of which would not preclude the lawful
consummation of such action or undertaking and would not in any
way result in a Material Adverse Effect.
"Non-Indonesia Bank" shall have the meaning ascribed
thereto in Section 5.06(f) hereof.
"Notes" shall mean the promissory notes provided for by
Section 2.07 hereof.
"Obligations" shall mean all obligations of the Company
or FI now existing or hereafter arising under the Credit
Documents, whether for principal, interest, fees, expenses or
otherwise.
"Other Acquisition Indebtedness" shall mean any
Indebtedness of the Company permitted pursuant to Section 8.10(c)
hereof.
"Participation Agreement" shall have the meaning
ascribed thereto in Section 11.06(c) hereof.
"Payor" shall have the meaning ascribed thereto in
Section 4.05 hereof.
"PBGC" shall mean the Pension Benefit Guaranty
Corporation referred to and defined in ERISA.
"Plan" shall mean any pension plan (other than a
Multiemployer Plan) which is covered by Title IV of ERISA or
Section 412 of the Code.
"Peril" shall have the meaning ascribed thereto in
Section 8.04 hereof.
"Permitted Contest" shall mean, with respect to any
Person, any contest of the validity or amount of any taxes or any
Lien (or the amount secured thereby) pursued by such Person in
good faith and by appropriate proceedings diligently conducted so
long as (a) adequate reserves have been established with respect
thereto in accordance with GAAP and (b) if the subject claim is
material, during the period of such contest the enforcement of
such subject claim is effectively stayed and any Lien arising
thereby shall be effectively removed of record by the posting of
a surety bond or other similar instrument by a reputable surety
company, the posting of a letter of credit issued by a reputable
bank or any Bank or the provision of cash collateral, in all
cases in an amount sufficient to assure the discharge of such
subject claim and any actual or proposed deficiency, additional
charge, penalty or expense arising from or incurred as a result
of such contest.
"Permitted Interest Rate Protection Agreement" shall
mean any interest rate protection agreement between the Company
and any Bank, provided that (a) the aggregate notional principal
amount of Indebtedness the subject of all such interest rate
protection agreements shall not at any time exceed the sum of the
aggregate principal amount then outstanding of all Loans and
Other Acquisition Indebtedness and (b) any Bank party to any such
interest rate protection agreement shall have, in its capacity as
counterparty to such agreement, (i) designated the Agent in
writing as its agent for purposes of the Credit Documents and
(ii) agreed in writing to be bound by the provisions thereof.
"Permitted Investments" shall mean (a) certificates of
deposit of, or other time deposits or demand deposits with, banks
having capital and surplus exceeding $100,000,000 (or with their
branches outside the United States); (b) up to $1,000,000 in the
aggregate of demand deposits with Indonesian banks not meeting
the requirements of (a) above for purposes of paying operating
costs in Indonesia; (c) readily marketable obligations issued or
guaranteed by the United States or any agency or instrumentality
thereof or issued or guaranteed by any State or any agency or
instrumentality or political subdivision thereof given one of the
two highest ratings by either Standard & Poor's Corporation or
Moody's Investors Service, Inc.; (d) investments in readily
marketable money market funds having assets in excess of one
billion Dollars, which assets have an average life of less than
one year and an average quality of at least "A" as rated by
Standard & Poor's Corporation or Moody's Investors Service, Inc.;
and (e) commercial paper rated A-1 by Standard & Poor's
Corporation or P-1 by Moody's Investors Service, Inc., issued by
an issuer rated not less than "A" by such rating agencies.
"Permitted Lien" shall mean, with respect to any
property or asset of the Company, any Lien the existence of which
is not prohibited pursuant to Section 8.09 hereof.
"Person" shall mean any individual, corporation,
company, voluntary association, partnership, joint venture,
trust, unincorporated organization or government (or any agency,
instrumentality or political subdivision thereof).
"Plan" shall mean any pension plan which is covered by
Title IV of ERISA or Section 412 of the Code.
"Principal Office" shall mean the principal office of
Chase (currently located at 1 Chase Manhattan Plaza, New York,
New York 10081) or any other Person then serving as Agent
pursuant to the provisions of the Credit Documents.
"Principal Payment Dates" shall mean each Quarterly
Date commencing on (and including) March 15, 1994, through (and
including) the Final Maturity Date.
"Project" shall mean such Infrastructure Support
Project assets and facilities, together with all related and
associated property and rights, now owned or hereafter acquired
by the Company pursuant to each Purchase and Sale Agreement or
otherwise, together with such other assets, properties or other
rights now owned or hereafter acquired necessary to or for, or
relating to, the performance of any or all Company Services.
"Project Documents" shall mean, collectively, each
Purchase and Sale Agreement, the Master Services Agreement, and
the Joint Venture Agreement.
"Project Governmental Approvals" shall mean all
Governmental Approvals necessary for (a) the execution, delivery
and performance of each Major Document by each party thereto, (b)
the acquisition, ownership, construction, possession, use,
operation and maintenance of the Project by the Company, (c) the
disposition by FI of all Project properties, (d) the use by the
Company and/or FI (and the employees or designees of each such
Person) of any and all Project properties, (e) the provision by
the Company of the Company Services and (f) the grant by the
Company of the Liens and other interests created or to be
created, or purported to be created, by the Security Documents.
"Project Governmental Approvals" shall include, without
limitation, the Contract of Work, the BPN Confirmation and the
Ministry of Mines Consent.
"Purchase and Sale Agreements" shall mean,
collectively, each Purchase and Sale Agreement to be entered into
between the Company and FI in substantially the form of Exhibit F
hereto.
"Quarterly Date Loan" shall mean any Loan made on a
Quarterly Date during the Availability Period.
"Quarterly Dates" shall mean each of March 15,
June 15, September 15 and December 15 in each calendar year,
provided, that if any such day is not a Business Day, the
relevant Quarterly Date shall be the immediately preceding
Business Day.
"Reacquisition Asset" shall have the meaning ascribed
thereto in Section 8.07(b)(iii).
"Reacquisition Event" shall have the meaning ascribed
thereto in Section 15.1 of the Master Services Agreement.
"Reference Banks" shall mean Chase, ABN-AMRO BANK, N.V.
and Citibank, N.A. (or their respective Applicable Lending
Offices, as the case may be).
"Regulation D, Regulation G, Regulation T, Regulation U
and Regulation X" shall mean, respectively, Regulation D,
Regulation G, Regulation T, Regulation U and Regulation X of the
Board of Governors of the Federal Reserve System.
"Regulatory Change" shall mean, with respect to any
Bank, any change after the date of this Agreement in United
States Federal, state or foreign law or regulation (including,
without limitation, Regulation D) or the adoption or making after
such date of any interpretation, directive or request applying to
any Bank of, under or pursuant to any United States Federal,
state or foreign law or regulation (whether or not having the
force of law) by any court or governmental or monetary authority
charged with the interpretation or administration thereof.
"Replacement Bank" shall have the meaning ascribed
thereto in Section 5.07(ii) hereof.
"Reportable Event" shall mean any "reportable event" as
defined in Section 4043(b) of ERISA or the regulations issued
thereunder.
"Required Payment" shall have the meaning ascribed
thereto in Section 4.05 hereof.
"Required Purchase Price" shall have the meaning
ascribed thereto in Section 8.07(a).
"Required Sale Price" shall mean, with respect to any
Reacquisition Asset and as of any date of determination, the
product of (a) the excess of the original purchase price paid by
the Company for such asset (which purchase price shall (x) in the
case of any Initial Transfer Asset, be as shown in Schedule V and
(y) in the case of any other Reacquisition Asset, be equal to the
Required Purchase Price therefor) over the portion of such
purchase price equal to FI's equity contribution to the Company
with respect thereto and (b) a fraction the numerator of which
shall be the aggregate principal amount of Loans and Other
Acquisition Indebtedness made and advanced to the Company on or
prior to such date of determination (the "Aggregate
Outstandings") over the aggregate principal amount of such
Aggregate Outstandings repaid pursuant to the regularly scheduled
amortization thereof on or prior to such date of determination
(but without regard to any prepayments or other reductions in
Aggregate Outstandings) and the denominator of which shall be the
Aggregate Outstandings.
"Sale Power" shall mean a Power of Attorney to Sell
(Kuasa Untuk Menjual) in such form as shall be reasonably
acceptable to each of the Agent and the Company.
"Secured Parties" shall mean, collectively, the Agent,
each Bank and each Person (other than the Company) party to any
Permitted Interest Rate Protection Agreement.
"Security Deposit Agreement" shall mean the Security
Deposit Agreement dated as of the date hereof between the Company
and Agent, substantially in the form of Exhibit G-1 hereto.
"Security Documents" shall mean, collectively, the
Security Deposit Agreement, the Fiduciary Transfer, the Fiduciary
Assignment, the Fiduciary Power, the Surat Kuasa, any other
agreement, document or instrument hereafter delivered by the
Company for the purpose of securing the Obligations (including,
without limitation, any Hypothec Power, any Sale Power and any
hypothec) and all financing statements or other similar
instruments required to be delivered hereunder or thereunder, and
the intercreditor agreement referred to in Section 8.10(c)(v).
"Shareholders" shall mean, collectively, ALatieF, FI
and any other Person that may from time to time own any capital
stock of the Company.
"SIBO Rate" shall mean, with respect to any Loan or
other amount payable hereunder or under any other Credit
Document, the rate per annum shown on the display page designated
as the "SIBO Page" on the Reuter Monitor Money Rates Service (or
any substitute page on such service with respect to Singapore
interbank offered rates) as the offered rate for deposits in
Dollars for a period comparable to the Interest Period (or, if
applicable, Default Interest Period) for such Loan (or, in the
case of any other amount payable hereunder or under any other
Credit Document, the relevant period applicable thereto) as of
11:00 a.m., Singapore time, two Business Days prior to the first
day of such period, provided that (a) if more than one such
offered rate appears on such page as of such time, the "SIBO
Rate" shall be the arithmetic mean (rounded upward, if necessary,
to the nearest 1/16 of 1%) of such offered rates and (b) if no
such offered rates appear on such page as of such time, the "SIBO
Rate" shall be the arithmetic mean (rounded upward, if necessary,
to the nearest 1/16 of 1%) of the respective rates per annum
quoted by each Reference Bank for the offering by such Reference
Bank to leading banks in the Singapore interbank market of
deposits in Dollars for a period comparable to such period as of
approximately 11:30 a.m., Singapore time, two Business Days prior
to the first day of such period.
"Subsidiary" shall mean, with respect to any Person,
any other Person of which securities or other ownership interests
having ordinary voting power to elect a majority of the board of
directors (or other persons performing similar functions) are at
the time directly or indirectly owned or controlled by such first
Person and/or one or more Subsidiaries of such first Person.
"Surat Kuasa" shall mean the Surat Kuasa (Power of
Attorney) dated the Closing Date granted by the Company to the
Agent, substantially in the form of Exhibit G-5 hereto.
"Triggering Reacquisition Event" shall have the meaning
ascribed thereto in Section 1.1(tt) of the Master Services
Agreement.
"United States" or "U.S." shall mean the United States
of America.
"Withdrawal Liability" shall mean any liability to a
multiemployer plan as defined in Section 4001(a)(3) of ERISA
which results from any complete or partial withdrawal from such
multiemployer plan, as such terms are defined in Part I of
Subtitle E of Title IV of ERISA.
1.02. Accounting Matters.
(a) Except as otherwise expressly provided herein, all
accounting terms used herein shall be interpreted, and all
financial statements required to be delivered to the Banks
hereunder shall be prepared, in accordance with GAAP applied on a
basis consistent with those used in the preparation of the most
recent audited financial statements furnished to the Banks
hereunder pursuant to Section 8.01 (or, if no such financial
statements shall have then been delivered, GAAP shall be applied
on a basis consistent with those used in the preparation of the
financial statements delivered to the Banks pursuant to
Section 6.01).
(b) The Company shall deliver to the Agent and the
Banks at the same time as the delivery of any annual financial
statement under Section 8.01 hereof, to the extent not contained
in such financial statement, a description in reasonable detail
of any material variation between the application of accounting
principles employed in the preparation of such statement and the
application of accounting principles employed in the preparation
of the next preceding annual financial statements (or, in the
case of the first such statements delivered, between such
statements and those referred to in Section 6.01), and reasonable
estimates of the difference between such statements arising as a
consequence thereof.
(c) The Company will not change the last day of its
fiscal year from December 31, or the last days of the first three
fiscal quarters in each of its fiscal years from March 31,
June 30 and September 30, respectively.
1.03. Other Definitional Provisions. In this
Agreement, unless the context indicates otherwise, terms defined
in the singular have the same meanings when used in the plural
and vice versa; words importing any gender include the other
gender; references to statutes, sections or regulations are to be
construed as including all statutory or regulatory provisions
consolidating, amending, replacing, succeeding or supplementing
the statute, section or regulation referred to; references to
"writing" include printing, typing, lithography, facsimile
reproduction and other means of reproducing words in a tangible
visible form; the words "including," "includes" and "include"
shall be deemed to be followed by the words "without limitation"
or "but not limited to" or words of similar import; references to
articles, sections (or subdivisions of sections), exhibits,
annexes or schedules are to those of this Agreement unless
otherwise indicated; references to agreements and other
contractual instruments shall be deemed to include all exhibits,
annexes, schedules and appendices attached thereto and all
subsequent amendments and other modifications to such instruments
to the extent such amendments or other modifications are
permitted by the terms of such agreement or instrument, this
Agreement and each other Credit Document (it being understood
that, in the case of any Existing Credit Agreement applicable to
FI or by which FI or any property of FI may be bound, neither
this Agreement nor any other Credit Document shall preclude any
amendment or modification to such Existing Credit Agreement
permitted by the terms thereof, including any increase in the
principal amount of borrowings to be made thereunder, so long as
such amendment or modification shall not result in, cause or
otherwise give rise to any default by FI of its obligations under
Section 4.11(c) of the FI Guaranty (including, without
limitation, any obligations of FI under Section 4.08 of the FI
Guaranty subsumed within such Section 4.11(c)); and references to
Persons include their respective permitted successors and
assigns.
SECTION 2. THE COMMITMENTS.
2.01. Loans. Each Bank severally agrees, on the terms
and conditions of this Agreement, to make Loans to the Company
(each a "Loan" and, collectively, the "Loans") in Dollars from
time to time on any Business Day, during the Availability Period
in an aggregate principal amount up to but not exceeding the
amount of such Bank's Commitment as then in effect, provided that
the aggregate principal amount of all Loans made shall in no
event exceed the aggregate amount of the Commitments. Once
repaid or prepaid in whole or in part, the Loans may not be
reborrowed.
2.02. Manner of Borrowing. The Company shall furnish
the Agent (which shall promptly notify the Banks) with a notice
of borrowing for each borrowing hereunder, which notice shall (i)
be irrevocable and effective only if given in writing and
received by the Agent no later than 10:00 a.m. Hong Kong time at
least five Business Days prior to the date of such borrowing,
(ii) specify the aggregate amount of the Loans to be borrowed
(which amount shall not be less than $10,000,000 or any integral
multiple of $1,000,000 in excess thereof), (iii) specify the date
of borrowing thereof (which shall be a Business Day) and (iv) in
the case of any requested Quarterly Date Loans, specify the
duration of the initial Interest Period(s) therefor (if not so
specified, the Interest Period shall be three months) and, if
more than one Interest Period shall be so specified, the
aggregate principal amount of Loans to which each Interest Period
shall relate. Not later than 11:30 a.m. Hong Kong time on the
date specified for each borrowing hereunder, each Bank shall make
available the amount of any such Loan to be made by it on such
date to the Agent in immediately available funds at Chase's
Applicable Lending Office. Loans so received by the Agent shall,
subject to the terms and conditions of this Agreement, be
forwarded by the Agent to the Company's PMA account with Chase in
Indonesia.
2.03. Changes of Commitments.
(a) The Company shall have the right from time to time
during the Availability Period to terminate or reduce the amount
of the undrawn Commitments upon delivery of the requisite prior
notice pursuant to Section 4.04 with respect to each such
termination or reduction; provided, however, that the amount of
any such termination or reduction shall not be less than
$5,000,000 or any integral multiple of $1,000,000 in excess
thereof.
(b) Any portion of the Commitments undrawn as of the
expiration of the Availability Period shall be automatically
terminated on and as of such expiration.
(c) The Agent shall promptly notify each Bank of its
pro rata share of each termination or reduction of the
Commitments and of the effective date thereof. The Commitments,
once terminated or reduced, may not be reinstated.
2.04. Fees.
(a) Commitment Fee. The Company shall pay to the
Agent, for account of each Bank, a commitment fee on the daily
average unused amount of the Commitments during the Availability
Period at a rate per annum equal to of 1% (the "Commitment
Fee"). The Commitment Fee shall be payable in full on the
earlier of (i) the date on which the Commitments are fully drawn
and (ii) the last day of the Availability Period.
(b) Agency Fee. On the Closing Date and on each
anniversary thereof (other than the Final Maturity Date unless
any Obligations shall remain outstanding on such date), the
Company shall pay to the Agent in advance an annual agency fee in
an amount equal to the annual amount agreed between Chase and the
Company in the Agency Letter.
2.05. Lending Offices. The Loans made by each Bank
shall be made and maintained at such Bank's Applicable Lending
Office.
2.06. Several Obligations; Remedies Independent. The
failure of any Bank to make any Loan to be made by it on the date
specified therefor shall not relieve any other Bank of its
obligation to make its Loan on such date, but neither any Bank
nor the Agent shall be responsible for the failure of any other
Bank to make a Loan to be made by such other Bank. The amounts
payable by the Company at any time hereunder and under the Notes
to each Bank shall be a separate and independent debt and each
Bank shall be entitled to protect and enforce its rights arising
out of this Agreement and the Notes, and it shall not be
necessary for any other Bank or the Agent to consent to, or be
joined as an additional party in, any proceedings for such
purposes.
2.07. Notes.
(a) The Loans made by each Bank shall be evidenced by a
single promissory note of the Company in substantially the form
of Exhibit D hereto, dated the Closing Date, executed by the
Company payable to such Bank in a principal amount equal to the
amount of its Commitment as originally in effect and otherwise
duly completed. The date, amount, interest rate and duration of
each Interest Period of each Loan made by each Bank to the
Company, and each payment made on account of the principal
thereof, shall be recorded by such Bank on its books and, prior
to any transfer of the Note held by it, endorsed by such Bank on
the schedule attached to such Note or any continuation thereof,
provided that the failure by any Bank to make any such
recordation or endorsement shall not affect the obligations of
the Company under this Agreement or such Note.
(b) No Bank shall be entitled to have its Note
subdivided, by exchange for promissory notes of lesser
denominations or otherwise, except in connection with a permitted
assignment of all or any portion of such Bank's Commitment, Loans
and Note pursuant to Section 11.06(b) hereof.
SECTION 3. PAYMENTS OF PRINCIPAL AND INTEREST;
PREPAYMENTS.
3.01. Repayment of Loans. The Company will repay the
principal of each Bank's Loan to the Agent, for the account of
such Bank, in the following amounts and on the dates set forth
below:
(i) on each Principal Payment Date prior to the Final
Maturity Date, an amount equal to the lesser of (x) 1.25% of
the aggregate outstanding principal balance of all such
Bank's Loans as of the earlier of (1) the date on which the
Commitments are fully drawn and (2) the close of business in
Hong Kong on the last day of the Availability Period and (y)
the aggregate outstanding principal amount of all such
Bank's Loans then outstanding; and
(ii) on the Final Maturity Date, an amount equal to the
aggregate principal amount of such Bank's Loans then
outstanding.
3.02. Interest. The Company will pay to the Agent,
for account of each Bank, interest on the unpaid principal amount
of each Loan made by such Bank for the period from (and
including) the date of such Loan to (but excluding) the date such
Loan shall be paid in full, at a rate per annum equal to the sum
of the SIBO Rate for each Interest Period relating thereto plus
the Applicable Margin. Accrued interest on each Loan shall be
paid (i) on the last day of each Interest Period therefor, (ii)
if any such Interest Period is longer than three months, on the
date that is three months after the first day of such Interest
Period (or, if there shall be no numerically corresponding date
in such subsequent month, on the last day thereof) and (iii) on
the date of any repayment or prepayment, in whole or in part, of
the principal of such Loan (but only on the principal so repaid
or prepaid).
3.03. Post-Default Interest. Notwithstanding the
provisions of Section 3.02, the Company will pay to the Agent,
for the account of the Banks, interest on any principal, interest
or any other amount whatsoever payable under this Agreement that
is not paid when due (whether at stated maturity, by acceleration
or otherwise), for the period from (and including) the due date
of such Obligation to (but excluding) the date the same shall be
paid in full at a rate per annum equal to two percent (2%) above
the greater of (a) the highest rate of interest applicable
pursuant to Section 3.02 (or, if applicable, Section 5.02) to the
principal of any Loan during any Interest Period ending on such
due date (or, if no Interest Period shall end on such due date,
any Interest Period in effect thereon) and (b) the SIBO Rate for
the then current Default Interest Period, if any, plus the
Applicable Margin. Post-default interest shall be paid from time
to time on demand by the Agent.
3.04. Prepayments.
(a) Optional. The Company shall have the right, from
time to time following the expiration of the Availability Period,
to prepay the principal amount of the Loans in whole or part upon
delivery of the requisite prior notice pursuant to Section 4.04
with respect to each such prepayment; provided, however, that
each such prepayment shall be in a principal amount equal to
either (i) $5,000,000 or any integral multiple of $1,000,000 in
excess thereof or (ii) the aggregate principal amount of all
Loans then outstanding.
(b) Mandatory.
(i) On the Quarterly Date next succeeding the date of
receipt of insurance proceeds which, pursuant to the terms of
Section 8.04 hereof, are required to be applied to the prepayment
of the Loans, the Company will prepay the outstanding Loans in
the amount so required.
(ii) In the event of any Regulatory Change which makes
it unlawful for any Bank to maintain any Loans, the Company will,
subject to the provisions of Section 5.03, prepay all such Loans
of such Bank in full on or prior to the earlier of (x) 180 days
following receipt of notice of such illegality pursuant to said
Section 5.03 and (y) the last day of any shorter period in which
such Bank is required pursuant to such Regulatory Change to
divest itself of such Loans.
(iii) On the date of any sale by the Company to FI of
any Reacquisition Asset pursuant to Section 8.07(b)(iii)(A)(1),
the Company will prepay the Loans in an amount (the "Repurchase
Prepayment Amount") equal to the greater of the Required Sale
Price with respect to such Reacquisition Asset and the purchase
price paid or to be paid on such date by FI to the Company for
such Reacquisition Asset (or, if there shall then be outstanding
any Other Acquisition Indebtedness which, by its terms, is
required to be prepaid in the circumstances described in this
Section 3.04(b)(iii), in an amount equal to the product of (x)
the then current Facility Fraction and (y) the Repurchase
Prepayment Amount for such Reacquisition Asset).
(iv) On the date of any sale by the Company to FI of
any or all Project assets pursuant to Section 8.07(b)(iv), the
Company will prepay the Loans in full.
(v) On each date on which the Net Disposition Proceeds
Balance shall equal or exceed $1,000,000, the Company will prepay
the Loans in an amount equal to such Net Disposition Proceeds
Balance (or, in the event that there shall then be outstanding
any Other Acquisition Indebtedness which, by its terms, is
required to be prepaid in the circumstances described in this
Section 3.04(b)(v), in an amount equal to the product of (x) the
then current Facility Fraction and (y) such Net Disposition
Proceeds Balance).
(c) Prepayments Generally. If any Loan shall be
prepaid on a day other than the last day of an Interest Period
therefor, the Company shall compensate each Bank for any and all
amounts payable pursuant to Section 5.04 in connection with such
prepayment. All prepayments of Loans shall be applied to the
installments of such Loans in inverse order of maturity.
SECTION 4. PAYMENTS; PRO RATA TREATMENT;
COMPUTATIONS; ETC.
4.01. Payments.
(a) Except to the extent otherwise provided herein, all
payments of principal, interest and other amounts to be made by
the Company under this Agreement, the Notes or any Credit
Document to which the Company is party shall be made in Dollars,
in immediately available funds, without deduction, set-off or
counterclaim, to the Agent at account number 910-2-698645
maintained by the Agent at the Principal Office, not later than
10:00 a.m. New York time on the date on which such payment shall
become due (each such payment made after such time on such due
date to be deemed to have been made on the next succeeding
Business Day).
(b) The Company shall, at the time of making each
payment under this Agreement, any Note or any Credit Document to
which the Company is party, specify to the Agent the Loans or
other Obligations of the Company to which such payment is to be
applied (and in the event that it fails to so specify, or if an
Event of Default has occurred and is continuing, the Agent may
distribute such payment to the Banks in such manner as it or the
Majority Banks may determine to be appropriate, subject to
Section 4.02 hereof).
(c) Each payment received by the Agent under this
Agreement, any Note or any Credit Document to which the Company
is party for account of a Bank shall be paid promptly to such
Bank (but taking account of the time difference between the
location of the Principal Office and such Bank's Applicable
Lending Office), in immediately available funds, for account of
such Bank's Applicable Lending Office for the Loan or other
Obligation in respect of which such payment is made.
(d) If the due date of any payment under this
Agreement, any Note or any Credit Document to which the Company
is party would otherwise fall on a day which is not a Business
Day, such due date shall instead be the immediately preceding
Business Day.
4.02. Pro Rata Treatment. Except to the extent
otherwise provided herein: (a) each borrowing from the Banks
under Section 2.01 hereof shall be made from the Banks pro rata
in accordance with the Banks' respective Commitments, each
payment of Commitment Fees under Section 2.04(a) hereof shall be
made for account of the Banks pro rata in accordance with the
Banks' respective Commitments, and each termination or reduction
of the amount of the Commitments under Section 2.03 hereof shall
be applied to the Commitments of the Banks pro rata according to
the amounts of their respective Commitments; (b) each payment or
prepayment of principal of Loans by the Company shall be made for
account of the Banks pro rata in accordance with the respective
unpaid principal amounts of the Loans held by the Banks; and (c)
each payment of interest on the Loans shall be made for account
of the Banks pro rata in accordance with the amounts of interest
due and payable to the respective Banks.
4.03. Computations. Interest on Loans and other
Obligations of the Company, and the Commitment Fee, shall be
computed on the basis of a year of 360 days and the actual days
elapsed in the period for which such amounts are payable
(including the first day but excluding the last day).
4.04. Certain Notices. Notices by the Company to the
Agent of terminations or reductions of Commitments, of optional
prepayments of Loans and of the duration of any Interest Period
shall be irrevocable and shall be effective only if given in
writing and received by the Agent not later than 10:00 a.m.
Hong Kong time on the date five Business Days prior to the
applicable termination or reduction of Commitments or optional
prepayment of Loans or the first day of such Interest Period, as
the case may be. Each notice of termination or reduction of
Commitments or optional prepayment of Loans shall specify the
amount of the Commitments to be terminated or reduced or the
amount of the Loans to be prepaid, as the case may be (consistent
with the provisions of Section 2.03 or 3.04(a), respectively),
and the effective date of such termination or reduction or the
date on which such prepayment shall be made, as applicable (which
shall be a Business Day). Each notice of the duration of an
Interest Period shall specify the aggregate principal amount of
Loans to which such Interest Period shall relate. The Agent
shall promptly notify the Banks of the contents of each such
notice. In the event that the Company fails to select the
duration of any Interest Period for any Loan within the time
period and otherwise as provided in this Section 4.04, the
duration of such Interest Period shall be three months.
4.05. Non-Receipt of Funds by the Agent. Unless the
Agent shall have been notified by a Bank or the Company (the
"Payor") prior to the date on which the Payor is scheduled to
make payment to the Agent of (in the case of a Bank) the proceeds
of a Loan to be made by it hereunder or (in the case of the
Company) a payment to the Agent for account of one or more of the
Banks hereunder (such payment being herein called the "Required
Payment"), which notice shall be effective upon receipt, that the
Payor does not intend to make the Required Payment to the Agent,
the Agent may assume that the Required Payment has been made and
in reliance upon such assumption may (but shall not be required
to) make the amount thereof available to the intended
recipient(s) on such date and, if the Payor has not in fact made
the Required Payment to the Agent, the recipient(s) of such
payment shall, on demand, repay to the Agent the amount so made
available together with interest thereon in respect of each day
during the period commencing on the date such amount was so made
available by the Agent until the date the Agent recovers such
amount at a rate per annum equal to that indicated by the Agent
in a notice to such recipient(s) as the Agent's cost of funds for
such period (determined by the Agent in its reasonable
discretion, which determination shall be conclusive) and, if such
recipient(s) shall fail promptly to make such payment, the Agent
shall be entitled to recover such amount, on demand, from the
Payor, together with interest as aforesaid. Nothing herein shall
diminish or otherwise affect the Company's obligations under
Section 3.03 if the Company shall fail to make any Required
Payment.
4.06. Sharing of Payments, Etc.
(a) The Company agrees that, in addition to (and
without limitation of) any right of set-off, banker's lien or
counterclaim a Bank may otherwise have, each Bank shall be
entitled, at its option, to offset balances held by it for
account of the Company at any of its offices, in Dollars or in
any other currency, against any principal of or interest on any
other amount payable to such Bank hereunder, which is not paid
when due (regardless of whether such balances are then due to the
Company), in which case it shall promptly notify the Company and
the Agent thereof, provided that such Bank's failure to give such
notice shall not affect the validity thereof.
(b) Except as otherwise provided in Section
3.04(b)(ii), if any Bank shall obtain payment of any principal of
or interest on any Loan made by it to the Company under this
Agreement through the exercise of any right of set-off, banker's
lien or counterclaim or similar right or otherwise, and, as
result of such payment, such Bank shall have received a greater
percentage of the principal of or interest on any Loan than the
percentage received by any other Banks, it shall promptly
purchase from such other Banks participations in (or, if and to
the extent specified by such Bank, direct interests in) the Loans
made by such other Banks (or in interest due thereon, as the case
may be) in such amounts, and make such other adjustments from
time to time as shall be equitable, to the end that all the Banks
shall share the benefit of such excess payment (net of any
expenses which may be incurred by such Bank in obtaining or
preserving such excess payment) pro rata in accordance with the
unpaid principal and/or interest on the Loans held by each of the
Banks. To such end all the Banks shall make appropriate
adjustments among themselves (by the resale of participations
sold or otherwise) if such payment is rescinded or must otherwise
be restored.
(c) The Company agrees that any Bank so purchasing a
participation (or direct interest) in the Loans made by other
Banks (or in interest due thereon, as the case may be) may, to
the fullest extent permitted by applicable law, exercise all
rights of set-off, banker's lien, counterclaim or similar rights
with respect to such participation as fully as if such Bank were
a direct holder of Loans in the amount of such participation.
(d) Nothing contained herein shall require any Bank to
exercise any such right or shall affect the right of any Bank to
exercise, and retain the benefits of exercising, any such right
with respect to any other indebtedness or obligation of the
Company. If, under any applicable bankruptcy, insolvency or
other similar law, any Bank receives a secured claim in lieu of a
set-off to which this Section 4.06 applies, such Bank shall, to
the extent practicable, exercise its rights in respect of such
secured claim in a manner consistent with the rights of the Banks
entitled under this Section 4.06 to share in the benefits of any
recovery on such secured claim.
SECTION 5. YIELD PROTECTION AND ILLEGALITY.
5.01. Additional Costs.
(a) The Company shall pay directly to each Bank from
time to time such amounts as such Bank may determine to be
necessary to compensate it for any costs which such Bank
determines are attributable to its making or maintaining of any
Loan or its obligation to make any Loan hereunder, or any
reduction in any amount receivable by such Bank hereunder in
respect of any of such Loans or such obligation (such increases
in costs and reductions in amounts receivable being herein called
"Additional Costs"), resulting from any Regulatory Change which:
(i) changes the basis of taxation of any amounts
payable to such Bank under this Agreement or its Note in
respect of any of such Loans (excluding (x) Indonesian Taxes
and (y) changes in any franchise tax or tax or other similar
governmental charges, fees or assessments based on the
overall net income of any Bank by the United States Federal
government or by any jurisdiction in which such Bank
maintains an office unless the presence of such office is
solely attributable to the enforcement of any rights
hereunder or under any Major Document with respect to an
Event of Default); or
(ii) imposes or modifies any reserve, special deposit
or similar requirements (other than, in the case of any Bank
for any period as to which the Company is required to pay
any amount under paragraph (e) below, the reserves against
"Eurocurrency liabilities" under Regulation D therein
referred to) relating to any extensions of credit or other
assets of, or any deposits with or other liabilities of,
such Bank (including any of such Loans or any deposits
referred to in the definition of "SIBO Rate" in Section 1.01
hereof), or any commitment of such Bank (including the
Commitment of such Bank hereunder); or
(iii) imposes any other condition affecting this
Agreement or its Note (or any of such extensions of credit
or liabilities) or Commitment.
If any Bank requests compensation from the Company under this
Section 5.01(a), the Company may, by notice to such Bank (with a
copy to the Agent), suspend the obligation of such Bank to
thereafter make any additional Loans of a category similar to
that with respect to which such compensation shall have been
requested until the Regulatory Change giving rise to such request
ceases to be in effect, provided that such suspension shall not
affect the right of such Bank to receive the compensation so
requested.
(b) Without limiting the effect of the provisions of
Section 5.01(a) hereof, in the event that, by reason of any
Regulatory Change, any Bank either (i) incurs Additional Costs
based on or measured by the excess above a specified level of the
amount of a category of deposits or other liabilities of such
Bank which includes deposits by reference to which the interest
rate on any Loans is determined as provided in this Agreement or
a category of extensions of credit or other assets of such Bank
which includes any Loans or (ii) becomes subject to restrictions
on the amount of such category of liabilities or assets which it
may hold, then, if such Bank so elects by notice to the Company
(with a copy to the Agent), the obligation of such Bank to
thereafter make any such additional Loans hereunder shall be
suspended until such Regulatory Change ceases to be in effect.
(c) Without limiting the effect of the foregoing
provisions of this Section 5.01 (but without duplication), the
Company shall pay directly to each Bank from time to time on
request such amounts as such Bank may determine to be necessary
to compensate such Bank for any costs which it determines are
attributable to the maintenance by such Bank (or any Applicable
Lending Office) of capital in respect of its Commitment or Loans
pursuant to any law or regulation or any interpretation,
directive or request (whether or not having the force of law) of
any court or governmental or monetary authority (i) following any
Regulatory Change or (ii) implementing following the Closing Date
any risk-based capital guideline or requirement (whether or not
having the force of law and whether or not the failure to comply
therewith would be unlawful) heretofore or hereafter issued by
any government or governmental or supervisory authority
implementing at the national level the Basle Accord (including,
without limitation, the Final Risk-Based Capital Guidelines of
the Board of Governors of the Federal Reserve System (12 CFR Part
208, Appendix A; 12 CFR Part 225, Appendix A) and the Final Risk-
Based Capital Guidelines of the Office of the Comptroller of the
Currency (12 CFR Part 3, Appendix A)), which compensation shall
include, without limitation, an amount equal to any reduction of
the rate of return on assets or equity of such Bank (or any
Applicable Lending Office) to a level below that which such Bank
(or any Applicable Lending Office) could have achieved but for
such law, regulation, interpretation, directive or request.
(d) Each Bank will notify the Company of any event
occurring after the date of this Agreement that will entitle such
Bank to compensation under paragraph (a) or (c) of this Section
5.01 as promptly as practicable, but in any event within 45 days
after such Bank obtains actual knowledge thereof; provided,
however, that if any Bank fails to give such notice within 45
days after it obtains actual knowledge of such an event, such
Bank shall, with respect to compensation payable pursuant to this
Section 5.01 in respect of any costs resulting from such event,
only be entitled to payment under this Section 5.01 for costs
incurred from and after the date 45 days prior to the date that
such Bank does give such notice; and provided, further, that each
Bank will change the Applicable Lending Office for the Loans of
such Bank affected by such event if such change will avoid the
need for, or reduce the amount of, such compensation and will
not, in the sole opinion of such Bank, be disadvantageous to such
Bank, except that such Bank shall have no obligation to change to
an Applicable Lending Office located in the United States. Each
Bank will furnish to the Company a certificate signed by an
officer of such Bank setting forth in reasonable detail the basis
and amount of each request by such Bank for compensation under
paragraph (a) or (c) of this Section 5.01. Determinations and
allocations by any Bank for purposes of this Section 5.01 of the
effect of any Regulatory Change pursuant to Section 5.01(a) or
(b) hereof, or of the effect of capital maintained pursuant to
Section 5.01(c) hereof, on its costs or rate of return of
maintaining Loans or its obligation to make Loans, or on amounts
receivable by it in respect of Loans, and of the amounts required
to compensate such Bank under this Section 5.01, shall be
conclusive, provided that such determinations and allocations are
made on a reasonable basis.
(e) Unless the provisions of paragraph (b) above are
applicable, the Company shall pay to each Bank on the last day of
each Interest Period for each Loan, so long as such Bank is, by
reason of any Regulatory Change, maintaining reserves against any
category of liabilities which includes deposits by reference to
which the interest rate on Loans is determined as provided in
this Agreement or against any category of extensions of credit or
other assets of such Bank which includes any Loans (including,
without limitation, any such Regulatory Change under Regulation D
in respect of "Eurocurrency liabilities" thereunder), an
additional amount (determined by such Bank and notified to the
Company through the Agent) equal to the product of the following
for such Loan for each day during such Interest Period:
(i) the principal amount of such Loan outstanding on
such day;
(ii) the excess of (x) a fraction the numerator of
which is the rate (expressed as a decimal) at which interest
accrues on such Loan for such Interest Period as provided in
this Agreement (less the Applicable Margin) and the
denominator of which is one minus the effective rate
(expressed as a decimal) at which such reserve requirements
are imposed on such Bank on such day over (y) such
numerator; and
(iii) 1/360.
5.02. Alternative Interest Rate. Anything to the
contrary herein notwithstanding, if on or prior to the
determination of the SIBO Rate for any Interest Period or Default
Interest Period:
(a) the Agent determines, which determination shall be
conclusive, that it is unable to obtain quotations of
interest rates for the relevant deposits referred to in the
definition of "SIBO Rate" in Section 1.01 hereof (whether
through the Reuter Monitor Money Rates Service or otherwise
as specified in such definition) in the relevant amounts or
for the relevant maturities for purposes of determining
rates of interest for any Loans as provided herein; or
(b) either the Agent or the Majority Banks determine,
which determination shall be conclusive, that the relevant
rate(s) of interest referred to in the definition of "SIBO
Rate" in Section 1.01 hereof with respect to such Interest
Period or Default Interest Period is or are not likely to
adequately cover the cost to the Majority Banks of making or
maintaining such Loans in such period;
then the Agent or the Majority Banks (through the Agent) shall
give the Company and each Bank prompt notice thereof and, so long
as such condition remains in effect, (i) the Banks shall
thereafter be under no obligation to make any additional Loans
and (ii) the Agent (in consultation with the Banks) and the
Company will promptly commence and diligently pursue negotiations
in order to establish an alternative, mutually acceptable, basis
(the "Substitute Basis") for determining the rate of interest to
be applicable to the Loans for such Interest Period or Default
Interest Period. If within the ten Business Day period following
the delivery of the notice referred to in the preceding sentence
(the "Negotiation Period"), the Agent (in consultation with the
Banks) and the Company have agreed upon a Substitute Basis, such
Substitute Basis shall take effect from (and, if necessary, be
retroactive to) the beginning of such Interest Period or Default
Interest Period, as the case may be. If a Substitute Basis shall
not have been agreed upon as aforesaid during the Negotiation
Period, the Agent shall forthwith notify each Bank thereof and
the following provisions shall apply: (x) within five Business
Days after receipt of such notice each Bank shall notify the
Company (through the Agent) of the cost to such Bank (as
determined by such Bank, which determination shall be conclusive)
of funding or maintaining outstanding its Loans for such Interest
Period or Default Interest Period; and (y) the interest payable
to each Bank on its Loans for such period shall be a rate per
annum equal to the cost of funding or maintaining outstanding its
Loans as so notified by such Bank plus the Applicable Margin
(provided that in the case of any Default Interest Period, the
interest rate payable in respect of any Loan shall be determined
pursuant to Section 3.03 taking account of the rate established
pursuant to this Section 5.02).
5.03. Illegality. Notwithstanding any other provision
of this Agreement, in the event of any Regulatory Change which
makes it unlawful for any Bank or its Applicable Lending Office
to honor its obligation to make or maintain Loans hereunder, then
such Bank shall promptly notify the Company thereof (with a copy
to the Agent) whereupon: (a) such Bank shall change the
Applicable Lending Office for such Loans if such change will
permit such Bank to lawfully make and maintain such Loans,
provided that such Bank shall have no obligation to change to any
Applicable Lending Office in the United States; or (b) if no such
change (other than to an Applicable Lending Office in the United
States) would permit such Bank to lawfully make and maintain such
Loans, such Bank's obligation to make any additional Loans
thereafter shall be suspended until such time as such Bank may
again make and maintain Loans and the provisions of Section
3.04(b)(ii) shall apply to all Loans of such Bank then
outstanding.
5.04. Compensation. The Company shall pay to the
Agent, for account of each Bank, upon the request of such Bank
through the Agent, such amount or amounts as shall be sufficient
(in the reasonable opinion of such Bank) to compensate it for any
loss, cost or expense which such Bank determines is attributable
to:
(a) any payment or prepayment of a Loan made by such
Bank for any reason (including, without limitation, the
prepayment of any Loan pursuant to Section 5.07 and the
acceleration of the Loans pursuant to Section 9 hereof) on a
date other than the last day of the Interest Period for such
Loan; or
(b) any failure by the Company for any reason
(including, without limitation, the failure of any of the
conditions precedent specified in Section 6 hereof to be
satisfied) to borrow a Loan from such Bank on the date for
such borrowing specified in the relevant notice of borrowing
given pursuant to Section 2.02 hereof.
Without limiting the effect of the preceding sentence, such
compensation shall include an amount equal to the excess, if any,
of (i) the amount of interest which otherwise would have accrued
on the principal amount so paid or prepaid or not borrowed for
the period from the date of such payment or prepayment or failure
to borrow to the last day of the then current Interest Period for
such Loan (or, in the case of a failure to borrow, the Interest
Period for such Loan which would have commenced on the date
specified for such borrowing) at the applicable rate of interest
for such Loan provided for herein over (ii) the interest
component of the amount such Bank would have offered to leading
banks in the Singapore interbank market for Dollar deposits by
such leading banks in amounts comparable to such principal amount
and with maturities comparable to such period (as reasonably
determined by such Bank).
5.05. HLT Classification. If, at any time after the
date hereof, any Loan of a Bank hereunder shall, on the basis of
(a) Applicable Law, (b) statements of policy (published or
unpublished) by any bank regulatory authority or (c) practices
prevailing in the banking marketplace with respect to the
interpretation or application of (a) and/or (b) above, be
classified as a "highly leveraged transaction" (an "HLT
Classification") such affected Bank shall promptly give notice of
such HLT Classification to the Company and each other Bank
(through the Agent), which notification shall set forth the basis
for, and amount of, the increased costs imposed upon (or the
decrease in effective yield suffered by) such affected Bank by
reason of such HLT Classification. The Company shall thereupon
promptly pay to such affected Bank an amount which, net of taxes,
offsets such increased costs and otherwise enables such affected
Bank to maintain its effective yield but for such HLT
Classification. Determinations by any affected Bank of the basis
for, or amount of, any increased costs or decrease in effective
yield attributable to any HLT Classification shall be conclusive.
5.06. Indonesian Taxes. The Company agrees that,
whether or not any Loans are made hereunder:
(a) Tax Payments. The Company shall pay when due all
present and future income, stamp and other taxes and levies,
imposts, deductions, charges, compulsory loans and
withholdings whatsoever imposed, assessed, levied or
collected by Indonesia or any political subdivision or
taxing authority thereof or therein or any association or
organization of which Indonesia may be a member (other than
income taxes, franchise taxes and levies, imposts,
deductions, charges, compulsory loans and withholdings
whatsoever imposed, assessed, levied or collected on or with
respect to the net income of the Agent and any Bank which
has its principal office or a branch office in Indonesia
unless the presence of such office is solely attributable to
the enforcement of any rights hereunder or under any Major
Document with respect to an Event of Default), together with
interest thereon and penalties, fines and surcharges with
respect thereto, if any, on or in respect of this Agreement,
any other Major Documents, the Loans, the registration,
recordation, notarization or other formalization of any
thereof, and any payments of principal, interest, charges,
fees or other amounts made on, under or in respect of any
thereof (all such non-excluded taxes and other amounts
hereinafter "Indonesian Taxes").
(b) Indemnification. The Company shall indemnify the
Agent and each Bank against, and reimburse the Agent and
each Bank upon demand for, any Indonesian Taxes paid by the
Agent or such Bank and any loss, liability, claim or expense
(including interest, penalties, fines, surcharges and legal
fees) which the Agent or such Bank may incur at any time
arising out of or in connection with any failure of the
Company to make any payments of Indonesian Taxes (as defined
and limited in clause (a) above) when due.
(c) Payments Free and Clear. Except as otherwise
expressly provided in paragraph (f) below, all payments on
account of the principal of and interest on the Loans and
Notes and all other Obligations (including amounts payable
under clause (b) of this Section 5.06) shall be made in
Dollars, free and clear of and without reduction by reason
of any Indonesian Taxes (as defined and limited in clause
(a) above), all of which will be for the account of and paid
in full when due by the Company. In the event that the
Company is required by applicable law, decree or regulation
to deduct or withhold Indonesian Taxes from any amounts
payable on, under or in respect of this Agreement or any
other Major Documents the Company shall make the required
deduction or withholding, promptly pay the amount of such
Indonesian Taxes to the appropriate taxing authorities and
pay to the Agent such additional amounts as may be required,
after the deduction or withholding of Indonesian Taxes, to
enable each Bank and the Agent to receive from the Company
on the due date thereof, an amount equal to the full amount
stated to be payable to such Bank and the Agent under this
Agreement, any other Major Documents, as the case may be.
(d) Evidence of Tax Payments. Without in any way
affecting the Company's obligations under the preceding
provisions of this Section 5.06, the Company agrees to
furnish to the Agent (together with a copy for each Bank)
the originals or certified copies of all tax receipts in
respect of each payment, deduction or withholding of
Indonesian Taxes required to be made by applicable laws or
regulations, within 45 days after the date each payment
under this Agreement subject to Indonesian Taxes is made to
the Government of Indonesia, and the Company shall at the
request of any Bank or the Agent, promptly furnish to such
Bank or the Agent any other information, documents and
receipts that such Bank or the Agent may require to
establish to its satisfaction that full and timely payment
has been made of all Indonesian Taxes required to be paid
hereunder.
(e) Notices. The Company will notify the Banks
(through the Agent) promptly upon becoming aware of the
application or imposition, or scheduled future application
or imposition, or scheduled future application or
imposition, of Indonesian Taxes; and each Bank will notify
the Company of any change of Applicable Lending Office or
establishment or closing of a branch in Indonesia by such
Bank which would give rise to the application or imposition
of Indonesian Taxes.
(f) Certain Certificates, Etc. Each Bank having its
principal office and Applicable Lending Office outside of
Indonesia (a "Non-Indonesia Bank") shall use reasonably
diligent efforts to deliver a duly completed Internal
Revenue Service Form 6166 (or, in the case of any Non-
Indonesia Bank having its Applicable Lending Office outside
the United States of America, such analogous form as may be
applicable in the jurisdiction of its Applicable Lending
Office) to the Company or, to the extent required by
Applicable Law in connection with any payment under the FI
Guaranty, to FI, on or prior to the 90th day following the
later of (a) the Closing Date, (b) in the case of any Non-
Indonesia Bank which becomes party to this Agreement
subsequent to the Closing Date, the date such Non-Indonesia
Bank becomes party hereto and (c) in the case of any payment
under the FI Guaranty, the date of receipt by such Non-
Indonesia Bank of a written request by FI to deliver such
applicable form to FI following demand by the Agent for such
payment under the FI Guaranty. Following delivery by a Non-
Indonesia Bank to the Company or, if applicable, FI, of a
duly completed Form 6166 (or, in the case of any Non-
Indonesia Bank having its Applicable Lending Office outside
the United States of America, such analogous form as may be
applicable in the jurisdiction of its Applicable Lending
Office), the Company or FI, as the case may be, is
authorized to file such form with the appropriate Indonesian
taxing authorities in order to obtain a reduced rate of
withholding with respect to payments of interest to such
Non-Indonesia Bank. Each Non-Indonesia Bank shall use
reasonably diligent efforts to deliver to the Company or, to
the extent required by Applicable Law in connection with any
payment under the FI Guaranty, to FI, such certificates,
forms or other documents as may be necessary under any other
provision of Applicable Law (including any amendment,
modification or supplement to Form 6166 or such analogous
form referred to in the preceding sentence) to reduce the
withholding rate with respect to payments of interest on
Loans of such Non-Indonesia Bank on or by the 90th day
following the date on which the Company or, in the case of
any payment under the FI Guaranty, FI, as the case may be,
shall have delivered to such Non-Indonesia Bank written
notice of the existence of such provision of Applicable Law
together with a copy thereof (accompanied by a verified
English translation if such provision of Indonesian
Applicable Law is not in English); provided, however, that
such Non-Indonesia Bank shall have no obligation to deliver
any such certificates, forms or other documents with respect
to information deemed by such Non-Indonesia Bank to be
confidential or proprietary. Notwithstanding any provision
in this Agreement to the contrary, if any Non-Indonesia Bank
shall have failed to exercise reasonably diligent efforts to
deliver to the Company or FI, as applicable, any
certificates, forms or other documents required to be
delivered to such Person by such Non-Indonesia Bank pursuant
to this Section 5.06(f) on or by the date required under
this Section 5.06(f) and the effect of such failure is to
cause the rate of withholding with respect to payments of
interest on such Non-Indonesia Bank's Loans to be higher
than that which would have been applicable had such
certificates, forms or other documents been delivered to the
applicable Indonesian taxing authorities, then any
withholding tax indemnity payment to any such Non-Indonesia
Bank by the Company pursuant to this Section 5.06 or by FI
pursuant to Section 2.07 of the FI Guaranty shall be
computed in a manner which is based on the applicable
reduced rate of withholding.
(g) Absence of Taxes. If as a consequence of any
change in Applicable Law no Indonesian Taxes are required to
be deducted or withheld from payments of interest on Loans
made by any Non-Indonesia Bank that is a United States Bank
(hereinafter a "U.S. Bank"), or if the Company (or, in the
case of any such payment under the FI Guaranty, FI) shall in
good faith conclude in such circumstances that no Indonesian
Taxes shall be required to be deducted or withheld from such
payments, then, in either such case, the Company (or FI, as
the case may be) shall deliver to the Agent and such U.S.
Bank (i) a certificate of an Authorized Officer of such
Person stating that no Indonesian Taxes shall be required to
be deducted or withheld from such payments and (ii) an
opinion of a firm of independent certified public
accountants of recognized international standing (and duly
licensed, chartered or authorized to practice in Indonesia),
in form and substance reasonably acceptable to each of the
Agent and such U.S. Bank, as to the existence of a
"reasonable basis" to conclude that no Indonesian Taxes
shall be required to be deducted or withheld from such
payments to such U.S. Bank.
5.07. Special Provisions Regarding Affected Banks. If
any Bank (an "Affected Bank") claims compensation from the
Company under Section 5.01(a), 5.01(b), 5.01(c), 5.01(e), 5.03,
5.05 or 5.06 hereof (without prejudice to any amounts then due to
such Bank under said Sections), the Company may designate any
Bank or a commercial bank acceptable to the Agent (such Bank or
commercial bank hereinafter a "Replacement Bank") to purchase all
(but not part) of the outstanding Loans of such Affected Bank,
together with such Affected Bank's Note, and, if such purchase
shall occur during the Availability Period and any Commitments
shall then be undrawn and in effect, to assume such Affected
Bank's undrawn Commitment, in each case on a date mutually
acceptable to the Replacement Bank, such Affected Bank, and the
Company, without recourse upon, or warranty by, or expense to,
such Affected Bank, for a purchase price equal to the outstanding
principal amount of the Loans of such Affected Bank plus all
interest accrued thereon and all other amounts owing to such
Affected Bank hereunder, and upon such assumption and purchase by
the Replacement Bank, such Replacement Bank shall be deemed to be
a "Bank" for all purposes of this Agreement and such Affected
Bank shall cease to be a "Bank" for all purposes of this
Agreement (other than for purposes of any provisions hereof or of
any other Credit Document which survive the repayment in full of
the Loans).
SECTION 6. CONDITIONS PRECEDENT.
6.01. Loans. The obligation of any Bank to make its
initial Loan hereunder is subject to the receipt by the Agent
(which, in the case of documents or other written materials other
than the Agency Letter, shall furnish copies to each Bank) of the
following documents, instruments and other materials, each of
which shall be satisfactory in form and substance to the Agent:
(a) Principal Documents.
(i) Credit Agreement. This Agreement, duly
executed and delivered by the Company, the Agent and the
Banks.
(ii) Notes. The Notes, duly executed and
delivered by the Company.
(iii) Security Documents. Each Security Document,
duly executed and delivered by all intended parties thereto,
together with evidence that (x) each Security Document (and
each financing statement, or notice of assignment or other
filing or notification deemed necessary or advisable by the
Agent and/or its counsel) has been filed, recorded and made
in every jurisdiction in which such filing and recording is
necessary in order to make valid and enforceable against the
Company and third parties the security interests and
assignments created or intended to be created thereby and
the rights of the Secured Parties thereunder as first
priority Liens and security interests, if any, and (y) all
taxes and filing or recording fees and charges in connection
therewith shall have been paid.
(iv) FI Guaranty. The FI Guaranty, duly executed
and delivered by FI in favor of the Agent.
(v) FI Consent. The FI Consent, duly executed
and delivered by FI.
(vi) Ministry of Mines Consent, BPN Confirmation
and Other Project Governmental Approvals. Copies of (x) the
Ministry of Mines Consent, certified by an Authorized
Officer of FI to be true, correct and complete and in full
force and effect on and as of the Closing Date, (y) the BPN
Confirmation, certified by an Authorized Officer of FI to be
true, correct and complete and in full force and effect on
and as of the Closing Date and (z) all other Project
Governmental Approvals as are necessary in connection with
the execution, delivery and performance by each of the
Company, ALatieF and FI of each Major Document to which such
Person is party (other than any Non-Essential Governmental
Approvals with respect to day-to-day operational and
construction activities contemplated to be undertaken in the
future pursuant to the Master Service Agreement), each
certified by an Authorized Officer of the relevant holder or
recipient of such Governmental Approval to be true, correct
and complete and in full force and effect on and as of the
Closing Date.
(vii) Project Documents. Executed copies of each
Project Document in effect on the Closing Date, certified by
an Authorized Officer of the Company (or, in the case of the
Joint Venture Agreement, by an Authorized Officer of FI) to
be true, complete and correct and in full force and effect
on and as of the Closing Date.
(b) Corporate Documents and Approvals.
(i) Corporate Action of Company. Copies of the
articles of association and all other constituting or
organizational documents of the Company, together with
copies of the resolutions of the Company's Board of
Directors and Board of Commissioners authorizing the
execution, delivery and performance by the Company of this
Agreement, the Notes and each other Major Document to which
the Company is party. Each of the foregoing documents and
resolutions shall be certified by an Authorized Officer of
the Company to be true, correct and complete and in full
force and effect on and as of the Closing Date.
(ii) Company Incumbency Certificate. An
incumbency certificate as to the natural persons authorized
to execute and deliver on the Company's behalf this
Agreement, the Notes and each other Major Document to which
the Company is party (including a specimen of the signature
of each such natural person).
(iii) Corporate Action of ALatieF. Copies of the
articles of association and all other constituting or
organizational documents of ALatieF, together with copies of
the resolutions of ALatieF's Board of Directors and Board of
Commissioners authorizing the execution, delivery and
performance by ALatieF of each Major Document to which
ALatieF is party. Each of the foregoing documents and
resolutions shall be certified by an Authorized Officer of
ALatieF to be true, correct and complete and in full force
and effect on and as of the Closing Date.
(iv) ALatieF Incumbency Certificate. An
incumbency certificate as to the natural persons authorized
to execute and deliver on ALatieF's behalf each Major
Document to which ALatieF is party (including a specimen of
the signature of each such natural person).
(v) Corporate Action of FI. Copies of the
articles of association and all other constituting or
organizational documents of FI together with copies of the
resolutions of FI's Board of Directors and Board of
Commissioners authorizing the execution, delivery and
performance by FI of each Major Document to which FI is
party. Each of the foregoing documents and resolutions
shall be certified by an Authorized Officer of FI to be
true, correct and complete and in full force and effect on
and as of the Closing Date.
(vi) FI Incumbency Certificate. An incumbency
certificate as to the natural persons authorized to execute
and deliver on FI's behalf each Major Document to which FI
is party (including a specimen of the signature of each such
natural person).
(vii) Good Standing Certificate. A certificate of
good standing for FI from the Secretary of State of the
State of Delaware.
(viii) Other Approvals. Copies of all consents,
waivers and/or releases under each of the Existing Credit
Agreements and any security documentation therefor necessary
for the execution and delivery of each of the Major
Documents and performance of the transactions contemplated
thereby, certified by an Authorized Officer of FI to be
true, correct and complete and in full force and effect on
and a of the Closing Date.
(c) Insurance.
(i) Certificates of Insurance. Certificates of
an insurance broker acceptable to the Agent with respect to
the insurance coverage required by Section 8.04, together
with a certificate of an Authorized Officer of FI certifying
that such policies comply with the requirements Section
8.04.
(d) Opinions of Counsel.
(i) United States Counsel to the Company and FI.
An opinion of Davis Polk & Wardwell, United States counsel
to the Company and FI dated the Closing Date, substantially
in the form of Exhibit H hereto.
(ii) Indonesian Counsel to the Company. An
opinion of Makarim & Taira S., Indonesian counsel to the
Company, dated the Closing Date, substantially in the form
of Exhibit I-1 hereto.
(iii) Indonesian Counsel to FI. As opinion of Ali
Budiardjo, Nugroho, Reksodiputro, substantially in the form
of Exhibit I-2 hereto.
(iv) Indonesian Counsel to ALatieF. An opinion of
Makarim & Taira S., Indonesian counsel to ALatieF, dated the
Closing Date, substantially in the form of Exhibit J,
hereto.
(v) Counsel to FI. An opinion of John G. Amato,
Esq., counsel to FI, dated the Closing Date, substantially
in the form of Exhibit K hereto.
(vi) Indonesian Counsel to the Banks. An opinion
of Mochtar, Karuwin & Komar, Indonesian counsel to the
Banks, dated the Closing Date, substantially in the form of
Exhibit L hereto.
(vii) United States Counsel to the Banks. An
opinion of Milbank, Tweed, Hadley & McCloy, United
States counsel to the Banks, dated the Closing Date,
substantially in the form of Exhibit M hereto.
(e) Certain Fees. (x) Chase Manhattan Asia Limited
("CMAL") shall have received all fees set forth in that
certain letter agreement dated as of May 27, 1993, between
CMAL and FI and (y) the Agent shall have received the fee
referred to in Section 2.04(b) for the year commencing on
the Closing Date.
(f) Other Documents.
(i) Existing Credit Agreements and Related
Documentation. An executed copy of each Existing Credit
Agreement and each FI Security Document, certified by an
Authorized Officer of FI to be true, correct and complete
and in full force and effect on and as of the Closing Date.
(ii) Contract of Work. An executed copy of the
Contract of Work, certified by an Authorized Officer of FI
to be true, correct and complete and in full force and
effect on and as of the Closing Date.
(iii) Financial Statements. (x) A pro forma
balance sheet of the Company showing (A) to the extent
required under GAAP, all material liabilities (contingent or
otherwise), commitments or unrealized or anticipated losses
of the Company as of the Closing Date and (B) the effect of
the acquisition by the Company of all Initial Transfer
Assets and the borrowing by the Company of Loans hereunder
in an aggregate principal amount of $60 million; (y) the
consolidated balance sheet of FI as at December 31, 1992,
and the related statements of income and changes in retained
earnings and cash flow of FI for the fiscal year ended on
said date, with the opinion thereon (in the case of said
balance sheet and statements) of Arthur Andersen & Co.; and
(z) the unaudited consolidated balance sheet of FI as of
June 30, 1993, and the related statements of income of FI
for the six-month period ended on such date, in each case
prepared in accordance with GAAP.
(iv) Accountant's Report. The Agent shall have
received a report, in form and substance satisfactory to it,
of a an internationally recognized firm of independent
public accountants acceptable to the Agent, with respect to
the Book Value of each Initial Transfer Asset.
(v) Agency Letter. The Agency Letter, duly
executed and delivered by the Company.
(vi) Other Documents as Requested. Such other
documents as the Agent, any Bank or counsel to the Agent may
reasonably request.
(g) Master Services Proceeds Account. The Company
shall have established the Master Services Proceeds Account with
the Agent at the Principal Office.
6.02. Further Conditions to Loans. The obligation of
each Bank to make any Loan to the Company hereunder (including,
without limitation, the initial Loan) is subject to the
satisfaction of the following additional conditions precedent:
(a) No Default. Immediately prior and after giving
effect to the borrowing of such Loan, no Default shall have
occurred and be continuing.
(b) Representations, Warranties and Certifications.
Immediately prior and after giving effect to the borrowing of
such Loan, all representations, warranties and certifications
made by the Company in or pursuant to Section 7 hereof and each
other Major Document and the representations, warranties and
certifications of FI made in or pursuant to each Major Document
shall be true, correct and complete on and as of the date of the
making of such Loan with the same force and effect as if made on
and as of such date.
(c) Purchase and Sale Agreement. (i) Each of the
Company and FI shall have executed a Purchase and Sale Agreement,
and each and every title transfer document contemplated thereby
or giving effect thereto, on or prior to such borrowing date with
respect to the Initial Transfer Assets and all related intangible
property and rights associated therewith, if any, to be sold by
FI to the Company on such date (such Initial Transfer Assets and
related intangible property and rights hereinafter the
"Applicable Assets"), (ii) the Agent shall have received an
executed copy of such Purchase and Sale Agreement and each such
title transfer document (or, in any such case, evidence
reasonably satisfactory to the Agent of the executon thereof
before an Indonesian notary) certified by an Authorized Officer
of FI to be true, correct and complete and in full force and
effect and (iii) all conditions set forth in such Purchase and
Sale Agreement to the sale by FI and the purchase by the Company
of the Applicable Assets (other than the making of such Loans by
the Banks and the payment by the Company of the "Purchase Price"
referred to in such Purchase and Sale Agreement for such
Applicable Assets) shall have been fully satisfied (and not
waived) and the Agent shall have received (x) a copy, certified
by an Authorized Officer of FI to be true, correct and complete,
of each document or instrument delivered pursuant to Article VI
of such Purchase and Sale Agreement (other than any such
documents or instruments (or evidence thereof) separately
received by the Agent pursuant to Section 6.01 above, clause (ii)
of this Section 6.02 or clause (y) below) and (y) an original,
addressed to (among other Persons) the Agent on behalf of the
Secured Parties, of each opinion referred to in Sections 6.02(a)
and 6.02(b) of such Purchase and Sale Agreement.
(d) Applicable Assets. After giving effect to the
transactions contemplated by the Purchase and Sale Agreement
referred to in clause (c) above, the Company shall, concurrently
with the borrowing of such Loan, acquire the Applicable Assets
free and clear of all Liens (other than Liens created or existing
pursuant to the Security Documents).
(e) Purchase Price. The purchase price to be paid by
the Company for the Applicable Assets to be acquired by the
Company on such borrowing date shall be as shown in Schedule V,
free of separate charge or compensation for any intangible assets
or rights comprising such Applicable Assets.
(f) Equity Contributions. On or prior to each
borrowing hereunder, each Person that is (or on such borrowing
date will become) a Shareholder shall have made an equity
contribution to the Company by depositing into the Master
Services Proceeds Account an amount in immediately available
funds equal to the product of (A) its then current percentage
interest in subscription rights to the capital stock of the
Company to be issued in connection with such contribution
(expressed as a decimal) and (B) 33-1/3% of the aggregate
purchase price to the Company of the Applicable Assets to be
acquired on such date.
(g) Amount of Loans. The aggregate amount of Loans to
be borrowed on such borrowing date shall not exceed 66-2/3% of
the aggregate purchase price of the Applicable Assets to be
acquired by the Company on such borrowing date.
(h) Survey. FI shall have filed with the Ministry of
Mines of Indonesia a survey of all buildings and structures
comprising the Applicable Assets and certain associated land in
respect of which the Company shall have been granted a right of
use as part of such Applicable Assets, and the Agent shall have
received a certificate of an Authorized Officer of FI as to the
accuracy of the descriptions contained in such survey.
(i) No Material Adverse Change. Immediately prior and
after giving effect to the borrowing of such Loan, no material
adverse change shall have occurred in the condition (financial or
otherwise), assets, business or operations of the Company or FI
since the Closing Date.
Each notice of borrowing by the Company hereunder shall
constitute a certification by the Company as to the accuracy of
the matters set forth in paragraph (a) through (i) of this
Section 6.02 as of the date of such borrowing unless the Company
otherwise notifies the Agent in writing prior to such borrowing
date.
SECTION 7. REPRESENTATIONS AND WARRANTIES. The
Company represents and warrants to each Bank that:
7.01. Corporate Existence and Authority. The Company
(a) is a corporation duly organized and validly existing under
the laws of Indonesia; (b) has all requisite corporate power and
authority to own its property and assets and to carry on its
business and operations and to execute, deliver and perform each
Major Document to which it is party; and (c) is qualified to do
business in all jurisdictions in which the nature of the business
conducted by it makes such qualification necessary. Except as
provided in Section 7.04(a)(ii) below, no filing, recording,
publishing or other act by or with any Governmental Authority
that has not been made or done is necessary in connection with
the existence or good standing of the Company or the execution,
delivery and performance of the Major Documents. To the extent
that the representation and warranty contained in the preceeding
sentence relates to the Ministry of Mines Consent, such
representation and warranty with respect to the Ministry of Mines
Consent shall be deemed first made or given on and as of the date
of the first borrowing hereunder.
7.02. Corporate Action. The execution, delivery and
performance by the Company of each of the Major Documents to
which it is party have been duly authorized by all necessary
corporate action on its part; and each such Major Document has
been duly and validly executed and delivered by the Company and
constitutes its legal, valid and binding obligation, enforceable
in accordance with its terms.
7.03. Financial Condition. The pro forma balance
sheet of the Company furnished to Agent on the Closing Date is
complete and correct and fairly presents the financial condition
of the Company following the acquisition of all Initial Transfer
Assets and the borrowing of $60 million of Loans. As of the
Closing Date, the Company does not have any material liabilities
(contingent or otherwise) or unrealized or anticipated losses,
except as referred to or reflected or provided for in said
balance sheet (and the notes thereto).
7.04. No Breach. The execution, delivery and perform-
ance by the Company of each of the Major Documents to which it is
party and the consummation of the transactions contemplated
thereby do not and will not (a) require any consent or approval
of any other Person except (i) such as have been obtained and are
in full force and effect and (ii) in the case of certain day-to-
day operational and construction activities contemplated to be
undertaken in the future pursuant to the Master Services
Agreement, any Non-Essential Governmental Approvals relating to
such activities, (b) violate any provision of the articles of
association or other organizational documents of the Company or
any Applicable Law or Governmental Approval applicable to the
Company or the Project, (c) conflict with, result in a breach of,
or constitute a default under any Major Document or any indenture
or loan or credit agreement or any other agreement, lease or
instrument to which the Company or FI is a party or by which the
Company or FI or the property of either such Person may be bound
or affected or (d) result in, or create any Lien (other than
under the Security Documents) upon or with respect to any of the
properties now owned or hereafter acquired by the Company. To
the extent that the representation and warranty contained in
clause (a)(i) of the preceeding sentence relates to the Ministry
of Mines Consent, such representation and warranty with respect
to the Ministry of Mines Consent shall be deemed first made or
given on and as of the date of the first borrowing.
7.05. Litigation. Except as set forth in Schedule II,
(a) there are no legal, arbitral or other proceedings by or
before any Governmental Authority now pending or, to the best
knowledge of the Company after diligent inquiry, threatened,
against the Company as to which there is a reasonable possibility
of an adverse determination and which, if adversely determined,
could reasonably be expected to have a Material Adverse Effect
and (b) the Company is not charged with or, to the best knowledge
of the Company after diligent inquiry, threatened with, a
material charge or violation, or under investigation with respect
to a possible material violation, of any provision of Applicable
Law.
7.06. Governmental Approvals. All Project
Governmental Approvals are listed in Schedule III hereto other
than Non-Essential Governmental Approvals with respect to day-to-
day operational and construction activities contemplated to be
undertaken in the future pursuant to the Master Services
Agreement. All Project Governmental Approvals listed in Schedule
III have been duly obtained, were validly issued, are in full
force and effect, are not subject to appeal, and are free from
conditions or requirements compliance with which could reasonably
be expected to result in a Material Adverse Effect or which the
Company or holder of such Governmental Approval has not or will
not satisfy in full on or prior to the date required under such
Project Governmental Approval or other Applicable Law. Except
for the BPN Confirmation and the Ministry of Mines Consent, all
Project Governmental Approvals required for the execution,
delivery and performance by the Company of each Major Document to
which it is party and for the acquisition, ownership, possession
and maintenance of the Project by the Company are (or, in the
case of any Non-Essential Governmental Approval referred to in
the first sentence of this Section 7.06, will be) held by and in
the name of the Company. The Company is a "Permitted Transferee"
as such term is used in each of the BPN Confirmation and the
Ministry of Mines Consent and, as such, is entitled to all the
rights and benefits conferred upon a "Permitted Transferee" under
each of the BPN Confirmation and the Ministry of Mines Consent.
The information set forth in each application and all other
written materials submitted (or, in the case of any Non-Essential
Governmental Approval referred to in the first sentence of this
Section 7.06, to be submitted) by the Company or any other Person
in connection with the Project Governmental Approvals to the
applicable Governmental Authority is (or, in the case of any Non-
Essential Governmental Approval referred to in the first sentence
of this Section 7.06, will be) accurate and complete in all
material respects and does not or will not, as the case may be,
omit to state any material fact necessary to make such
information not misleading. The Project will in all material
respects conform to and comply with all covenants, conditions,
restrictions and reservations in the Project Governmental
Approvals applicable thereto and all other Applicable Law. The
Company has no reason to believe that the Agent, acting for the
benefit of the Secured Parties, will not be entitled, without
undue expense or delay, to all of the rights and benefits of the
Company under each Project Governmental Approval of the Company
set forth on Schedule III upon the exercise of remedies under the
Security Documents. The Agent has received a certified copy of
each Project Governmental Approval (other than the Non-Essential
Governmental Approvals referred to in the first sentence of this
Section 7.06). Neither the Company, FI nor, to the best
knowledge of the Company, ALatieF, is in violation in any
material respect of any Governmental Approval or any other
Applicable Law. To the extent that the representations and
warranties contained in this Section 7.06 relate to the Ministry
of Mines Consent, such representations and warranties with
respect to Ministry of Mines Consent shall be deemed first made
or given on and as of the date of the first borrowing hereunder.
7.07. Nature of Business. The Company has not engaged
in any business other than the development of the Project and
Infrastructure Support Project assets contemplated to become part
of the Project and, following the Closing Date, the provision of
the Company Services.
7.08. Title; Security Documents. The Company has
good, legal and valid title to the Collateral purported to be
covered by the Security Documents to which it is a party, free
and clear of all Liens other than Permitted Liens. The
provisions of the Security Documents are effective to create, in
favor of the Agent for the benefit of the Secured Parties, a
legal, valid and enforceable Lien on and security interest in all
of the Collateral purported to be covered thereby, and, upon the
filing and recording of the financing statements, other
instruments and the Security Documents referred to in Section
6.01(a)(iii) hereof, all necessary and appropriate recordings and
filings will have been made in all necessary and appropriate
public offices, and all other necessary and appropriate action
will have been taken, so that each such Security Document will
create a first priority Lien on and security interest in all
right, title, estate and interest of the Company in the
Collateral covered or purported to be covered thereby, prior and
superior to all other Liens other than Permitted Liens, valid and
enforceable as such against the Company and third parties. No
mortgage or financing statement or other instrument or
recordation covering all or any part of the Collateral purported
to be covered by the Security Documents is on file with respect
to the Company in any recording office, except such as may have
been filed in favor of the Agent for the benefit of the Secured
Parties or in respect of any Permitted Lien.
7.09. Subsidiaries. The Company has no Subsidiaries.
7.10. Shareholders; Shareholder Interests and Related
Matters.
(a) The only shareholders of the Company on the
Closing Date are ALatieF and FI. As of the Closing Date, ALatieF
owns 66- % of the shares of issued and outstanding capital stock
of the Company and FI owns 33- % of such stock.
(b) As of the Closing Date, The Company does not have
outstanding any securities convertible into or exchangeable for
any of its stock or other ownership interests or any rights to
subscribe for or to purchase, or any warrants or options for the
acquisition of, or any agreements providing for the issuance
(contingent or otherwise) of, or any calls, commitments or claims
of any character relating to any such stock or other ownership
interests (other than the stock issuance provisions in favor of,
and the commitments by, ALatieF and FI in the Company's articles
of association and the Joint Venture Agreement, as the case may
be).
7.11. Conflicting Documents; Project Documents.
(a) The Company is not party to or in any way bound by
any Conflicting Document.
(b) The Agent received a certified copy of each
Project Document as in effect on the date of delivery and each
amendment, modification or supplement thereto and all of the
Project Documents are in full force and effect. All conditions
precedent to the obligations of the respective parties under the
Project Documents have been satisfied or waived except for such
conditions precedent which need not and cannot be satisfied until
a later stage of development of the Project, and the Company has
no reason to believe that any such condition precedent cannot be
satisfied on or prior to the commencement of the appropriate
stage of development of the Project. All representations,
warranties and other factual statements made in the Project
Documents, by the Company and FI and, to the best knowledge of
the Company, each other Person party thereto, are true, correct
and complete in all material respects (or, if stated to have been
made solely as of an earlier date, were true and correct as of
such date). Neither the Company nor any other Person is in
default in the performance of any material covenant or obligation
set forth in any Project Document.
7.12. Utility Services. All utility services
necessary for the operation, maintenance and use of the Project,
including, as necessary, but not limited to, water supply, storm
and sanitary sewer, gas, electric and telephone services and
facilities, are, or will be when needed, available to the
Project.
7.13. Disclosure. The written information and
materials furnished by the Company or any Affiliate thereof to
the Agent, any Bank or any Affiliate thereof or its or their
counsel or advisors relating either generally or specifically to
the transactions contemplated by the Major Documents (including,
without limitation, all written information and materials in
respect of the Infrastructure Support Project, the Project, any
Transferred Assets, any Major Document, any Governmental Approval
or other Applicable Law relating to the transactions contemplated
by any of the Major Documents and/or the business, operations,
assets, prospects or condition (financial or otherwise) of the
Company, FI or any material shareholder of either such Person)
did not, as of the date furnished and when taken as a whole,
contain any untrue statement of a material fact or omit to state
any material fact necessary to make the statements herein or
therein not misleading in light of the circumstances under which
they were made. There is no fact known to the Company that has
not been disclosed in writing to the Banks which has had, or
which could reasonably be expected result in, a Material Adverse
Effect with respect to the Company.
7.14. Use of Loans. No part of the proceeds of any
Loan hereunder will be used for the purpose, whether immediate,
incidental or ultimate, of buying or carrying any margin stock or
to extend credit to others for such purpose. No part of the
proceeds of the Loans will be used, whether directly or
indirectly, and whether immediately, incidentally or ultimately,
for any purpose which entails a violation of, or which is
inconsistent with Regulations G, T, U or X.
7.15. Existing Credit Agreement Event. No Existing
Credit Agreement Event, and no event which with the giving of
notice or lapse of time or both would be an Existing Credit
Agreement Event, is in existence.
7.16. Performance of Services. The Company has
(internally or by contract with third parties), or will have
(internally or by contract with third parties) on or prior to the
time required, the necessary know-how, expertise and manpower to
perform the Company Services in accordance with the provisions of
the Master Services Agreement.
7.17. Public Utility Holding Company Act. The Company
is not a "holding company", a "subsidiary company" of a "holding
company" or an "electric utility company", or an "affiliate" of
any of the foregoing, within the meaning of the Public Utility
Holding Company Act of 1935, as amended.
7.18. Investment Company Act. The Company is not an
"investment company" as defined in, or subject to regulation
under, the Investment Company Act of 1940.
7.19. Hak Guna Bangunan Title. The Company has no
reason to believe that it will not obtain Hak Guna Bangunan title
to the real property underlying the Project assets below Milepost
50 on a timely basis following application for such title with
BPN.
7.20. Employee Benefit Plans. As of the Closing Date,
no pension benefit plan as defined in Section 3(2) of ERISA
maintained, sponsored or contributed to by the Company or any
Company Commonly Controlled Entity or which has been so
maintained, sponsored or contributed to by any such Person within
the five year period prior to the Closing Date is, or during such
five year period was, subject to ERISA (including, without
limitation, Title IV thereof).
7.21. Environmental Compliance. The Company has
complied with all Applicable Law relating to environmental
pollution or to environmental regulation or control or to
employee health or safety the non-compliance with which could
have a Material Adverse Effect, and the Company has not received
any notice of any such non-compliance. The Company is aware of
no events, conditions or circumstances involving environmental
pollution or contamination or employee health or safety that
could reasonably be expected to result in material liability to
the Company.
SECTION 8. COVENANTS OF THE COMPANY. The Company
agrees that so long as any of the Commitments are in effect and
until payment in full of all Obligations:
8.01. Financial Statements and Other Information. The
Company will deliver to each of the Banks:
(a) as soon as available and in any event within 60
days after the end of each quarterly fiscal period of each
of the first three quarters of the fiscal year of the
Company, statements of income of the Company for such period
and for the period from the beginning of the respective
fiscal year to the end of such period, and the related
balance sheets as at the end of such period, setting forth
in each case in comparative form the corresponding figures
for the corresponding period in the preceding fiscal year,
if applicable, all in accordance with GAAP, accompanied by a
certificate of a senior financial officer of the Company,
which certificate shall state that said financial statements
fairly present the financial condition and results of
operations, as the case may be, of the Company in accordance
with GAAP, consistently applied, as at the end of, and for,
such period (subject to normal year-end audit adjustments);
(b) as soon as available and in any event within 95
days after the end of each fiscal year of the Company,
statements of income and changes in retained earnings and
changes in cash flow of the Company for such year and the
related balance sheets as at the end of such year, setting
forth in each case in comparative form the corresponding
figures for the preceding fiscal year, if applicable, all in
accordance with GAAP, and accompanied by an opinion thereon
of independent certified public accountants of recognized
international standing, which opinion shall state that said
financial statements fairly present the financial condition
and results of operations of the Company as at the end of,
and for, such fiscal year, and a certificate of such
accountants stating that, in the ordinary course of making
the examination necessary for their opinion, they obtained
no knowledge, except as specifically stated, of any Default;
(c) as soon as practicable, but in any event within 45
days thereof, a statement indicating any change in the
regularly retained firm of independent public accountants of
the Company;
(d) promptly upon their becoming available, copies of
all registration statements and regular periodic reports, if
any, which the Company shall have filed with any securities
exchange (but without limitation of the Company's
obligations under Section 8.21);
(e) in the event that any capital stock of the Company
shall have been publicly offered, promptly upon the mailing
thereof to the Shareholders, copies of all financial
statements, reports and proxy statements so mailed (but
without limitation of the Company's obligations under
Section 8.21);
(f) promptly after the occurrence of a material
default under any Project Document, notice of such default
describing the same in reasonable detail and (i) together
with such notice or as soon thereafter as possible if such
default is by the Company, a description of the action that
the Company has taken and proposes to take with respect
thereto and (ii) if such default is by any other party
thereto, copies of all material correspondence and materials
received by the Company from such defaulting party in
respect of subject matter of such default prior to the
occurrence thereof (which shall accompany such notice) and
thereafter (which shall be forwarded promptly upon receipt
by the Company);
(g) promptly following adoption thereof pursuant to
Article 4 of the Master Services Agreement, a copy of each
year's General Operating Plan contemplated pursuant to such
Article 4;
(h) promptly following any suspension or proposed
suspension by FI of any Company Services pursuant to Article
7 of the Master Services Agreement, a notice of such
suspension or proposed suspension describing the affected
Company Services and the reasons, if any, given by FI
therefor, together with copies of any written materials
furnished to the Company by FI in connection with such
suspension or proposed suspension;
(i) promptly after the Company knows that any Default
has occurred, a notice of such Default describing the same
in reasonable detail and, together with such notice or as
soon thereafter as possible, a description of the action
that the Company has taken and proposes to take with respect
thereto;
(j) as soon as available, any other document, notice
or other information relating to any event, circumstance or
condition which could reasonably be expected to result in a
Material Adverse Effect in respect of the Company; and
(k) from time to time, with reasonable promptness,
such other information regarding the condition (financial or
otherwise), business, affairs, assets or operations of the
Company, FI, ALatieF (to the extent available to FI or the
Company) or the Project as the Agent or any Bank may
request.
The Company will furnish to each Bank, concurrently with each set
of financial statements pursuant to paragraph (a) or (b) above, a
certificate of a senior financial officer of the Company to the
effect that such officer has reviewed, or caused to be reviewed
by individuals under his supervision, this Agreement and each
other Major Document and has made, or has caused to be made under
his supervision, a review of the transactions contemplated hereby
and thereby and the condition of the Company and the Project, and
such review has not disclosed the existence of, nor does such
officer or any person under his supervision have any knowledge
of, the existence as at the date of such certificate of any
condition, event, or circumstance that constitutes a Default (in
each case, irrespective of the reason for the existence thereof)
or, if any such condition, event or circumstance does exist as at
such date, describing the same in reasonable detail and
describing the action that the Company has taken and proposes to
take with respect thereto.
8.02. Proceedings. The Company shall promptly upon
obtaining knowledge of any act, event, circumstance, condition or
state of facts (including, without limitation, knowledge of any
pending or threatened action, suit or proceeding at law or in
equity by or before any Governmental Authority or other body
against the Company or any Person party to a Major Document)
which has had or could reasonably be expected to result in a
Material Adverse Effect, furnish to the Agent a notice of such
act, event, circumstance, condition or state of facts describing
the same in reasonable detail and, together with such notice or
as soon thereafter as possible, a description of the action that
the Company and/or FI has taken and/or proposes to take with
respect thereto.
8.03. Maintenance of Existence; Etc. The Company
shall preserve and maintain its legal existence and all of its
licenses, rights, privileges and franchises necessary for the
maintenance of its existence and the due performance of all its
obligations under the Major Documents to which it is party and
the exercise of all its rights under the Project Documents to
which it is party.
8.04. Insurance. The Company will keep insured, or
will cause to be kept insured, by financially sound and reputable
insurers all property of a character usually insured by a
corporation engaged in the same or similar business similarly
situated and/or owning assets and properties of a nature similar
to those of the Company against loss or damage of the kinds
insured against, and in the amounts and with deductibles
customarily carried, by such corporations and carry such other
insurance as is usually carried by such corporations, and shall
in all events maintain, or cause to be maintained, such
insurance, in such amounts, and having such deductibles, as is or
may from time to time be required under any Major Document,
provided that (without limitation of the foregoing) in any event
the Company will maintain or cause to be maintained:
(1) Property Insurance -- insurance against loss or
damage covering all of the tangible real and personal
property and improvements of the Company, and loss of
operating income of the Company, by reason of any Peril (as
defined below) in such amounts as shall be reasonable and
customary and sufficient to avoid the insured named therein
from becoming a co-insurer of any loss under such policy but
in any event in an amount at least equal to the aggregate
amount of the Obligations then outstanding, subject to
deductibles as aforesaid.
(2) Automobile Liability Insurance for Bodily Injury
and Property Damage -- insurance in respect of all vehicles
(whether owned, hired or rented by the Company) at any time
located at, or used in connection with, its properties or
operations against liability for bodily injury and property
damage in such amounts as are then customary for vehicles
used in connection with similar properties and businesses,
but in any event to the extent required by applicable law.
(3) Comprehensive General Liability Insurance --
insurance against claims for bodily injury, death or
property damage occurring on, in or about the properties of
the Company, or resulting from the use of products sold by
the Company, in such amounts as are then customarily
maintained by responsible persons engaged in businesses
similar to that of the Company and/or owning assets and
properties of a nature similar to those of the Company.
(4) Workers' Compensation Insurance -- insurance
(including Employers' Liability Insurance) to the extent
required by applicable Indonesia law.
(5) Excess and Umbrella Liability Insurance --
insurance against claims for bodily injury, death or
property damage which are in excess of the coverage for such
claims referred to in Section 8.04(2) and 8.04(3) hereof, in
such amounts as are reasonable and customary for responsible
persons engaged in businesses similar to that of the
Company.
Such insurance shall name the Agent as additional insured on
behalf of the Secured Parties (in the case of insurance of the
type referred to in clauses (2), (3) and (5) of this Section
8.04) and as loss payee (in the case of insurance of the type
referred to in clause (1) of this Section 8.04) for any physical
damage claim greater than $10,000,000 (the "Threshold Amount").
All insurance required to be maintained pursuant to clause (1) of
this Section 8.04 shall provide that (i) there shall be no
recourse against the Agent or the Secured Parties for payment of
premiums or other amounts with respect thereto and (ii) the
insurer is required to provide the Agent with at least 30 days'
(or ten days' in the case of nonpayment of premiums) prior notice
of reduction in coverage or amount of such insurance (other than
a reduction in coverage or amount resulting from a payment
thereunder) or any cancellation or non-renewal on substantially
the same coverage and deductible terms of any policy. With
respect to the insurance required to be maintained pursuant to
clauses (2)-(5) of this Section 8.04, the Company will advise the
Agent promptly of any policy cancellation or any material
reduction or amendment, or intended cancellation or lapse without
renewal, provided that nothing herein shall limit the Company's
obligation to maintain, or cause to be maintained, the foregoing
insurance in effect at all times.
Proceeds of insurance for physical damage not exceeding
the Threshold Amount received by the Company shall be applied by
it to pay (or reimburse itself for) the costs of repairing or
replacing the damaged property or operation. Proceeds of
insurance for physical damage in excess of the Threshold Amount
shall be applied as follows: (i) if no Default or Material
Adverse Effect has occurred and is continuing and no Default or
Material Adverse Effect could reasonably be expected to occur
during any repair, replacement or reconstruction period (a
"Restoration Period"), such proceeds shall be released to the
Company for application as provided in the preceding sentence;
and (ii) if a Default or Material Adverse Effect has occurred and
is continuing or (in the opinion of the Majority Banks) could
reasonably be expected to occur during the applicable Restoration
Period, such proceeds shall be released as provided in clause (i)
above after the Banks are notified by the Company that it intends
to repair or replace the damaged property or operation, unless
within 60 days after receipt by the Banks of the Company's
notice, the Majority Banks direct that such proceeds be applied
to the prepayment of the Loans, in which case they shall be so
applied, provided that if there shall then be outstanding any
Other Acquisition Indebtedness which, by its terms, requires that
a portion of such proceeds be applied to the prepayment of such
Indebtedness, only the portion of such proceeds equal to the
product thereof and the then current Facility Fraction shall be
applied to the prepayment of the Loans. Promptly after the
occurrence of an event of loss giving rise to the operation of
this paragraph and the Company's determination as to whether it
intends to repair or replace the damaged property or operation,
the Company will give the Banks (through the Agent) notice
thereof.
On or before the date on which the initial Loans are
made hereunder the Company will deliver to the Agent certificates
of an insurance broker acceptable to the Agent with respect to
the insurance policies required to be maintained hereunder
setting forth the respective coverages, limits of liability,
carriers, policy numbers and periods of coverage. Thereafter, on
the renewal date of each policy the Company will deliver to the
Agent certificates of an insurance broker acceptable to the Agent
evidencing that all insurance required hereunder is in full force
and effect. The Company will not, and will not permit any other
Person to, obtain or carry separate insurance concurrent in form
or contributing in the event of loss with that required by this
Section 8.04 unless the Agent on behalf of the Secured Parties is
the named insured thereunder, with loss payable as provided
herein. The Company will immediately notify the Agent whenever
any such separate insurance is obtained and shall deliver to the
Agent the certificates evidencing the same.
Without limiting the obligations of the Company under
the foregoing provisions of this Section 8.04, in the event the
Company shall fail to maintain in full force and effect insurance
as required by the foregoing provisions of this Section 8.04,
then the Agent may, but shall have no obligation so to do,
procure insurance covering the interests of the Secured Parties
in such amounts and against such risks as the Agent (or the
Majority Banks) shall deem appropriate and the Company shall
reimburse the Agent in respect of any premiums paid by the Agent
in respect thereof.
For purposes hereof, the term "Peril" shall mean,
collectively, fire, lightning, flood, windstorm, hail,
earthquake, explosion, riot and civil commotion, vandalism and
malicious mischief, damage from aircraft, vehicles and smoke and
all other perils covered by the "all-risk" endorsement then in
use in the jurisdictions where the properties of the Company are
located.
8.05. Taxes. The Company shall pay and discharge all
taxes, levies, assessments and other charges imposed on the
Company or on its income or profits or on any of its property
prior to the date on which material penalties attach thereto,
provided that the Company shall have the right to contest the
validity or amount of any such tax, levy, assessment or other
charge pursuant to a Permitted Contest. The Company shall
promptly pay any valid, final judgment enforcing any such tax,
levy, assessment or other charge and cause the same to be
satisfied of record.
8.06. Books and Records. The Company shall keep
proper books of record in accordance with GAAP and any other
method of accounting required by Applicable Law and permit
representatives of the Agent or any Bank to visit and inspect its
properties, to examine, copy or make excerpts from its books,
records and documents and to discuss its affairs, finances and
accounts with its principal officers, engineers and, in the
presence of Company officers or employees (whether physical or
otherwise), independent accountants, all at such reasonable times
and at such intervals as such representatives may desire.
8.07. Prohibition of Fundamental Changes.
(a) The Company shall not merge into or consolidate
with, or acquire all or any substantial part of the assets or any
class of stock of or other interest in any other Person, except
that nothing herein shall prohibit the acquisition by the Company
from FI of (i) any Initial Transfer Assets, and any related
intangible rights or properties, pursuant to a Purchase and Sale
Agreement for a purchase price equal to that shown on Schedule V
as being applicable to such tangible Initial Transfer Assets and
(ii) any other Infrastructure Support Project asset or property
listed in Exhibit I to the Joint Venture Agreement (as in effect
on the Closing Date) or, in lieu of any such listed property or
asset, any other Infrastructure Support Project asset or property
substantially equivalent to any such listed asset or property
(provided that (x) the Company shall have received all consents,
waivers and/or releases necessary or, in the reasonable opinion
of the Agent, desirable, under the Existing Credit Agreements and
any security documentation therefor in connection with the
conveyance of such other asset or property by FI to the Company
and the attachment of the Liens of the Security Documents thereto
with the priority purported to be granted thereby and (y) the
substitution of such other asset or property for such listed
asset or property shall not increase the ratio in such Exhibit I
(as in effect on the Closing Date) of "public use" property
within the meaning of paragraph 3 of Article 22 of the Contract
of Work to non-"public use" property), in each case pursuant to a
Purchase and Sale Agreement for a purchase price (the "Required
Purchase Price") no greater than the Book Value of such asset or
property at the time of such acquisition, provided that if the
Company shall incur any Indebtedness in connection with the
acquisition of any such Infrastructure Support Project assets or
properties referred to in clause (ii) of this Section 8.07(a),
such Indebtedness shall conform to the provisions of Section
8.10(c) below.
(b) The Company shall not convey, sell, lease,
transfer or otherwise dispose of, in one transaction or a series
of transactions, any assets except:
(i) sales of assets no longer used or useful in the
Company's business made in the ordinary course of the
Company's business and for which the Company shall have
received prior to or concurrently with such sale
adequate and fair consideration (and, if such
consideration shall include cash, such cash shall have
been deposited into the Master Services Proceeds
Account), in an aggregate amount not exceeding $500,000
in any calendar year;
(ii) sales of residential single family dwellings
for which the Company shall have received prior to or
concurrently with such sale and deposited into the
Master Service Proceeds Account adequate and fair cash
consideration;
(iii) the sale of any Project asset to FI upon the
occurrence of any Reacquisition Event (other than a
Triggering Reacquisition Event) with respect to such
asset (a "Reacquisition Asset"), provided that (A) no
intangible Project asset or right shall be sold
separately from the related tangible Project asset(s),
(B) the purchase price to be paid by FI for such
Project asset(s) shall have been paid prior to or
concurrently with such sale either (1) by deposit of
immediately available funds to the Master Service
Proceeds Account of an amount at least equal to the
Required Sale Price for such Reacquisition Asset(s) or
(2) by substitution with such other property or assets
of FI having a then current Book Value at least equal
to the Required Sale Price for such Reacquisition
Asset(s) and otherwise satisfactory to the Majority
Banks and (C) pursuant to documentation satisfactory to
the Agent, FI shall have directly assumed, and the
Company shall be released from, all ongoing contractual
liabilities and obligations relating to (but only to
the extent relating to) the ownership of such
Reacquisition Asset(s) and/or any Company Services in
respect thereof; and
(iv) the sale of any or all Project assets to FI
upon the occurrence of any Triggering Reacquisition
Event, provided that (A) the purchase price to be paid
by FI for such asset(s) shall be at least equal to the
sum of all Obligations and all amounts owed by the
Company in respect of Other Acquisition Indebtedness
(whether or not such amounts shall be then due and
payable) and (B) prior to or concurrently with such
sale an amount equal to Obligations shall have been
deposited by FI into the Master Services Proceeds
Account in immediately available funds.
8.08. Maintenance of Title and Lien. The Company
shall take, or cause to be taken, all action required or
desirable to maintain good, legal and valid title to the
Collateral purported to be covered by the Security Documents to
which it is a party and shall maintain and preserve the Liens
created by the Security Documents and the priority thereof. The
Company shall from time to time execute or cause to be executed
any and all further instruments (including financing statements,
continuation statements and similar statements with respect to
any Security Document) reasonably requested by the Agent for such
purposes. The Company shall promptly discharge at the Company's
cost and expense any Lien (other than Permitted Liens) on the
Collateral.
8.09. Limitation on Liens. The Company will not
create, incur, assume or suffer to exist any Lien upon any of its
property, assets or revenues, whether now owned or hereafter
acquired, except:
(a) Liens created pursuant to the Security Documents;
(b) Liens imposed by any Governmental Authority for
taxes, assessments or charges not yet due or which are being
contested pursuant to a Permitted Contest, provided that the
amount of any such contested taxes, assessments or other
governmental charges is not material;
(c) carriers', warehousemen's, mechanics',
materialmen's, repairmen's or other like Liens arising in
the ordinary course of business which are not overdue or
which are being contested pursuant to a Permitted Contest;
(d) pledges or deposits under worker's compensation,
unemployment insurance and other social security
legislation;
(e) easements, rights-of-way, restrictions and other
similar encumbrances incurred in the ordinary course of
business and encumbrances consisting of zoning restrictions,
easements, licenses, restrictions on the use of property or
minor imperfections in interest which, in the aggregate, are
not material in amount, and which do not in any case
materially detract from the value of the property subject
thereto or interfere with the ordinary conduct of the
business of the Company;
(f) pledges or deposits of cash collateral in order to
remove of record any Lien upon or with respect to any other
property of the Company in connection with the prosecution
by the Company of a Permitted Contest with respect to such
Lien (including any such pledge or deposit made as security
for any letter of credit referred to in Section 8.10(f));
(g) Liens securing Other Acquisition Indebtedness
and/or Indebtedness permitted by Section 8.10(d) hereof; and
(h) any extension, renewal or replacement of the
foregoing; provided, however, that the Liens permitted
hereunder shall not be spread to cover any additional
Indebtedness or property (other than a substitution of like
property).
8.10. Indebtedness. The Company will not create,
incur, assume or suffer to exist any Indebtedness except:
(a) Indebtedness to the Banks and/or the Agent
hereunder;
(b) Indebtedness to any Bank arising under a Permitted
Interest Rate Protection Agreement;
(c) Indebtedness up to but not exceeding a principal
amount of $120 million created and incurred solely in
connection with any acquisition transaction permitted
pursuant to Section 8.07(a)(ii) following the borrowing of
Loans hereunder in an amount equal to the aggregate
unreduced Commitments (as originally in effect), provided
that (i) the debt/equity ratio in connection with any such
acquisition shall be no greater than 2:1; (ii) the terms of
such additional Indebtedness (financial or otherwise), any
guaranty thereof and/or any security therefor shall be no
less favorable to the Company and FI, and no more favorable
to the Persons providing such Indebtedness, than the terms
provided hereunder and under the other Major Documents (by
way of illustration, this clause (ii) shall preclude, among
other things and without limitation, the incurrence or
existence of Indebtedness having (1) a final maturity date
prior to the Final Maturity Date or (2) an amortization
schedule (or equivalent repayment mechanism) providing for
the repayment of principal (other than at final maturity) on
a basis more rapid than that provided in Section 3.01(i)(x)
hereof, but nothing in this clause (ii) shall preclude the
incurrence or existence of Indebtedness bearing interest at
a rate higher than that applicable to the Loans); (iii) each
of the Company and FI shall have obtained all approvals and
consents from all Persons (other than Non-Essential
Governmental Approvals) necessary in connection with the
consummation of such acquisition, the provision of any
related additional Company Services and the incurrence of
such additional Indebtedness and the Agent shall have
received an opinion to such effect in form and substance
satisfactory to it from counsel acceptable to it; (iv) the
acquisition of such additional assets and/or the incurrence
of such additional Indebtedness shall not result in, cause
or otherwise give rise to a Default or Material Adverse
Effect; and (v) the holders of such additional Indebtedness
shall have executed and delivered to the Banks an
intercreditor agreement in form and substance satisfactory
to the Majority Banks;
(d) purchase money indebtedness, in an aggregate
principal amount outstanding up to but not exceeding $5
million, incurred in connection with the acquisition of
assets other than those financed in whole or part with the
proceeds of the Loans or any Indebtedness referred in
paragraph (c) above;
(e) unsecured working capital indebtedness (including
letters of credit) in an aggregate amount not in excess of
$15 million; and
(f) any letter of credit issued for the account of the
Company in order to remove of record any Lien upon or with
respect to any property of the Company in connection with
the prosecution by the Company of any Permitted Contest if
cash collateral equal to the face amount of such letter of
credit shall have been deposited with or for the benefit of
the issuer of such letter of credit.
8.11. Investments. The Company will not make or
permit to remain outstanding any Investments except Permitted
Investments.
8.12. Compliance with Applicable Law; Etc.
(a) The Company shall comply in all material respects
with all Applicable Law (including, without limitation, all such
applicable law relating to environmental pollution, regulation or
control or to employee health or safety) and shall from time to
time obtain and renew, and shall comply with, all Governmental
Approvals as shall now or hereafter be necessary under Applicable
Law. The Company shall promptly upon receipt or publication
furnish a certified copy of each material Governmental Approval
to the Agent.
(b) Except as provided in clause (c) below, the
Company shall not petition, request or take any legal or
administrative action that seeks to amend, supplement or modify
any Project Governmental Approval if such amendment, supplement
or modification could reasonably be expected to result in, cause
or otherwise give rise to a Material Adverse Effect.
(c) If any Material Adverse Effect of a type referred
to in clause (b) of the definition thereof shall occur and be
known to the Company, the Company shall diligently and timely (i)
make all filings, (ii) pursue all remedies and appeals which the
Company determines, in good faith, to be desirable and (iii) take
such other lawful action, in each case, as shall be necessary or,
in the good faith opinion of the Company, desirable to (A)
prevent such Material Adverse Effect from becoming final and non-
appealable or otherwise irrevocable, (B) postpone the
effectiveness of such Material Adverse Effect and (C) cause such
Material Adverse Effect to be revoked or amended or modified so
as to eliminate the reasonable possibility of such Material
Adverse Effect.
8.13. Dividend Payments. The Company will not make
any Dividend Payment at any time; provided, however, that the
Company may make Dividend Payments in cash on each Quarterly Date
(or if such date is not a Business Day, on the next succeeding
Business Day), subject to the satisfaction of each of the
following conditions on the date of such Dividend Payment and
after giving effect thereto:
(a) no Default shall have occurred and be continuing;
(b) the making and amount of such Dividend Payment
shall be permitted under the terms of the Major Documents
and shall not give rise to any default thereunder
(including, without limitation, Section 11.7 of the Joint
Venture Agreement);
(c) on the date of such Dividend Payment, the Company
shall have paid (i) all Obligations due on or prior to such
date, (ii) all Cash Operating Costs in respect of the
quarterly period ending on such date, and (iii) all amounts,
if any, owed to FI pursuant to Sections 10.3 and 10.4(f)(ii)
of the Master Services Agreement; and
(d) the Company shall have delivered to each Bank upon
the declaration of such Dividend Payment a certificate of a
senior officer of the Company with respect to the
satisfaction of the foregoing conditions as at the date of
such certificate.
8.14. Lines of Business. The Company shall not engage
in any business, services or other activity other than the
ownership, possession, operation and maintenance of the Project
and the provision of the Company Services as contemplated
pursuant to the Major Documents.
8.15. Transactions with Affiliates. Except as
expressly permitted by this Agreement, the Company will not
directly or indirectly (a) make any Investment in an Affiliate;
(b) purchase or acquire assets from an Affiliate; or (c) enter
into any other transaction directly or indirectly with or for the
benefit of an Affiliate; provided that (i) nothing herein shall
prohibit the Company from performing its obligations and/or
exercising its rights under any Major Document, (ii) any
Affiliate who is an individual may serve as a director, officer
or employee of the Company and receive reasonable compensation
for his or her services in such capacity and (iii) nothing herein
shall prohibit any transaction between the Company and Affiliate
thereof upon fair and reasonable terms no less favorable to the
Company than those which would obtain in an arm's-length
transaction between Persons that are not Affiliates.
8.16. Use of Proceeds. The Company will use the
proceeds of the Loans hereunder solely to finance the acquisition
by the Company of a portion of the Initial Transfer Assets from
time to time acquired by the Company during the Availability
Period pursuant to each Purchase and Sale Agreement executed
during such period; provided, that neither the Agent nor any Bank
shall have any responsibility as to the use of any of such
proceeds.
8.17. Cash Flow Uses. The Company will apply all
funds withdrawn by the Company from the Master Services Proceeds
Account in the following order of priority:
FIRST, for the payment of the Obligations then due,
SECOND, for the payment of Cash Operating Costs then
due, provided that the payment of such operating costs
would not impair the Company's ability to pay its
Obligations as and when such Obligations come due,
THIRD, for the payment of all amounts, if any, owed to
FI pursuant to Sections 10.3 and 10.4(f)(ii) of the
Master Services Agreement, provided that the payment of
such amounts would not impair the Company's ability to
pay the Obligations and any Cash Operating Costs as and
when the same became due, and
FOURTH, for such purposes as the Company may determine,
consistent with the provisions of this Agreement.
8.18. Project Construction; Maintenance. The Company
will: (a) prior to the acquisition of any Infrastructure Support
Project assets inspect such assets in order to ensure that such
assets have been duly fabricated, constructed, assembled and
completed in accordance with good engineering practice and
generally accepted construction procedures, (b) operate and
manage and, where applicable, construct the Project in accordance
with sound industry practice, and (c) maintain and preserve the
Project and all of its other properties necessary or useful in
the proper conduct of its business in good working order and
condition, ordinary wear and tear exempted.
8.19. Performance, Enforcement and Amendment of
Agreements.
(a) The Company will at all times perform and observe
in all material respects all of its covenants and agreements
under each Project Document, diligently enforce all rights and
obligations thereunder and maintain each Project Document in full
force and effect (except to the extent of an expiration or
modification by its terms), all in accordance with the terms
thereof.
(b) The Company will not, amend, modify, supplement,
terminate or waive any provision of, or exercise any election or
right of approval, or permit or suffer to occur any of the
foregoing, under any Project Document, its articles of
association or any other constituting document of the Company
unless (i) such amendment, modification, supplement or waiver
relates exclusively to the amount or method of computation of the
rate of return of ALatieF or (ii) in any other case, the Company
shall have given the Agent prior written notice of such
amendment, modification, supplement, termination or waiver
together with a description of the reason(s) for and effect
thereof (except that no such prior notice or description need be
furnished for any amendment to the Exhibits to the Master
Services Agreement augmenting the scope of Company Services
and/or changing the qualitative standards applicable to any
Company Services pursuant to Section 5.1 of the Master Services
Agreement and the Exhibits thereto) and the effect of such
amendment, modification, supplement, termination or waiver is not
adverse to the Company or the Banks.
8.20. Conflicting Documents. The Company will not
enter into, or become bound by, any Conflicting Documents.
8.21. Offering or Transfer of Interests in the
Company. The Company will not, without the prior written consent
of the Majority Banks, permit or suffer to occur any offering or
transfer (whether public or private) of shares (other than the
subscription by ALatieF and FI of shares of the capital stock of
the Company pursuant to Article VI of the Joint Venture Agreement
and the Company's articles of association) or other ownership
interests in the Company or of any securities convertible or
exchangeable into any such shares or ownership interests or any
warrants or options for the acquisition thereof (any such
offering or transfer hereinafter a "Transfer Event"), whether or
not permitted by the terms of the Company's articles of
association or the Joint Venture Agreement; provided, however,
that notwithstanding anything to the contrary contained herein, a
Transfer Event shall not require the consent of the Majority
Banks so long as:
(i) such Transfer Event shall be in compliance with
Applicable Law, the Company's articles of association and
the Joint Venture Agreement;
(ii) such Transfer Event shall not result in, cause,
otherwise give rise to, or create a significant likelihood
of the occurrence of, a Default or Material Adverse Effect;
(iii) no single Person (other than ALatieF, FI or FCX)
or group of Affiliates shall own more than 10% of the
capital stock of the Company after giving effect to such
Transfer Event and all dilution contemplated by the terms of
any convertible or exchangeable securities and warrants and
options outstanding with respect to the capital stock of the
Company;
(iv) such Transfer Event shall occur after the
expiration of the Availability Period;
(v) the Company shall have delivered to the Agent
prior to such Transfer Event a Certificate of an Authorized
Officer of the Company as to the matters specified in
clauses (i) through (iv) above; and
(vi) the Agent shall have received prior to such
Transfer Event an opinion of counsel satisfactory to it, in
form and substance satisfactory to it, as to the matters of
law specified in clauses (i) and (ii) above.
8.22. Source of Interest. The Company will conduct
business so that interest paid on the Loans and Notes to any Bank
which is not a "related person" to the Company within the meaning
of Section 861(c)(2)(B) of the Code as in effect on the Closing
Date will be deemed to be income from sources without the United
States within the meaning of Sections 861(a)(1)(A) and 861(c) of
the Code as in effect on the Closing Date and (b) the Company
will use its best efforts (without undue cost) to conduct
business so that interest paid on the Loans and the Notes to any
Bank which is not a "related person" to the Company within the
meaning of Section 861(a)(2)(B) of the Code (as it may be amended
or substituted after the Closing Date) will be deemed to be
income from sources without the United States within the meaning
of Sections 861(a)(1)(A) and 861(c) of the Code (as it may be
amended or substituted after the Closing Date).
8.23. HGB Title Application; Hypothec Power and Sale
Power.
(a) Within 60 days following the acquisition by the
Company of any Infrastructure Support Project asset or property,
the Company shall make or cause to be made all necessary requests
and/or filings with the BPN in order to initiate proceedings for
the acquisition of Hak Guna Bangunan title by the Company with
respect to all real property underlying such asset or property
and all real property used or useful in connection therewith,
provided that such real property is located below Milepost 50.
Following the initiation of such proceedings, the Company will
promptly file such additional documents and take such additional
action as shall be necessary to acquire Hak Guna Bangunan title
to such real property.
(b) Promptly following the grant by BPN to the Company
of Hak Guna Bangunan title to any real property, the Company
shall execute and deliver to the Agent a Hypothec Power and a
Sale Power with respect to such real property. The Company shall
furnish to the notary public designated by the Agent such
documents, forms, licenses, permits as may be required by such
notary public in connection with the proper and valid execution
of the Hypothec Power and/or Sale Power (including, without
limitation, the original certificate of Hak Guna Bangunan title
with respect to such real property).
8.24. Employee Benefit Plans. The Company shall, and
shall cause each Company Commonly Controlled Entity to, comply in
all material respects with the applicable provisions of ERISA and
furnish to the Agent (i) promptly following the date on which any
pension benefit plan defined in Section 3(2) of ERISA maintained,
sponsored or contributed to by the Company or any Company
Commonly Controlled Entity becomes subject to ERISA (including,
without limitation, Title IV thereof), written notice thereof,
(ii) as soon as possible, and in any event within 30 days after
any responsible officer of the Company or any Company Commonly
Controlled Entity knows or has reason to know that any Reportable
Event with respect to any Company Plan has occurred that alone or
together with any other Reportable Event with respect to the same
or another such Company Plan could reasonably be expected to
result in liability of the Company to the PBGC in an aggregate
amount exceeding $500,000, a statement of a financial officer of
the Company setting forth the details as to such Reportable Event
and the action that the Company and/or such Company Commonly
Controlled Entity proposes to take with respect thereto, together
with a copy of the notice of such Reportable Event, if any, given
to the PBGC, (iii) promptly after receipt thereof, a copy of any
notice the Company or any Company Commonly Controlled Entity may
receive from the PBGC relating to the intention of the PBGC to
terminate any Company Plan or to appoint a trustee to administer
any Company Plan, (iv) within 10 days after a filing with the
PBGC pursuant to Section 412(n) of the Code of a notice of
failure to make any required installment or other payment with
respect to a Company Plan, a statement of a financial officer of
the Company setting forth details as to such failure and the
action that the Company and/or any Company Commonly Controlled
Entity proposes to take with respect thereto, together with a
copy of such notice given to the PBGC and (v) promptly and in any
event within 30 days after receipt thereof by the Company or any
Company Commonly Controlled Entity from the sponsor of a Company
Multiemployer Plan, a copy of each notice received by the Company
or any Company Commonly Controlled Entity concerning the
imposition of any Withdrawal Liability by such Company
Multiemployer Plan.
SECTION 9. EVENTS OF DEFAULT. If one or more of the
following events (herein called "Events of Default") shall occur
and be continuing:
(a) the Company shall default in the payment when due
of any principal of any Loan; the Company shall default in
the payment when due of any interest on any Loan or any
other amount payable by it hereunder and such default shall
continue for a period not less than five days after the due
date for such interest or other amount; or FI shall default
in the payment of any amount payable by it under the FI
Guaranty following written demand therefor by the Agent or
any Bank (through the Agent); or
(b) any representation, warranty or certification made
or deemed made by the Company or FI in any Credit Document
or in any certificate, financial statement or other document
furnished by any such Person to any Bank or the Agent shall
prove to have been false or misleading in any material
respect as of the time made or furnished; or
(c) the Company shall default in the performance of
any of its obligations under Section 8 hereof (other than
Sections 8.01, 8.02, 8.03, 8.06, 8.18 and 8.22) hereof or
any of its obligations under any Security Document; or the
Company shall default in the performance of any of its
obligations under Section 8.01, 8.02, 8.03, 8.06, 8.18 or
8.22 hereof or any of its other obligations in this
Agreement or any other Credit Document and such default
shall continue unremedied for a period of 30 days after
notice thereof to the Company by the Agent or any Bank
(through the Agent); or FI shall default in the performance
of its obligations under Section 4 of the FI Guaranty (other
than Sections 4.01, 4.02, 4.03, 4.05, 4.06, 4.12 and 4.14);
or FI shall default in the performance of any of its
obligations under Section 4.01, 4.02, 4.03, 4.05, 4.06, 4.12
or 4.14 of the FI Guaranty or any of its other obligations
under the Credit Documents (other than, in the case of FI,
as set forth in paragraph (a) above) and such default shall
continue unremedied for a period of 30 days after notice
therein to FI by the Agent or any Bank (through the Agent);
or
(d) the Company or FI shall admit in writing its
inability to, or be generally unable to, pay its debts as
such debts become due; or
(e) the Company or FI shall (i) apply for or consent
to the appointment of, or the taking of possession by, a
receiver, custodian, trustee or liquidator of itself or of
all or a substantial part of its property, (ii) make a
general assignment for the benefit of its creditors, (iii)
commence a voluntary case under the Bankruptcy Code (as now
or hereafter in effect) or any other law relating to
bankruptcy, insolvency, reorganization, winding-up or
composition, readjustment or moratorium of debts, (iv) file
a petition seeking to take advantage of any law relating to
bankruptcy, insolvency, reorganization, winding-up, or
composition, readjustment or moratorium of debts, (v) fail
to controvert in a timely and appropriate manner, or
acquiesce in writing to any petition filed against it in an
involuntary case under the Bankruptcy Code or any other law
relating to bankruptcy, insolvency, reorganization, winding-
up or composition, readjustment or moratorium of debts, or
(vi) take any corporate action for the purpose of effecting
any of the foregoing; or
(f) a proceeding or case shall be commenced involving
the Company or FI without the application or consent of such
Person, seeking (i) its liquidation, reorganization,
dissolution or winding-up, or the composition, readjustment
or moratorium of its debts, (ii) the appointment of a
trustee, receiver, custodian, liquidator or the like of such
Person or of all or any substantial part of its assets, or
(iii) similar relief in respect of the Company or FI under
any law relating to bankruptcy, insolvency, reorganization,
winding-up or composition, adjustment or moratorium of
debts, and such proceeding or case shall continue
undismissed, or an order, judgment or decree approving or
ordering any of the foregoing shall be entered and continue
unstayed and in effect, for a period of 60 or more days (or
such shorter period of time which such Person has pursuant
to such law to cause the dismissal of such proceeding or
case or stay the effectiveness of any such order, judgment
or decree); or an order for relief against the Company or FI
shall be entered in an involuntary case under the Bankruptcy
Code or any other law relating to bankruptcy, insolvency,
reorganization, winding-up or composition, readjustment or
moratorium of debts; or
(g) the Company shall default in the payment when due
of any amount in respect of any Indebtedness (other than the
Obligations) having an aggregate principal amount at least
equal to $500,000 (after giving effect to any period of
grace with respect to such Indebtedness); or any event
specified in any note, agreement, indenture or other
document evidencing or relating to any Indebtedness (other
than the Obligations) (hereinafter the "Applicable
Indebtedness") shall occur if the effect of such event is to
cause, or (with or without the giving of any required notice
or the expiration of any grace period or both) to permit the
holder or holders of any Indebtedness of the Company (or a
trustee or agent on behalf of such holder or holders) to
cause, Indebtedness of the Company at least equal to
$500,000 in the aggregate to become due, or to be prepaid in
full (whether by redemption, purchase or otherwise), prior
to its stated maturity (other than any such event (i)
constituting a sale by the Company permitted pursuant to
Section 8.07(b) of any property or asset which sale causes
Indebtedness described in Section 8.10(d) with respect to
such property or asset to become due upon consummation of
such sale, provided such Indebtedness is paid in full when
due and (ii) which results in the prepayment of Other
Acquisition Indebtedness under circumstances described in
Section 3.04(b)(i), (ii), (iii), (iv) and/or (v)
concurrently with (but not prior to) the prepayment of Loans
pursuant to such Sections, except that any prepayment of
such Other Acquisition Indebtedness under the circumstances
described in 3.04(b)(ii) need not be concurrent with the
prepayment of any Loans pursuant to such Section if the
provisions of such Section shall not then be applicable to
any Loans); or
(h) default shall be made with respect to any
Indebtedness of FI (other than Indebtedness under any
Existing Credit Agreement, the FI Guaranty or any other
Major Document) if the effect of any such default shall be
to accelerate, or to permit the holder or obligee of any
Indebtedness (or any trustee on behalf of such holder or
obligee) to accelerate (with or without notice or lapse of
time or both), the maturity of Indebtedness in an aggregate
amount in excess of $10,000,000; or any payment of principal
or interest, regardless of amount, on any Indebtedness of FI
(other than Indebtedness under any Existing Credit
Agreement, the FI Guaranty or any other Major Document) in
an aggregate principal amount in excess of $10,000,000 shall
not be paid when due, whether at maturity, by acceleration
or otherwise (after giving effect to any period of grace
specified in the instrument evidencing or governing such
Indebtedness); or
(i) an Existing Credit Agreement Event shall have
occurred and be continuing; or
(j) the Contract of Work shall be terminated or shall
fail to be in full force and effect; or
(k) a final judgment or judgments shall be rendered by
a court or courts against the Company or FI for the payment
of money in excess of $500,000 in the aggregate (in the case
of the Company) or $10,000,000 in the aggregate (in the case
of FI) and the same shall not be discharged (or provision
shall not be made for such discharge), or a stay of
execution thereof shall not be procured, within 30 days from
the date of entry thereof and the Company or FI, as the case
may be, shall not, within said period of 30 days, or such
longer period during which execution of the same shall have
been stayed, appeal therefrom and cause the execution
thereof to be stayed during such appeal; or
(l) FI shall fail to make any payment when due under
Article 10 of the Master Services Agreement; or
(m) the Company, ALatieF or FI shall default in its
obligations under any Project Document (other than, in the
case of FI, as set forth in paragraph (l) above), which
default could reasonably be expected to have or result in a
Material Adverse Effect, and such default shall continue
unremedied for 30 days after the occurrence thereof; or
(n) FTX shall at any time fail to own directly or
indirectly, beneficially or of record, at least 50.1% of the
voting stock of FI or otherwise fail to possess the power to
direct or cause the direction of the management and
operations of FI; or
(o) a Reportable Event or Reportable Events, or a
failure to make a required payment (within the meaning of
Section 412(n)(1)(A) of the Code) shall have occurred with
respect to any Company Plan or FI Plan that could reasonably
be expected to result in liability of the Company or FI to
the PBGC or to any such Plan in an aggregate amount
exceeding $500,000 (in the case of any Company Plan) or
$10,000,000 (in the case of any FI Plan) and, within 30 days
after the reporting of any such Reportable Event to the
Agent or after the receipt by the Agent of the statement
required pursuant to clause (iv) of Section 8.24 hereof or
clause (iii) of Section 4.06 of the FI Guaranty, as the case
may be, the Agent shall have notified the Company or FI, as
applicable, in writing that, (x) the Majority Banks have
made a determination that on the basis of such Reportable
Event or Reportable Events or the receipt of such statement,
there are reasonable grounds, (A) for the termination of the
applicable Company Plan(s) or FI Plan(s), as the case may
be, by the PBGC (B) for the appointment by the appropriate
United States District Court of a trustee to administer such
Company Plan(s) or FI Plan(s) or (C) for the imposition of a
lien in favor of any Company Plan or FI Plan and (y) as a
result thereof an Event of Default exists hereunder; or a
trustee shall be appointed by a United States District Court
to administer any such Company Plan(s) or FI Plan(s); or the
PBGC shall institute proceedings to terminate any Company
Plan or FI Plan; or
(p) (x) the sponsor of a Company Multiemployer Plan or
FI Multiemployer Plan shall notify the Company or any
Company Commonly Controlled Entity (in the case of any
Company Multiemployer Plan) or FI or any FI Company
Controlled Entity (in the case of any FI Multiemployer
Plan), as the case may be (each a "notified Person"), that
such notified Person has incurred Withdrawal Liability to
such Company Multiemployer Plan or FI Multiemployer Plan, as
applicable, (y) such notified Person does not have
reasonable grounds for contesting such Withdrawal Liability
(or, if such reasonable grounds do exist, a contest of such
Withdrawal Liability is not being timely prosecuted by
appropriate proceedings), and (z) the amount of such
Withdrawal Liability specified in such notice, when
aggregated with all other amounts required to be paid to
Company Multiemployer Plans or FI Multiemployer Plans, as
applicable, in connection with Withdrawal Liabilities
(determined as of the date or dates of such notification),
exceeds or requires payments in any one year exceeding
$500,000 (in the case of such Withdrawal Liabilities to
Company Multiemployer Plans) or $10,000,000 (in the case
Withdrawal Liabilities to FI Multiemployer Plans); or
(q) the sponsor of a Company Multiemployer Plan or FI
Multiemployer Plan shall notify the Company or any Company
Commonly Controlled Entity (in the case of any Company
Multiemployer Plan) or FI or any FI Company Controlled
Entity (in the case of any FI Multiemployer Plan), as the
case may be, that such Company Multiemployer Plan or FI
Multiemployer Plan is in reorganization or is being
terminated, within the meaning of Title IV of ERISA, if
solely as a result of such reorganization or termination the
aggregate annual contributions of the Company, any Company
Commonly Controlled Entity, FI or any FI Company Entity to
all such Company Multiemployer Plans or FI Multiemployer
Plans that are then in reorganization or have been or are
being terminated have been or will be increased over the
amounts required to be contributed to such Company
Multiemployer Plans or FI Multiemployer Plans for their most
recently completed plan years by an amount exceeding
$500,000 (in the case of any such Company Multiemployer
Plans) or $10,000,000 (in the case of any such FI
Multiemployer Plans); or
(r) the Company or FI shall fail to obtain, renew,
maintain or comply in all material respects with all such
Project Governmental Approvals which shall at the time in
question be necessary (i) for the performance by such Person
of its respective obligations under any Credit Documents to
which it is party or for the performance by such Person of
its respective material obligations under any Project
Documents to which it is party or, in the case of the
Company, the enforcement of its respective material rights
under the Project Documents, or (ii) for the grant by the
Company of the Liens created or purported to be created
under the Security Documents or for the validity and
enforceability thereof, or any such Project Governmental
Approval shall be revoked, terminated, withdrawn, suspended,
modified or withheld or shall cease to be in full force and
effect, and such failure to obtain, renew, maintain or
comply or such revocation, termination or other event shall
continue unremedied for 30 days after receipt by the Company
of written notice from the Agent or any Bank (through the
Agent); or any proceeding shall be commenced by or before
any Governmental Authority for the purpose of so revoking,
terminating, withdrawing, suspending, modifying or
withholding any such Project Governmental Approval and such
proceeding is not dismissed or otherwise resolved favorably
for such Person within 90 days; or any Major Document shall
cease to be in full force and effect; or
(s) any Security Document or the FI Guaranty shall
cease for any reason to be in full force and effect or any
party thereto (other than the Agent or any Bank) shall so
assert in writing; any Security Document shall cease to be
in effective to grant to the Agent for the benefit of the
Secured Parties a valid and effective first priority Lien on
the Collateral described therein; or
(t) any Governmental Authority shall condemn, seize,
nationalize, assume the management of or appropriate any
material portion of the property, assets or revenues of the
Company or FI (either with or without payment of
compensation); or the Ministry of Mines and Energy of
Indonesia (or any successor entity) or the Government of
Indonesia (or any successor entity, lawful or otherwise)
shall have taken any action (whether or not having the force
of law) in contravention of the Contract of Work which
materially adversely affects the ability of the Company, FI
or ALatieF to perform its obligations under any Major
Document to which it is party; or
(u) the Company shall abandon the Project for a period
of 30 or more days,
THEREUPON: (1) in the case of an Event of Default other than
those referred to in clauses (e) and (f) of this Section 9, the
Agent may and, upon request of the Majority Banks, shall, by
notice to the Company, cancel the Commitments and/or declare the
principal amount then outstanding of, and the accrued interest
on, the Loans and all other amounts payable by the Company
hereunder and under the Notes (including, without limitation, any
amounts payable under Section 5.04 hereof) to be forthwith due
and payable, whereupon such amounts shall be immediately due and
payable without presentment, demand, protest or other formalities
of any kind, all of which are hereby expressly waived by the
Company; and (ii) in the case of the occurrence of an Event of
Default referred to in clause (e) or (f) of this Section 9, the
Commitments shall automatically be canceled and the principal
amount then outstanding of, and the accrued interest on, the
Loans and all other amounts payable by the Company hereunder and
under the Notes (including, without limitation, any amounts
payable under Section 5.04 hereof) shall automatically become
immediately due and payable without presentment, demand, protest
or other formalities of any kind, all of which are hereby
expressly waived by the Company.
SECTION 10. THE AGENT.
10.01. Appointment, Powers and Immunities. Each Bank
hereby irrevocably appoints and authorizes the Agent to act as
its agent hereunder and under the other Credit Documents with
such powers as are specifically delegated to the Agent by the
terms of this Agreement and of the other Credit Documents,
together with such other powers as are reasonably incidental
thereto. Without limitation of the foregoing, each Bank hereby
specifically authorizes the Agent to execute and deliver on its
behalf the FI Consent, each Security Document and any other
document or instrument contemplated hereby or thereby. The Agent
(which term as used in this sentence and in Section 10.05 hereof
and in the first sentence of Section 10.06 hereof shall include
reference to its affiliates and its own and its affiliates'
officers, directors, employees and agents): (a) shall not have
duties or responsibilities except those expressly set forth in
this Agreement and in the other Credit Documents and shall not by
reason of this Agreement or any other Credit Document be a
trustee for any Bank; (b) shall not be responsible to any Bank
for any recitals, statements, representations or warranties
contained in this Agreement or in any other Credit Document, or
in any certificate or other document referred to or provided for
in, or received by any of them under, this Agreement or any other
Credit Document, or for the value, validity, effectiveness,
genuineness, enforceability or sufficiency of this Agreement or
any other Credit Document or any other document referred to or
provided for herein or therein or for any failure by the Company
or any other Person to perform any of its obligations hereunder
or thereunder; (c) shall not be required to initiate or conduct
any litigation or collection proceedings hereunder or under any
other Credit Document; and (d) shall not be responsible for any
action taken or omitted to be taken by it hereunder or under any
other Credit Document or under any other document or instrument
referred to or provided for herein or therein or in connection
herewith or therewith, except for its own gross negligence or
willful misconduct. The Agent may employ agents and attorneys-
in-fact and shall not be responsible for the negligence or
misconduct of any such agents or attorneys-in-fact selected by it
in good faith. The Agent may deem and treat the payee of any
Note as the holder thereof for all purposes hereof unless and
until a written notice of the assignment or transfer thereof
shall have been filed with the Agent, together with the written
consent of the Company to such assignment or transfer, and the
Agent shall have consented to such assignment or transfer.
10.02. Reliance by Agent. The Agent shall be entitled
to rely upon any certification, notice or other communication
(including any thereof by telephone, telex, telegram or cable)
believed by it to be genuine and correct and to have been signed
or sent by or on behalf of the proper Person or Persons, and upon
advice and statements of legal counsel, independent accountants
and other experts selected by the Agent. As to any matters not
expressly provided for by this Agreement or any other Credit
Document, the Agent shall in all cases be fully protected in
acting, or in refraining from acting, hereunder and thereunder in
accordance with instructions signed by the Majority Banks, and
such instructions of the Majority Banks and any action taken or
failure to act pursuant thereto shall be binding on all of the
Banks.
10.03. Defaults. The Agent shall not be deemed to
have knowledge or notice of the occurrence of a Default (other
than the non-payment of principal of or interest on Loans or of
the Commitment Fee) unless notified by a Bank or the Company
specifying such Default and stating that such notice is a "Notice
of Default". In the event that the Agent receives such a notice
of the occurrence of a Default, the Agent shall give prompt
notice thereof to the Banks (and shall give each Bank prompt
notice of each such non-payment). The Agent shall (subject to
Section 10.07 hereof) take such action with respect to such
Default as shall be directed by the Majority Banks, provided
that, unless and until the Agent shall have received such
directions, the Agent may (but shall not be obligated to) take
such action, or refrain from taking such action, with respect to
such Default as it shall deem advisable in the best interest of
the Banks.
10.04. Rights as Banks. With respect to its
Commitment and the Loans made by it, Chase (and any successor
acting as an Agent) in its capacity as a Bank hereunder shall
have the same rights and powers hereunder as any other Bank and
may exercise the same as though it were not acting as an Agent,
and the term "Bank" or "Banks" shall, unless the context
otherwise indicates, include the Agent in their individual
capacities. Chase (and any successor acting as an Agent) and its
affiliates may (without having to account therefor to any Bank)
accept deposits from, lend money to and generally engage in any
kind of banking, trust or other business with the Company and any
of its affiliates) as if it were not acting as an Agent, and
Chase and its affiliates may accept fees and other consideration
from the Company for services in connection with this Agreement
or otherwise without having to account for the same to the Banks.
10.05. Indemnification. The Banks agree to indemnify
the Agent (to the extent not reimbursed under Section 11.03
hereof, but without limiting the obligations of the Company under
said Section 11.03), ratably in accordance with the aggregate
principal amount of the Loans made by the Banks (or, if no Loans
are at the time outstanding, ratably in accordance with their
respective Commitments), for any and all liabilities,
obligations, losses, damages, penalties, actions,judgments,
suits, costs, expenses or disbursements of any kind and nature
whatsoever which may be imposed on, incurred by or asserted
against such Agent in any way relating to or arising out of this
Agreement or any other Credit Document or any other documents
contemplated by or referred to herein or therein or the
transactions contemplated hereby (including, without limitation,
the costs and expenses which the Company is obligated to pay
under Section 11.03 hereof but excluding, unless a Default has
occurred and is continuing, normal administrative costs and
expenses incident to the performance of its agency duties
hereunder) or the enforcement of any of the terms hereof or
thereof or of any such other documents, provided that no Bank
shall be liable for any of the foregoing to the extent they arise
from the gross negligence or willful misconduct of the party to
be indemnified.
10.06. Non-Reliance on Agent and other Banks. Each
Bank agrees that it has, independently and without reliance on
the Agent or any other Bank, and based on such documents and
information as it has deemed appropriate, made its own credit
analysis of the Company, FI, ALatieF and Indonesia and its own
decision to enter into this Agreement and that it will,
independently and without reliance upon any of the Agent or any
other Banks, and based on such documents and information as it
shall deem appropriate at the time, continue to make its own
analysis and decisions in taking or not taking action under this
Agreement or any of the other Credit Documents. The Agent shall
not be required to keep informed as to the performance or
observance by the Company of this Agreement or any of the other
Credit Documents or any other document referred to or provided
for herein or therein or to inspect the properties or books of
the Company. Except for notices, reports and other documents and
information expressly required to be furnished to the Banks by
the Agent hereunder, the Agent shall not have any duty or
responsibility to provide any Bank with any credit or other
information concerning the affairs, financial condition or
business of the Company, FI or ALatieF (or any of their
respective Affiliates) which may come into the possession of the
Agent or any of its affiliates.
10.07. Failure to Act. Except for action expressly
required of the Agent hereunder and under the other Credit
Documents, the Agent shall in all cases be fully justified in
failing or refusing to act hereunder and thereunder unless it
shall receive further assurances to its satisfaction from the
Banks of their indemnification obligations under Section 10.05
hereof against any and all liability and expense which may be
incurred by it by reasons of taking or continuing to take any
such action.
10.08. Resignation or Removal of Agent. Subject to
the appointment and acceptance of a successor Agent as provided
below, the Agent may resign at any time by giving notice thereof
to the Banks and the Company, and the Agent may be removed at any
time with or without cause by the Majority Banks. Upon any such
resignation or removal, the Majority Banks (with the consent of
the Company, not to be unreasonably withheld or delayed) shall
have the right to appoint a successor Agent. If no successor
Agent shall have been so appointed by the Majority Banks and
shall have accepted such appointment within 30 days after the
retiring Agent's giving of notice of resignation or the Majority
Banks' removal of the retiring Agent, then the retiring Agent
may, on behalf of the Banks, appoint a successor Agent, which
shall be a bank which has an office in New York, New York with a
combined capital and surplus of at least $500,000,000. Upon the
acceptance of any appointment as Agent hereunder by a successor
Agent, such successor Agent shall thereupon succeed to and become
vested with all the rights, powers, privileges and duties of the
retiring Agent, and the retiring Agent shall be discharged from
its duties and obligations hereunder. After any retiring Agent's
resignation or removal hereunder as Agent, the provisions of this
Section 10 shall continue in effect for its benefit in respect of
any actions taken or omitted to be taken by it while it was
acting as the Agent.
10.09. Change of Reference Banks. Any Reference Bank
may at any time be replaced at the request of the Company or any
other Bank (with the consent of the Company) by another Bank
designated (or consented to) by the Company, provided the
Majority Banks (including in any event such other Bank) consent
to such replacement.
SECTION 11. MISCELLANEOUS.
11.01. Waiver. No failure on the part of the Agent or
any Bank to exercise and no delay in exercising, and no course of
dealing with respect to, any right, power or privilege under this
Agreement or any Note shall operate as a waiver thereof, nor
shall any single or partial exercise of any right, power or
privilege under this Agreement or any Note preclude any other or
further exercise thereof or the exercise of any other right,
power or privilege. The remedies provided herein are cumulative
and not exclusive of any remedies provided by law.
11.02. Notices. All notices and other communications
provided for herein and under the Security Documents (including,
without limitation, any modifications of, or waivers or consents
under, this Agreement) shall be given or made by telex, telecopy,
telegraph, cable or in writing and telexed, telecopied,
telegraphed, cabled, mailed or delivered to the intended
recipient at the "Address for Notices" specified opposite its
name on the signature pages hereto; or, as to any party, at such
other address as shall be designated by such party in a notice to
each other party. Except as otherwise provided in this
Agreement, all such communications shall be deemed to have been
duly given when transmitted by telex or telecopier, delivered to
the telegraph or cable office or personally delivered or, in the
case of a mailed notice, upon receipt, in each case given or
addressed as aforesaid.
11.03. Expenses, Indemnification; Etc. The Company
agrees to pay or reimburse each of the Banks and the Agent for
paying: (a) all reasonable out-of-pocket costs and expenses of
the Agent (including, without limitation, the fees and expenses
of Milbank, Tweed, Hadley & McCloy, special United States counsel
to the Agent) in connection with (i) the negotiation,
preparation, execution and delivery of this Agreement, the other
Credit Documents and the Project Documents and the making of the
Loans hereunder and (ii) any amendment, modification or waiver of
any of the terms of this Agreement, any of the other Credit
Documents or any Project Document; (b) all costs and expenses of
the Banks and the Agent (including counsels' fees) in connection
with any Default and any enforcement or collection proceedings
resulting therefrom; and (c) all transfer, stamp, documentary or,
other similar taxes, assessments or charges levied by any
governmental or revenue authority in respect of this Agreement,
any or the other Credit Documents or any Project Document or any
other document referred to herein or therein and all costs,
expenses, taxes, assessments and other charges incurred in
connection with any filing, registration, recording or perfection
of any security interest contemplated by this Agreement, any
other Credit Document or any Project Document or any document
referred to herein or therein.
The Company hereby agrees to indemnify the Agent and
each Bank and their respective directors, officers, employees and
agents from, and hold each of them harmless against, any and all
losses, liabilities, claims, damages or expenses incurred by any
of them arising out of or by reason of any third party
investigation or litigation or other proceedings (including any
threatened investigation or litigation or other proceedings)
relating to (a) any actual or proposed use by the Company of the
proceeds of any of the Loans, (b) the execution, delivery and
performance (or breach) by any of the Company, FI, ALatieF or any
other Person party to a Major Document (other than the Agent or
any Bank) of any Major Document or any document contemplated
thereby and (c) without limitation of (b) above, any failure by
any of the Company, FI, ALatieF or any other Person party to a
Major Document (other than the Agent or any Bank) to comply with
Applicable Law (including, without limitation, any such law
relating to the protection of health, safety and/or the
environment). Such indemnity shall include, without limitation,
the reasonable fees and disbursements of counsel incurred in
connection with any such investigation or litigation or other
proceedings (but excluding any such losses, liabilities, claims,
damages or expenses incurred by reason of the gross negligence or
willful misconduct of the Person to be indemnified), and shall
survive the payment in full of all other Obligations.
11.04. Amendments, Etc. (a) Except as otherwise
expressly provided in this Agreement, any provision of this
Agreement may be amended or modified only by an instrument in
writing signed by the Company, the Majority Banks (or by the
Agent acting with the consent of the Majority Banks) and, solely
in the case of any "FI Amendment" (as defined below) and without
limitation of any obligations of FI under the FI Guaranty, FI,
and any provision of this Agreement may be waived by the Majority
Banks (or by the Agent acting with the consent of the Majority
Banks); provided that no amendment, modification or waiver shall,
unless by an instrument signed by all of the Banks or by the
Agent acting with the consent of all of the Banks (and, if its
rights are affected thereby, the Agent): (a) increase the amount
or extend the term of the Commitment, or extend the time for the
reduction or termination of the Commitments, (b) extend the date
fixed for the payment of principal of or interest on any Loan,
(c) reduce the amount of any payment of principal thereof or the
rate at which interest is payable thereon or any fee is payable
hereunder, (d) alter the terms of this Section 11.04, (e) amend
the definition of the term "Majority Banks", or (f) release or
otherwise terminate the Lien in favor of the Banks under the
Security Documents with respect to any Collateral (except as
otherwise permitted by the Credit Documents). For purposes of
this Section 11.04, the term "FI Amendment" shall mean any
amendment or modification to this Agreement which (a) increases
the Commitments, or provides for the making of loans to the
Company, in either case in a principal amount greater than $60
million, (b) increases the Applicable Margin, (c) changes in a
manner adverse to the Company the basis for determining the rate
of interest applicable to the Loans from that set forth in the
definition of "SIBO Rate" in Section 1.01 or Section 5.02, as
applicable, (d) increases the rate at which commitment fees
accrue pursuant to Section 2.04(a), (e) advances the Final
Maturity Date or makes the amortization of principal of the Loans
more rapid than as provided in Section 3.01(i)(x) or (f) releases
or otherwise terminates the Lien in favor of the Banks with
respect to any material Collateral (except to the extent such
release or termination is permitted under the Credit Documents).
(b) In the case of any amendment or modification of
this Agreement which, in accordance with the terms hereof is
required only to be, and is in fact, approved and executed by
less than all of the Banks (or, where expressly provided herein,
by the Agent alone), each Bank that has not and, in accordance
with the terms hereof, is not required to, approve and execute
such amendment or modification shall be deemed to have (i)
approved such amendment or modification and (ii) appointed the
Agent as its lawful attorney-in-fact to execute such amendment or
modification on its behalf.
11.05. Successors and Assigns. This Agreement shall
be binding upon and inure to the benefit of the parties hereto
and their respective successors and permitted assigns.
11.06. Assignments and Participations.
(a) The Company may not assign its rights or
obligations hereunder or under the Notes without the prior
consent of all of the Banks and the Agent.
(b) No Bank may assign any of its Loans, its Note or
its Commitment without the prior consent of the Company and the
Agent; provided that, (i) such consent shall not be unreasonably
withheld so long as such Bank retains for its own account a
portion of its Commitment and/or Loans in an amount not less than
U.S. $5,000,000; (ii) without the consent of the Company or the
Agent, any Bank may assign to another Bank or its affiliate all
or (subject to the further clauses below) any portion of its
Commitment; (iii) unless the Company and the Agent otherwise
consent, any such partial assignment shall be in a minimum amount
of U.S. $2,500,000 (or, if such Bank's Commitment is greater than
U.S. $2,500,000 but not in excess of U.S. $5,000,000, in a
minimum amount equal to the excess of such Bank's Commitment
amount over U.S. $2,500,000); (iv) such assigning Bank shall also
simultaneously assign to such assignee Bank the same proportion
of each of its Loans then outstanding (together with the same
proportion of its Note then outstanding) and (v) such assignee
Bank shall be a commercial bank. Upon written notice to the
Company and the Agent of an assignment permitted by the preceding
sentence (which notice shall identify the assignee, the amount of
the assigning Bank's Commitment and Loans assigned in detail
reasonably satisfactory to the Agent) and upon the effectiveness
of any assignment consented to by the Company and the Agent, the
assignee shall have, to the extent of such assignment (unless
otherwise provided in such assignment with the consent of the
Company and the Agent), the obligations, rights and benefits of a
Bank hereunder holding the Commitment and Loans (or portions
thereof) assigned to it (in addition to the Commitment and Loans,
if any, theretofore held by such assignee) and the assigning Bank
shall, to the extent of such assignment, be released from the
Commitment (or portions thereof) so assigned.
(c) A Bank may sell or agree to sell to one or more
other Persons a participation in all or any part of any Loan held
by it or Loans made or to be made by it,in which event each such
participant shall not have any rights or benefits under this
Agreement or any Note or any other Credit Document (the
participant's rights against such Bank in respect of such
participation to be those set forth in the agreement (the
"Participation Agreement") executed by such Bank in favor of the
participant). All amounts payable by the Company to any Bank
under Section 5 hereof shall be determined as if such Bank had
not sold or agreed to sell any participations in such Loan and as
if such Bank were funding all of such Loan in the same way that
it is funding the portion of such Loan in which no participations
have been sold. In no event shall a Bank that sells a
participation be obligated to the participant under the
Participation Agreement to take or refrain from taking any action
hereunder or under any other Credit Document or under such Bank's
Note except that such Bank may agree in the Participation
Agreement that it will not, without the consent of the
participant, agree to (i) the increase or extension of the term,
or the extension of the time for the reduction or termination, of
such Bank's Commitment, (ii) the extension of any date fixed for
the payment of principal of or interest on the related Loan or
Loans or any portion of any fees payable to the participant,
(iii) the reduction of any payment of principal thereof, (iv) the
reduction of the rate at which either interest is payable thereon
or (if the participant is entitled to any part thereof)
commitment fee is payable hereunder to a level below the rate at
which the participant is entitled to receive interest or
commitment fee (as the case may be) in respect of such
participation or (v) release or otherwise terminate the Lien
under any Security Document on any of the assets and revenues
purported to be covered thereby except as otherwise expressly
provided in the Credit Documents.
(d) Any Bank may at any time assign all or any portion
of its rights under this Agreement and its Note to a Federal
Reserve Bank. No such assignment shall release the transferror
Bank from its obligations hereunder.
(e) A Bank may furnish any information concerning the
Company in the possession of such Bank from time to time to
assignees and participants (including prospective assignees and
participants), subject, however, to the provisions of Section
11.11 hereof.
11.07. Survival. The obligations of the Company under
Sections 5.01, 5.04 and 11.03 hereof shall survive the repayment
of the Loans and the termination of the Commitments.
11.08. Captions. The table of contents and captions
and section headings appearing herein are included solely for
convenience of reference and are not intended to affect the
interpretation of any provision of this Agreement.
11.09. Counterparts. This Agreement may be executed
in any number of counterparts, all of which taken together shall
constitute one and the same instrument and any of the parties
hereto may execute this Agreement by signing any such
counterpart.
11.10. Governing Law; Submission to Jurisdiction;
Waiver of Jury Trial; Waiver of Certain Claims and Defenses.
This Agreement and the Notes shall be governed by, and construed
in accordance with, the law of the state of New York. Without in
any way limiting the right of any Secured Party to commence and
pursue proceedings against the Company in Indonesia, the Company
hereby submits to the nonexclusive jurisdiction of (1) the United
States district court for the southern district of New York, (2)
any New York state court sitting in New York City and (3) High
Court of Justice in London, United Kingdom for the purposes of
all legal proceedings arising out of or relating to this
Agreement or the transactions contemplated hereby. The Company
irrevocably waives, to the fullest extent permitted by law, any
objection which it may now or hereafter have to the laying of the
venue of any such proceeding brought in such a court and any
claim that any such proceeding brought in such a court has been
brought in an inconvenient forum. EACH OF THE COMPANY, THE AGENT
AND THE BANKS HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT
PERMITTED BY LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL
PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY. The Company additionally
hereby irrevocably waives, to the fullest extent permitted by
law, any claim or defense that any action or proceeding relating
in any way to this Agreement, the Loans, the Notes or any other
Credit Document should be dismissed or stayed by reason, or
pending the resolution, of any action or proceeding commenced by
the Company relating in any way to this Agreement, the Loans, the
Notes or any other Credit Document whether or not commenced
earlier. To the fullest extent permitted by law, the Company
shall take all measures necessary for any such action or
proceeding commenced by the Agent or any Bank to proceed to
judgment prior to the entry of judgment in any such action or
proceeding commenced by the Company. To the extent that the
Company may now or hereafter be entitled, in any jurisdiction in
which judicial proceedings may at any time be commenced with
respect to this Agreement or any Credit Document, to claim for
itself or its property, assets or revenues any immunity (whether
by reason of sovereignty or otherwise) from suit, jurisdiction of
any court, attachment prior to judgement, set-off, execution of a
judgment or from any other legal process or remedy, and to the
extent that there may be attributed to the Company such an
immunity (whether or not claimed), the Company hereby irrevocably
agrees not to claim and hereby irrevocably waives such immunity.
11.11. Confidentiality. Each Bank and the Agent
agrees (on behalf of itself and each of its affiliates,
directors, officers, employees and representatives) to use
reasonable precautions to keep confidential, in accordance with
their customary procedures for handling confidential information
of this nature and in accordance with safe and sound banking
practices, any non-public information supplied to it by the
Company pursuant to this Agreement which is identified by the
Company as being confidential at the time the same is delivered
to the Banks or the Agent, provided that nothing herein shall
limit the disclosure of any such information (a) to the extent
required by statute, rule, regulation or judicial process, (b) to
counsel for any of the Banks or the Agent, (c) to bank examiners,
auditors or accountants, (d) to any Agent or any other Bank, (e)
as required in connection with any litigation to which any one or
more of the Banks or the Agent is a party, (f) to other experts
engaged by the Agent or any Bank in connection with the Credit
Agreement and the transactions contemplated hereby, (g) to the
extent that such information is required to be disclosed to a
Government Authority in connection with a tax audit or dispute,
(h) in connection with any Default and any enforcement or
collection proceedings resulting therefrom or in connection with
the negotiation of any restructuring or "work-out" (whether or
not consummated) of the obligations of the Company and/or FI
under the Credit Documents or the obligations of any party under
any Project Document or (i) to any assignee or participant (or
prospective assignee or participant) so long as such assignee or
participant (or prospective assignee or participant) first
executes and delivers to the respective Bank an agreement (a
"Confidentiality Agreement") in substantially the form of
Exhibit N hereto; and provided finally that in no event shall any
Bank or any Agent be obligated or required to return any
materials furnished by the Company. The obligations of each Bank
under this Section 11.11 shall supersede and replace the
obligations of such Bank under any confidentiality letter in
respect of this financing signed and delivered by such Bank to
the Company prior to the date hereof.
11.12. Judgment Currency. This is an international
loan transaction in which the specification of Dollars and
payment in New York, New York, United States is of the essence,
and Dollars shall be the currency of account in all events. The
payment obligations of the Company under this Agreement and the
Notes shall not be discharged by an amount paid in another
currency or in another place, whether pursuant to a judgment or
otherwise, to the extent that the amount so paid on conversion to
Dollars and transfer to New York City under normal banking
procedures does not yield the amount of Dollars in New York City
due hereunder. If for the purpose of obtaining judgment in any
court it is necessary to convert a sum due hereunder in Dollars
into another currency (the "second currency"), the rate of
exchange which shall be applied shall be that at which in
accordance with normal banking procedures the Agent could
purchase Dollars with the second currency on the Business Day
next preceding that on which such judgment is rendered. The
obligation of the Company in respect of any such sum due from it
to the Agent or any Bank hereunder or under the Notes (an
"entitled person") shall, notwithstanding the rate of exchange
actually applied in rendering such judgment, be discharged only
to the extent that on the Business Day following receipt by such
entitled person of any sum adjudged to be due hereunder or under
the Notes in the second currency such entitled person may in
accordance with normal banking procedures purchase in the free
market and transfer to New York City Dollars with the amount of
the second currency so adjudged to be due; and the Company hereby
agrees, as a separate obligation and notwithstanding any such
judgment, to indemnity such entitled person against, and to pay
such entitled person on demand, in Dollars in New York City, any
difference between the sum originally due to such entitled person
in Dollars and the amount of Dollars so purchased and
transferred.
11.13. Publication of Articles of Association. Each
Bank hereby releases the Direksi (executive officers) of the
Company from any personal liability that such Direksi may have
hereunder solely as a consequence of the Company having executed
this Agreement prior to the publication of the Company's articles
of association in the official Gazette, provided that the
foregoing release shall not apply to (i) any personal liability
of the Direksi arising as a consequence of any other event or
circumstance whatsoever or (ii) any liability or obligation of
the Company or any other Person (including FI) under any Major
Document.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed as of the day and year first above
written.
The Company P.T. ALATIEF FREEPORT
INFRASTRUCTURE CORPORATION
By
Name:
Title:
Sarinah Jaya
Jl. Rawa Terale II, No. 2,
Kawasan Industri Pulo Gadung
Jakarta, Indonesia
Telecopier No.: 6221 489 5019
Telephone No. : 6221 489 3659
Attention: Noor Budaman
The Agent THE CHASE MANHATTAN BANK
(NATIONAL ASSOCIATION), AS AGENT
By
Name:
Title:
Address for Notices to Chase
as Agent:
7th Floor World Trade Center
280 Gloucester Road
Causeway Bay
Hong Kong
Telex No. : 73437 CHASM HX
Telecopier No.: 852-837-5221
Telephone No. : 852-837-5536
Attention : Tommy Tang,
Agency/OBU
Copies to:
The Chase Manhattan Bank, N.A.
Chase Plaza - 4th Floor
Jl. Jend. Sudirman Kav. 21
Jakarta , Indonesia
Telecopier No.: 6221-571-2445
6221-571-0958
Telephone No. : 6221-571-8446
Attention : Witjaksono Sidharta
The Banks THE CHASE MANHATTAN BANK
(NATIONAL ASSOCIATION)
By
Name:
Title:
Address for Notices:
New York International
Banking Facility
c/o Asia Service Unit
7th Floor World Trade Center
280 Gloucester Road
Causeway Bay
Hong Kong
Telex No. : 73437 CHASM HX
Telecopier No.: 852-837-5221
Telephone No. : 852-837-5534
Attention : Franky Lai,
Agency/OBU
Copies to:
The Chase Manhattan Bank, N.A.
Chase Plaza - 4th Floor
Jl. Jend. Sudirman Kav. 21
Jakarta , Indonesia
Telecopier No.: 6221-571-2445
6221-571-0958
Telephone No. : 6221-571-8446
Attention : Witjaksono Sidharta
The Banks AMERICAN EXPRESS BANK LTD.
By:_________________________
Name:
Title:
Address for Notices:
16 Collyer Quay
Hitachi Towers
8th Floor
Singapore 0104
Telex No. : RS 21172
Telecopier No.: (65) 5384833
(Singapore)
(6221) 521 6999
(Jakarta)
Telephone No.: (65) 43930652
(Singapore)
(6221) 521 6455
(Jakarta)
Attention: Juliana Ong,
Singapore
Eko Budianto,
Jakarta
The Banks BANQUE PARIBAS
By:_________________________
Name:
Title:
Address for Notices:
UOB Plaza I #43-01
80 Raffles Place
Singapore 0104
Telex No. : RS 20414 PARSIN
Telecopier No.: (65) 5384300
Telephone No. : (65) 4395000
Attention: Gigi Chen,
Assistant General
Manager, Project Finance
Patrick Bader,
Deputy Manager
Project Finance
The Banks CITIBANK, N.A.
By:_________________________
Name:
Title:
Address for Notices:
5 Shenton Way
UIC Building
Singapore 0106
Telex : RS 24584 CITIBANK
Telecopy No. : (65) 320-5092
Telephone No.: (65) 320-5337
Attention : Corporate Finance
Money Market
Restiana Ling Gadjaya
Sylvia Tennjaya
Copies to:
Citibank, N.A. Jakarta
Landmark Building
Jl. Jend. Sudirman No. 1
Jakarta 12910
Attention: Robert Hughes
John Pitfield
The Banks BANQUE NATIONALE DE PARIS
By:_________________________
Name:
Title:
Address for Notices:
Tung Centre
20 Collyer Quay
Singapore 0104
Telex No. : NABAPAR RS 24315
23424
Telecopier No.: (65) 2243459
Telephone No. : (65) 2240211
Attention : Lee Fook Chiew
Edmund Tang
Therese Miranda
The Banks ABN AMRO BANK N.V.
By:_________________________
Name:
Title:
Address for Notices:
18 Church Street
Singapore 0104
Telex No. : ABNSIN RS 24396
Telecopier No.: (65) 5325373
Telephone No. : (65) 5315319
Attention : Corporate Banking
Department
Chow Ying Hoong
Joey Wong
The Banks BRI FINANCE LIMITED
By:_________________________
Name:
Title:
Address for Notices:
30/F, Far East Finance Centre
16 Harcourt Road, HK
Hong Kong
Telex No. : 70397 BRIEL HX
Telecopier No.: (852) 8613693
Telephone No. : (852) 5271318
Attention : Simon S.W. Wong
Windy Leung
The Banks PT. PAN INDONESIA BANK
By:_________________________
Name:
Title:
Address for Notices:
Panin Bank Centre
Jl. Jend. Sudirman (Senayan)
Jakarta 10270-Indonesia
Telex No. : 47380,
47384 PIBHO JA
Telecopier No.: (005 6221) 7251903
Telephone No. : (005 6221) 7394545
Attention : Devid Lukman
SCHEDULE I
to the Credit Agreement
LIST OF APPLICABLE LENDING OFFICES
OF THE BANKS AND COMMITMENTS
Name of Bank Applicable Lending Office Commitment
The Chase Manhattan Bank New York International Banking $15,000,000
(National Association) Facility
c/o Asia Service Unit
7th Floor World Trade Center
280 Gloucester Road
Causeway Bay
Hong Kong
American Express Bank Singapore $14,000,000
Ltd. 16 Collyer Quay
Hitachi Towers
8th Floor
Singapore 0104
Banque Paribas Singapore Branch $10,000,000
UOB Plaza I #43-01
80 Raffles Place
Singapore 0104
Citibank, N.A. Singapore $10,000,000
5 Shenton Way
UIC Building
Singapore 0106
Banque Nationale de Singapore Branch $ 5,000,000
Paris Tung Centre
20 Collyer Quay
Singapore 0104
ABN AMRO Bank N.V. Singapore Branch $ 4,000,000
18 Church Street
Singapore 0104
BRI Finance Limited Hong Kong $ 1,000,000
30th Floor
Far East Finance Centre
16 Harcourt Road
Hong Kong
PT. Pan Indonesia Bank Panin Bank Centre $ 1,000,000
Jl. Jend. Sudirman (Senayan)
Jakarta, 10270 Indonesia
===========
TOTAL COMMITMENT $60,000,000
SCHEDULE II
to Credit Agreement
LITIGATION RELATING TO COMPANY
(NONE)
SCHEDULE III
to Credit Agreement
PROJECT GOVERNMENTAL APPROVALS
(OTHER THAN NON-ESSENTIAL GOVERNMENTAL APPROVALS)
1. Notification Letter of Presidential Approval from the State Minister of
Investment/Chairman of the Capital Investment Coordinating Board
approving the application of FI and ALatieF to form the Company.
2. Notification Letter of Presidential Approval from the State Minister of
Investment/Chairman of the Capital Investment Coordinating Board
approving the transfer of the Initial Transfer Assets from FI to the
Company.
3. Decree of the Minister of Justice of the Republic of Indonesia granting
approval of the Articles of Association of the Company.
4. Letter signed by a duly authorized senior official of the Bank of
Indonesia evidencing registration of the Credit Agreement with the Bank of
Indonesia.
5. BPN Confirmation
6. Ministry of Mines Consent
SCHEDULE IV
to Credit Agreement
(NOT USED)
EXECUTION COPY
===========================================================
P.T. FREEPORT INDONESIA COMPANY
_______________________
$550,000,000
AMENDED CREDIT AGREEMENT
Dated as of June 1, 1993
with
CERTAIN BANKS,
MORGAN GUARANTY TRUST COMPANY OF NEW YORK
(for purposes of Article VIII only),
as FI Trustee
and
CHEMICAL BANK,
as Agent
===========================================================
(CS&M Ref. No. 6700-143)
TABLE OF CONTENTS
Page
Parties and Recitals ................................ 1
ARTICLE I
Definitions
Section 1.1. Definitions .......................... 1
Section 1.2. Accounting Terms ..................... 25
Section 1.3. Section, Article, Exhibit and
Schedule References ................ 26
ARTICLE II
(Intentionally left blank)
ARTICLE III
The Loans
Section 3.1. (Intentionally left blank) ........... 26
Section 3.2. Revolving Credit Facility ............ 26
Section 3.3. Loans ................................ 26
Section 3.4. Notice of Loans ...................... 27
Section 3.5. Promissory Notes ..................... 28
Section 3.6. Interest on Loans .................... 29
Section 3.7. Fees ................................. 29
Section 3.8. Maturity and Reduction of
Commitments ........................ 30
Section 3.9. Interest on Overdue Amounts;
Alternative Rate of Interest ....... 31
Section 3.10. Prepayment of Loans .................. 33
Section 3.11. Continuation and Conversion of
Loans ............................. 34
Section 3.12. Reserve Requirements; Change in
Circumstances ...................... 36
Section 3.13. Change in Legality ................... 40
Section 3.14. Indemnity ............................ 41
Section 3.15. Pro Rata Treatment ................... 42
Section 3.16. Sharing of Setoffs ................... 42
Section 3.17. Payments ............................. 43
Section 3.18. U.S. Taxes ........................... 44
Section 3.19. Indonesian Taxes ..................... 47
ARTICLE IV
Representations and Warranties
Section 4.1. Representations and Warranties........ 48
(a) Organization, Powers ............ 48
(b) Authorization ................... 49
(c) Governmental Approval ........... 49
(d) Enforceability .................. 50
(e) Financial Statements ............ 50
(f) Litigation; Compliance with
Laws; etc. .................... 51
(g) Title, etc. ..................... 52
(h) Federal Reserve Regulations;
Use of Proceeds ............... 53
(i) Taxes ........................... 54
(j) Employee Benefit Plans .......... 54
(k) Investment Company Act .......... 54
(l) Public Utility Holding Company
Act ........................... 55
(m) Subsidiaries .................... 55
(n) Assigned Agreements ............. 55
(o) FI Security Documents ........... 55
(p) No Material Misstatements ....... 55
ARTICLE V
Covenants
Section 5.1. Affirmative Covenants of FTX ......... 56
(a) Financial Statements, etc. ...... 56
(b) Taxes and Claims ................ 58
(c) Maintenance of Existence;
Conduct of Business ........... 58
(d) Compliance with Applicable Laws . 58
(e) Litigation ...................... 58
(f) ERISA ........................... 59
(g) (Intentionally left blank) ...... 59
(h) Security ........................ 59
(i) Insurance ....................... 60
(j) Access to Premises and Records .. 61
(k) FI Security Arrangements ........ 61
(l) Protection of Contract Rights ... 61
(m) Source of Interest .............. 62
(n) Further Assurances .............. 62
(o) Covenants regarding FI
and FCX ....................... 63
Section 5.2. Negative Covenants of FTX ............ 63
(a) Conflicting Agreements .......... 63
(b) Borrowing Base Limits ........... 63
(c) Consolidation or Merger;
Disposition of Assets and
Capital Stock ................. 63
(d) Liens ........................... 65
(e) Current Ratios .................. 67
(f) Fixed Charge Ratios ............. 68
(g) Debt ............................ 68
(h) (Intentionally left blank) ...... 71
(i) Convertible Debt Payments ....... 71
(j) Ownership of Subsidiaries ....... 71
(k) Fiscal Year ..................... 72
(l) Investments in Nonrestricted
Subsidiaries and Persons Not
Subsidiaries .................. 72
(m) Federal Reserve Regulations ..... 73
(n) Certain Debt Agreements ......... 73
(o) Investments in the Major
Subsidiaries .................. 73
(p) Investments in FCX .............. 74
(q) Equity Payments ................. 74
(r) Covenants Regarding IMC-Agrico .. 76
(s) Covenants Regarding ALatief-FI .. 77
Section 5.3. Additional Covenants of
FI and FCX ......................... 77
ARTICLE VI
Conditions of Credit
Section 6.1. Conditions Precedent to
Each Credit Event ................... 78
Section 6.2. Representations and Warranties with
Respect to Credit Events ............ 78
ARTICLE VII
Events of Default
Section 7.1. Events of Default .................... 79
ARTICLE VIII
The Agent and the FI Trustee
Section 8.1. The Agent and the FI Trustee ......... 83
ARTICLE IX
Guarantees
Section 9.1. Guarantee ............................ 88
ARTICLE X
Miscellaneous
Section 10.1. Notices ............................. 90
Section 10.2. Survival of Agreement ............... 90
Section 10.3. Successors and Assigns; Participa-
tions; Purchasing Banks ........... 91
Section 10.4. Expenses of the Banks; Indemnity .... 96
Section 10.5. Right of Setoff ..................... 98
Section 10.6. Applicable Law ...................... 98
Section 10.7. Waivers; Amendments ................. 98
Section 10.8. Severability ........................ 100
Section 10.9. Counterparts ........................ 100
Section 10.10. Headings ............................ 100
Section 10.11. Entire Agreement .................... 100
Section 10.12. Amendment Closing Date .............. 101
Section 10.13. Waiver of Jury Trial, etc. .......... 101
Section 10.14. Interest Rate Limitation ............ 101
Section 10.15. Jurisdiction; Consent to Service of
Process ........................... 101
Section 10.16. Confidentiality ...................... 102
Section 10.17. Judgment Currency..................... 103
Schedule I Subsidiaries
Schedule II-1 Applicable Margin for Loans Prior to and
Including the Conversion Date
Schedule II-2 Applicable Margin for Loans After the
Conversion Date
Schedule III Commitments of the Banks
Schedule 4.1(c) Governmental Approvals
Schedule 4.1(n) Assigned Agreements
Schedule 5.2(d) Deemed Leases
Exhibit A Terms of Subordination
Exhibit B Form of Borrowing Confirmation for Loans
Exhibit C Form of Promissory Note
Exhibit D Form of Commitment Transfer Supplement
CREDIT AGREEMENT entered into as of
October 27, 1989, as amended through June 1,
1993, among P.T. FREEPORT INDONESIA COMPANY,
a limited liability company organized under
the laws of Indonesia and also domesticated
in Delaware ("FI"), FREEPORT-McMoRan INC., a
Delaware corporation ("FTX"), FREEPORT-
McMoRan COPPER & GOLD INC., a Delaware
corporation ("FCX"), the undersigned banks
(collectively, the "Banks"), MORGAN GUARANTY
TRUST COMPANY OF NEW YORK, a New York banking
corporation (for purposes of Article VIII
hereof only), as trustee for the Banks under
the FI Trust Agreement and, in such capacity,
as security agent for the Banks under the FI
Security Documents (as herein defined) (in
such capacity, the "FI Trustee") and CHEMICAL
BANK, a New York banking corporation, as
agent for the Banks (in such capacity, the
"Agent").
FI has requested the Banks to extend credit to FI
in order to enable it to borrow on a revolving credit basis
at any time and from time to time prior to the Maturity Date
(as herein defined). The aggregate principal amount of all
revolving credit loans at any time outstanding hereunder
shall not exceed $550,000,000. The proceeds of such
borrowings are to be used for general corporate purposes,
including, without limitation, the financing of
acquisitions.
The Banks are willing to make loans to FI upon the
terms and subject to the conditions hereinafter set forth,
including the guarantee by FTX and FCX (the "Guarantors") of
the loans to FI.
NOW, THEREFORE, in consideration of the premises
and of the mutual covenants herein contained, the parties
hereto agree as follows:
ARTICLE I
Definitions
SECTION 1.1. Definitions. As used in this Agree-
ment, the following terms have the meanings indicated (any
term defined in this Article I or elsewhere in this Agree-
ment in the singular and used in this Agreement in the
plural shall include the plural, and vice versa):
"Adjusted CD Rate" means, with respect to any CD
Rate Loan for any Interest Period, an interest rate per
annum (rounded upwards, if not already a whole multiple of
1/100 of 1%, to the next higher 1/100 of 1%) equal to the
sum of (a) a rate per annum equal to the product of (i) the
Fixed CD Rate in effect for such Interest Period and
(ii) Statutory Reserves, plus (b) the Assessment Rate. For
purposes hereof, the term "Fixed CD Rate" shall mean the
rate of interest determined by the Agent to be the
arithmetic average (rounded upwards, if not already a whole
multiple of 1/100 of 1%, to the next higher 1/100 of 1%) of
the respective rates per annum notified to the Agent by the
Reference Banks as the prevailing rate per annum bid at or
about 10:00 a.m., New York City time, on the first Business
Day of the Interest Period applicable to such CD Rate Loan
by three New York City negotiable certificate of deposit
dealers of recognized standing selected by each such
Reference Bank for the purchase at face value from such
Reference Bank of negotiable certificates of deposit of
major United States money center banks in a principal amount
approximately equal to such Reference Bank's portion of such
CD Rate Loan and with a maturity comparable to such Interest
Period.
"ALatief" means P.T. ALatief Nusakarya
Corporation, an Indonesian limited liability company.
"ALatief-FI" means the joint venture company to be
organized under the laws of Indonesia by FI and ALatief
pursuant to the ALatief-FI Joint Venture Agreement.
"ALatief-FI Joint Venture Agreement" means the
Joint Venture Agreement made and entered into on March 11,
1993, between FI and ALatief, as such agreement may be
amended as permitted by Section 5.2(s)(ii) and in effect
from time to time.
"ALatief-FI Transfer" means the transfer by FI of
the non-mining infrastructure facilities, as described in
the ALatief-FI Joint Venture Agreement, to ALatief-FI.
"Alternate Base Rate" means for any day, a rate
per annum (rounded upwards, if not already a whole multiple
of 1/100 of 1%, to the next higher 1/100 of 1%) equal to the
greatest of (a) the Prime Rate in effect on such day,
(b) the Base CD Rate in effect on such day plus 1% and
(c) the Federal Funds Effective Rate in effect for such day
plus 1/2 of 1%. For purposes hereof, the term "Prime Rate"
shall mean the rate of interest per annum announced by
Chemical Bank from time to time as its prime rate in effect
at its principal office in the City of New York; each change
in the Prime Rate shall be effective on the date such change
is publicly announced as being effective. "Base CD Rate"
means the sum of (x) the product of (i) the Three-Month
Secondary CD Rate and (ii) Statutory Reserves and (y) the
Assessment Rate. "Three-Month Secondary CD Rate" shall
mean, for any day, the secondary market rate for three-month
certificates of deposit reported as being in effect on such
day (or, if such day shall not be a Business Day, the next
preceding Business Day) by the Board through the public
information telephone line of the Federal Reserve Bank of
New York (which rate will, under the current practices of
the Board, be published in Federal Reserve Statistical
Release H.15(519) during the week following such day), or,
if such rate shall not be so reported on such day or such
next preceding Business Day, the average of the secondary
market quotations for three-month certificates of deposit of
major money center banks in New York City received at
approximately 10:00 a.m., New York City time, on such day
(or, if such day shall not be a Business Day, on the next
preceding Business Day) by Chemical Bank from three New York
City negotiable certificate of deposit dealers of recognized
standing selected by it. "Federal Funds Effective Rate"
shall mean, for any day, the weighted average of the rates
on overnight Federal funds transactions with members of the
Federal Reserve Bank of New York, or, if such rate is not so
published for any day which is a Business Day, the average
of the quotations for the day of such transactions received
by Chemical Bank from three Federal funds brokers of
recognized standing selected by it. If for any reason
Chemical Bank shall have determined (which determination
shall be conclusive absent manifest error) that it is unable
to ascertain the Base CD Rate or the Federal Funds Effective
Rate or both for any reason, including the inability or
failure of Chemical Bank to obtain sufficient quotations in
accordance with the terms thereof, the Alternate Base Rate
shall be determined without regard to clause (b) or (c), or
both, of the first sentence of this definition, as
appropriate, until the circumstances giving rise to such
inability no longer exist. Any change in the Alternate Base
Rate due to a change in the Prime Rate, the Three-Month
Secondary CD Rate or the Federal Funds Effective Rate shall
be effective on the effective date of such change in the
Prime Rate, the Three-Month Secondary CD Rate or the Federal
Funds Effective Rate, respectively.
"Amendment Agreement" means the Second Amendment
dated as of June 1, 1993, to the Credit Agreement dated as
of October 27, 1989, as previously amended by the Amendment
thereto dated as of December 20, 1991, among FI, the
Guarantors, certain banks, the FI Trustee, the Agent, The
Fuji Bank, Limited and Morgan Guaranty Trust Company of New
York, as outgoing co-agents, and Morgan Guaranty Trust
Company of New York, as outgoing agent for the Banks.
"Amendment Closing Date" has the meaning assigned
to such term in Section 2(b) of the Amendment Agreement.
"Applicable CD Rate" means on a per annum basis,
in respect of any Loan, for each day during the Interest
Period for such Loan, the sum of (i) the Adjusted CD Rate as
determined by the Agent plus (ii) the Applicable Margin.
"Applicable LIBO Rate" means on a per annum basis,
in respect of any Loan, for each day during the Interest
Period for such Loan, the sum of (i) the LIBO Rate as
determined by the Agent plus (ii) the Applicable Margin.
"Applicable Margin" means, during each period set
forth in Section 3.6(d), the rate per annum set forth
opposite the applicable condition on Schedule II hereto for
each type of Loan listed thereon.
"Applicable Percentage" of any Bank means the
percentage set opposite such Bank's name on Schedule III
hereto.
"Applicable Reference Rate" means on a per annum
basis in respect of any Reference Rate Loan, for any day,
the sum of the Alternate Base Rate, plus the Applicable
Margin.
"Assessment Rate" means with respect to each day
during an Interest Period, the net annual assessment rate
(rounded upwards, if not already a whole multiple of 1/100
of 1%, to the next highest whole multiple of 1/100 of 1%)
determined by the Agent to be payable to the Federal Deposit
Insurance Corporation or any successor ("FDIC") for FDIC's
insuring time deposits made in Dollars at offices of
Chemical Bank in the United States as of the day two
Business Days prior to the first day of such Interest
Period.
"Assigned Agreements" means the Contract of Work
and the Concentrate Sales Agreements.
"Assignment Agreement" means the Amended and
Restated Pledge and Assignment and General Assignment of
Accounts Receivable dated as of October 27, 1989, between FI
and the FI Trustee, as such agreement may be further amended
and in effect from time to time.
"Available Borrowing Base" has the meaning
assigned to such term in Article I of the FTX Credit
Agreement.
"Bank" means each bank signatory hereto and its
successors and permitted assigns under Section 10.3(d).
"Board" means the Board of Governors of the
Federal Reserve System of the United States.
"Borrowing Base" has the meaning assigned to such
term in Article I of the FTX Credit Agreement.
"Borrowing Base Bank" means each FTX Lender and,
until such time as the FM Lenders shall by their written
consent release all recourse under the FM Credit Agreement
and the related documents against FTX, each FM Lender.
"Borrowing Base Certificate" has the meaning
assigned to such term in Article I of the FTX Credit
Agreement.
"Borrowing Base Debt" has the meaning assigned to
such term in Article I of the FTX Credit Agreement.
"Borrowing Base Factors" has the meaning assigned
to such term in Section 2.1 of the FTX Credit Agreement.
"Borrowing Date" means, with respect to any Loan,
the date on which such Loan is disbursed.
"Business Day" means a day on which the Banks are
each open for business at their respective Domestic Offices;
provided that when the term "Business Day" is used with
respect to LIBO Rate Loans, such term shall mean a day on
which the Banks are each also open for business at their
respective LIBOR Offices.
"Capital Interest" has the meaning assigned to
such term in Section 4.01 of the IMC-Agrico Partnership
Agreement.
"Capitalized Lease Obligation" means the obliga-
tion of any Person to pay rent or other amounts under a
lease of (or other agreement conveying the right to use)
real and/or personal property which obligation is, or in
accordance with GAAP (including Statement of Financial
Accounting Standards No. 13 of the Financial Accounting
Standards Board) is required to be, classified and accounted
for as a capital lease on a balance sheet of such Person
under GAAP, and for purposes of this Agreement the amount of
such obligation shall be the capitalized amount thereof
determined in accordance with GAAP.
"Cash Flow Ratio" means, for purposes of
Schedules II-1 and II-2 hereto, at the end of any fiscal
quarter, the cumulative sum, for the four consecutive fiscal
quarters ending with such quarter, of FTX's (a) Consolidated
Cash Flow, minus interest expense and capitalized interest
paid or accrued on Debt and Corporate Group Loans and minus
extraordinary or unusual nonrecurring cash items included in
Consolidated Cash Flow, divided by (b) the aggregate
principal amount of all Debt and Corporate Group Loans
outstanding at the end of such fiscal quarter.
"CD Rate Loan" means any Loan for which interest
is determined, in accordance with the provisions hereof, at
the Applicable CD Rate.
"Code" means the Internal Revenue Code of 1986, as
amended from time to time.
"Collateral Agent" means Chemical Bank in its
capacity as Collateral Agent for the Lenders (as defined in
the FTX Intercreditor Agreement) under the FTX
Intercreditor Agreement.
"Commitment" means, with respect to each Bank, the
Commitment of such Bank hereunder as set forth on Sched-
ule III hereto, as the same may be permanently terminated or
reduced from time to time pursuant to Section 3.8. The
Commitment of each Bank shall automatically and permanently
terminate on the Maturity Date.
"Commitment Fee" has the meaning assigned to such
term in Section 3.7(a).
"Commitment Period" means the period commencing
with and including the Original Execution Date and ending on
but not including the Maturity Date.
"Commitment Transfer Supplement" means a
Commitment Transfer Supplement, substantially in the form of
Exhibit D.
"Concentrate Sales Agreements" means all contracts
and agreements with respect to the sale or disposition of
ores or minerals produced by the mining, concentrating and
related operations conducted by FI pursuant to the Contract
of Work, as such agreements may be amended and in effect
from time to time.
"Consolidated Cash Flow" means, with respect to
any Person and for any fiscal quarter, the sum of
(a) consolidated net income after taxes (before deducting
minority interests in net income (loss) of consolidated
subsidiaries, but disregarding all extraordinary or unusual
noncash items in calculating such net income) of such Person
and such Person's subsidiaries for such quarter; plus
(b) consolidated interest paid or accrued on the Corporate
Group Loans and on Debt by such Person or subsidiaries
during such quarter and deducted in determining consolidated
net income; plus (c) depreciation, depletion and
amortization charges and deferred taxes deducted in
computing consolidated net income; provided that such
calculation will exclude items relating to Nonrestricted
Subsidiaries.
"Contract of Work" shall mean the Contract of Work
made December 30, 1991, between the Ministry of Mines of the
Government of the Republic of Indonesia, acting for and on
behalf of the Government of the Republic of Indonesia, and
FI, together with any related Implementation Agreement or
Memorandum of Understanding with such Ministry of Mines
acting on behalf of the Government of the Republic of
Indonesia, as such agreement may be implemented,
supplemented or amended and in effect from time to time.
"Conversion Date" means June 28, 1996.
"Corporate Group Facility" means this Agreement
and the FTX Credit Agreement.
"Corporate Group Loan Exposure" means the sum of
Loan Exposure plus FTX Credit Agreement Loan Exposure.
"Corporate Group Loans" means the Loans made
hereunder and the FTX Credit Agreement Loans made under the
FTX Credit Agreement.
"Corporate Group Notes" means the Promissory Notes
and the FTX Agreement Notes.
"Credit Event" means the making of a Loan.
"Debt" means at any time (1) Indebtedness for
Borrowed Money, (2) the undischarged balance of any produc-
tion payment, (3) the unearned balance of any advance
payment received under any contract, and (4) debt created,
issued, Guaranteed, incurred or assumed for the deferred
(for 180 days or more) purchase price of property or serv-
ices purchased; excluding, however, accrued expenses and
accounts payable (other than for such deferred purchase
price and/or for borrowed money) incurred in the ordinary
course of business; provided that the same are not overdue
in a material amount or, if overdue, are being contested in
good faith and by appropriate proceedings and also exclud-
ing, for purposes of Section 7.1(i), any obligation or
liability in respect of Debt (including the undischarged
balance of any production payment and the unearned balance
of any advance payment received under any contract) for the
repayment or satisfaction of which the recourse of the
creditor is limited to specified assets or properties (or
the proceeds of production therefrom) of FTX or any
Restricted Subsidiary.
"Deemed Lease" means an agreement characterized by
the parties thereto as a lease solely for income tax pur-
poses and as to which such parties have elected to have the
provisions of the former Section 168(f)(8) of the Internal
Revenue Code of 1954 apply.
"Default" means any event which upon the giving of
notice or lapse of time or both would become an Event of
Default.
"Dollars" or "$" means United States Dollars.
"Domestic Office" means, for any Bank, the Domes-
tic Office set forth for such Bank on the signature pages
hereof, unless such Bank shall designate a different
Domestic Office by notice in writing to the Agent and FTX.
"Equity Payment" means (i) any cash dividend on,
or purchase, redemption or other payment in respect of, the
capital stock of FTX (other than mandatory dividend payments
on the Preferred Stock as in effect on the Amendment Closing
Date), (ii) open market purchases by FTX of Depositary Units
of FRP and (iii) open market purchases by FTX of capital
stock of FCX.
"ERISA" means the Employee Retirement Income
Security Act of 1974, as amended from time to time.
"ERISA Affiliate" means any trade or business
(whether or not incorporated) which is a member of a group
of which FTX is a member and which is under common control
within the meaning of Section 414 of the Code.
"Event of Default" means any Event of Default
defined in Article VII.
"FCC" means Freeport Chemical Company, a Delaware
corporation.
"FCX" means Freeport-McMoRan Copper & Gold Inc., a
Delaware corporation.
"FI" means P.T. Freeport Indonesia Company, a
limited liability company organized under the laws of
Indonesia and domesticated in Delaware.
"FI Borrowing Base" has the meaning assigned such
term in Section 2.1 of the FTX Credit Agreement.
"FI Free Cash" means the product of (i) the lesser
of (x) the then outstanding Borrowing Base Debt of FI and
(y) 95% of all amounts above $30,000,000 held by FI in cash
or unencumbered Permitted Investments, and (ii) 1.0 minus
the MS Factor of FI.
"FI Obligations" has the meaning assigned to such
term in Section 9.1.
"FI Product" means ores or minerals produced by
the FI Project or otherwise obtained from the Mining Area
(as defined in the Contract of Work) and any kinds of
products, including, without limitation, concentrates,
produced from such ores or minerals.
"FI Project" means the mining, concentrating and
related operations conducted or to be conducted by FI in
Irian Jaya, Indonesia, pursuant to the Contract of Work.
"FI Receivables Purchase Agreement" means any
agreement entered into by FI with respect to the sale by FI
of accounts receivable.
"FI Security Documents" means the FI Trust
Agreement, the Assignment Agreement, the Surat Kuasa, the
Fiduciary Transfer, the Fiduciary Assignment, the Fiduciary
Power and all Uniform Commercial Code financing statements
and their Indonesian equivalents required to be filed
hereunder or under the FI Security Documents.
"FI Trust Agreement" means the Trust Agreement
dated as of May 15, 1970, as amended through the Amendment
Closing Date, among FI, the Banks and the FI Trustee, as the
same may be amended and in effect from time to time.
"FI Trustee" means Morgan Guaranty Trust Company
of New York, or any successor trustee, as trustee for the
Banks pursuant to the FI Trust Agreement and, in such
capacity, as security agent for the Banks under the FI
Security Documents.
"Fiduciary Assignment" means the Fiduciary
Assignment of Accounts Receivable (the Penyerahan Hak Atas
Tagihan) dated December 30, 1991, as amended by the First
Amendment thereto dated the Amendment Closing Date, granted
by FI to the FI Trustee, as the same may be further amended
and in effect from time to time.
"Fiduciary Power" means the Power of Attorney to
Establish Fiduciary Transfer (Kuasa Untuk Memasang
Penyerahan Hak Milik Fidusia) dated December 30, 1991, as
amended by the First Amendment thereto dated the Amendment
Closing Date, granted by FI to the FI Trustee (the "Amended
Fiduciary Power"), as the same may be further amended and in
effect from time to time.
"Fiduciary Transfer" means the Fiduciary Transfer
of Assets (Penyerahan Hak Secara Fidusia) dated December 30,
1991, as amended by the First Amendment thereto dated the
Amendment Closing Date, granted by FI to the FI Trustee, as
the same may be further amended and in effect from time to
time.
"Financial Officer" of any corporation means the
principal financial officer, principal accounting officer,
treasurer, assistant treasurer or controller of such corpo-
ration.
"Fixed Charges" means, for any Person at the end
of any fiscal quarter, the cumulative sum, for the four
consecutive quarters ending with such quarter, of (a) the
aggregate principal amount of all Corporate Group Loans
required to be repaid pursuant to Section 3.8(b) of each of
this Agreement and the FTX Credit Agreement and all Debt
paid or payable by such Person and such Person's
Subsidiaries (other than Nonrestricted Subsidiaries) during
such quarters plus (b) all interest paid or payable on Debt
and Corporate Group Loans by such Person and such Person's
Subsidiaries (other than Nonrestricted Subsidiaries) during
such quarters; provided, however, that any principal amount
of Debt and any interest payable in one fiscal quarter and
paid in another shall not be twice included in Fixed
Charges; provided further, however, that any Corporate Group
Loans prepaid pursuant to Section 3.10(a) or Section 3.10(c)
of either this Agreement or the FTX Credit Agreement or
continued or converted pursuant to Section 3.11 of either
this Agreement or the FTX Credit Agreement and any other
Debt prepaid, continued, converted or refinanced pursuant to
similar provisions of agreements or instruments governing
such other Debt shall not be included as Fixed Charges if
such Debt would not otherwise have matured within three
months of such prepayment, continuation, conversion or
refinancing.
"Fixed Charge Ratio" means for any Person at the
end of any fiscal quarter, the quotient, for the four
consecutive quarters ending with such quarter, of
(a) Consolidated Cash Flow divided by (b) Fixed Charges.
"FM Agent" means Chemical Bank as agent for the FM
Lenders under the FM Credit Agreement.
"FM Corporation" means FM Properties Inc., a
Delaware corporation.
"FM Credit Agreement" means the Credit Agreement
dated as of June 11, 1992, among FM Properties, FTX, the FM
Lenders and the FM Agent, as the same may be amended and in
effect from time to time.
"FM Lenders" means the banks party to the FM
Credit Agreement.
"FM Properties" means FM Properties Operating Co.,
a Delaware general partnership whose partners are FTX and FM
Corporation.
"FM Properties Credit" has the meaning assigned to
such term in Section 2.1(iv) of the FTX Credit Agreement.
"FM Properties Indebtedness" means the obligations
of FM Properties under the FM Credit Agreement and up to
$125,000,000 principal amount of the obligations of FM
Properties (including Guarantees of obligations of
Nonrestricted Subsidiaries as to which FM Properties became
a guarantor) assumed in connection with the transfer by FTX
of certain oil, gas and real estate assets to FM Properties
as described in the Information Statement contained in the
Registration Statement filed by FM Corporation on Form 10
with the SEC for the registration of the common stock, par
value $.01 per share, and related preferred stock purchase
rights of FM Corporation under the Securities Exchange Act
of 1934, as such Form 10 was amended through June 9, 1992.
"FRP" means Freeport-McMoRan Resource Partners,
Limited Partnership, a Delaware limited partnership.
"FRP Borrowing Base" has the meaning assigned such
term in Section 2.1 of the FTX Credit Agreement.
"FRP GPCo" means the direct or indirect Wholly-
Owned Subsidiary of FTX which is the entity which has the
rights and obligations of FRP GPCo as defined in and
contemplated by the IMC-Agrico Contribution Agreement.
"FRP Partner" means the Wholly-Owned Restricted
Subsidiary, organized as a limited partnership, of which FRP
will own a majority limited partnership interest and which
has the rights and obligations of FRP Partner as defined in
and contemplated by the IMC-Agrico Contribution Agreement.
"FTX Agent" means Chemical Bank as agent for the
FTX Lenders under the FTX Credit Agreement.
"FTX Agreement Notes" means the promissory notes
of FTX issued to the FTX Lenders pursuant to the FTX Credit
Agreement.
"FTX Borrowing Base" has the meaning assigned to
such term in Section 2.1 of the FTX Credit Agreement.
"FTX Credit Agreement" means the Amended and
Restated Credit Agreement entered into as of May 15, 1991,
as amended and restated in its entirety as of June 1, 1993,
among FTX, FRP, the FTX Lenders and the FTX Agent, as the
same may be further amended and in effect from time to time.
"FTX Credit Agreement Loan" means any loan made by
the FTX Lenders pursuant to the FTX Credit Agreement.
"FTX Credit Agreement Loan Exposure" means the
aggregate amount of unpaid principal of all FTX Credit
Agreement Loans made by the FTX Lenders.
"FTX Credit Agreement Total Commitment" means
$800,000,000, the committed amount under the FTX Credit
Agreement, as the same may be permanently terminated or
reduced from time to time.
"FTX Credit Event" means the making of an FTX
Credit Agreement Loan.
"FTX Free Cash" means the lesser of (i) the then
outstanding Borrowing Base Debt of FTX and (ii) 75% of all
amounts above $50,000,000 held by FTX in cash or
unencumbered Permitted Investments.
"FTX Intercreditor Agreement" means the
Intercreditor Agreement entered into as of June 11, 1992, as
amended and restated in its entirety as of June 1, 1993,
among the Agent on behalf of the Banks, the FTX Agent on
behalf of the FTX Lenders, the FM Agent on behalf of the FM
Lenders, Hibernia National Bank, as agent for the Pel-Tex
Bank Lenders, the Burke Parties (as defined therein) and
Chemical Bank, as collateral agent, as such agreement may be
further amended and in effect from time to time.
"FTX Lenders" means the banks party to the FTX
Credit Agreement.
"FTX Pledge Agreement" means a pledge agreement in
the form of Exhibit A-1 to the FTX Intercreditor Agreement,
to be executed by FTX and delivered to the Collateral Agent
pursuant to Section 5.1(h), as such agreement may be amended
and in effect from time to time.
"FTX Security Agreement" means a security
agreement in the form of Exhibit B-1 to the FTX
Intercreditor Agreement, to be executed by FTX and delivered
to the Collateral Agent pursuant to Section 5.1(h), as such
agreement may be amended and in effect from time to time.
"FTX Subsidiary Pledge Agreement" means a pledge
agreement in the form of Exhibit A-2 to the FTX
Intercreditor Agreement, to be executed by a wholly-owned
Restricted Subsidiary of FTX and delivered to the Collateral
Agent pursuant to Section 5.1(h), as such agreement may be
amended and in effect from time to time.
"FTX Subsidiary Security Agreement" means a
security agreement in the form of Exhibit B-2 to the FTX
Intercreditor Agreement, to be executed by a wholly-owned
Restricted Subsidiary of FTX and delivered to the Collateral
Agent pursuant to Section 5.1(h), as such agreement may be
amended and in effect from time to time.
"GAAP" has the meaning assigned to such term in
Section 1.2.
"Governmental Authority" means any United States
or Indonesian Federal, state, local or foreign court or
governmental agency, authority, instrumentality or
regulatory body.
"Governmental Rule" means any statute, law,
treaty, rule, code, ordinance, regulation, permit,
certificate or order of any Governmental Authority or any
judgment, decree, injunction, writ, order or like action of
any court, arbitrator or other judicial or quasijudicial
tribunal.
"Guarantee" means, with respect to any Person, any
obligation, contingent or otherwise, of such Person guaran-
teeing or having the economic effect of guaranteeing any
Debt or obligation of any other Person in any manner,
whether directly or indirectly, and including, without
limitation, any agreement to pay dividends or other distri-
butions upon the stock of such other Person, or any obliga-
tion of such other Person, direct or indirect, (i) to
purchase (or advance or supply funds for the purchase of)
any security for the payment of such Debt, obligation,
dividend or distribution, (ii) to purchase property, securi-
ties or services for the purpose of assuring the owner of
such Debt or obligation or the holder of such stock of the
payment of such Debt, obligation, dividend or distribution
including, without limitation, any take-or-pay contract or
agreement to buy a minimum amount or quantity of production
or to provide an operating subsidy which, in each case, is
utilized for a third party financing, or (iii) to maintain
working capital, equity capital or any other financial
statement condition of the primary obligor, so as to enable
the primary obligor to pay such Debt, obligation, dividend
or distribution; provided, however, that the term Guarantee
shall not include any endorsement for collection or deposit
in the ordinary course of business.
"Guarantor" has the meaning assigned to such term
in the Introduction.
"HLT" means a transaction which the Agent, on the
basis of any of (i) applicable law, (ii) the rules, regula-
tions, interpretations, guidelines, statements of policy,
published or unpublished, or directives of Federal or state
bank regulatory authorities and (iii) practices prevailing
in the market as to the interpretation or application of
items referred to in (i) or (ii) above, classifies as a
"highly leveraged transaction" or gives a similar or succes-
sor classification.
"IMC" means IMC Fertilizer, Inc., a Delaware
corporation.
"IMC-Agrico" means a general partnership whose
partners will be FRP Partner, IMC Partner and IMC-Agrico MP,
or such other entity which will have the rights and
obligations of the Partnership as defined in and
contemplated by the IMC-Agrico Contribution Agreement.
"IMC-Agrico Contribution Agreement" means the
Contribution Agreement dated as of April 5, 1993, between
FRP and IMC, as amended and in effect from time to time as
permitted by Section 5.2(r).
"IMC-Agrico MP" means a corporation the equity
interest in which will be owned by the FRP Partner and the
IMC Partner, or such other entity (other than a direct or
indirect subsidiary of IMC-Agrico) that shall have the
rights and obligations of the Managing Partner as defined in
and contemplated by the IMC-Agrico Contribution Agreement.
"IMC-Agrico Parent Agreement" means the Parent
Agreement to be entered into by and among IMC, FRP, FTX and
IMC-Agrico, substantially in the form of Exhibit B to the
IMC-Agrico Contribution Agreement, as amended and in effect
from time to time as permitted by Section 5.2(r).
"IMC Partner" means a corporation that has the
rights and obligations of IMC GPCo as defined in and
contemplated by the IMC-Agrico Contribution Agreement.
"IMC-Agrico Partnership Agreement" means the
Partnership Agreement to be entered into by and among FRP
Partner, IMC Partner and IMC-Agrico MP, substantially in the
form of Exhibit A to the IMC-Agrico Contribution Agreement,
as amended and in effect from time to time as permitted by
Section 5.2(r).
"IMC-Agrico Transfer" means the transfer by FRP to
IMC-Agrico of certain assets related to the phosphate
chemicals business, as described in the IMC-Agrico
Contribution Agreement.
"Indebtedness for Borrowed Money" means, for any
Person, all Guarantees of such person plus all liabilities
of such Person, other than Corporate Group Loans and
Guarantees thereof, in respect of (a) money borrowed,
(b) notes, debentures, bonds or other obligations issued,
(c) obligations for deferred payment for property purchased
having an original maturity greater than one year after the
date of incurrence thereof and (d) Capitalized Lease
Obligations.
"Indocopper Shareholders Agreement" means the
Amended and Restated Shareholders Agreement dated as of
November 12, 1992, by and among P.T. Indocopper Investama
Corporation, FCX, certain individuals and P.T. Bakrie
Investindo.
"Indonesian Taxes" means all present and future
income, stamp and other taxes, levies, imposts, deductions,
charges, compulsory loans and withholdings whatsoever
imposed, assessed, levied or collected by Indonesia or any
political subdivision or taxing authority thereof or therein
or any association or organization of which Indonesia may be
a member (but excluding taxes or other similar governmental
charges, fees or assessments imposed upon the net income of
the Agent, the FI Trustee or any Bank which has its
principal office in Indonesia or a branch office in
Indonesia, unless the presence of such office is solely
attributable to the enforcement of any rights hereunder or
under any FI Security Document with respect to an Event of
Default), together with interest thereon and penalties,
fines and surcharges and other liabilities with respect
thereto, if any, on or in respect of this Agreement, the
Loans to FI, the FI Security Documents, the Assigned
Agreements or the Corporate Group Notes of FI, the
registration, recordation, notarization or other
formalization of any thereof, and any payments of principal,
interest, charges, fees or other amounts made on, under or
in respect of any thereof.
"Interest Payment Date" means (i) as to any
Reference Rate Loan, the next succeeding March 31, June 30,
September 30 or December 31 (subject to Section 3.17), or if
earlier, the Maturity Date, and (ii) as to any other Loan,
the last day of the Interest Period applicable to such Loan
(and, in the case of any Interest Period of more than three
months' or 90 days' duration, the date that would be the
last day of such Interest Period if such Interest Period
were of three months' or 90 days' duration) and the date of
any conversion or continuation of such Loan to a Loan of a
different type.
"Interest Period" means (i) as to any LIBO Rate
Loan, the period commencing on the date of such LIBO Rate
Loan and ending on the numerically corresponding day (or, if
there is no numerically corresponding day, on the last day)
in the calendar month that is 1, 2, 3 or 6 months there-
after, as FI may elect, (ii) as to any CD Rate Loan, a
period of 30, 60, 90 or 180 days' duration, as FI may elect,
commencing on the date of such CD Rate Loan and (iii) as to
any Reference Rate Loan, the period commencing on the date
of such Reference Rate Loan and ending on the earliest of
(x) the next succeeding March 31, June 30, September 30 or
December 31, (y) the Maturity Date and (z) the date such
Reference Rate Loan is converted to a Loan of another type
or repaid or prepaid as permitted hereby; provided, however,
that (1) if any Interest Period would end on a day that
shall not be a Business Day, such Interest Period shall be
extended to the next succeeding Business Day unless, with
respect to LIBO Rate Loans only, such next succeeding
Business Day would fall in the next calendar month, in which
case such Interest Period shall end on the next preceding
Business Day, (2) no Interest Period may be selected with
respect to a LIBO Rate Loan or a CD Rate Loan that would end
later than a Reduction Date occurring after the making of
such Loan if the aggregate outstanding principal amount of
the Corporate Group Loans (after giving effect to all
borrowings and payments of Corporate Group Loans made on the
date of such Loan) having Interest Periods extending beyond
such Reduction Date would otherwise exceed the aggregate
amount of the Commitments as reduced on such Reduction Date,
(3) no Interest Period with respect to any Loan shall end
later than the Maturity Date and (4) interest shall accrue
from and including the first day of an Interest Period to
but excluding the last day of such Interest Period.
"KfW" means Kreditanstalt fur Wiederaufbau, a
corporation organized under the public law of the Federal
Republic of Germany.
"KfW Credit Agreement" means a credit agreement
between FI and KfW pursuant to terms approved in writing by
the FTX Agent, as amended and in effect from time to time.
"LIBO Rate" means, with respect to any LIBO Rate
Loan for any Interest Period, an interest rate per annum
(rounded upwards, if not already a whole multiple of 1/100
of 1%, to the next higher 1/100 of 1%) equal to the arithme-
tic average of the respective rates per annum at which
dollar deposits approximately equal in principal amount to
such LIBO Rate Loan and for a maturity equal to the applica-
ble Interest Period are offered in immediately available
funds to the London branches of the Reference Banks in the
London Interbank Market for Eurodollars at approximately
11:00 a.m., London time, two Business Days prior to the
commencement of such Interest Period.
"LIBO Rate Loan" means any Loan for which interest
is determined, in accordance with the provisions hereof, at
the Applicable LIBO Rate.
"LIBOR Office" means, for any Bank, the LIBOR
Office set forth for such Bank on the signature pages hereof
or as otherwise notified in writing to the Agent and FTX,
unless such Bank shall designate a different LIBOR Office by
notice in writing to the Agent and FTX.
"Lien" means with respect to any asset, (a) a
mortgage, deed of trust, lien, pledge, encumbrance, charge
or security interest in or on such asset, (b) the interest
of a vendor or a lessor under any conditional sale
agreement, capital lease or title retention agreement
relating to such asset, (c) in the case of securities, any
purchase option, call or similar right of a third party with
respect to such securities except for any purchase option,
call or similar right under the Partnership Agreement as in
effect on the Amendment Closing Date or as modified from
time to time with the consent of the Required Banks and
(d) other encumbrances of any kind, including, without
limitation, production payment obligations.
"Loan" means any loan made pursuant to
Section 3.2.
"Loan Documents" means the Amendment Agreement,
the Corporate Group Facility, the Corporate Group Notes, the
FTX Intercreditor Agreement, the Security Agreement, the
Pledge Agreement, the FI Security Documents and all other
agreements, certificates and instruments now or hereafter
entered into in connection with any of the foregoing, in
each case as amended and modified from time to time.
"Loan Exposure" means the aggregate amount of
unpaid principal of all Loans made by the Banks.
"Long-Term Concentrate Sales Agreement" means any
Concentrate Sales Agreement with a term of at least one
year.
"Major Subsidiary" means each of FI and FRP.
"Margin Stock" has the meaning assigned to such
term in Regulation U of the Board, as the same is from time
to time in effect.
"Maturity Date" means December 31, 1999, or, if
earlier, the date of termination of the Commitments pursuant
to the terms hereof.
"Memorandum of Understanding" means the Memorandum
of Understanding dated as of December 27, 1991, between the
Ministry of Mines and Energy of the Government of the
Republic of Indonesia, and FI as amended, modified or
supplemented and in effect from time to time.
"MS Factor" has the meaning assigned to such term
in Section 2.1 of the FTX Credit Agreement.
"Multiemployer Plan" means a multiemployer plan as
defined in Section 4001(a)(3) of ERISA to which FTX or any
ERISA Affiliate is making or accruing an obligation to make
contributions, or has within any of the preceding five plan
years made or accrued an obligation to make contributions.
"Net Asset Value" means the present value assigned
to an asset by FTX based on the assumptions utilized in the
most recent engineering or other asset valuation report
provided to each Borrowing Base Bank pursuant to
Section 5.1(g), as adjusted for FTX's net ownership interest
and after coverage as provided in the most recent Borrowing
Base Certificates, as certified by the Treasurer or another
Financial Officer of FTX for purposes of Section 2.5 of the
FTX Credit Agreement.
"Net Proceeds" means (i) the gross fair market
value of the consideration or other amounts payable to or
receivable by FTX, any Restricted Subsidiary and IMC-Agrico,
in respect of any sales, transfers, distributions (other
than cash dividends and dividends by FTX consisting of stock
or units of the Subsidiaries) or other dispositions of
assets or properties (including any capital or other equity
interests owned, but excluding direct issuances of equity by
FTX or a Restricted Subsidiary other than in the ordinary
course of business, less (ii) the amount, if any, of all
taxes (but including income taxes only to the extent such
Person reasonably estimates that such income taxes will be
paid on the date of the next income tax filing by such
Person or such affiliate of such Person), and reasonable and
customary fees, commissions, costs and other expenses (other
than those payable to FTX, any Restricted Subsidiary, IMC or
any affiliate of IMC) which are incurred in connection with
such sales, transfers, distributions or other dispositions
and are payable by the seller or the transferor of the
assets or property to which such sales, transfers,
distributions or other dispositions relate, but only to the
extent not already deducted in arriving at the amount
referred to in clause (i); provided, however, that with
respect to IMC-Agrico, for purposes of Section 2.5 of the
FTX Credit Agreement, only the FRP Share in excess of
$25,000,000 shall be deemed to constitute Net Proceeds.
"FRP Share" means the Capital Interest of FRP Partner
multiplied by the amount preceding this proviso.
"1992 Form 10-K" has the meaning assigned to such
term in Section 4.1(e).
"Nonrestricted Subsidiary" means (i) any of the
following: Bella Luna Incorporated, a Louisiana
corporation, Eastern Mining Company Inc., a Delaware
corporation, Freeport Copper Company, a Delaware
corporation, Freeport-McMoRan Chile Inc., a Delaware
corporation, Freeport-McMoRan Spain Incorporated, a Delaware
corporation, Freeport-McMoRan Thaitex Company, a Delaware
corporation, Freeport-Warim, Inc., a Delaware corporation,
P.T. Indonesia Freeport Finance Company, an Indonesian
corporation, Freeport Egyptian Sulphur Company, a Delaware
corporation, Dill Holdings Incorporated, a Delaware
corporation, Freeport International, Incorporated, a Dela-
ware corporation, and Freeport Mining Company, a Delaware
corporation, (ii) any Subsidiary of any Nonrestricted
Subsidiary and (iii) any surviving corporation (other than
FTX or a Restricted Subsidiary) into which any of such
corporations referred to in clause (i) or (ii) is merged or
consolidated, subject to Section 5.2(c) and (iv) any
Subsidiary organized after the date of this Agreement for
the purpose of acquiring the stock or assets of another
Person or for start-up ventures or exploration programs or
activities. By written notice to the Agent, FTX may
(x) declare any Nonrestricted Subsidiary to be a Restricted
Subsidiary and such former Nonrestricted Subsidiary shall
thereafter be deemed to be a Restricted Subsidiary for all
purposes of this Agreement or (y) at any time other than
when a Default or Event of Default has occurred and is
continuing or the aggregate principal amount of the
Corporate Group Loans exceeds the Available Borrowing Base,
in any fiscal year, declare one or more Restricted
Subsidiaries, the interest of FTX in all of which has an
equity value or loan investment of less than $5,000,000 in
the aggregate, to be a Nonrestricted Subsidiary and any such
former Restricted Subsidiary shall thereafter be deemed to
be a Nonrestricted Subsidiary for all purposes of this
Agreement.
"Operating Lease" means any lease other than a
lease giving rise to a Capitalized Lease Obligation.
"Original Execution Date" means October 27, 1989.
"Partnership Agreement" has the meaning assigned
to such term in the FM Credit Agreement.
"PBGC" means the Pension Benefit Guaranty Corpora-
tion referred to and defined in ERISA.
"Pel-Tex Agreements" means the Loan Agreement and
related documents dated as of December 31, 1985, as amended
and in effect from time to time, among FTX, as ultimate
successor to FMP Operating Company (as purchaser), and Pel-
Tex Oil Company, Inc., Chenier Oil Company, Inc., Burke and
Pel-Tex Oil Company, Inc., doing business as Burmont
Company, Earl P. Burke, Jr., and Fay Stouder Burke (as
sellers).
"Pel-Tex Bank Agreement" means the Credit
Agreement dated as of December 31, 1985, among the Burke
Parties, the banks named therein and Hibernia National Bank,
as agent for such banks, as the same may be amended and in
effect from time to time.
"Pel-Tex Lenders" means, collectively, Burke Oil
Company (formerly, Pel-Tex Oil Company, Inc.), Chenier Oil
Company, Inc., Burke and Pel-Tex Oil Company, Inc., doing
business as Burmont Company, Earl P. Burke, Jr., and Fay
Stouder Burke (collectively, the "Burke Parties") and the
banks party to the Pel-Tex Bank Agreement.
"Permitted Investments" means (a) certificates of
deposit of, or other bank accounts with, banks (or with
their branches) having a short-term deposit rating issued by
Moody's Investors Services, Inc., of P-1; (b) investments in
readily marketable money market funds having assets in
excess of one billion dollars, which assets have an average
life of less than one year and an average quality of at
least "A" as rated by Standard & Poor's Corporation or
Moody's Investors Services, Inc.; and (c) commercial paper
rated A-1 by Standard & Poor's Corporation or P-1 by Moody's
Investors Services, Inc.
"Permitted Secured Swap" means any interest rate
protection agreement or commodities price protection
agreement between FTX, FI or FRP and any Bank that shall be
ratably secured pursuant to this Agreement, the FTX
Intercreditor Agreement, an intercreditor agreement relating
to the assets of FI subject to the FI Security Documents
and, in the case of any such interest rate or commodities
price protection agreement with FI, the FI Security
Documents.
"Person" means an individual or a corporation,
partnership, trust, incorporated or unincorporated associa-
tion, joint stock company, government (or an agency or
political subdivision thereof) or other entity of any kind.
"Plan" means any pension plan (other than a
Multiemployer Plan) which is subject to the provisions of
Title IV of ERISA and which is maintained for employees of
FTX or any ERISA Affiliate.
"Pledge Agreement" means, collectively, the FTX
Pledge Agreement and any FTX Subsidiary Pledge Agreement.
"Power Facilities Transfer" means, collectively,
each transfer by FI of electric power generation and
transmission facilities with arrangements providing for the
continued supply of electric power to the FI Project, all on
terms and conditions approved by the Agent.
"Preferred Stock" has the meaning assigned to such
term in Section 5.2(q).
"Promissory Notes" means the promissory notes of
FI referred to in Section 3.5.
"Reduction Date" has the meaning assigned to such
term in Section 3.8(b).
"Reference Banks" means Chemical Bank, ABN Amro
Bank, N.V., and National Westminster bank, PLC.
"Reference Rate Loan" means any Loan for which
interest is determined, in accordance with the provisions
hereof, at the Applicable Reference Rate.
"Reportable Event" means any "reportable event" as
defined in Section 4043(b) of ERISA or the regulations
issued thereunder.
"Required Banks" means at any time Banks having
Commitments representing at least 66-2/3% of the aggregate
Commitments hereunder.
"Required Borrowing Base Banks" has the meaning
assigned to such term in Article I of the FTX Credit
Agreement.
"Responsible Officer" of any corporation means any
executive officer or Financial Officer of such corporation
and any other officer or similar official thereof responsi-
ble for the administration of the obligations of such corpo-
ration in respect of this Agreement.
"Restricted Subsidiary" means FRP, FCX, FI, FRP
Partner, FRP GPCo, FCC and any other Subsidiary that is not
a Nonrestricted Subsidiary.
"Sales Proceeds Account" has the meaning assigned
to such term in the FI Trust Agreement.
"Scheduled Principal Payments" for any period and
for any Person means the aggregate principal amount of all
Loans repaid pursuant to Section 3.10(b) by virtue of
Section 3.8(b) in such period, (ii) the aggregate principal
amount of all FTX Credit Agreement Loans repaid pursuant to
Section 3.10(b) by virtue of Section 3.8(b) of the FTX
Credit Agreement in such period, plus (iii) scheduled
principal payments on all Debt.
"SEC" means the Securities and Exchange Commis-
sion.
"Security Agreement" means, collectively, the FTX
Security Agreement and any FTX Subsidiary Security
Agreement.
"Shared Collateral" has the meaning assigned such
terms in the FTX Intercreditor Agreement.
"Statutory Reserves" means a fraction (expressed
as a decimal), the numerator of which is the number one and
the denominator of which is the number one minus the aggre-
gate of the maximum reserve percentages (including, without
limitation, any marginal, special, emergency, or supplemen-
tal reserves) expressed as a decimal established by the
Board and any other banking authority to which any Bank is
subject (a) with respect to the Adjusted CD Rate, for new
negotiable time deposits in Dollars of over $100,000 with
maturities approximately equal to the applicable Interest
Period and (b) with respect to the LIBO Rate, for Eurocur-
rency Liabilities (as defined in Regulation D of the Board).
Such reserve percentages shall include, without limitation,
those imposed under such Regulation D. Statutory Reserves
shall be adjusted automatically on and as of the effective
date of any change in any reserve percentage.
"Subordination Provisions" means the form of
subordination provisions attached hereto as Exhibit A.
"Subsidiary" means as to any Person, any
corporation at least a majority of whose securities having
ordinary voting power for the election of directors (other
than securities having such power only by reason of the
happening of a contingency) are at the time owned by such
Person and/or one or more other Subsidiaries of such Person
and any partnership (other than joint ventures for which the
intention under the applicable agreements, including
operating agreements, if any, is that such joint ventures be
partnerships solely for purposes of the Code) in which such
Person or a Subsidiary of such Person is a general partner;
provided that unless otherwise specified, "Subsidiary" means
a Subsidiary of FTX and provided, further, that FM
Properties, FM Corporation and IMC-Agrico shall not at any
time be Subsidiaries for any purposes of this Agreement.
"Surat Kuasa" means the Surat Kuasa (Power of
Attorney) dated December 30, 1991, as amended by the First
Amendment thereto dated the Amendment Closing Date, granted
by FI to the FI Trustee, as the same may be further amended
and in effect from time to time.
"Termination Event" means any event or condition
which constitutes grounds under Section 4042 of ERISA for
the termination of, or for the appointment of a trustee to
administer, any Plan.
"Total Commitment" means the sum of all the then
effective Commitments.
"Transfer Effective Date" has the meaning assigned
to such term in each Commitment Transfer Supplement.
"Transferee" means any Participant or Purchasing
Bank, as such terms are defined in Section 10.3.
"Unused Net Commitment Amount" means the amount of
the FTX Credit Agreement Total Commitment less the Corporate
Group Loan Exposure.
"Wholly-Owned Restricted Subsidiary" means any
Subsidiary all of the stock of which is at the time owned by
FTX, FRP and/or one or more other Wholly-Owned Restricted
Subsidiaries of either of them.
"Withdrawal Liability" means liability to a
Multiemployer Plan as a result of a complete or partial
withdrawal from such Multiemployer Plan, as such terms are
defined in Part I of Subtitle E of Title IV of ERISA.
SECTION 1.2. Accounting Terms. Except as other-
wise herein specifically provided, each accounting term used
herein shall have the meaning given it under United States
generally accepted accounting principles in effect from time
to time (with such changes thereto as are approved or
concurred in from time to time by FTX's independent public
accountants, as applicable) applied on a basis consistent
with those used in preparing the financial statements
referred to in Section 5.1(a) ("GAAP"); provided, however,
that each reference in Section 5.2 hereof, or in the
definition of any term used in Section 5.2 hereof, to GAAP
shall mean generally accepted accounting principles as in
effect on the Amendment Closing Date and as applied by FTX
in preparing the financial statements referred to in
Section 4.1(e).
SECTION 1.3. Section, Article, Exhibit and
Schedule References. Unless otherwise stated, Section,
Article, Exhibit and Schedule references made herein are to
Sections, Articles, Exhibits or Schedules, as the case may
be, of this Agreement.
ARTICLE II
(Intentionally left blank.)
ARTICLE III
The Loans
SECTION 3.1. (Intentionally left blank.)
SECTION 3.2. Revolving Credit Facility. Upon the
terms and subject to the conditions and relying upon the
representations and warranties herein set forth, each Bank,
severally and not jointly, agrees to make Loans to FI, at
any time and from time to time during the Commitment Period,
in an aggregate principal amount at any one time outstanding
not to exceed such Bank's Applicable Percentage of the
Unused Net Commitment Amount on the Borrowing Date for such
Loan. Within the foregoing limits, FI may borrow, repay and
reborrow, prior to the Maturity Date, all or any portion of
the Commitments hereunder, subject to the terms, provisions
and limitations set forth herein; provided, however, that no
borrowing shall be made hereunder if (i) after giving effect
thereto the principal amount outstanding of the Loans of any
Bank would exceed the Commitment of such Bank or (ii) except
for continuations or conversions of existing Loans during
any applicable 90-day period referred to in Section 2.4 of
the FTX Credit Agreement without increase in the principal
amount of such Loans, the aggregate principal amount of all
the Corporate Group Loans would exceed the lesser of (x) the
then current Available Borrowing Base or (y) the then
current FTX Credit Agreement Total Commitment.
SECTION 3.3. Loans. (a) The Loans made by the
Banks to FI on any one date shall be in a minimum aggregate
principal amount of $5,000,000 and an integral multiple of $1,000,000.
The first Loan by each Bank to FI made after the Amendment Closing
Date shall be made against delivery to such Bank of an appropriate
Promissory Note, payable to the order of such Bank in the amount of
its Commitment, executed by FI, as referred to in Section 3.5.
(b) Each Loan shall be either a Reference Rate Loan, a CD
Rate Loan or a LIBO Rate Loan as FI may request pursuant to
Section 3.4. Subject to the provisions of Sections 3.4 and 3.11,
Loans of more than one type may be outstanding at the same time.
(c) Each Bank shall make its portion, as determined under
Section 3.15, of each Loan hereunder on the proposed date thereof by
paying the amount required to the Agent in New York, New York in
immediately available funds not later than 2:00 p.m., New York City
time, and the Agent shall by 3:00 p.m., New York City time, credit the
amounts so received to the general deposit account of FI with the
Agent or, if Loans shall not be made on such date because any
condition precedent to a borrowing herein specified is not met, return
the amounts so received to the respective Banks. Unless the Agent
shall have received notice from a Bank prior to the date of any Loan
that such Bank will not make available to the Agent such Bank's
portion of such Loan, the Agent may assume that such Bank has made
such portion available to the Agent on the date of such Loan in
accordance with this paragraph (c) and the Agent may, in reliance upon
such assumption, make available to FI on such date a corresponding
amount. If and to the extent that such Bank shall not have made such
portion available to the Agent, such Bank and FI severally agree to
repay to the Agent forthwith on demand such corresponding amount
together with interest thereon, for each day from the date such amount
is made available to the applicable Borrower until the date such
amount is repaid to the Agent at the interest rate applicable at such
time to such Loan. If such Bank shall repay to the Agent such
corresponding amount, such amount shall constitute such Bank's Loan
for purposes of this Agreement.
SECTION 3.4. Notice of Loans. (a) FI shall give the
Agent irrevocable telephonic (promptly confirmed in writing),
written, telecopy or telex notice in the form of Exhibit B with
respect to each Loan (i) in the case of a LIBO Rate Loan, not later
than 10:30 a.m., New York City time, three Business Days before a
proposed borrowing, (ii) in the case of a CD Rate Loan, not later
than 10:30 a.m., New York City time, one Business Day before a
proposed borrowing, and (iii) in the case of a Reference Rate Loan,
not later than 10:30 a.m., New York City time, on the date of a
proposed borrowing. Such notice shall be irrevocable (except that in
the case of a LIBO Rate Loan, FI may, subject to Section 3.14,
revoke such notice by giving written or telex notice thereof to the
Agent not later than 10:30 a.m., New York City time, two Business Days
before such proposed borrowing) and shall in each case refer to this
Agreement and specify (1) whether the Loan then being requested is to
be a Reference Rate Loan, CD Rate Loan or LIBO Rate Loan, (2) the date
of such Loan (which shall be a Business Day) and amount thereof, and
(3) if such Loan is to be a CD Rate Loan or LIBO Rate Loan, the
Interest Period or Interest Periods with respect thereto. If no
election as to the type of Loan is specified in any such notice by FI,
such Loan shall be a Reference Rate Loan. If no Interest Period
with respect to any CD Rate Loan or LIBO Rate Loan is
specified in any such notice by FI, then (x) in the case of
a CD Rate Loan, FI shall be deemed to have selected an
Interest Period of 30 days' duration and (y) in the case of
a LIBO Rate Loan, FI shall be deemed to have selected an
Interest Period of one month's duration. The Agent shall
promptly advise the other Banks of any notice given by FI
pursuant to this Section 3.4(a) and of each Bank's portion
of the requested Loan.
(b) FI may continue or convert all or any part of
any Loan with a Loan of the same or a different type in
accordance with Section 3.11 and subject to the limitations
set forth therein.
(c) Notwithstanding any provision to the contrary
in this Agreement, FI shall not in any notice of borrowing
under this Section 3.4 request any CD Rate Loan or LIBO Rate
Loan which, if made, would result in more than 20 separate
CD Rate Loans and LIBO Rate Loans of any Bank and CD Rate
Loans and LIBO Rate Loans (each as defined in the FTX Credit
Agreement) of any FTX Lender being outstanding under the
Corporate Group Facility at any one time. For purposes of
the foregoing, Loans having different Interest Periods,
regardless of whether they commence on the same date, shall
be considered separate Loans.
SECTION 3.5. Promissory Notes. (a) The Loans
made by each Bank to FI shall be evidenced by a Promissory
Note duly executed on behalf of FI, dated the Original
Execution Date, in substantially the form attached hereto as
Exhibit C, payable to such Bank in a principal amount equal
to its Commitment on such date. The outstanding principal
balance of each Loan, as evidenced by such Promissory Note,
shall be payable on the Maturity Date. Each Note shall bear
interest from its date on the outstanding principal balance
thereof, as provided in Section 3.6.
(b) Each Bank, or the Agent on its behalf, shall,
and is hereby authorized by FI to, endorse on the schedule
attached to the Promissory Note delivered by FI to such Bank
(or on a continuation of such schedule attached to such
Promissory Note and made a part thereof), or otherwise
record in such Bank's internal records, an appropriate
notation evidencing the date and amount of each Loan from
such Bank to FI, as well as the date and amount of each
payment and prepayment with respect thereto; provided,
however, that the failure of any Bank or the Agent to make
such a notation or any error in such a notation shall not
affect the obligation of FI under such Promissory Note.
SECTION 3.6. Interest on Loans. (a) Subject to
the provisions of Section 3.9, each Reference Rate Loan
shall bear interest at a rate per annum (computed on the
basis of the actual number of days elapsed over a year of
365 or 366 days, as the case may be), equal to the
Applicable Reference Rate. Interest on each Reference Rate
Loan shall be payable on the applicable Interest Payment
Date.
(b) Subject to the provisions of Section 3.9,
each CD Rate Loan shall bear interest at a rate per annum
(computed on the basis of the actual number of days elapsed
over a year of 360 days) equal to the Applicable CD Rate for
the Interest Period in effect for such Loan. Interest on
each CD Rate Loan shall be payable on each applicable
Interest Payment Date. The Applicable CD Rate shall be
determined by the Agent, and such determination shall be
conclusive absent manifest error. The Agent shall promptly
advise FI and each Bank of such determination.
(c) Subject to the provisions of Section 3.9,
each Loan which is a LIBO Rate Loan shall bear interest at a
rate per annum (computed on the basis of the actual number
of days elapsed over a year of 360 days) equal to the
Applicable LIBO Rate for the Interest Period in effect for
such Loan. Interest on each such LIBO Rate Loan shall be
payable on each applicable Interest Payment Date. The
Applicable LIBO Rate shall be determined by the Agent, and
such determination shall be conclusive absent manifest
error. The Agent shall promptly advise FI and each Bank of
such determination.
(d) If the Applicable Margins for Loans change
pursuant to Schedule II-1 or II-2 as a result of a change in
the Cash Flow Ratio, such change shall become effective on
the first day of the third month after the last day of the
fiscal quarter with respect to which such Cash Flow Ratio
was calculated and shall continue in effect until the first
day of the third month after the last day of the next
succeeding fiscal quarter for which a change in the Cash
Flow Ratio would require a different Applicable Margin for
Loans pursuant to Schedule II-1 or II-2.
SECTION 3.7. Fees. (a) On the last Business Day
of each March, June, September and December, and on the
Maturity Date, FI shall pay each Bank, through the Agent, a
commitment fee (a "Commitment Fee") from and including the
Original Execution Date through and including the Maturity
Date on (i) with respect to any quarter (or shorter period
commencing with the Original Execution Date or ending on the
date immediately preceding the Amendment Closing Date) prior
to the Amendment Closing Date, the average daily unused
amount of such Bank's Commitment (as defined in and
calculated in accordance with this Agreement as in effect
prior to the Amendment Closing Date), if any, equal to 1/4
of 1% per annum and (ii) with respect to any quarter after
the Amendment Closing Date, the amount set forth in and
pursuant to (and not in duplication of) Section 3.7(a) of
the FTX Credit Agreement.
(b) (Intentionally left blank.)
(c) All Commitment Fees under this Section 3.7
shall be computed on the basis of the actual number of days
elapsed in a year of 365 or 366 days, as the case may be.
The Commitment Fees due to each Bank shall cease to accrue
on the earlier of the Maturity Date and the termination of
the Commitment of such Bank pursuant to Section 3.8.
(d) On the Amendment Closing Date FTX will also
pay to each Bank a participation fee (a "Participation Fee")
as set forth on Schedule IV to the FTX Credit Agreement,
such fee to be paid pursuant to Section 3.7(d) of the FTX
Credit Agreement and not in duplication of such fee.
(e) FTX agrees to pay to the Agent, for its own
account pursuant hereto and to the FTX Credit Agreement, on
May 15th of each year, an agency fee (the "Agency Fee") as
agreed between FTX and the Agent.
SECTION 3.8. Maturity and Reduction of Commit-
ments. (a) Upon at least five days' prior written or telex
notice to the Agent, FI may without penalty at any time in
whole permanently terminate, or from time to time perma-
nently reduce, the Total Commitment, ratably among the Banks
in accordance with the amounts of their respective Commit-
ments; provided, however, that each partial reduction of the
Commitment Amount shall be in a minimum principal amount of
$5,000,000 and an integral multiple of $1,000,000; provided
further, that the Total Commitment may not be reduced to an
amount which is less than the lesser of (i) the aggregate
principal amount of all Loans outstanding after such
reduction and (ii) the amount of the FTX Credit Agreement
Total Commitment on such date.
(b) The Total Commitment shall be permanently
reduced on the Conversion Date to the aggregate principal
amount of the Loans outstanding on such date (after giving
effect to any Loans made on such date). Thereafter, the
Total Commitment shall be reduced on the last Business Day
of March, June, September and December in each year (each a
"Reduction Date"), commencing on September 30, 1996, by
14 consecutive reductions, each in an amount equal to the
lesser of (i) 1/14th of the Total Commitment as in effect on
the Conversion Date after reduction as aforesaid and
(ii) the Total Commitment on such Reduction Date.
(c) (Intentionally left blank.)
(d) (Intentionally left blank.)
(e) On the Maturity Date the Commitments shall
terminate and any outstanding Loans shall be due and payable
in full.
SECTION 3.9. Interest on Overdue Amounts; Alter-
native Rate of Interest. (a) If FI shall default in the
payment of the principal of or interest on any Corporate
Group Loan or any other amount becoming due hereunder or
under the FTX Credit Agreement), by acceleration or
otherwise, FI shall on demand from time to time pay
interest, to the extent permitted by law, on such defaulted
amount up to the date of actual payment (after as well as
before judgment):
(i) in the case of the payment of principal of or
interest on a CD Rate Loan or LIBO Rate Loan, at a
rate 2% above the rate which would otherwise be payable
under Section 3.6(b) or (c), as the case may be, until
the scheduled maturity date with respect thereto and
thereafter as provided in clause (ii) below; and
(ii) in the case of the payment of principal of or
interest on a Reference Rate Loan or any other amount
payable hereunder (other than principal of or interest
on any CD Rate Loan or LIBO Rate Loan to the extent
referred to in clause (i) above), at a rate 2% above
the Applicable Reference Rate.
(b) In the event, and on each occasion, that on
the day two Business Days prior to the commencement of any
Interest Period for a LIBO Rate Loan the Agent shall have
determined (which determination shall be conclusive and
binding upon FI absent manifest error) that (i) dollar
deposits in the requested principal amount of such LIBO Rate
Loan are not generally available in the London Interbank
Market, (ii) the rate at which dollar deposits are being
offered will not adequately and fairly reflect the cost to
any Bank of making or maintaining the principal amount of
such LIBO Rate Loan during such Interest Period or
(iii) reasonable means do not exist for ascertaining the
Applicable LIBO Rate, the Agent shall as soon as practicable
thereafter give written or telex notice of such
determination to FI and the other Banks, and any request by
FI for the making, continuation or conversion of a LIBO Rate
Loan pursuant to Section 3.4 or 3.11 shall, until the Agent
shall have advised FI and the Banks that the circumstances
giving rise to such notice no longer exist, be deemed to be
a request for a Reference Rate Loan: provided, however,
that if the Agent makes the determination specified in (ii)
above, at the option of FI such request shall be deemed to
be a request for a Reference Rate Loan only from such Bank
referred to in (ii) above; provided further, however, that
such option shall not be available to FI if the Agent makes
the determination specified in (ii) above with respect to
three or more Banks. Each determination of the Agent
hereunder shall be conclusive absent manifest error.
(c) In the event, and on each occasion, that on
or before the day on which the Adjusted CD Rate for a CD
Rate Loan is to be determined, the Agent shall have
determined (which determination shall be conclusive and
binding upon FI absent manifest error) that (i) the Adjusted
CD Rate for such Loan cannot be ascertained for any reason,
including, without limitation, the inability or failure of
the Agent to obtain sufficient bids in accordance with the
terms of the definition of Base CD Rate, or (ii) that the
Adjusted CD Rate for such CD Rate Loan will not adequately
and fairly reflect the cost to any Bank of making or
maintaining the principal amount of such CD Rate Loan during
such Interest Period, the Agent shall, as soon as
practicable thereafter, give written or telex notice of such
determination to FI and the other Banks, and any request by
FI for the making, continuation or conversion of a CD Rate
Loan pursuant to Section 3.4 or 3.11 shall, until the Agent
shall have advised FI and the Banks that the circumstances
giving rise to such notice no longer exist, be deemed to be
a request for a Reference Rate Loan; provided, however, that
if the Agent makes the determination specified in (ii)
above, at the option of FI such request shall be deemed to
be a request for a Reference Rate Loan only from such Bank
referred to in (ii) above; provided further, however, that
such option shall not be available to FI if the Agent makes
the determination specified in (ii) above with respect to
three or more Banks. Each determination by the Agent
hereunder shall be conclusive absent manifest error.
SECTION 3.10. Prepayment of Loans. (a) FI shall
have the right at any time and from time to time to prepay
any Loan, in whole or in part, subject to the requirements
of Section 3.14 but otherwise without premium or penalty,
upon prior written or telex notice to the Agent by
10:30 a.m., New York City time, on the date of such
prepayment; provided, however, that each such partial
prepayment shall be in a minimum amount of $5,000,000 and an
integral multiple of $1,000,000.
(b) FI shall from time to time pay or prepay so
much of the Loans as shall be necessary in order that
(i) the aggregate principal amount of the Corporate Group
Loans (after giving effect to any other prepayment of
Corporate Group Loans on such date) outstanding will not
exceed the FTX Credit Agreement Total Commitment then in
effect and (ii) the aggregate principal amount of the Loans
(after giving effect to any other prepayment of Loans on
such date) outstanding will not exceed the Total Commitment
then in effect. All prepayments under this Section shall be
subject to Section 3.14.
(c) Not later than 90 days after each reduction
in the amount of the Borrowing Base as a result of any
redetermination of the Borrowing Base Factors pursuant to
Article II of the FTX Credit Agreement, FI shall prepay the
outstanding Loans in such amount as may be necessary so that
the aggregate principal amount of the outstanding Corporate
Group Loans (after giving effect to any other prepayment of
Corporate Group Loans on such date) does not exceed the
Available Borrowing Base after giving effect to such
reduction; provided, however, that if such reduction in the
Borrowing Base is a result of any sales, transfers,
distributions, or other dispositions of assets or properties
(including, without limitation, shares of any capital stock
or other equity interests of any Restricted Subsidiary)
other than in the ordinary course of business, such 90-day
grace period will not apply with respect to the required
mandatory prepayment. During any such applicable 90-day
period, continuations or conversions of Loans in accordance
with Section 3.11 are permitted; provided that the Interest
Periods for such continued or converted borrowings do not
extend beyond such 90-day period unless the condition
requiring prepayments pursuant to this Section 3.10(c) shall
no longer exist. Any prepayment of any CD Rate Loan or LIBO
Rate Loan pursuant to this Section 3.10(c) shall be subject
to Section 3.14.
(d) Each notice of prepayment delivered pursuant
to paragraph (a) above shall specify the prepayment date and
the principal amount of each Loan (or portion thereof) to be
prepaid, shall be irrevocable and shall commit FI to prepay
such Loan by the amount stated therein on the date stated
therein. All prepayments shall be applied first to
Reference Rate Loans and then to other Loans and shall be
accompanied by accrued interest on the principal amount
being prepaid to the date of prepayment. Any amounts
prepaid may be reborrowed to the extent permitted by the
terms of this Agreement.
(e) The Loans of FI shall be paid or prepaid
pursuant to Section 5.1(i).
SECTION 3.11. Continuation and Conversion of
Loans. FI shall have the right, subject to the provisions
of Section 3.9, (i) on three Business Days' prior
irrevocable notice by FI to the Agent, to continue or
convert any type of Loans with LIBO Rate Loans, (ii) on one
Business Day's prior irrevocable notice by FI to the Agent,
to continue or convert any type of Loans with CD Rate Loans
or (iii) with irrevocable notice by FI to the Agent by
10:30 a.m. on the date of such proposed continuation or
conversion, to continue or convert any type of Loans with
Reference Rate Loans, in each case subject to the following
further conditions:
(a) each continuation or conversion shall be made
pro rata as to each type of Loan of FI to be continued
or converted among the Banks in accordance with the
respective amounts of their Commitments and the notice
given to the Agent by FI shall specify the aggregate
amount of Loans to be continued or converted;
(b) in the case of a continuation or conversion of
less than all Loans of FI, the Loans continued or
converted shall be in a minimum aggregate principal
amount of $5,000,000 and an integral multiple of
$1,000,000;
(c) accrued interest on each Loan (or portion
thereof) being continued or converted shall be paid by
FI at the time of continuation or conversion;
(d) the Interest Period with respect to any Loan
made in respect of a continuation or conversion thereof
shall commence on the date of the continuation or
conversion;
(e) any portion of a Loan maturing or required to
be prepaid in less than 30 days may not be continued or
converted with a CD Rate Loan and any portion of a Loan
maturing or required to be prepaid in less than one
month may not be continued or converted with a LIBO
Rate Loan;
(f) a CD Rate Loan or a LIBO Rate Loan may be
continued or converted on the last day of the
applicable Interest Period and, subject to
Section 3.14, on any other day;
(g) no Loan (or portion thereof) may be continued
or converted into a CD Rate Loan or LIBO Rate Loan if,
after such continuation or conversion, an aggregate of
more than 20 separate CD Rate Loans and LIBO Rate Loans
of any Bank and CD Rate Loans and LIBO Rate Loans (each
as defined in the FTX Credit Agreement) of any FTX
Lender would be outstanding under the Corporate Group
Facility determined as set forth in Section 3.4(c);
(h) no Loan shall be continued or converted if
such Loan by any Bank would be greater than the amount
by which its Commitment exceeds the amount of its other
Loans at the time outstanding or if such Loan would not
comply with the other provisions of this Agreement,
including clause (ii) of the proviso to Section 3.2;
and
(i) any portion of a LIBO Rate Loan or CD Rate
Loan which cannot be converted into or continued as a
LIBO Loan or CD Rate Loan by reason of (e) and (g)
above shall be automatically converted at the end of
the Interest Period in effect for such Loan into a
Reference Rate Loan.
The Agent shall communicate the information contained in
each irrevocable notice delivered by FI pursuant to this
Section 3.11 to the other Banks promptly after its receipt
of the same.
The Interest Period applicable to any CD Rate Loan
or LIBO Rate Loan resulting from a continuation or
conversion shall be specified by FI in the irrevocable
notice of continuation or conversion delivered pursuant to
this Section; provided, however, that if no such Interest
Period shall be specified, FI shall be deemed to have
selected an Interest Period in the case of a CD Rate Loan of
30 days' duration, and in the case of a LIBO Rate Loan of
one month's duration.
For purposes of this Section 3.11, notice received
by the Agent from FI after 10:30 a.m., New York time, in the
case of a request for a LIBO Rate Loan or a CD Rate Loan, or
2:00 p.m., New York time, in the case of a request for a
Reference Rate Loan, on a Business Day shall be deemed to be
received on the immediately succeeding Business Day.
SECTION 3.12. Reserve Requirements; Change in
Circumstances. (a) FI shall pay to each Bank on the last
day of each Interest Period for any LIBO Rate Loan so long
as such Bank may be required to maintain reserves against
Eurocurrency Liabilities (as defined in Regulation D of the
Board) (or so long as such Bank may be required to maintain
reserves against any other category of liabilities which
includes deposits by reference to which the interest rate on
any LIBO Rate Loan is determined as provided in this
Agreement or against any category of extensions of credit or
other assets of such Bank which includes any LIBO Rate Loan)
an additional amount (determined by such Bank and notified
to FI), equal to the product of the following for each
affected LIBO Rate Loan for each day during such Interest
Period:
(i) the principal amount of such affected LIBO
Rate Loan outstanding on such day; and
(ii) the remainder of (x) the product of Statutory
Reserves on such date times the Applicable LIBO Rate on
such day minus (y) the Applicable LIBO Rate on such
day; and
(iii) 1/360.
Each Bank shall separately bill FI directly for all amounts
claimed pursuant to this Section 3.12(a).
(b) Notwithstanding any other provision herein,
if after the Amendment Closing Date any change in condition
or applicable law or regulation or in the interpretation or
administration thereof (whether or not having the force of
law and including, without limitation, Regulation D of the
Board) by any authority charged with the administration or
interpretation thereof shall occur which shall:
(i) subject any Bank (which shall for the purpose
of this Section include any assignee or lending office
of any Bank) to any tax with respect to any amount paid
or to be paid by any Bank with respect to its LIBO Rate
Loans or CD Rate Loans (other than any franchise tax or
tax or other similar governmental charges, fees or
assessments based on the overall net income of such
Bank by the U.S. Federal government or by any
jurisdiction in which such Bank maintains an office,
unless the presence of such office is solely
attributable to the enforcement of any rights hereunder
or under any FI Security Document with respect to an
Event of Default);
(ii) change the basis of taxation of payments to
any Bank of principal of or interest on its LIBO Rate
Loans or CD Rate Loans or other fees and amounts
payable hereunder, or any combination of the foregoing
(other than any franchise tax or tax or other similar
governmental charges, fees or assessments based on the
overall net income of any Bank by the U.S. Federal
government or by any jurisdiction in which such Bank
maintains an office unless the presence of such office
is solely attributable to the enforcement of any rights
hereunder or under any FI Security Document with
respect to an Event of Default);
(iii) impose, modify or deem applicable any reserve,
special deposit or similar requirement against assets
of, deposits with, for the account of or credit
extended by any Bank (except any such reserve require-
ment which is reflected in the Adjusted CD Rate);
(iv) impose on any such Bank or the London
Interbank Market any other condition affecting this
Agreement or LIBO Rate Loans or CD Rate Loans made by
such Bank; or
(v) impose upon any Bank any other condition with
respect to any amount paid or to be paid by any Bank
with respect to its LIBO Rate Loans or CD Rate Loans or
this Agreement;
and the result of any of the foregoing shall be to increase
the cost to any Bank of making or maintaining its LIBO Rate
Loans or CD Rate Loans or Commitment hereunder, or to reduce
the amount of any sum (whether of principal, interest or
otherwise) received or receivable by such Bank or to require
such Bank to make any payment, in respect of any such Loan,
in each case by or in an amount which such Bank in its sole
judgment shall deem material, then FI shall pay to such Bank
such an amount or amounts as will compensate the Bank for
such additional cost, reduction or payment.
(c) If any Bank shall have determined that the
applicability of any law, rule, regulation, agreement or
guideline adopted after the Amendment Closing Date pursuant
to or arising out of the July 1988 report of the Basle
Committee on Banking Regulations and Supervisory Practices
entitled "International Convergence of Capital Measurement
and Capital Standards", or the adoption after the Amendment
Closing Date of any other law, rule, regulation or guideline
regarding capital adequacy, or any change in any of the
foregoing enacted after the Amendment Closing Date or in the
interpretation or administration of any of the foregoing by
any governmental authority, central bank or comparable
agency charged with the interpretation or administration
thereof, or compliance by any Bank (or any lending office of
such Bank) or any Bank's holding company with any request or
directive enacted after the Amendment Closing Date regarding
capital adequacy (whether or not having the force of law) of
any such authority, central bank or comparable agency, has
or would have the effect of reducing the rate of return on
such Bank's capital or on the capital of such Bank's holding
company, if any, as a consequence of its obligations here-
under to a level below that which such Bank or such Bank's
holding company could have achieved but for such adoption,
change or compliance (taking into consideration such Bank's
policies and the policies of such Bank's holding company
with respect to capital adequacy) by an amount deemed by
such Bank to be material, then from time to time FI shall
pay to such Bank such additional amount or amounts as will
compensate such Bank or such Bank's holding company for any
such reduction suffered.
(d) If and on each occasion that a Bank makes a
demand for compensation pursuant to paragraph (a), (b) or
(c) above, or under Section 3.18 (it being understood that a
Bank may be reimbursed for any specific amount under only
one such paragraph or Section), FI may, upon at least three
Business Days' prior irrevocable written or telex notice to
each of such Bank and the Agent, in whole permanently
replace the Commitment of such Bank; provided that such
notice must be given not later than the 30th day following
the date of a demand for compensation made by such Bank; and
provided that FI shall replace such Commitment with the
commitment of a commercial bank satisfactory to the Agent.
Such notice from FI shall specify an effective date for the
termination of such Bank's Commitment which date shall not
be later than the tenth day after the date such notice is
given. On the effective date of any termination of such
Bank's Commitment pursuant to this clause (d), FI shall pay
to the Agent for the account of such Bank (A) any Commitment
Fees on the amount of such Bank's Commitment so terminated
accrued to the date of such termination, (B) the principal
amount of any outstanding Loans held by such Bank plus
accrued interest on such principal amount to the date of
such termination and (C) the amount or amounts requested by
such Bank pursuant to clause (a), (b) or (c) above or
Section 3.18, as applicable. FI will remain liable to such
terminated Bank for any loss or expense that such Bank may
sustain or incur as a consequence of such Bank's making any
LIBO Rate Loan or CD Rate Loan or any part thereof or the
accrual of any interest on any such Loan in accordance with
the provisions of this clause (d) as set forth in
Section 3.14. Upon the effective date of termination of any
Bank's Commitment pursuant to this clause (d), such Bank
shall cease to be a "Bank" hereunder; provided that no such
termination of any such Bank's Commitment shall affect
(i) any liability or obligation of FI or any other Bank to
such terminated Bank which accrued on or prior to the date
of such termination or (ii) such terminated Bank's rights
hereunder in respect of any such liability or obligation.
(e) A certificate of each Bank setting forth such
amount or amounts as shall be necessary to compensate such
Bank as specified in paragraph (a), (b) or (c) above, as the
case may be, shall be delivered as soon as practicable to
FI, and in any event within 90 days of the change giving
rise to such amount or amounts, and shall be conclusive
absent manifest error. FI shall pay each Bank the amount
shown as due on any such certificate within 15 days after
its receipt of the same. In preparing such a certificate,
each Bank may employ such assumptions and allocations of costs
and expenses as it shall in good faith deem reasonable.
(f) Failure on the part of any Bank to demand
compensation for any increased costs or reduction in amounts
received or receivable or reduction in return on capital
within the 90 days required pursuant to clause (e) above shall
not constitute a waiver of such Bank's rights to demand
compensation for any increased costs or reduction in amounts
received or receivable or reduction in return on capital for
any period after the date that is 90 days prior to the date of
the delivery of demand for compensation. The protection of
this Section shall be available to each Bank regardless of any
possible contention of invalidity or inapplicability of the
law, regulation or condition which shall have occurred or been
imposed. FI shall not be required to make any additional
payment to any Bank pursuant to Section 3.12 (a) or (b) in
respect of any such cost, reduction or payment that could be
avoided by such Bank in the exercise of reasonable diligence,
including a change in the lending office of such Bank if
possible without material cost to such Bank. Each Bank agrees
that it will promptly notify FI and the Agent of any event of
which the responsible account officer shall have knowledge
which would entitle such Bank to any additional payment
pursuant to this Section 3.12. FI agrees to furnish promptly
to the Agent official receipts evidencing any withholding or
deduction of any tax.
SECTION 3.13. Change in Legality. (a) Not-
withstanding anything to the contrary herein contained, if any
change in any law or regulation or in the interpretation
thereof by any governmental authority charged with the
administration or interpretation thereof shall make it
unlawful for any Bank to make or maintain any LIBO Rate Loan
or to give effect to its obligations as contemplated hereby,
then, by written notice to FI and to the Agent, such Bank may:
(i) declare that LIBO Rate Loans will not thereafter
be made by such Bank hereunder, whereupon FI shall be
prohibited from requesting LIBO Rate Loans from such Bank
hereunder unless such declaration is subsequently
withdrawn; and
(ii) require that all outstanding LIBO Rate Loans
made by it be converted to Reference Rate Loans, in
which event (A) all such LIBO Rate Loans shall be automati-
cally converted to Reference Rate Loans as of the effective
date of such notice as provided in paragraph (b) below,
(B) all payments and prepayments of principal which would
otherwise have been applied to repay the converted LIBO Rate
Loans shall instead be applied to repay the Reference Rate
Loans resulting from the conversion of such LIBO Rate Loans
and (C) the Reference Rate Loans resulting from the
conversion of such LIBO Rate Loans shall be prepayable only
at the times the converted LIBO Rate Loans would have been
prepayable, notwithstanding the provisions of Section 3.10.
(b) For purposes of Section 3.13(a), a notice to
FI by any Bank shall be effective on the date of receipt by
FTX.
SECTION 3.14. Indemnity. FI shall indemnify each
Bank against any loss or expense which such Bank may sustain
or incur as a consequence of any failure by FI to fulfill on
any Borrowing Date the applicable conditions set forth in
Article VI, any failure by FI to borrow hereunder or to
convert or continue any Loan hereunder after irrevocable
notice of borrowing, continuation or conversion pursuant to
Section 3.4 or 3.11 has been given, any payment, prepayment
(except for any prepayment excluded by the terms of Section
5.1(i)) or conversion of a CD Rate Loan or LIBO Rate Loan to
FI required by any other provision of this Agreement or
otherwise made on a date other than the last day of the
applicable Interest Period (whether by reason of voluntary
prepayment, mandatory prepayment or otherwise), any default
in payment or prepayment of the principal amount of any CD
Rate Loan or LIBO Rate Loan to FI or any part thereof or
interest accrued thereon, as and when due and payable (at
the due date thereof, by irrevocable notice of prepayment or
otherwise, including the occurrence of any Event of
Default), including, but not limited to, any loss or reason-
able expense sustained or incurred or to be sustained or
incurred in liquidating or employing deposits from third
parties acquired to effect or maintain such Loan or any part
thereof as a CD Rate Loan or LIBO Rate Loan. Such loss or
reasonable expense shall include, without limitation, an
amount equal to the excess, if any, as reasonably determined
by each affected Bank of (i) its cost of obtaining the funds
for the Loan being paid, prepaid or converted or not bor-
rowed, continued or converted (based on the Absolute Rate,
Adjusted CD Rate or the LIBO Rate applicable thereto) for
the period from the date of such payment, prepayment or
conversion or failure to borrow, continue or convert to the
last day of the Interest Period for such Loan (or, in the
case of a failure to borrow, continue or convert, the
Interest Period for such Loan which would have commenced on
the date of such failure to borrow continue or convert) over
(ii) the amount of interest (as reasonably determined by
such Bank) that would be realized by such Bank in
reemploying the funds so paid, prepaid or converted or not
borrowed, continued or converted by making a Loan of the
same type in such principal amount and with a maturity
comparable to such period. A certificate of any Bank
setting forth any amount or amounts which such Bank is
entitled to receive pursuant to this Section shall be
delivered to FI and shall be conclusive absent manifest
error.
SECTION 3.15. Pro Rata Treatment. Except as
permitted under any of Sections 3.9(b) or (c), 3.12, 3.13,
3.14, 3.18, 3.19 or 10.17, each borrowing under each type of
Loan, each payment or prepayment of principal of the
Promissory Notes, each payment of interest on the Promissory
Notes, each other reduction of the principal or interest
outstanding under the Promissory Notes, however achieved,
including by setoff by any person, each payment of the
Commitment Fees, each reduction of the Commitments and each
continuation or conversion of Loans shall be made pro rata
among the Banks in the proportions that their respective
Commitments bear to the Total Commitment. Each Bank agrees
that in computing such Bank's portion of any borrowing to be
made hereunder, the Agent may, in its discretion, round each
Bank's percentage of such borrowing to the next higher or
lower whole dollar amount.
SECTION 3.16. Sharing of Setoffs. Each Bank
agrees that if it shall, through the exercise of a right of
banker's lien, setoff or counterclaim against FI or either
Guarantor, or pursuant to a secured claim under Section 506
of Title 11 of the United States Code or other security or
interest arising from, or in lieu of, such secured claim,
received by such Bank under any applicable bankruptcy,
insolvency or other similar law (including any Indonesian
law) or otherwise, obtain payment (voluntary or involuntary)
in respect of any Promissory Note held by it as a result of
which the unpaid principal portion of the Promissory Notes
held by it shall be proportionately less than the unpaid
principal portion of the Promissory Notes held by any other
Bank, it shall be deemed to have simultaneously purchased
from such other Bank at face value a participation in the
Promissory Notes held by such other Bank, so that the
aggregate unpaid principal amount of the Promissory Notes
and participations in Promissory Notes held by each Bank
shall be in the same proportion to the aggregate unpaid
principal amount of all Promissory Notes then outstanding as
the principal amount of the Promissory Notes held by it
prior to such exercise of banker's lien, setoff or counter-
claim was to the principal amount of all Promissory Notes
outstanding prior to such exercise of banker's lien, setoff
or counterclaim; provided, however, that if any such
purchase or purchases or adjustments shall be made pursuant
to this Section and the payment giving rise thereto shall
thereafter be recovered, such purchase or purchases or
adjustments shall be rescinded to the extent of such
recovery and the purchase price or prices or adjustment
restored without interest. FI and each Guarantor expressly
consents to the foregoing arrangements and agrees that any
Bank holding a participation in a Promissory Note deemed to
have been so purchased may exercise any and all rights of
banker's lien, setoff or counterclaim with respect to any
and all moneys owing hereunder by FI or such Guarantors to
such Bank as fully as if such Bank had made a Loan directly
to FI in the amount of such participation.
SECTION 3.17. Payments. (a) Except as otherwise
provided in this Agreement, all payments and prepayments to
be made by FI or either Guarantor to the Banks hereunder,
whether on account of Commitment Fees, payment of principal
or interest on the Promissory Notes or other amounts at any
time owing hereunder, shall be made to the Agent at its
Domestic Office for the account of the several Banks in
immediately available funds. All such payments shall be
made to the Agent as aforesaid not later than 10:30 a.m.,
New York City time, on the date due; and funds received
after that hour shall be deemed to have been received by the
Agent on the following Business Day.
(b) As promptly as possible, but no later than
2:00 p.m., New York City time, on the date of each borrow-
ing, each Bank participating in the Loans made on such date
shall pay to the Agent such Bank's Applicable Percentage of
such Loan plus, if such payment is received by the Agent
after 2:00 p.m., New York City time, on the date of such
borrowing, interest at a rate per annum equal to the rate in
effect on such day, quoted by the Agent at its Domestic
Office, for the overnight "sale" to such Bank of Federal
funds. At the time of, and by virtue of, such payment, such
Bank shall be deemed to have made its Loan in the amount of
such payment. The Agent agrees to pay any moneys, including
such interest, so paid to it by the lending Banks promptly,
but no later than 3:00 p.m., New York City time, on the date
of such borrowing, to FI in immediately available funds.
(c) If any payment of principal, interest,
Commitment Fee or any other amount payable to the Banks
hereunder or under any Promissory Note shall fall due on a
day that is not a Business Day, then (except in the case of
payments of principal of or interest on LIBO Rate Loans, in
which case the provisions of Section 3.5 shall apply) such
due date shall be extended to the next succeeding Business
Day, and interest shall be payable on principal in respect
of such extension.
(d) Unless the Agent shall have been notified by
FI prior to the date on which any payment or prepayment is
due hereunder (which notice shall be effective upon receipt)
that FI does not intend to make such payment or prepayment,
the Agent may assume that FI has made such payment or
prepayment when due and the Agent may in reliance upon such
assumption (but shall not be required to) make available to
each Bank on such date an amount equal to the portion of
such assumed payment or prepayment such Bank is entitled to
hereunder, and, if FI has not in fact made such payment or
prepayment to the Agent, such Bank shall, on demand, repay
to the Agent the amount made available to such Bank,
together with interest thereon in respect of each day during
the period commencing on the date such amount was made
available to such Bank and ending on (but excluding) the
date such Bank repays such amount to the Agent, at a rate
per annum equal to the rate, in effect on such day, quoted
by the Agent at its Domestic Office for the overnight "sale"
to the other Banks of Federal funds.
(e) All payments of the principal of or interest
on the Loans or any other amounts to be paid to any Bank,
the Agent or the FI Trustee under this Agreement or any of
the other Loan Documents shall be made in Dollars, without
reduction by reason of any currency exchange expense.
SECTION 3.18. U.S. Taxes. (a) Except as
required by law, any and all payments by FI hereunder shall
be made, in accordance with Section 3.17, free and clear of
and without deduction for any and all present or future
taxes, levies, imposts, deductions, charges or withholdings,
and all liabilities with respect thereto imposed by the
United States or any political subdivision thereof,
excluding taxes imposed on the net income of the Agent or
any Bank (or any Transferee) and franchise taxes imposed on
the Agent or any Bank (or Transferee) (all such nonexcluded
taxes, levies, imposts, deductions, charges, withholdings
and liabilities being hereinafter referred to as "Taxes").
If as a result of a Change in Tax Law FI shall be required
by law to deduct any Taxes from or in respect of any sum
payable hereunder to the Banks (or any Transferee) or the
Agent, (i) the sum payable shall be increased by the amount
necessary so that after making all required deductions
(including deductions applicable to additional sums payable
under this Section 3.18) such Bank (or Transferee) or the
Agent (as the case may be) shall receive an amount equal to
the sum it would have received had no such deductions been
made, (ii) FI shall make such deductions and (iii) FI shall
pay the full amount deducted to the relevant taxing
authority or other Governmental Authority in accordance with
applicable law; provided, however, that no Transferee of any
Bank shall be entitled to receive any greater payment under
this Section 3.18 than such Bank would have been entitled to
receive with respect to the rights assigned, participated or
otherwise transferred unless such assignment, participation
or transfer shall have been made at a time when the circum-
stances giving rise to such greater payment did not exist.
"Change in Tax Law" means as to each Bank (or
Transferee) the enactment, promulgation, execution or
ratification of, or any change in or amendment to, any law
(or in the application or official interpretation of any
law), including an amendment, modification or revocation of
an applicable tax treaty or a change in official position
regarding the application or interpretation thereof,
occurring after the Amendment Closing Date.
(b) Within 30 days after the date of any payment
of Taxes withheld by FI in respect of any payment to any
Bank (or Transferee other than a participation holder) or
the Agent, FI will furnish to the Agent, at its address
referred to on the signature page, the original or a
certified copy of a receipt evidencing payment thereof.
(c) At the time it becomes a party to this
Agreement or a Transferee, each Bank (or Transferee) that is
organized under the laws of a jurisdiction outside the
United States shall deliver to FI such certificates,
documents or other evidence, as required by the Code or
Treasury Regulations issued pursuant thereto, including
Internal Revenue Service Form 1001 or Form 4224 and any
other certificate or statement of exemption required by
Treasury Regulation Section 1.1441-1, 1.1441-4 or 1.1441-
6(c) or any subsequent version thereof or successors
thereto, properly completed and duly executed by such Bank
(or Transferee) establishing that such payment is (i) not
subject to United States Federal withholding tax under the
Code because such payment is effectively connected with the
conduct by such Bank (or Transferee) of a trade or business
in the United States or (ii) totally exempt from United
States Federal withholding tax. Unless FI and the Agent
have received forms or other documents satisfactory to them
indicating that such payments hereunder or under the
Promissory Notes are not subject to United States Federal
withholding tax FI or the Agent shall withhold taxes from
such payments at the applicable statutory rate.
(d) FI shall not be required to pay any
additional amounts to any Bank (or Transferee) in respect of
United States Federal withholding tax pursuant to para-
graph (a) above if the obligation to pay such additional
amounts would not have arisen but for a failure by such Bank
(or Transferee) to comply with the provisions of para-
graph (c) above.
(e) Any Bank (or Transferee) claiming any addi-
tional amounts payable pursuant to this Section 3.18 shall
give notice to the Agent and FI within 90 days of the Change
in Tax Law and use reasonable efforts (consistent with legal
and regulatory restrictions) to file any certificate or
document requested by FI to change the jurisdiction of its
applicable lending office if the making of such a filing or
change would avoid the need for or reduce the amount of any
such additional amounts which may thereafter accrue and
would not, in the sole determination of such Bank, be
otherwise disadvantageous to such Bank (or Transferee). The
failure of any Bank (or Transferee) to give the required 90
day notice shall excuse FI from its obligation to pay
additional amounts pursuant to this Section 3.18 incurred
prior to the giving of such notice.
(f) Without prejudice to the survival of any
other agreement contained herein, the agreements and obliga-
tions contained in this Section 3.18 and Section 3.19 shall
survive the payment in full of the principal of and interest
on all Loans made hereunder.
SECTION 3.19. Indonesian Taxes. (a) FI shall
pay when due all Indonesian Taxes.
(b) FI shall indemnify the Agent, the FI Trustee
and each Bank (or Transferee) against, and shall reimburse
the Agent, the FI Trustee and each Bank (or Transferee) upon
demand for, any Indonesian Taxes paid by the Agent, the FI
Trustee or such Bank (or Transferee) and any loss,
liability, claim or expense (including interest, penalties,
fines, surcharges and legal fees) which the Agent, the FI
Trustee or such Bank may incur at any time arising out of or
in connection with any failure of FI to make any payments of
Indonesian Taxes when due.
(c) All payments on account of the principal of
or interest on the Loans made to FI, the Promissory Notes of
FI and all other amounts payable by FI to or for the account
of any Bank (or Transferee) or the Agent hereunder
(including amounts payable under Section 3.19(a) or 3.19(b))
or to or for the FI Trustee under the FI Security Documents
and to any of them under any other Loan Document shall be
made free and clear of and without reduction by reason of
any Indonesian Taxes. In the event that FI is required by
any applicable law, decree or regulation to deduct or
withhold Indonesian Taxes from any amounts payable on, under
or in respect of this Agreement or any other Loan Document,
FI shall make the required deduction or withholding,
promptly pay the amount of such Indonesian Taxes to the
appropriate taxing authorities and pay to the Agent such
additional amounts as may be required, after the deduction
or withholding of Indonesian Taxes, to enable each Bank (or
Transferee), the FI Trustee or the Agent to receive from FI
on the due date thereof, an amount equal to the full amount
stated to be payable to such Bank (or Transferee), the FI
Trustee or the Agent under this Agreement or any other
applicable Loan Document.
(d) Without in any way affecting FI's obligations
under the other provisions of this Section 3.19, FI shall
furnish to the Agent the originals or certified copies of
all tax receipts in respect of each payment, deduction or
withholding of Indonesian Taxes required to be made by
applicable laws or regulations, within 45 days after the
date on which each payment under this Agreement or any other
Loan Document subject to Indonesian Taxes is made, and FI
shall, at the request of any Bank (or Transferee), the FI
Trustee or the Agent, promptly furnish to such Bank (or
Transferee), the FI Trustee or the Agent any other
information, documents and receipts that such Bank (or
Transferee), the FI Trustee or the Agent may require to
establish to its satisfaction that full and timely payment
has been made of all Indonesian Taxes required to be paid
hereunder.
(e) FI will notify the Banks (through the Agent)
promptly upon becoming aware of the application or
imposition, or scheduled future application or imposition,
of Indonesian Taxes; and each Bank (if not theretofore
notified by FI) will notify FI of any such application or
imposition which becomes known to its officers then
supervising the Loans of such Bank hereunder as part of
their normal duties, and of any change of its lending office
or establishment or closing of a branch in Indonesia by such
Bank which would give rise to the application or imposition
of Indonesian Taxes.
ARTICLE IV
Representations and Warranties
SECTION 4.1. Representations and Warranties.
(i) FTX represents and warrants with respect to itself and
FRP, (ii) the Guarantors and FI jointly and severally
represent with respect to FI and (iii) the Guarantors
jointly and severally represent with respect to FCX, in each
case to each of the Banks, as follows:
(a) Organization, Powers. Each of FTX, each
Major Subsidiary and FCX (i) is duly organized, validly
existing and in good standing under the laws of the
State of Delaware and, in the case of FI, the laws of
the Republic of Indonesia, (ii) has the requisite power
and authority to own its property and assets (and, in
the case of FI, has the requisite licenses to use real
property not owned) and to carry on its business as now
conducted and as proposed to be conducted, and (iii) is
qualified to do business in every jurisdiction where
such qualification is required, except where the
failure so to qualify would not have a material adverse
effect on its condition, financial or otherwise. Each
of FTX, FI and FCX has the power to execute, deliver
and perform its obligations under this Agreement and
the other Loan Documents to which it is or is to be a
party, and FI has the power to borrow hereunder and to
execute and deliver the Promissory Notes to be
delivered by it. Each of FTX, each Major Subsidiary
and FCX has all requisite corporate power, and has all
material governmental licenses, authorizations, con-
sents and approvals necessary to own its own assets and
carry on its business as now being or as proposed to be
conducted.
(b) Authorization. The execution, delivery and
performance of this Agreement (including, without
limitation, performance of the obligations set forth in
Section 5.1(h)) and the other Loan Documents to which
it is or is to be, a party and the borrowings hereunder
(i) have been duly authorized by all requisite
corporate and, if required, stockholder action on the
part of FI or the applicable Guarantor, as the case may
be, and (ii) will not (A) violate (x) any Governmental
Rule or the certificate or articles of incorporation or
other constitutive documents or the By-laws or
regulations of such Person or (y) any provisions of any
indenture, agreement or other instrument to which such
Person is a party, or by which such Person or any of
their respective properties or assets are or may be
bound, (B) be in conflict with, result in a breach of
or constitute (alone or with notice or lapse of time or
both) a default under any indenture, agreement or other
instrument referred to in (ii)(A)(y) above or
(C) result in the creation or imposition of any lien,
charge or encumbrance of any nature whatsoever upon any
property or assets of such Person, except as contem-
plated by the Pledge Agreement, the Security Agreement
and the FI Security Documents.
(c) Governmental Approval. Except for those
consents, approvals and registrations listed on
Schedule 4.1(c) hereto, each of which has been obtained
and is in full force and effect, no registration with
or consent or approval of, or other action by, any
Governmental Authority is or will be required in
connection with the execution, delivery and performance
by FI or either Guarantor, as appropriate, of this
Agreement or any other Loan Document to which it is, or
is to be, a party or the borrowings hereunder by FI.
Other than routine authorizations, permissions or
consents which are of a minor nature and which are
customarily granted in due course after application or
the denial of which would not materially adversely
affect the business, financial condition or operations
of any Guarantor or Major Subsidiary, such Person has
all franchises, licenses, certificates, authorizations,
approvals or consents from all national, state and
local governmental and regulatory authorities required
to carry on its business as now conducted and as
proposed to be conducted.
(d) Enforceability. This Agreement and each of
the other Loan Documents to which it is a party
constitutes a legal, valid and binding obligation of FI
and each Guarantor, as applicable, and the Pledge
Agreement, the Security Agreement and each other Loan
Document to be entered into after the Amendment Closing
Date will, upon its execution and delivery, constitute
the legal, valid and binding obligations of FI or such
Guarantor, as applicable, in each case enforceable in
accordance with its respective terms (subject, as to
the enforcement of remedies against such Person, to
applicable bankruptcy, reorganization, insolvency,
moratorium and similar laws affecting creditors' rights
against such Person generally in connection with the
bankruptcy, reorganization or insolvency of such Person
or a moratorium or similar event relating to such
Person).
(e) Financial Statements. FTX has heretofore
furnished to each of the Banks consolidated balance
sheets and statements of income and changes in retained
earnings and cash flow as of and for the fiscal years
ended December 31, 1991 and 1992, all audited and
certified by Arthur Andersen & Co., independent public
accountants, included in FTX's Annual Report on
Form 10-K for the year ended December 31, 1992 (the
"1992 Form 10-K"), and unaudited consolidated balance
sheets and statements of income and cash flow as of and
for the fiscal quarter ended March 31, 1993 included in
FTX's Quarterly Report on Form 10-Q for the quarter
ended March 31, 1993. In addition, FTX has heretofore
furnished to each of the Banks consolidated balance
sheets and statements of income and cash flow for each
Major Subsidiary and FCX as of and for the fiscal years
ended December 31, 1991 and 1992, all audited and
certified by Arthur Andersen & Co and unaudited
consolidated balance sheets and statements of income
and cash flow for each Major Subsidiary and FCX as of
and for the fiscal quarter ended March 31, 1993. All
such balance sheets and statements of income and cash
flow present fairly the financial condition and results
of operations of FTX and the Subsidiaries or of either
Major Subsidiary or FCX, as of the dates and for the
periods indicated. Such financial statements and the
notes thereto disclose all material liabilities, direct
or contingent, of FTX and the Subsidiaries or of either
Major Subsidiary or FCX, as of the dates thereof which
are required to be shown on financial statements
prepared in accordance with GAAP. The financial
statements referred to in this Section 4.1(e) have been
prepared in accordance with GAAP. There has been no
material adverse change since December 31, 1992, in the
businesses, assets, operations, prospects or condition,
financial or otherwise, of (i) FTX, (ii) FRP, (iii) FI,
(iv) FCX or (v) FTX and the Subsidiaries taken as a
whole.
(f) Litigation; Compliance with Laws; etc.
(i) Except as disclosed in the 1992 Form 10-K and any
subsequent reports filed as of 20 days prior to the
Amendment Closing Date with the SEC on Form 10-Q or
Form 8-K which have been delivered to the Banks, there
are no actions, suits or proceedings at law or in
equity or by or before any governmental instrumentality
or other agency or regulatory authority now pending or,
to the knowledge of FTX, threatened against or
affecting FTX or any Subsidiary or the businesses,
assets or rights of FTX or any Subsidiary (i) which
involve this Agreement or any of the other Loan
Documents or any of the transactions contemplated
hereby or thereby or the collateral for the Loans
(including, in the case of FI, the Contract of Work) or
(ii) as to which there is a reasonable possibility of
an adverse determination and which, if adversely deter-
mined, could, individually or in the aggregate, materi-
ally impair the ability of FTX, either Major Subsidiary
or FCX to conduct its business substantially as now
conducted, or materially and adversely affect the
businesses, assets, operations, prospects or condition,
financial or otherwise, of FTX, either Major Subsidiary
or FCX, or impair the validity or enforceability of, or
the ability of FTX, either Major Subsidiary or FCX to
perform its obligations under this Agreement or any of
the other Loan Documents to which such Person is a
party.
(ii) Neither FTX nor any Subsidiary is in
violation of any law, or in default with respect to any
judgment, writ, injunction, decree, rule or regulation
of any court or governmental agency or instrumentality,
where such violation or default could have a materially
adverse effect on the businesses, assets, operations or
condition, financial or otherwise, of FTX, either Major
Subsidiary or FCX. Without limitation of the
foregoing, FTX and each Subsidiary has complied with
all Governmental Rules (including, in the case of FI,
all such requirements under the Contract of Work and
under environmental Governmental Rules of Indonesia)
relating to environmental pollution or to environmental
regulation or control or to employee health or safety
where any such noncompliance could have a materially
adverse effect on the businesses, assets, operations or
condition, financial or otherwise, of FTX, either Major
Subsidiary or FCX. Neither FTX nor any Subsidiary has
received notice of any material failure so to comply.
FTX's and the Subsidiaries' plants do not handle any
hazardous wastes, hazardous substances, hazardous
materials, toxic substances, toxic pollutants or
substances similarly denominated, as those terms or
similar terms are used in the Resource Conservation and
Recovery Act, the Comprehensive Environmental Response
Compensation and Liability Act, the Hazardous Materials
Transportation Act, the Toxic Substance Control Act,
the Clean Air Act, the Clean Water Act or any other
applicable law relating to environmental pollution or
employee health and safety (and, in the case of FI, the
equivalent substances to which the Contract of Work or
the environmental Governmental Rules of Indonesia
apply), in violation of any law or any regulations
promulgated pursuant thereto where any such violation
could have a materially adverse effect on the
businesses, assets, operations or condition, financial
or otherwise, of FTX, either Major Subsidiary or FCX.
FTX is aware of no events, conditions or circumstances
involving environmental pollution or contamination or
employee health or safety that could reasonably be
expected to result in material liability on the part of
FTX or any Subsidiary.
(g) Title, etc. FTX, each Major Subsidiary and
FCX have good and valid title to their respective
material properties, assets and revenues (exclusive of
oil, gas and other mineral properties on which no
development or production activities are being
conducted following discovery of commercially exploit-
able reserves), free and clear of all Liens except such
as are permitted by Section 5.2(d) and except for
covenants, restrictions, rights, easements
and minor irregularities in title which do not
individually or in the aggregate interfere with the
occupation, use and enjoyment by FTX or the respective
Subsidiary of such properties and assets in the normal
course of business as presently conducted or materially
impair the value thereof for use in such business and
FI has the requisite licenses under the Governmental
Rules of Indonesia to use the real property on which it
conducts its business.
(h) Federal Reserve Regulations; Use of Proceeds.
(i) Neither FTX nor any Subsidiary is engaged
principally, or as one of its important activities, in
the business of extending credit for the purpose of
purchasing or carrying Margin Stock.
(ii) No part of the proceeds of the Loans will be
used, whether directly or indirectly, and whether imme-
diately, incidentally or ultimately, for any purpose
which entails a violation of, or which is inconsistent
with, the provisions of the Regulations of the Board,
including, without limitation, Regulations G, U or X
thereof.
(iii) FI will use the proceeds of all Loans made to
it for its general corporate purposes, including the
making of acquisitions.
(iv) As of each date when this representation is
made or deemed made, either FTX (i) owns directly and
beneficially Margin Stock with a current market value
(within the meaning of Regulation U) at least equal to
twice the aggregate amount of credit secured, directly
or indirectly (within the meaning of Regulation U), by
such Margin Stock on such date (after giving effect to
any Credit Event, FTX Credit Event, borrowing pursuant
to the KfW Credit Agreement or Borrowing (as such term
is defined in the FM Credit Agreement) or other
increase in such credit occurring on such date and to
any other obligations secured by such Margin Stock) or
(ii) owns directly and beneficially assets other than
Margin Stock ("Other Collateral") with a current market
value (within the meaning of Regulation U) at least
equal to twice the aggregate amount of credit secured,
directly or indirectly (within the meaning of
Regulation U), by such Other Collateral on such date
(after giving effect to any Credit Event, FI Credit
Event, borrowing pursuant to the KfW Credit Agreement
or Borrowing (as such term is defined in the FM Credit
Agreement) or other increase in such credit occurring
on such date and to any other obligations secured by
such Other Collateral. There are no Liens on such
Margin Stock or such Other Collateral, as the case may
be (other than those created by the Pledge Agreement),
nor is there any Debt or any other obligation (other
than the loans under the FM Credit Agreement, the
Corporate Group Loans, the loans made pursuant to the
KfW Credit Agreement, the Permitted Secured Swaps, the
Pel-Tex Debt and Permitted Swaps (as such terms are
defined in the FM Credit Agreement)) secured, directly
or indirectly (within the meaning of Regulation U), by
such Margin Stock or Other Collateral.
(i) Taxes. FTX and the Subsidiaries have filed
or caused to be filed all Federal, state and local tax
returns and all Indonesian tax returns which are
required to be filed by them, and have paid or caused
to be paid all taxes shown to be due and payable on
such returns or on any assessments received by any of
them, other than any taxes or assessments the validity
of which FTX or any Subsidiary is contesting in good
faith by appropriate proceedings, and with respect to
which FTX or such Subsidiary shall, to the extent
required by GAAP, have set aside on its books adequate
reserves.
(j) Employee Benefit Plans. FTX and each of its
ERISA Affiliates is in compliance in all material
respects with the applicable provisions of ERISA and
the regulations and published interpretations thereun-
der. No Reportable Event has occurred with respect to
any Plan as to which FTX or any ERISA Affiliate was
required to file a report with the PBGC, and the
present value of all vested benefit liabilities under
each Plan maintained by FTX or an ERISA Affiliate
(based on those assumptions used to fund such Plan) did
not, as of the last annual valuation date applicable
thereto, exceed by $25,000,000 the value of the assets
of such Plan. Neither FTX nor any ERISA Affiliate has
incurred any withdrawal Liability that materially
adversely affects the financial condition of FTX and
its ERISA Affiliates taken as a whole. Neither FTX nor
any ERISA Affiliate has received any notification that
any Multiemployer Plan is in reorganization or has been
terminated, within the meaning of Title IV of ERISA,
and no Multiemployer Plan is reasonably expected to be
in reorganization or to be terminated, where such
reorganization has resulted or can reasonably be
expected to result in an increase in the contributions
required to be made to such Plan that would materially
and adversely affect the financial condition of FTX and
its ERISA Affiliates taken as a whole.
(k) Investment Company Act. Neither FTX nor any
Subsidiary is an "investment company" as defined in, or
subject to regulation under, the Investment Company Act
of 1940.
(l) Public Utility Holding Company Act. Neither
FTX nor any Subsidiary is a "holding company", or a
"subsidiary company" of a "holding company", or an
"affiliate" of a "holding company" or of a "subsidiary
company" of a "holding company", within the meaning of
the Public Utility Holding Company Act of 1935, as
amended.
(m) Subsidiaries. Schedule I constitutes a
complete and correct list, as of the Amendment Closing
Date or the date of any update thereof required by Sec-
tion 5.1(a)(6), of all Restricted Subsidiaries with at
least $1,000,000 in total assets, indicating the
jurisdiction of incorporation or organization of each
corporation or partnership and the percentage of shares
or units owned on such date directly or indirectly by
FTX in each. FTX owns on such date, free and clear of
all Liens, this percentage of voting shares or partner-
ship interests outstanding of the Subsidiaries shown on
Schedule I, and all such shares or partnership inter-
ests are validly issued and fully paid.
(n) Assigned Agreements. Schedule 4.1(n) is a
complete and correct list, as of the Amendment Closing
Date, of each Long-Term Concentrate Sales Agreement
(copies of which have heretofore been furnished to the
Agent). FI is not in default in any material respect
in its obligations under any Assigned Agreement nor is
any counterparty to any such agreement in default in
its obligations in any respect that could materially
and adversely affect the ability of FI to perform its
obligations under the Corporate Group Facility.
(o) FI Security Documents. The Liens created by
the FI Security Documents are in full force and effect
and constitute first priority (except for Liens
expressly permitted by Section 5.2(d)), perfected
security interests in favor of the FI Trustee for the
benefit of the Banks in the property and assets stated
to be subject to each such FI Security Document.
(p) No Material Misstatements. No information,
report (including any Borrowing Base Certificate and
any exhibit, schedule or other attachment thereto or
other document delivered in connection therewith),
financial statement, exhibit or schedule prepared or
furnished by FI or FTX to the Agent, any Bank or the FI
Trustee in connection with this Agreement or any of the
other Loan Documents or included therein contained or
contains any material misstatement of fact or omitted
or omits to state any material fact necessary to make
the statements therein, in the light of the circum-
stances under which they were made, not misleading.
ARTICLE V
Covenants
SECTION 5.1. Affirmative Covenants of FTX. So
long as any Bank shall have any Loan Exposure or any
commitment to make a Loan hereunder, FTX agrees that, unless
the Required Banks shall have otherwise consented in
writing:
(a) Financial Statements, etc. FTX shall furnish
each Bank:
(1) within 95 days after the end of each
fiscal year of FTX, a consolidated balance sheet
of FTX and its Subsidiaries, of each Major
Subsidiary and of FCX as at the close of such
fiscal year and consolidated statements of income
and changes in retained earnings or partners'
capital and cash flow of FTX and the Subsidiaries,
of each Major Subsidiary and of FCX for such year,
with the opinion thereon of Arthur Andersen & Co.
or other independent public accountants of
national standing selected by FTX;
(2) within 50 days after the end of each of
the first three quarters of each fiscal year of
FTX, a consolidated balance sheet of FTX and its
Subsidiaries, of each Major Subsidiary and of FCX
as at the end of such quarter and consolidated
statements of income of FTX and the Subsidiaries,
of each Major Subsidiary and of FCX for such
quarter and for the period from the beginning of
the fiscal year to the end of such quarter,
certified by the Treasurer or other authorized
financial or accounting officer of FTX;
(3) promptly after their becoming available,
(a) copies of all financial statements, reports
and proxy statements which FTX, either Major
Subsidiary or FCX shall have sent to its stock-
holders generally, (b) copies of all registration
statements (excluding registration statements
relating to employee benefit plans) and regular
and periodic reports, if any, which FTX, either
Major Subsidiary or FCX shall have filed with the
SEC, or any governmental agency substituted
therefor, and (c) if requested by any Bank, copies
of each annual report filed with any governmental
agency pursuant to ERISA with respect to each Plan of
FTX or any of the Subsidiaries;
(4) within 95 days after the end of each
fiscal year of FTX, a certificate by the Treasurer
or other authorized Financial Officer of FTX, to
the effect that no Event of Default or Default has
occurred and is continuing, or if any Event of
Default or Default has occurred and is continuing,
describing the same in reasonable detail;
(5) promptly upon the occurrence of any
Termination Event, Event of Default, or any
material default in the performance of any of its
agreements contained in Section 5.1 or 5.2, the
occurrence of any default under any other Loan
Document (other than the FTX Credit Agreement), or
the commencement of any proceeding regarding FTX
or any Subsidiary under any Federal or state
bankruptcy law, notice thereof, describing the
same in reasonable detail;
(6) at the time of provision of the financial
statements referred to in clauses (1) and (2)
above, an update of Schedule I to corred, add or
delete any required information;
(7) all the financial statements and other
documents required to be furnished to the
FTX Lenders pursuant to Section 4.1(a) of the
FTX Credit Agreement and, so long as the guarantee
by FTX of FM Properties' obligations under the FM
Credit Agreement is in effect, all the financial
statements and other documents required to be
furnished to the FM Lenders pursuant to Section
4.1(a) of the FM Credit Agreement; provided,
however, that FTX shall not be required to furnish
duplicate copies of such financial statements or
other documents to Banks which are also
FTX Lenders or FM Lenders, as applicable; and
(8) from time to time, such further informa-
tion regarding the business, affairs and financial
condition of FTX or any Subsidiary as any Bank may
reasonably request.
At the time FTX furnishes financial statements pursuant
to the foregoing clauses (1) and (2), FTX will also
furnish each Bank a certificate by the Treasurer or
other authorized Financial Officer of FTX setting forth
the calculation of: (a) the current ratios as
determined in accordance with Section 5.2(e), (b) the
fixed charge ratios as determined in accordance with
Section 5.2(f), (c) the Cash Flow Ratio, (d) if the
Facility is then an HLT, the calculation of the ratio
set forth in Section 5.2(q) and (e) the Available
Borrowing Base; provided that the Cash Flow Ratio shall
be provided within 50 days of the end of each fiscal
quarter.
(b) Taxes and Claims. FTX shall, and shall cause
each Subsidiary to, pay and discharge all taxes,
assessments and governmental charges or levies,
including Indonesian Taxes, imposed upon it or upon its
income or profits, or upon any property belonging to
it, prior to the date on which material penalties
attach thereto; provided that neither FTX nor any
Subsidiary shall be required to pay any such tax,
assessment, charge or levy, the payment of which is
being contested in good faith by proper proceedings and
with respect to which FTX or such Subsidiary shall
have, to the extent required by GAAP, set aside on its
books adequate reserves.
(c) Maintenance of Existence; Conduct of Busi-
ness. FTX shall, and shall cause each Major Subsidiary
and FCX to, preserve and maintain its corporate
existence and all its rights, privileges and franchises
necessary or desirable in the normal conduct of its
business; provided that nothing herein shall prevent
any transaction permitted by Section 5.2(c).
(d) Compliance with Applicable Laws. FTX shall,
and shall cause each Subsidiary to, comply with the
requirements of all applicable laws, rules, regulations
and orders of any Governmental Authority, a breach of
which would materially and adversely affect the
consolidated financial condition or business of FTX,
either Major Subsidiary or FCX, except where contested
in good faith and by proper proceedings and with
respect to which FTX or such Subsidiary shall have, to
the extent required by GAAP, set aside on its books
adequate reserves.
(e) Litigation. FTX shall promptly give to each
Bank notice in writing of all litigation and all
proceedings before any governmental or regulatory
agencies or arbitration authorities affecting FTX or
any Subsidiary, except those which, if adversely
determined, do not relate to the Loan Documents and
which would not have a material adverse effect on the
business, assets, operations or financial condition of
any Guarantor or Major Subsidiary or the ability of FI
or either Guarantor to comply with their obligations
under the Loan Documents.
(f) ERISA. FTX shall, and shall cause each
Subsidiary to, comply in all material respects with the
applicable provisions of ERISA and furnish to the Agent
(i) as soon as possible, and in any event within
30 days after any Responsible Officer of FTX or any
ERISA Affiliate knows or has reason to know that any
Reportable Event with respect to any Plan has occurred
that alone or together with any other Reportable Event
with respect to the same or another Plan could reason-
ably be expected to result in liability of FTX to the
PBGC in an aggregate amount exceeding $10,000,000, a
statement of a Financial Officer of FTX setting forth
details as to such Reportable Event and the action that
FTX proposes to take with respect thereto, together
with a copy of the notice of such Reportable Event, if
any, given to the PBGC, (ii) promptly after receipt
thereof, a copy of any notice FTX or any ERISA
Affiliate may receive from the PBGC relating to the
intention of the PBGC to terminate any Plan or Plans or
to appoint a trustee to administer any such Plan,
(iii) within 10 days after a filing with the PBGC
pursuant to Section 412(n) of the Code of a notice of
failure to make a required installment or other payment
with respect to a Plan, a statement of a Financial
Officer of FTX setting forth details as to such failure
and the action that FTX proposes to take with respect
thereto, together with a copy of such notice given to
the PBGC and (iv) promptly and in any event within 30
days after receipt thereof by FTX or any ERISA
Affiliate from the sponsor of a Multiemployer Plan, a
copy of each notice received by FTX or any ERISA
Affiliate concerning the imposition of Withdrawal
Liability by a Multiemployer Plan.
(g) (Intentionally left blank)
(h) Security. (i) FI at all times shall comply
with the provisions of the FI Security Documents and
maintain in full force and effect all the rights,
powers and benefits of the FI Trustee under the FI
Security Documents in accordance with their terms,
including (x) the validity and effectiveness of the
powers of attorney granted by the Surat Kuasa and the
Fiduciary Power and the fiduciary transfers effectuated
by the Fiduciary Transfer and the Fiduciary Assignment
and (y) maintenance of the security interest of the FI
Trustee in the collateral required to be subjected to
the Liens created by the FI Security Documents as a
perfected first priority security interest as provided
therein; and
(ii) in the event (A) the aggregate principal
amount of outstanding Corporate Group Loans exceeds for
a period of 20 or more consecutive days the Available
Borrowing Base, (B) an Event of Default shall occur and
continue for a period of 20 or more consecutive days,
or (C) any of the FM Lenders, the Pel-Tex Lenders or
the FTX Lenders shall receive or be entitled to receive
and have requested receipt of security or liens in or
on any property of FTX or any of its Subsidiaries
(other than the initial mortgages and security
interests granted by FTX pursuant to Section 5.1(d) of
the FM Credit Agreement and any security interests
granted by FI to the FTX Lenders) as security for any
amount owing under the FM Credit Agreement, the Pel-Tex
Agreements or the Pel-Tex Bank Agreement or the FTX
Credit Agreement, FTX and each of its wholly-owned
Restricted Subsidiaries (other than FRP, FCX and FI and
any Subsidiary of any of them) shall, subject to the
FTX Intercreditor Agreement, provide the Banks, as
security for the amounts owed by FTX hereunder, with
the same security interests and pledges, in each case
upon the same terms, as are provided by FTX and its
wholly-owned Restricted Subsidiaries to the FTX
Lenders, as set forth in Section 5.1(h)(ii)(ii) of the
FTX Credit Agreement.
(i) Insurance. FTX and each Restricted
Subsidiary shall (i) keep its insurable properties
adequately insured at all times; (ii) maintain such
other insurance, to such extent and against such risks,
including fire, flood and other risks insured against
by extended coverage, as is customary with companies in
the same or similar businesses; (iii) maintain in full
force and effect public liability insurance against
claims for personal injury or death or property damage
occurring upon, in, about or in connection with the use
of any properties owned, occupied or controlled by it
in such amount as it shall reasonably deem necessary;
and (iv) maintain such other insurance as may be
required by law. The proceeds of any political risk
insurance of FCX shall be applied promptly to the
prepayment of the Loans of FI and the Loans pursuant to
the FI Credit Agreement (it being understood that the
allocation of such prepayments among such Loans shall
be determined solely by FCX). Prepayments pursuant to
this Section 5.1(i) shall not be subject to
Section 3.14 unless the occurrence that entitles FCX to
such insurance proceeds results in an Event of Default.
(j) Access to Premises and Records. FTX and each
Subsidiary shall maintain financial records in accor-
dance with GAAP, and, at all reasonable times and as
often as any Bank may reasonably request, permit
representatives of any Bank to have access to its
financial records and its premises and to the records
and premises of any of its subsidiaries, if any, and to
make such excerpts from such records as such represen-
tatives deem necessary and to discuss its affairs,
finances and accounts with its officers and its inde-
pendent certified public accountants or other parties
preparing consolidated or consolidating statements for
it or on its behalf.
(k) FI Security Arrangements. FI will
(i) promptly assign all Long-Term Concentrate Sales
Agreements and the proceeds from all FI Receivables
Purchase Agreements in effect from time to time to the
FI Trustee under, and in accordance with, Article III
of the FI Trust Agreement and (ii) furnish to the Agent
and each Bank copies of each Long-Term Concentrate
Sales Agreement and FI Receivables Purchase Agreement
entered into after the Amendment Closing Date, and each
amendment, waiver or supplement to any Concentrate
Sales Agreement which after such amendment, waiver or
supplement would be a Long-Term Concentrate Sales
Agreement, in each case promptly after the execution
and delivery thereof. FI may permit Long-Term
Concentrate Sales Agreements to expire or terminate in
accordance with their terms.
(l) Protection of Contract Rights. FI will not
terminate, suspend, amend or grant waivers of any
provisions of any of the Assigned Agreements or the FI
Security Documents without the prior written consent of
the Required Banks; provided, however, that FI may
amend or waive provisions in any Concentrate Sales
Agreement so long as such amendment or waiver will not
materially adversely affect the business, financial
condition or operations of FI or any rights of the FI
Trustee or the Banks. FI will promptly furnish to the
Banks and the Agent copies of any amendments to or
waivers or supplements of the Assigned Agreements and
the FI Security Documents. FI shall take all steps
necessary or advisable to protect its rights (and the
rights of the FI Trustee) under the Assigned Agreements
and FI Security Documents.
(m) Source of Interest. FI (i) will conduct
business so that interest paid on the Loans of FI to
any Bank (or Transferee) which is not a "related
person" to FTX within the meaning of
Section 861(c)(2)(B) of the Code as in effect on the
Amendment Closing Date will be deemed to be income from
sources without the United States within the meaning of
Sections 861(a)(1)(A) and 861(c) of the Code as in
effect on the Amendment Closing Date and (ii) will use
its best efforts (without undue cost) to conduct
business so that interest paid on the Loans of FI to
any Bank (or Transferee) which is not a related person
to FTX within the meaning of Section 861(c)(2)(B) of
the Code (as it may be amended or substituted after the
Amendment Closing Date) will be deemed to be income
from sources without the United States within the
meanings of Sections 861(a)(1)(A) and 861(c) of the
Code (as it may be amended or substituted after the
Amendment Closing Date).
(n) Further Assurances. FI and the Guarantors
shall, and shall cause its Subsidiaries to, execute any
and all further documents, financing statements,
agreements and instruments, and take all further
actions (including filing Uniform Commercial Code
financing statements and any Indonesian equivalents),
which may be required under applicable law, or which
the Required Banks, the Agent or the FI Trustee may
reasonably request, in order to effectuate the
transactions contemplated by this Agreement and the FI
Security Documents and in order to grant, preserve,
protect and perfect the validity and first priority of
the security interests created by the FI Security
Documents and, if and when executed, the Security
Agreement and the Pledge Agreement.
(o) Covenants regarding FI and FCX. FTX shall
cause FI and FCX to perform its covenants set forth in
Section 5.3.
SECTION 5.2. Negative Covenants of FTX. So long
as any Bank shall have any Loan Exposure or any commitment
to make a Loan hereunder, FTX agrees that, without the prior
written consent of the Required Banks:
(a) Conflicting Agreements. FTX shall not and
shall cause its Restricted Subsidiaries not to enter
into any agreement (other than this Agreement, the FTX
Credit Agreement and the KfW Credit Agreement)
containing any provision which would be violated or
breached by the performance of their obligations under
any Loan Document or under any instrument or document
delivered or to be delivered by them hereunder or
thereunder or in connection herewith or therewith,
including any agreement with any persons which would
prohibit or restrict (i) in the case of the Restricted
Subsidiaries, the payments of dividends or other
distributions (other than restrictions existing on the
Amendment Closing Date) or (ii) the ability of such
entities to create Liens on any of their assets (other
than assets which are subject to Liens permitted
pursuant to paragraphs (ii), (iii), (iv), (vi) , (vii)
and (viii) of Section 5.2(d) and extensions and
renewals and replacements thereof permitted pursuant to
Section 5.2(d)(xii)).
(b) Borrowing Base Limits. Except to the extent
expressly permitted by Section 2.4 of the FTX Credit
Agreement or Section 3.10(c), FTX shall not at any time
permit the sum of the Corporate Group Loan Exposure and
all Borrowing Base Debt to exceed the then effective
Borrowing Base.
(c) Consolidation or Merger; Disposition of
Assets and Capital Stock. FTX shall not, and shall not
permit any Restricted Subsidiary to, merge into or
consolidate with any corporation, or sell, lease,
transfer or otherwise dispose of all or any substantial
part of the assets of FTX or of any Restricted
Subsidiary, including, without limitation, the rights
of FI under the Contract of Work (except for (u) the
IMC-Agrico Transfer and investments permitted by
Section 5.2(r), (v) the ALatief-FI Transfer and
investments permitted by Section 5.2(s), the Power
Facilities Transfer and the transfer in respect of
Contract Area Block B referred to in Section 8.1(i),
(w) dispositions of accounts receivable, Permitted
Investments and inventory in the ordinary course of
business, provided that the proceeds of any sale of
accounts receivable by FI are deposited in the Sales
Proceeds Account (as defined in the FI Trust
Agreement), (x) dispositions of obsolete or worn-out
property, or real estate not used or useful in its
business, (y) subject to the last sentence of
Section 5.2(j) and to Sections 5.2(o) and (p),
dispositions of assets by FTX or a Restricted
Subsidiary to another Restricted Subsidiary or FTX and
subject to Section 5.2(l), dispositions of assets by a
Restricted Subsidiary to a Nonrestricted Subsidiary;
provided, however, that any Person through which FRP
owns any interest in IMC-Agrico shall at all times be a
Restricted Subsidiary, and (z) to the extent permitted
by Section 5.2(q), the payment of cash dividends by FTX
or any Restricted Subsidiary and dividends by FTX
consisting of stock or units of the Subsidiaries),
whether now owned or hereafter acquired; except that:
(i) FTX or any Restricted Subsidiary may
merge or liquidate any corporation (other than, in
the case of a Restricted Subsidiary, any Guarantor
or Major Subsidiary) into itself;
(ii) any Restricted Subsidiary (other than
FCX and either Major Subsidiary) may be merged
into any other corporation; provided that such
corporation, immediately following such merger,
shall be deemed a Restricted Subsidiary; and
(iii) subject to the last sentence of
Section 5.2(j), FTX or any Restricted Subsidiary
may sell or otherwise dispose of any assets or
securities of any Subsidiary; provided, however,
that the gross fair market value of the
consideration or other amounts payable to or
receivable by FTX or such Restricted Subsidiary
with respect to such sales or other dispositions
is deemed to be Net Proceeds;
provided, however, that in the case of a merger permit-
ted by clause (i) above, immediately thereafter and
giving effect thereto, FTX or, as the case may be, a
Restricted Subsidiary would be the surviving corpora-
tion and, in the case of a merger permitted by
clause (i) or clause (ii) above or of any disposition
of assets or securities permitted by clause (iii)
above, no Default or Event of Default would,
immediately thereafter and giving effect thereto, have
occurred and be continuing. Each sale or other
disposition permitted by clause (iii) above shall be
permitted only if FTX or the respective Restricted
Subsidiary shall receive fair consideration therefor,
as determined by the Board of Directors of FTX or of
such Restricted Subsidiary, as the case may be. It is
understood and agreed that no transaction pursuant to a
Deemed Lease shall be considered a disposition of
assets within the meaning of this Section 5.2(c).
(d) Liens. FTX shall not, nor shall it permit
any Restricted Subsidiary to, create or suffer to exist
any Lien upon any of its respective properties,
revenues or assets, now owned or hereafter acquired,
securing any indebtedness or obligation, except:
(i) materialmen's, suppliers', tax and other
like Liens arising in the ordinary course of FTX's
or such Restricted Subsidiary's business securing
obligations which are not overdue or are being
contested in good faith by appropriate proceedings
and as to which adequate reserves have been set
aside on its books to the extent required by GAAP,
Liens arising in connection with workers'
compensation, unemployment insurance and progress
payments under government contracts, and other
Liens incident to the ordinary conduct of FTX's or
such Restricted Subsidiary's business or the
ordinary operation of property or assets and not
incurred in connection with the obtaining of any
Debt or Guarantee;
(ii) Liens on assets or properties not owned
as of the Amendment Closing Date by FTX or any
Restricted Subsidiary securing only Debt of FTX or
any such Restricted Subsidiary that is otherwise
without recourse to FTX or any such Restricted
Subsidiary or any of its or their properties or
assets; provided, however, that FTX complies with
Section 5.2(g)(v);
(iii) Liens, existing at the time of the
acquisition by FTX or any Restricted Subsidiary of
the majority of the capital stock or all the
assets of any other corporation or existing at the
time of the merger of any such corporation into
FTX or a Restricted Subsidiary, on such capital
stock or assets so acquired or on the assets of
the corporation so merged into FTX or such
Restricted Subsidiary; provided, however, that
such acquisition or merger (and the discharge of
such Liens referred to in the immediately
succeeding proviso) shall not otherwise result in
an Event of Default or Default; and provided
further that all such Liens shall be discharged
within 180 days after the date of the respective
acquisition or merger;
(iv) Liens securing Debt referred to in
Section 5.2(g)(x);
(v) Liens in favor of the Agent or the Banks
or in favor of the Collateral Agent as provided in
the FTX Intercreditor Agreement, Liens in favor of
the Pel-Tex Lenders as permitted by the FTX
Intercreditor Agreement, Liens, if any, in favor
of the FTX Agent or the FTX Lenders or in favor of
the Collateral Agent as provided in the FRP
Security Agreement, the FRP Pledge Agreement, the
FRP Subsidiary Security Agreement or the FRP
Subsidiary Pledge Agreement, each as defined in
the FTX Credit Agreement and Liens in favor of the
Banks, the FTX Lenders, and the FI Trustee under
the FI Security Documents, all as contemplated by
Section 5.1(h) of the FTX Credit Agreement;
(vi) Liens listed on Schedule 5.2(d) hereto
securing obligations of FTX or a Restricted
Subsidiary under Deemed Leases;
(vii) Liens securing the Debt referred to in
paragraphs (iv), (v), (viii) and (ix) of
Section 5.2(g);
(viii) Liens of lessors of property (in such
capacity) leased by FTX or a Restricted Subsidiary
pursuant to an Operating Lease, which Lien is
limited to the property leased thereunder;
(ix) the reciprocal collateral mortgages
granted by FRP on its interests in Main Pass 299
sulphur and oil and gas interests to its joint
venture partners;
(x) zoning restrictions, easements, rights-
of-way, restrictions on use of real property and
other similar encumbrances incurred in the
ordinary course of business which, in the
aggregate, are not substantial in amount and do
not materially detract from the value of the
property subject thereto or interfere with the
ordinary conduct of the business of FTX or any of
its Subsidiaries;
(xi) Liens securing Permitted Secured Swaps
between FI and any Bank; and
(xii) extensions, renewals and replacements
of Liens referred to in paragraphs (i), (ii),
(iv), (vii), (viii), (ix), (x) and (xi) of this
Section 5.2(d); provided that any such extension,
renewal or replacement Lien shall be limited to
the property or assets covered by the Lien
extended, renewed or replaced and that the
obligations secured by any such extension, renewal
or replacement Lien shall be in an amount not
greater than the amount of the obligations secured
by the Lien extended, renewed or replaced.
(e) Current Ratios. FTX shall not fail to
maintain, as of the last day of each fiscal quarter,
consolidated current assets of FTX and its consolidated
Subsidiaries (other than Nonrestricted Subsidiaries but
including minority interests) in an amount at least
equal to the amount of consolidated current liabilities
of FTX and its consolidated Subsidiaries (other than
Nonrestricted Subsidiaries but including minority
interests) and each Major Subsidiary shall not fail to
maintain (on an individual, stand alone basis), on the
last day of each fiscal quarter, consolidated current
assets of it and its consolidated Subsidiaries (other
than Nonrestricted Subsidiaries but including minority
interests) at least equal to the amount of consolidated
current liabilities of it and its consolidated Subsidi-
aries (other than Nonrestricted Subsidiaries but
including minority interests). For purposes hereof,
consolidated current assets and consolidated current
liabilities shall be determined in accordance with
GAAP, except that (i) investments in shares of corpora-
tions (excluding shares which are, and which are held
as, marketable securities) and advances to Nonr-
estricted Subsidiaries and other firms or companies in
which FTX has a material investment, direct or
indirect, or which have a direct or indirect material
investment in FTX, shall not be included in current
assets; (ii) current assets shall be increased by the
portion of the Unused Net Commitment Amount which,
under the terms of the Corporate Group Facility, will,
if not sooner terminated or drawn down by FI or any
Borrower (as defined in the FTX Credit Agreement),
remain outstanding for at least twelve months following
the time of determination; provided that if such
availability is required by any Borrower (as defined in
the FTX Credit Agreement) to comply with Section 5.2(e)
of the FTX Credit Agreement, such availability will be
considered to be a utilization of the Commitments (and
consequently unavailable to FI for purposes of this
paragraph (e)); and (iii) the current portion of long-
term Debt shall not be included in current liabilities.
(f) Fixed Charge Ratios. FTX and each Major
Subsidiary shall not permit its respective Fixed Charge
Ratio to be less than 1.25 to 1.00 at the end of any
fiscal quarter.
(g) Debt. Neither FTX nor any Restricted
Subsidiary shall incur, create, assume or permit to
exist any Debt of any of them except:
(i) (A) up to $373,000,000 aggregate prin-
cipal amount of FTX's 6.55% Convertible
Subordinated Notes Due 2001;
(B) $150,000,000 aggregate principal amount
of FTX's 10-7/8% Senior Subordinated Debentures
due 2001;
(C) $750,000,000 aggregate face amount of
FTX's Zero Coupon Convertible Subordinated
Debentures Due 2006.
(D) $1,035,000,000 aggregate face amount of
FCX's Liquid Yield Option Notes due 2011 (Zero
Coupon Subordinated Exchangeable Notes, "LYONS")
or, subject to Section 2.2(IV) of the FTX Credit
Agreement, unsecured refinancings thereof not
involving an increase in the aggregate principal
amount over the then accreted principal amount of
the LYONS outstanding;
(E) up to $75,000,000 aggregate principal
amount outstanding pursuant to the KfW Credit
Agreement; and
(F) up to $800,000,000 aggregate principal
amount outstanding pursuant to the FTX Credit
Agreement.
(ii) (A) Debt of FTX owing to a Subsidiary,
provided that such Debt is subordinated to the
Loans on the terms of Exhibit A hereto if the
original term of such Debt is in excess of six
months or could be extended at the option of FTX
beyond six months from the original date of such
Debt;
(B) Debt of a Major Subsidiary owing to FTX
so long as FTX does not have any Loans outstanding
(whether made before or after the incurrence of
Debt by such Major Subsidiary);
(C) subject to Sections 5.2(o) and (p), Debt
of FI owing to FCX or FCX owing to FI; and
(D) subject to Sections 5.2(o) and (p), Debt
of a Restricted Subsidiary other than a Major
Subsidiary owing to FTX or any other Restricted
Subsidiary;
(iii) Debt incurred by FTX in any amount and
Debt incurred by each Major Subsidiary not in
excess of $30,000,000 in the aggregate for such
Major Subsidiary, in each case pursuant to
commercial paper or uncommitted lines of credit
with commercial banks having a maturity of less
than six months;
(iv) purchase money indebtedness of FTX and
any Restricted Subsidiary incurred in the ordinary
course of business;
(v) Debt of FTX and any Restricted Subsidiary
secured by Liens described in Section 5.2(d)(ii)
that is otherwise nonrecourse to FTX and each
Restricted Subsidiary if not less than 20 days
prior to the date such Debt is incurred, created
or assumed FTX or such Restricted Subsidiary
delivers to the Required Banks the terms of such
Debt relating to the nonrecourse nature of such
Debt and the Required Banks have not, on or prior
to such date, given written notice to FTX or such
Restricted Subsidiary of their objection thereto;
(vi) Indebtedness for Borrowed Money (other
than Guarantees and Capitalized Leases) of FTX
that is subordinated to the Loans and FTX's
guarantee pursuant to Section 9.1 if (A) 30 days
prior to the incurrence of such Indebtedness for
Borrowed Money, FTX delivers to each Bank the
terms of the subordination provisions governing
such Indebtedness for Borrowed Money, (B) FTX has
not, prior to such incurrence, received notice
that Banks having Commitments (as defined in the
FTX Credit Agreement) representing at least 33-
1/3% of the aggregate Commitments under and as
defined in the FTX Credit Agreement have objected
to such subordination provisions and (C) such
Indebtedness for Borrowed Money has a maturity
date of not less than ten years, with no scheduled
repayments or amortization for at least ten years
after such Indebtedness for Borrowed Money is
incurred;
(vii) Guarantees by FTX or any Restricted
Subsidiary of (A) Debt (other than non-recourse
Debt referred to in Section 5.2(g)(v)) or
obligations of a Restricted Subsidiary or (B) Debt
or obligations of Nonrestricted Subsidiaries or
any other Person to the extent permitted by
paragraphs (l), (r) and (s) of this Section 5.2;
(viii) Capitalized Leases (including those
resulting from sale and leaseback transactions) of
FTX or any Restricted Subsidiary if at least
30 days prior to entering into any such
Capitalized Lease, FTX or such Restricted
Subsidiary delivers to each Bank the terms thereof
and, in the case of FI (i) such Capitalized Leases
are in connection with financings of the port
facility, power plants, aircraft, ships,
infrastructure assets or vehicles and (ii) the
aggregate amount of any Capitalized Leases of FI
in connection with financings of vehicles is not
in excess of $25,000,000; and
(ix) recourse liability of FTX or any
Restricted Subsidiary in connection with the sale
of accounts receivable by FTX or such Restricted
Subsidiary, as the case may be; provided, however,
that such recourse liability shall not be in
excess of the sales price of the receivables so
sold and, in the case of a sale of accounts
receivable by FI, the proceeds of such sale are
deposited in the Sales Proceeds Account in
accordance with Article III of the FI Trust
Agreement; and
(x) other Debt not referred to in paragraphs (i) through
(ix) of this Section 5.2(g), in an aggregate principal
amount not exceeding $50,000,000.
(h) (Intentionally left blank.)
(i) Convertible Debt Payments. FTX may not make
any payment on the Debt referred to in Sec-
tion 5.2(g)(i)(A) and (C) except (x) in common stock of
FTX with cash payment for fractional shares and (y)
otherwise in an aggregate amount not in excess of
$15,000,000.
(j) Ownership of Subsidiaries. FTX shall not at
any time directly or indirectly own shares or units of
voting stock or interests having less than (x) 40%
ownership interest in each of FRP and FI, (y) 50.1%
ownership interest in FCX and (z) such voting power as
provides effective control of the policy and direction
of FRP, FCX and FI. FCX shall not at any time directly
or indirectly own shares of voting stock or interests
having less than 50.1% ownership interest in FI,
including, so long as Section 4(c) of the Indocopper
Shareholders Agreement and the definitions related
thereto are in effect and have not been amended, shares
of voting stock or interests held through P.T.
Indocopper Investama Corporation. FTX shall own its
interests in FRP, FCX and FI, and FCX shall own its
interests in FI, free and clear of all Liens, except as
contemplated by Section 5.1(h). FTX shall promptly
notify the Agent in the event there occurs any
significant decrease in its or FCX's percentage
ownership of such voting power below that indicated in
the most recent Borrowing Base Certificate or, in the
case of its ownership, any decrease in such percentage
interest below 50%. The ownership by FTX of equity
interests in FRP shall be direct and not through any
intervening entity. The ownership by the Guarantors of
common stock of FI shall be direct and not through any
intervening entity, except for the percentage of common
stock held by FCX on the Amendment Closing Date through
P. T. Indocopper Investama Corporation. FTX shall at
no time permit any significant percentage of the assets
of either Major Subsidiary or FCX to be transferred to
another Subsidiary which is not a Restricted Subsidiary
directly owned by FTX; provided, however, that the
foregoing shall not prohibit the IMC-Agrico Transfer,
the ALatief-FI Transfer, the Power Facilities Transfer
or the transfer referred to in Section 8.1(i) in
respect of Contract Area Block B.
(k) Fiscal Year. FTX shall not change its fiscal
year to end on any date other than December 31.
(l) Investments in Nonrestricted Subsidiaries and
Persons Not Subsidiaries. FTX and the Restricted
Subsidiaries shall not make or permit to exist (x) any
Guarantee by FTX or a Restricted Subsidiary of the Debt
of any Person which is not a Restricted Subsidiary or
(y) any loans or advances to, or purchase any stock,
other securities or evidences of indebtedness of, or
permit to exist any investment (whether by transfer of
assets or otherwise) or acquire any investment
whatsoever in or make any Guarantee with respect to any
such loans, advances, purchases, investments or
acquisitions of interest made by any Person with
respect to, or any other payment for the benefit of,
any Nonrestricted Subsidiaries the aggregate out-
standing amount of which under this clause (y) and
Guarantees under clause (x) at any time exceeds by more
than $50,000,000 the largest aggregate amount thereof
outstanding at any time in the next preceding fiscal
year of FTX; provided that, notwithstanding the
provisions of clauses (x) and (y) above, FTX may (i)
Guarantee the FM Properties Indebtedness and, so long
as no Default or Event of Default shall have occurred
and be continuing (or would result thereupon), make
advances, loans and equity contributions to FM
Properties, (ii) Guarantee obligations of FM Properties
pursuant to any Permitted Swap (as defined in the FM
Credit Agreement) provided that such Guarantee is
granted on the same terms as FTX's Guarantee of the
FM Properties Indebtedness, (iii) consummate the
ALatief-FI Transfer and consummate Guarantees of
ALatief-FI's initial financing as permitted pursuant to
Sections 5.2(s)(i) and 5.2(s)(vii) and (iv) make
investments as permitted under Section 5.2(r), all of
which shall not be included in the calculation above
regarding the prohibition on investments in
Nonrestricted Subsidiaries and other entities in excess
of $50,000,000 of the preceding year's aggregate
investment.
(m) Federal Reserve Regulations. FTX will not,
and will cause the Major Subsidiaries not to, use the
proceeds of any Loan in any manner that would result in
a violation of, or be inconsistent with, the provisions
of Regulations G, U or X of the Board (collectively,
the "Margin Regulations"). FTX will not, and will
cause the Major Subsidiaries not to, take any action at
any time that would (A) result in a violation of the
substitution and withdrawal requirements of said
Regulations, in the event the same should become
applicable to this Agreement or any Loan or (B) cause
the representation and warranty contained in Sec-
tion 4.1(h) at any time to be other than true and
correct. In the event that the Company at any time
believes that there exists a reasonable possibility
that it will become unable to make the representation
set forth in Section 4.1(h)(iv), and alternative
methods for complying with the Margin Regulations in
connection with this Agreement are available, the
Lenders and the Company shall promptly enter into
negotiations with a view to amending this Agreement to
provide for such alternative methods of compliance.
(n) Certain Debt Agreements. FTX shall not,
without the prior written consent thereto of the
Required Banks, (x) agree to any increase in the
principal amount of, or interest rate on, or security
for, any of the Debt referred to in
Section 5.2(g)(i)(A)-(E) or (y) amend, supplement or
change in any material manner (including any earlier
maturity date or amortization schedule), any of the
terms or provisions of any agreement, note or other
instrument governing or evidencing any of the Debt
referred to in Section 5.2(g)(i)(A) and (B).
(o) Investments in the Major Subsidiaries.
Neither FTX nor any of its Restricted Subsidiaries
shall make or permit to exist any loans or advances to,
or purchase any stock, other securities or evidences of
indebtedness of, or permit to exist any investment or
acquire any interest whatsoever in the Major
Subsidiaries or any Subsidiary of either of them, other
than (i) investments existing on the Amendment Closing
Date in shares of common stock or units of such Major
Subsidiary, (ii) Debt permitted by Section 5.2(g)(ii),
(iii) open market purchases of Depositary Units of FRP
to the extent permitted by Section 5.2(q),
(iv) purchases by FTX of equity interests in FRP
sufficient to allow capital expenditures by FRP of up
to $30,000,000 per annum, (v) investments by each Major
Subsidiary and its Subsidiaries in Subsidiaries of such
Major Subsidiary, (vi) investments in FI expressly
contemplated by the Note Purchase Agreement dated as of
July 2, 1991 among FCX and FI, (vii) investments in FI
as a result of the issuance of common stock of FI in
exchange for or discharge of FI's 8.235% Convertible
Subordinated Debentures due 2007, (viii) Guarantees
permitted by Section 5.2(g)(vii) and (ix) the advance
by FCX to FI of the net proceeds of the Debt referred
to in Section 5.2(g)(i)(D).
(p) Investments in FCX. Except for
(i) Guarantees permitted by Section 5.2(g)(vii),
(ii) intercompany loans from FI to FCX and (iii) open
market purchases of the common stock of FCX to the
extent permitted by Section 5.2(q), FTX and the
Restricted Subsidiaries shall not make or permit to
exist any loans or advances to, or purchase any stock,
other securities or evidences of indebtedness of, or
permit to exist any investment (whether by transfer of
assets or otherwise) or acquire any investment
whatsoever in or make any Guarantee with respect to any
such loans, advances, purchases, investments or acqui-
sitions of interest made by any Person with respect to,
or any other payment for the benefit of, FCX the
aggregate outstanding amount of which at any time
exceeds by more than $60,000,000 the largest aggregate
amount thereof outstanding at any time in the next
preceding fiscal year of FTX.
(q) Equity Payments. FTX shall not make an
Equity Payment if there is then continuing any Default
or Event of Default (or a Default or Event of Default
would result therefrom), other than a failure to be in
compliance with Section 3.2 resulting solely from a
redetermination of the Borrowing Base Factors during a
90-day period as permitted by the last sentence of
Section 2.4 of the FTX Credit Agreement, or if the
Available Borrowing Base would, after giving effect to
such Equity Payment, not remain at or above zero,
without taking into account any redetermination of the
Borrowing Base pursuant to Section 2.3 of the FTX
Credit Agreement; provided, however, that FTX may pay
cash dividends with respect to outstanding shares of
(i) its Convertible Exchangeable Preferred Stock
registered with the SEC by FTX's Registration Statement
on Form S-3 No. 33-12816 and (ii) its $4.375
Convertible Exchangeable Preferred Stock, par value
$1.00 ((i) and (ii) collectively, the "Preferred
Stock") in accordance with the terms of the Preferred
Stock. In addition to the limitations described in the
immediately preceding sentence, if this credit facility
is or would at any time be designated an HLT, FTX shall
not make a proposed Equity Payment if the following
ratio (excluding items relating to Non-Restricted
Subsidiaries for purposes of such calculation) would
not be greater than 1.30 to 1:
Numerator: the sum for the preceding four
fiscal quarters of FTX's (i) Consolidated Cash
Flow, and (ii) any other Net Proceeds from asset
sales not included in clause (i) above.
Denominator: (x) the sum for the preceding
three fiscal quarters of FTX's (i) interest paid
plus capitalized interest on all Debt and
Corporate Group Loans, (ii) Scheduled Principal
Payments, (iii) Equity Payments and Preferred
Stock dividends plus (y) the sum of FTX's (A)
proposed Equity Payment, (B) all previous Equity
Payments and Preferred Stock dividends during the
current fiscal quarter and (C) Scheduled Principal
Payments and projected interest payments on all
Debt and Corporate Group Loans (using the interest
rates applicable at the time of calculation of the
ratio), in each case for the current quarter;
provided, however, that any Corporate Group Loans
prepaid pursuant to Section 3.10(a) or Section
3.10(c) of either this Agreement or the FTX Credit
Agreement or continued or converted pursuant to
Section 3.11 or either this Agreement or FTX
Credit Agreement shall not be included in such
calculation and any other Debt prepaid or
refinanced pursuant to similar provisions of
agreements or instruments governing such other
Debt shall not be included in such calculation if
such Debt would not otherwise have matured within
three months of such prepayment, continuation,
conversion or refinancing.
(r) Covenants Regarding IMC-Agrico. (i) FTX and
the Restricted Subsidiaries shall not make or permit to
exist any loans or advances to, or purchase any stock,
other securities or evidences of indebtedness of, or
permit to exist any investment whatsoever in or make
any Guarantee with respect to any such loans, advances,
purchases, investments or acquisitions of interest made
by any Person with respect to, or any other payment for
the benefit of, IMC-Agrico except (A) the IMC-Agrico
Transfer and (B) in the case of FTX and the Restricted
Subsidiaries, to the extent that the aggregate amount
outstanding of which at any time does not exceed by
more than $50,000,000 the largest aggregate amount
thereof outstanding at any time in the next preceding
fiscal year of FTX.
(ii) FTX shall not permit IMC-Agrico to incur
Debt, other than Debt to FTX or any Restricted
Subsidiary permitted pursuant to paragraph (i) of this
Section 5.2(r), in excess of $225,000,000 at any time
outstanding, and shall not permit Debt of IMC-Agrico at
any time outstanding owing to any Persons (other than
FRP, any Subsidiary of FRP, IMC and any Subsidiary of
IMC) to exceed $110,000,000.
(iii) FTX (A) shall not permit FRP Partner to
agree, without the prior written consent of the
Required Banks, (x) to amend Section 6.04(a), (b) or
(d) or Section 6.07 of the IMC-Agrico Partnership
Agreement or any defined term included in either such
Section or (y) to enter into any agreement which
conflicts with either Section which would in the case
of either (x) or (y) dilute the control of FRP Partner
or narrow the scope of the decisions subject to vote by
FRP Partner, (B) shall notify the Agent of any proposed
amendment to any of the IMC-Agrico Contribution
Agreement, the IMC-Agrico Partnership Agreement or the
IMC-Agrico Parent Agreement and (C) shall not, and
shall not permit any of its Subsidiaries to, in each
case without the prior written consent of the Required
Banks, agree to amend any such agreement if, in the
opinion of the Agent, such amendment would reasonably
be expected to adversely affect the interests of the
Banks.
(iv) Neither FTX nor FRP shall permit its
accounting of IMC-Agrico to be other than as a
proportional consolidating interest unless FTX, FRP and
the Agent have agreed upon mutually acceptable
amendments to the financial covenants herein.
(s) Covenants Regarding ALatief-FI. (i) FTX and
FI shall not permit ALatief-FI to incur the initial
transfer and the initial financing referred to in
Section 7.2 of the ALatief-FI Joint Venture Agreement
without the prior written consent of the Agent, such
consent not to be unreasonably withheld, and, if FI
shall not have Guaranteed such financing, without the
prior written consent of the Required Borrowing Base
Banks, each such consent to be conditioned upon the
satisfactory factoring of such financing into the
calculation of Borrowing Base Debt.
(ii) FI shall notify the Agent of any proposed
amendments to the ALatief-FI Joint Venture Agreement
and, without the prior written consent of the Required
Banks, FI shall not agree to amend the ALatief-FI Joint
Venture Agreement if, in the opinion of the Agent, such
amendment could adversely affect the interests of the
Banks.
SECTION 5.3. Additional Covenants of FI and FCX.
So long as any Bank shall have any Loan Exposure or any
commitment to make a Loan hereunder, FI and FCX each
directly agrees with the Banks and the Agent that, without
the prior written consent of the Required Banks, it will
not, and will cause each of its own Subsidiaries not to,
fail to comply with the provisions of Sections 5.1 and 5.2
which are applicable to it and FI will not materially alter
the nature and scope of the business and activities in which
it is engaged as of the Amendment Closing Date.
ARTICLE VI
Conditions of Credit
SECTION 6.1. Conditions Precedent to Each Credit
Event. Each Credit Event shall be subject to the following
conditions precedent:
(i) the representations and warranties on the part
of FI and the Guarantors and of FRP contained in the
Loan Documents shall be true and correct in all mate-
rial respects at and as of the date of such Credit
Event as though made on and as of such date;
(ii) the Agent shall have received a notice of such
borrowing as required by Section 3.4;
(iii) no Event of Default shall have occurred and be
continuing on the date of such Credit Event or would
result from such Credit Event;
(iv) there shall have been no amendments to the
Certificate of Incorporation, the Certificate of
Domestication or the Certificate of Limited
Partnership, as applicable, or the By-laws or
Partnership Agreement, as applicable, of any Guarantor
or Major Subsidiary since the date of the Certificate
furnished by FTX pursuant to Section 6(a) of the
Amendment Agreement, other than amendments, if any,
copies of which have been furnished to the Agent; and
(v) except as permitted by the proviso to
Section 5.2(c), there shall be no proceeding for the
dissolution or liquidation of any Guarantor or Major
Subsidiary or any proceeding to revoke the Certificate
of Incorporation of FTX, FCX or FI or to rescind the
partnership agreement of FRP or the corporate or
partnership existence, which is pending or, to the
knowledge of FTX, threatened against or affecting any
Guarantor or Major Subsidiary.
SECTION 6.2. Representations and Warranties with
Respect to Credit Events. Each Credit Event shall be deemed
a representation and warranty by FTX and FI that the
conditions precedent to such Credit Event, unless otherwise
waived in accordance herewith, shall have been satisfied.
ARTICLE VII
Events of Default
SECTION 7.1. Events of Default. If any of the
following acts or occurrences (an "Event of Default") shall
occur and be continuing:
(a) default for three or more days in the payment
when due of any principal or any corporate Group Note;
or
(b) default for five or more days in the payment
when due of any interest on any Corporate Group Note,
or of any other amount payable under the Corporate
Group Facility; or
(c) any representation or warranty made or deemed
made in or in connection with any Loan Document or in
any certificate, letter or other writing or instrument
furnished or delivered to the Agent, the FTX Agent, the
FI Trustee, any Bank or any FTX Lender pursuant hereto
or to the FTX Credit Agreement shall prove to have been
incorrect in any material respect when made or
effective or reaffirmed and repeated, as the case may
be; or
(d) default by FTX, either Major Subsidiary or FCX
in the due observance or performance of any covenant,
condition or agreement in Section 5.1(c) or 5.1(h) of
either this Agreement or the FTX Credit Agreement,
other than the covenant to preserve and maintain all of
such Person's rights, privileges and franchises
desirable in the normal conduct of it business; or
(e) default by FTX, either Major Subsidiary or FCX
in the due observance or performance of any covenant,
condition or agreement in Section 5.2 of this Agreement
or in Section 5.2 of the FTX Credit Agreement (other
than, in each case, paragraph (k)); or
(f) default by FTX, either Major Subsidiary or FCX
in the due observance or performance of any other
covenant, condition or agreement in the Corporate Group
Facility which shall remain unremedied for 30 days
after written notice thereof shall have been given to
such Person by any Bank; or
(g) FTX or any Restricted Subsidiary shall
(i) voluntarily commence any proceeding or file any
petition seeking relief under Title 11 of the United
States Code, as now constituted or hereafter amended,
or any other Federal or state bankruptcy, insolvency,
liquidation or similar law or, in the case of FI, any
such law of Indonesia, (ii) consent to the institution
of, or fail to contravene in a timely and appropriate
manner, any proceeding or the filing of any petition
described in clause (h) below, (iii) apply for or
consent to the appointment of a receiver, trustee,
custodian, sequestrator or similar official for FTX or
such Restricted Subsidiary or for a substantial part of
its property or assets, (iv) file an answer admitting
the material allegations of a petition filed against it
in any such proceeding, (v) make a general assignment
for the benefit of creditors, (vi) become unable, admit
in writing its inability or fail generally to pay its
debt as they become due or (vii) take any action for
the purpose of effecting any of the foregoing; or
(h) an involuntary proceeding shall be commenced
or an involuntary petition shall be filed in a court of
competent jurisdiction seeking (i) relief in respect of
FTX or any Restricted Subsidiary, or of a substantial
part of the property or assets of FTX or any Restricted
Subsidiary, under Title 11 of the United States Code,
as now constituted or hereafter amended, or any other
Federal or state bankruptcy, insolvency, receivership
or similar law, (ii) the appointment of a receiver,
trustee, custodian, sequestrator or similar official
for FTX or any Restricted Subsidiary or for a
substantial part of the property of FTX or any
Restricted Subsidiary or (iii) the winding-up or
liquidation of FTX or any Restricted Subsidiary; and
such proceeding or petition shall continue undismissed
for 60 days, or an order or decree approving or
ordering any of the foregoing shall continue unstayed
and in effect for 30 days; or
(i) default shall be made with respect to any Debt
of FTX or any Restricted Subsidiary if the effect of
any such default shall be to accelerate, or to permit
the holder or obligee of any Debt (or any trustee on
behalf of such holder or obligee) to accelerate (with
or without notice or lapse of time or both), the
maturity of Debt in an aggregate amount in excess of
$10,000,000; or any payment of principal or interest,
regardless of amount, on any Debt of FTX or a
Restricted Subsidiary in an aggregate principal amount
in excess of $10,000,000, shall not be paid when due,
whether at maturity, by acceleration or otherwise
(after giving effect to any period of grace specified
in the instrument evidencing or governing such Debt);
or
(j) a Reportable Event or Reportable Events, or a
failure to make a required payment (within the meaning
of Section 412(n)(1)(A) of the Code) shall have
occurred with respect to any Plan or Plans that reason-
ably could be expected to result in liability of FTX to
the PBGC or to a Plan in an aggregate amount exceeding
$10,000,000 and, within 30 days after the reporting of
any such Reportable Event to the Agent or after the
receipt by the Agent of the statement required pursuant
to clause (iii) of Section 5.1(f), the Agent shall have
notified FI in writing that (i) the Required Banks have
made a determination that, on the basis of such Report-
able Event or Reportable Events or the receipt of such
statement, there are reasonable grounds (A) for the
termination of such Plan or Plans by the PBGC, (B) for
the appointment by the appropriate United States
District Court of a trustee to administer such Plan or
Plans or (C) for the imposition of a lien in favor of a
Plan and (ii) as a result thereof an Event of Default
exists hereunder; or a trustee shall be appointed by a
United States District Court to administer any such
Plan or Plans; or the PBGC shall institute proceedings
to terminate any Plan or Plans; or
(k) FTX or any ERISA Affiliate shall have been
notified by the sponsor of a Multiemployer Plan that it
has incurred Withdrawal Liability to such Multiemployer
Plan, (ii) FTX or such ERISA Affiliate does not have
reasonable grounds for contesting such Withdrawal
Liability and is not in fact contesting such Withdrawal
Liability in a timely and appropriate manner, and
(iii) the amount of such Withdrawal Liability specified
in such notice, when aggregated with all other amounts
required to be paid to Multiemployer Plans in
connection with Withdrawal Liabilities (determined as
of the date or dates of such notification), exceeds
$10,000,000 or requires payments exceeding $10,000,000
in any year; or
(l) FTX or any ERISA Affiliate shall have been
notified by the sponsor of a Multiemployer Plan that
such Multiemployer Plan is in reorganization or is
being terminated, within the meaning of Title IV of
ERISA, if solely as a result of such reorganization or
termination the aggregate annual contributions of FTX and
its ERISA Affiliates to all Multiemployer Plans that are
then in reorganization or have been or are being terminated
have been or will be increased over the amounts required to
be contributed to such Multiemployer Plans for their most
recently completed plan years by an amount exceeding
$10,000,000;
(m) a final judgment for the payment of money in excess
of $10,000,000 shall be rendered by a court or other
tribunal against FTX or any Restricted Subsidiary and shall
remain undischarged for a period of 45 consecutive days
during which execution of such judgment shall not have been
stayed effectively; or any action shall be legally taken by
a judgment creditor to levy upon assets or properties of FTX
or any Restricted Subsidiary to enforce any such judgment;
(n) the security interest in the Contract of Work
granted in the FI Trust Agreement shall be deemed to be
invalid or fail to be in full force and effect or the
Contract of Work shall be terminated or otherwise fail to be
in full force and effect or shall be amended without the
consent of the Required Banks in any manner which materially
and adversely affects the rights and benefits granted to the
FI Trustee and the Banks under the FI Security Documents; or
the Ministry of Mines and Energy of Indonesia (or any
successor entity) or the Government of Indonesia shall have
taken any action in contravention of the Contract of Work
which materially adversely affects FI's ability to perform
its obligations under the Corporate Group Facility or the
rights and benefits granted to the FI Trustee under any FI
Security Document; or
(o) any Governmental Authority shall condemn, seize,
nationalize, assume the management of or appropriate any
material portion of FI's property, assets or revenues
(either with or without payment of compensation);
then, and in any such event (other than an event with
respect to FTX or either Major Subsidiary described in
paragraph (g) or (h) above), and at any time thereafter
during the continuance of such event, the Agent may,
and at the request of the Required Banks shall, by written
or telegraphic notice to FTX, take one or more of the
following actions at the same or different times:
(i) declare the Total Commitment to be terminated,
whereupon the Total Commitment shall
forthwith terminate; (ii) declare all sums then owing by FI
under the Promissory Notes or otherwise owing hereunder to
be forthwith due and payable, whereupon all such sums shall
become and be immediately due and payable without present-
ment, demand, protest or other notice of any kind, all of
which are hereby expressly waived by FI, anything contained
herein or in any Promissory Note to the contrary notwith-
standing or (iii) exercise any or all the remedies then
available under the FI Security Documents, the Pledge
Agreement or the Security Agreements; provided, however,
that upon the occurrence of any event described in para-
graph (g) or (h) of this Section 7.1 as to which FTX or
either Major Subsidiary is the entity involved, all sums
then owing by FI to the Banks upon the Promissory Notes or
otherwise hereunder shall, without any declaration or other
action by any Bank hereunder, be immediately due and payable
and the Total Commitment hereunder shall be immediately
terminated subject to the final sentence of this Section 7.1
without presentment, demand, protest or notice of any kind,
all of which are expressly waived by FI, anything contained
herein or in any Promissory Note to the contrary
notwithstanding. Promptly following the making of any such
declaration, the Agent shall give notice thereof to FI but
failure to do so shall not impair the effect of such
declaration.
ARTICLE VIII
The Agent and the FI Trustee
SECTION 8.1. The Agent and the FI Trustee.
(a) For convenience of administration and to expedite the
transactions contemplated by this Agreement, Chemical Bank
is hereby appointed as Agent and Collateral Agent for the
Banks under this Agreement and Morgan Guaranty Trust Company
of New York as trustee under the FI Trust Agreement is
hereby appointed as FI Trustee for the Banks under the FI
Security Documents. Each Bank (i) confirms and agrees to be
bound by the terms of the FI Trust Agreement and (ii) agrees
that the FI Trustee in accepting appointment and in acting
as security agent under the FI Security Documents shall be
entitled to all the rights, immunities, privileges,
protections, exculpations, indemnifications, liens and other
benefits applicable to its acting as trustee under the FI
Trust Agreement. Neither the Agent nor the Collateral Agent
shall have any duties or responsibilities with respect
hereto except those expressly set forth herein. Each Bank
hereby irrevocably appoints and expressly authorizes the
Agent and the Collateral Agent, without hereby limiting any
implied authority, to take such action as the Agent or the
Collateral Agent, as applicable, on its behalf and to exer-
cise such powers under this Agreement as are delegated to
such Person by the terms hereof, together with such powers
as are reasonably incidental thereto. Each of the Agent and
the Collateral Agent may exercise any of its duties here-
under by or through their respective agents, officers or
employees. In addition, each Bank hereby irrevocably
(i) authorizes and directs the Collateral Agent to enter, on
behalf of each of them, into the FTX Intercreditor Agreement
and, as contemplated pursuant to this Agreement, the Pledge
Agreement and the Security Agreement and (ii) authorizes and
directs the FI Trustee to enter, on behalf of each of them,
into the FI Security Documents, and in each case agrees to
be bound by the terms thereof.
(b) Neither the Agent, the Collateral Agent nor
any of their respective directors, officers, agents or
employees shall be liable to any Bank, FI or either
Guarantor for any action taken or omitted to be taken by it
or them in good faith under or in connection with this
Agreement and shall neither be responsible to any Bank, FI
or either Guarantor for the consequences of any oversight or
error of judgment nor be answerable to any Bank, FI or
either Guarantor for any loss unless the same shall happen
through its or their gross negligence or wilful misconduct.
The Agent may treat the payee of any Promissory Note as the
holder thereof until written notice of transfer shall have
been filed with it signed by such payee and in form
satisfactory to the Agent. The Agent and the Collateral
Agent may each consult with legal counsel selected by it and
shall be entitled to rely upon the advice of such counsel as
to its duties and shall not be liable for any action taken
or suffered in good faith by it in accordance with the
advice of such counsel. Neither the Agent nor the Col-
lateral Agent shall be under a duty to enter into or pass
upon the validity, effectiveness, genuineness or value of
this Agreement, any Promissory Note or any other Loan Docu-
ment, any other instrument or document delivered pursuant
hereto or thereto or herewith or therewith, or any repre-
sentation, warranty or agreement made herein or therein or
in connection herewith or therewith, and the Agent and the
Collateral Agent each shall be entitled to assume that the
same are valid, effective and genuine in what they purport
to be. Neither the Agent nor the Collateral Agent shall
incur any liability under or in respect of this Agreement by
acting upon any notice, consent, certificate, warranty or
other paper or instrument believed by such Person to be
genuine or authentic or to be signed by the proper party, or
with respect to anything which it may do or refrain from
doing in the reasonable exercise of its judgment, or which
may seem to it to be necessary or desirable on such
premises.
(c) To the extent that either the Agent or the
Collateral Agent shall not be reimbursed by FI or either
Guarantor for any costs, liabilities or expenses incurred in
such capacity or, to the extent the FI Trustee shall not be
reimbursed by the Borrowers for any costs, liabilities or
expenses incurred in its capacity as trustee under the FI
Trust Agreement (including in its capacity as security agent
under the FI Security Documents), each Bank agrees to
indemnify such Person, pro rata in accordance with its
Applicable Percentage, from and against any and all liabili-
ties, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements of any
kind or nature whatsoever which may be imposed on or
incurred by or asserted against such Person in any way
relating to or arising out of this Agreement or the FI Trust
Agreement, as the case may be; provided, however, that no
Bank shall be liable for any portion of such liabilities,
obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements resulting from the
Agent's, the Collateral Agent's or the FI Trustee's gross
negligence or wilful misconduct. Each Bank agrees promptly
to pay to the Agent, the Collateral Agent or the FI Trustee,
as applicable, its pro rata portion of the statement of
amounts payable by FI to such Person under this Agreement
which are not paid by FI for any reason, within 30 days of
the date such statement is sent to the Banks by such Person.
(d) It is expressly understood and agreed that
the obligations of the Agent and the Collateral Agent are
only those expressly set forth with respect to it in this
Agreement. The Agent shall not be required to take any
action and shall have no obligations, except such actions
and obligations which it is expressly required to take or
observe by the terms of this Agreement. Each Bank agrees
that the Agent shall be entitled to take any action which it
is permitted to take hereunder, but shall only be required
to take any such action at the written request of the
Required Banks. The Agent and the Collateral Agent shall be
entitled to assume that no Event of Default or Default has
occurred and is continuing, unless such Person has actual
knowledge of such fact or has received notice from a Bank
that such Bank considers that an Event of Default or Default
has occurred and is continuing and specifying the nature
thereof. In the event that the Agent or the Collateral
Agent shall have acquired actual knowledge of any such Event
of Default or Default, such Person shall promptly give
notice thereof to the Banks, and will take such action and
assert such rights pursuant to this Agreement as the
Required Banks shall direct. The Agent and the Collateral
Agent shall in all cases be fully protected for any action
taken pursuant to such directions.
(e) The Agent and the Collateral Agent may resign
at any time by giving written notice thereof to the Banks
and FI and may be removed at any time with or without cause
by the Required Banks. Upon any such resignation or
removal, the Required Banks shall have the right to appoint,
and FI shall have the right to approve (such approval not to
be unreasonably withheld or delayed) a successor Agent or
Collateral Agent, as the case may be. If no successor Agent
or Collateral Agent, as the case may be, shall have been so
appointed and approved and shall have accepted such
appointment, within 30 days after the retiring Person's
giving of notice of resignation or the Banks' removal of the
retiring Person, then the retiring Person may, on behalf of
the Banks, appoint a successor Agent or Collateral Agent, as
the case may be, which shall be a Bank. Upon the acceptance
of any appointment as Agent or Collateral Agent hereunder by
a successor Agent or Collateral Agent, as the case may be,
such successor Agent or Collateral Agent shall thereupon
succeed to and become vested with all the rights, powers,
privileges and duties of the retiring Person, and the
retiring Person shall be discharged from its duties and
obligations hereunder. After any such retiring Person's
resignation or removal hereunder as Agent or Collateral
Agent, as applicable, the provisions of this Article VIII
shall inure to its benefit as to any actions taken or
omitted to be taken by it while it was the Agent or
Collateral Agent, as applicable, under this Agreement.
(f) The Agent shall be responsible for
supervising the preparation, execution and delivery of this
Agreement and the other agreements and instruments
contemplated hereby, any amendment or modification thereto
and the closing of the transactions contemplated hereby and
thereby. In addition, the Agent shall assist each of the
Collateral Agent and the FI Trustee in the performance of
its duties as may be reasonably requested by such Person
from time to time.
(g) The obligations of the Agent, the Collateral
Agent and the FI Trustee shall be separate and several and
neither of them shall be responsible or liable for the acts
or omissions of the other, except to the extent that a Bank
serves in more than one agent and/or trustee capacity, such
Bank shall be responsible for the acts and omissions
relating to each such agency and/or trust function.
(h) Without the prior written consent of the
Required Banks, the Collateral Agent will not consent to any
modification, supplement or waiver of the FTX Intercreditor
Agreement.
(i) Notwithstanding any other provision of this
Section 8.1, the Agent will, at the request of FI, instruct
the FI Trustee to release from the FI Trust Agreement and
the other FI Security Documents (and enter into an amendment
to the FI Trust Agreement and the other FI Security
Documents and execute such other instruments as may be
necessary in connection therewith) any interest of the FI
Trustee in (i) the rights of FI under the Contract of Work
in respect of all or any part of Contract Area Block B (as
defined in the Contract of Work), without further consent by
the Required Banks and the Required Banks (as defined in the
FTX Credit Agreement) if, in the opinion or opinions of
counsel acceptable to the Agent and in the opinion of the
Agent, such release is to be effected without impairing or
adversely affecting (A) the Lien and interest of the FI
Trustee stated to be created in the rights of FI under the
Contract of Work in respect of Contract Area Block A (as
defined in the Contract of Work) and the FI Project (to the
extent it includes the mining, concentrating,
transportation, shipping and related operations of FI in
respect of FI Product obtained or produced from Contract
Area Block A) by the FI Trust Agreement and the other FI
Security Documents, the Memorandum of Understanding and the
Contract of Work or (B) the rights of FI relating to
ownership and operation of the FI Project (to the extent it
includes the mining, concentration, transportation, shipping
and related operations of FI in respect of FI Product
obtained or produced from Contract Area Block A), (ii) the
property and rights to be transferred pursuant to the
ALatief-FI Transfer and (iii) the property and rights to be
transferred pursuant to the Power Facilities Transfer.
ARTICLE IX
Guarantees
SECTION 9.1. Guarantee. As consideration for the
Banks' obligations to lend hereunder, each Guarantor hereby
unconditionally and irrevocably guarantees, as a primary
obligor and not merely as a surety, the due and punctual
payment of (x) the principal of and interest on each
Promissory Note of FI, when and as due, whether at maturity,
by acceleration, by notice of prepayment or otherwise,
(y) all other monetary obligations of FI to the Banks, the
Agent and the FI Trustee under this Agreement and (z) all
amounts owing by FI to any Bank pursuant to any Permitted
Secured Swap (collectively, the "FI Obligations"). Each
Guarantor further agrees that the FI Obligations may be
extended or renewed, in whole or in part, without notice or
further assent from it, and that it will remain bound upon
its guarantee notwithstanding any extension or renewal of
any such FI Obligation.
Each Guarantor waives presentment to, demand of
payment from and protest to FI of any of the FI Obligations,
and also waives notice of acceptance of its guarantee and
notice of protest for nonpayment. The obligations of each
Guarantor under this Section 9.1 shall not be affected by
(a) the failure of any Bank, the Agent or the FI Trustee to
assert any claim or demand or to enforce any right or remedy
against FI under the provisions of this Agreement or
otherwise; (b) any rescission, waiver, amendment or
modification of any of the terms or provisions of this
Agreement, any Promissory Note any guarantee or any other
agreement; (c) the release of any security held by any Bank,
the Agent or the FI Trustee for the Obligations guaranteed
by it or any of them; or (d) the failure of any Bank, the
Agent or the FI Trustee to exercise any right or remedy
against any other guarantor of the FI Obligations.
Each Guarantor further agrees that its guarantee
constitutes a guarantee of payment when due and not of
collection, and waives any right to require that any resort
be had by any Bank, the Agent or the FI Trustee to any
security held for payment of the FI Obligations or to any
balance of any deposit account or credit on the books of
such Bank in favor of FI or any other Person.
The obligations of each Guarantor under this
Section 9.1 shall not be subject to any reduction,
limitation, impairment or termination for any reason,
including, without limitation, any claim of waiver, release,
surrender, alteration or compromise, and shall not be
subject to any defense or setoff, counterclaim, recoupment
or termination whatsoever by reason of the invalidity,
illegality or unenforceability of the FI Obligations or
otherwise. Without limiting the generality of the
foregoing, the obligations of each Guarantor under this
Section 9.1 shall not be discharged or impaired or otherwise
affected by the failure of any Bank, the Agent or the FI
Trustee to assert any claim or demand or to enforce any
remedy under this Agreement, any Promissory Note, any
guarantee or any other agreement, by any waiver or
modification of any thereof, by any default, failure or
delay, wilful or otherwise, in the performance of the FI
Obligations, or by any other act or omission which may or
might in any manner or to any extent vary the risk of either
Guarantor, or otherwise operate as a discharge of FTX or FCX
as a matter of law or equity.
Each Guarantor further agrees that its guarantee
shall continue to be effective or be reinstated, as the case
may be, if at any time payment, or any part thereof, of
principal of or interest on any Obligation guaranteed by it
(including, without limitation, any payment pursuant to this
guarantee) is rescinded or must otherwise be restored by any
Bank, the Agent or the FI Trustee upon the bankruptcy or
reorganization of FI or otherwise.
In furtherance of the foregoing and not in limita-
tion of any other right which any Bank, the Agent or the FI
Trustee may have at law or in equity against either
Guarantor by virtue hereof, upon the failure of FI to pay
any of the FI Obligations when and as the same shall become
due, whether at maturity, by acceleration, after notice of
prepayment or otherwise, each Guarantor hereby promises to
and will, upon receipt of written demand by any Bank, the
Agent or the FI Trustee, forthwith pay, or cause to be paid,
to the Agent for distribution to the Banks, the Agent or the
FI Trustee, as appropriate, in cash the amount of such
unpaid FI Obligations, and at such time as all such FI
Obligations owing to such Bank, the Agent, or the FI Trustee
as applicable, have been indefeasibly paid in full and its
Commitment terminated, such Bank shall, in a reasonable
manner, assign the amount of such FI Obligations owed to it
and paid by such Guarantor pursuant to this guarantee to
such Guarantor, such assignment to be pro tanto to the
extent to which the FI Obligations in question were
discharged by such Guarantor or make such other disposition
thereof as such Guarantor shall direct (all without recourse
to such Bank, the Agent or the FI Trustee, as applicable and
without any representation or warranty by such Bank, the
Agent or the FI Trustee, as applicable.
Upon payment by either Guarantor of any sums to a
Bank, the Agent or the FI Trustee as provided above in this
Section 9.1, all rights of such Guarantor against FI or the
other Guarantor arising as a result thereof by way of right
of subrogation or otherwise shall in all respects be sub-
ordinated and junior in right of payment to the prior indef-
easible payment in full of all the FI Obligations to the
Banks, the Agent and the FI Trustee and all the FI Obligat-
ions (as defined in the FTX Credit Agreement) and shall not
be exercised by such Guarantor prior to indefeasible payment
in full of all Corporate Group Loans and termination of the
Commitments and the commitments under the FTX Credit Agreement.
ARTICLE X
Miscellaneous
SECTION 10.1. Notices. Notices and other com-
munications provided for herein shall be in writing and
shall be delivered by hand or overnight or same day courier
service or mailed or sent by telex, telecopy, graphic
scanning or other telegraphic communications equipment of
the sending party to the appropriate party's address set
forth on the signature pages hereof. All notices and other
communications given to any party hereto in accordance with
the provisions of this Agreement shall be deemed to have
been given on the date of receipt if hand delivered or three
days after being sent by registered or certified mail,
postage prepaid, return receipt requested, if by mail, or
upon receipt if by any telecopy, telegraphic or telex
communications equipment, in each case addressed to such
party as provided in this Section 10.1 or in accordance with
the latest unrevoked direction from such party. Any notice
delivered to FTX hereunder shall be deemed also to have been
given to FI, and such notice shall be deemed to have been
given to FI on the day it is deemed to have been given to
FTX.
SECTION 10.2. Survival of Agreement. All cove-
nants, agreements, representations and warranties made by FI
or the Guarantors herein and in the certificates or other
instruments prepared or delivered in connection with this
Agreement shall be considered to have been relied upon by
the Banks, the Agent and the FI Trustee and shall survive
the making by the Banks of the Loans and the execution and
delivery to the Banks of the Promissory Notes evidencing
such Loans regardless of any investigation made by the Banks
or on their behalf, and shall continue in full force and
effect as long as the principal of or any accrued interest
on any Corporate Group Note, any Commitment Fee or any other
fee or amount payable under the Corporate Group Notes or the
Corporate Group Facility is outstanding and unpaid and so
long as the Commitments or the commitments under the FTX
Credit Agreement have not been terminated.
SECTION 10.3. Successors and Assigns; Participa-
tions; Purchasing Banks. (a) This Agreement shall be
binding upon and inure to the benefit of FI, the Guarantors,
the Banks, the Agent, the FI Trustee (for purposes of
Article VIII only), all future holders of the Promissory
Notes, and its respective successors and assigns, except
that neither FTX, FI, nor FCX may assign or transfer any of
its rights or obligations under this Agreement without the
prior written consent of each Bank. Any Bank may at any
time pledge or assign all or any portion of its rights under
this Agreement and the Promissory Notes issued to it to a
Federal Reserve Bank; provided that no such pledge or
assignment shall release a Bank from any of its obligations
hereunder.
(b) Any Bank may, in the ordinary course of its
business and in accordance with applicable law, at any time
sell to one or more banks or other entities ("Participants")
participating interests in any Loan owing to such Bank, any
Promissory Note held by such Bank, any Commitment of such
Bank or any other interest of such Bank hereunder. In the
event of any such sale by a Bank of participating interests
to a Participant, such Bank's obligations under this Agree-
ment to the other parties to this Agreement shall remain
unchanged, such Bank shall remain solely responsible for the
performance thereof, such Bank shall remain the holder of
any such Promissory Note for all purposes under this Agree-
ment and FI and the Guarantors and the Agent shall continue
to deal solely and directly with such Bank in connection
with such Bank's rights and obligations under this Agree-
ment. FI and the Guarantors agree that if amounts outstand-
ing under this Agreement and the Promissory Notes are due
and unpaid, or shall have been declared or shall have become
due and payable upon the occurrence of an Event of Default,
each Participant shall be deemed to have the right of setoff
in respect of its participating interest in amounts owing
under this Agreement and any Promissory Note to the same
extent as if the amount of its participating interest were
owing directly to it as a Bank under this Agreement or any
Promissory Note; provided that such right of setoff shall be
subject to the obligation of such Participant to share with
the Banks, and the Banks agree to share with such Partici-
pant, as provided in Section 3.16. FI and the Guarantors
also agree that each Participant shall be entitled to the
benefits of Sections 3.12, 3.13, 3.14, 3.16, 3.18, 3.19 and
10.5 with respect to its participation in the Commitments
and the Loans outstanding from time to time; provided that
no Participant shall be entitled to receive any greater
amount pursuant to such Sections than the transferor Bank
would have been entitled to receive in respect of the amount
of the participation transferred by such transferor Bank to
such Participant had no such transfer occurred and provided
further that the voting rights of any Participant would be
limited to changes in amounts of Loan or Commitment, rates,
fees and maturity affecting such Participant and release of
all or substantially all the collateral for the FI
Obligations. Each Bank selling a participation with a tenor
longer than 183 days will use its best efforts to inform FTX
of (i) the amount of any such participations sold and
(ii) the identity of all Participants purchasing such
participations.
(c) (Intentionally left blank.)
(d) This Agreement shall not be assignable by the
Banks, except that a Bank may, in accordance with applicable
law, and subject to Section 10.3(j), at any time assign by
novation all or any part of its rights and obligations under
this Agreement and its Promissory Notes (I) to any Bank or
any affiliate thereof, without FI's consent, or (II) to one
or more additional banks or financial institutions (any such
entity referred to in clause (I) or (II) being a "Purchasing
Bank") with FI's consent, such consent not to be
unreasonably withheld (except that any Bank may assign its
rights and obligations under this Agreement and any
affiliate thereof and its Promissory Notes to any other Bank
that is a party to this Agreement without the necessity of
approval by FI or any Guarantor), pursuant to a Commitment
Transfer Supplement in the form of Exhibit D hereto,
executed by such Purchasing Bank, such transferor Bank (and,
in the case of a Purchasing Bank that is not then a Bank or
an affiliate thereof, by FI and the Agent), and delivered to
the Agent for its recording in the Register. Assignments
shall be by novation only. Upon such execution, delivery
and recording (and, if required, consent of FI), from and
after the Transfer Effective Date determined pursuant to
such Commitment Transfer Supplement, (x) the Purchasing Bank
thereunder shall (if not already a party hereto) be a party
hereto and, to the extent provided in such Commitment
Transfer Supplement, have the rights and obligations of a
Bank hereunder with a Commitment as set forth therein, and
(y) the transferor Bank thereunder shall, to the extent
provided in such Commitment Transfer Supplement, be released
from its obligations under this Agreement (and, in the case
of a Commitment Transfer Supplement covering all or the
remaining portion of a transferor Bank's rights and obliga-
tions under this Agreement, such transferor Bank shall cease
to be a party hereto). Such Commitment Transfer Supplement
shall be deemed to amend this Agreement to the extent, and
only to the extent, necessary to reflect the addition of
such Purchasing Bank (if not already a party hereto) and the
resulting adjustment of Applicable Percentages arising from
the purchase by such Purchasing Bank of all or a portion of
the rights and obligations of such transferor Bank under
this Agreement and the Promissory Notes. On or prior to the
Transfer Effective Date determined pursuant to such Commit-
ment Transfer Supplement, FI, at its own expense, shall
execute and deliver to the Agent in exchange for the
surrendered Promissory Note a new Promissory Note to the
order of such Purchasing Bank in an amount equal to the
Commitment assumed by it pursuant to such Commitment
Transfer Supplement and, if the transferor Bank has retained
a Commitment hereunder, a new Promissory Note to the order
of the transferor Bank in an amount equal to the Commitment
retained by it hereunder. Such new Promissory Notes shall
be dated the Original Execution Date and shall otherwise be
in the form of the Promissory Notes replaced thereby. The
Promissory Note surrendered by the transferor Bank shall be
returned by the Agent to FI marked "canceled".
(e) The Agent shall maintain at its address
referred to in Section 10.1 a copy of each Commitment
Transfer Supplement delivered to it and a register (the
"Register") for the recordation of the names and addresses
of the Banks, and the Commitment of, and principal amount of
the Loans owing to, each Bank from time to time. The
entries in the Register shall be conclusive, in the absence
of manifest error, and the parties hereto may treat each
Person whose name is recorded in the Register as the owner
of the Loan recorded therein for all purposes of this
Agreement. The Register shall be available for inspection
by the parties hereto at any reasonable time and from time
to time upon reasonable prior notice.
(f) Upon its receipt of a Commitment Transfer
Supplement executed by a transferor Bank and a Purchasing
Bank (and, in the case of a Purchasing Bank that is not then
a Bank or an affiliate thereof, by FI and the Agent)
together with payment to the Agent of a registration and
processing fee of $2,000, the Agent shall (i) promptly
accept such Commitment Transfer Supplement and (ii) on the
Transfer Effective Date determined pursuant thereto record
the information contained therein in the Register and give
notice of such acceptance and recordation to the Banks and
FI.
(g) Subject to Section 10.16, FI authorizes each
Bank to disclose to any Participant or Purchasing Bank
(each, a "Transferee") and any prospective Transferee any
and all financial information in such Bank's possession
concerning FTX and its affiliates which has been delivered
to such Bank by or on behalf of FTX or FI pursuant to this
Agreement or which has been delivered to such Bank by or on
behalf of FTX or FI in connection with such Bank's credit
evaluation of FTX and its affiliates prior to becoming a
party to this Agreement.
(h) If, pursuant to this Section 10.3, any
interest in this Agreement or any Promissory Note is trans-
ferred to any Transferee other than a Participant which is
organized under the laws of any jurisdiction other than the
United States or any State thereof, the transferor Bank
(x) shall immediately notify the Agent of such transfer,
describing the terms thereof and indicating the identity and
country of residence of each Transferee and (y) shall cause
such Transferee, concurrently with the effectiveness of such
transfer, (i) to represent to the transferor Bank (for the
benefit of the transferor Bank, the Agent and FI) that under
applicable law and treaties no taxes will be required to be
withheld by the Agent, FI or the transferor Bank with
respect to any payments to be made to such Transferee in
respect of the Loans, (ii) to furnish to the transferor Bank
(and, in the case of any Purchasing Bank registered in the
Register, the Agent and FI) either U.S. Internal Revenue
Service Form 4224 or U.S. Internal Revenue Service Form 1001
(wherein such Transferee claims entitlement to complete
exemption from U.S. Federal withholding tax on all interest
payments hereunder) and (iii) to agree (for the benefit of
the transferor Bank, the Agent and FI) to provide the
transferor Bank (and, in the case of any Purchasing Bank
registered in the Register, the Agent and FI) a new
Form 4224 or Form 1001 upon the expiration or obsolescence
of any previously delivered form and comparable statements
in accordance with applicable U.S. laws and regulations and
amendments duly executed and completed by such Transferee,
and to comply from time to time with all applicable U.S.
laws and regulations with regard to such withholding tax
exemption. Notwithstanding any other provision contained
herein to the contrary, FI and the Agent shall be entitled
to deduct and withhold United States withholding taxes with
respect to all payments to be made hereunder to or for such
transferor Bank or Transferee as may be required by United
States law due to such assignments and such transferor Bank
or Transferee shall indemnify and hold harmless FI and the
Agent from and against any tax, interest, penalty or other
expense that FI and the Agent may incur as a consequence of
any failure to withhold United States taxes applicable
because of any transfer or participation arrangement that is
not fully disclosed to them as required hereunder.
(i) If, pursuant to this Section 10.3, a Bank
sells participating interests to a Participant which is
organized under the laws of any jurisdiction other than the
United States or any State thereof, the selling Bank shall
cause such Participant, concurrently with the effectiveness
of such sale, (i) to represent to the selling Bank (for the
benefit of the selling Bank, the Agent and FI) that under
applicable law and treaties no taxes will be required to be
withheld by the Agent, FI or the selling Bank with respect
to any payments to be made to such Participant in respect of
the Loans, (ii) to furnish to the selling Bank either U.S.
Internal Revenue Service Form 4224 or U.S. Internal Revenue
Service Form 1001 (wherein such Participant claims
entitlement to complete exemption from U.S. Federal
withholding tax on all interest payments hereunder) and
(iii) to agree (for the benefit of the selling Bank, the
Agent and FI) to provide the selling Bank a new Form 4224 or
Form 1001 upon the expiration or obsolescence of any
previously delivered form and comparable statements in
accordance with applicable U.S. laws and regulations and
amendments duly executed and completed by such Participant,
and to comply from time to time with all applicable U.S.
laws and regulations with regard to such withholding tax
exemption. Notwithstanding any other provision contained
herein to the contrary, FI and the Agent shall be entitled
to deduct and withhold United States withholding taxes with
respect to all payments to be made hereunder to or for such
selling Bank or Participant as may be required by United
States law due to such participations and such selling Bank
or Participant shall indemnify and hold harmless FI and the
Agent from and against any tax, interest, penalty or other
expense that FI and the Agent may owe as a consequence of
any selling Bank's failure to obtain tax forms securing
complete exemption from U.S. withholding taxes.
(j) Notwithstanding anything in this Section 10.3
to the contrary, (i) without the prior written consent of
the Agent and FTX, no Bank which is an FM Lender shall
(except as permitted by paragraph (a) of this Section 10.3
regarding assignments to Federal Reserve Banks) assign any
interest in or Commitment under this Agreement or any Loans
unless at the same time it shall also assign, to the same
assignee, the same proportion of its interest in and
commitment and loans outstanding under the FM Credit
Agreement pursuant to the provisions governing assignments
set forth therein and (ii) no Bank which is an FTX Lender
shall (except as permitted by paragraph (a) of this
Section 10.3 regarding assignments to Federal Reserve Banks)
make any such assignment of its interests hereunder unless
it shall also assign, to the same assignee, the same
proportion of its interest in and commitment and loans
outstanding under the FTX Credit Agreement.
SECTION 10.4. Expenses of the Banks;
Indemnity. (a) The Guarantors and FI agree, jointly and
severally, to pay all out-of-pocket expenses reasonably
incurred by the Agent in connection with the preparation of
this Agreement and the Promissory Notes or with any
amendments, modifications or waivers of the provisions
hereof or thereof (whether or not the transactions hereby
contemplated shall be consummated) or reasonably incurred by
the Agent or any Bank in connection with the enforcement or
protection of their rights in connection with this Agreement
or with the Loans made or the Promissory Notes issued
hereunder (whether through negotiations, legal proceedings
or otherwise), including, but not limited to, the reasonable
fees and disbursements of Cravath, Swaine & Moore, special
counsel for the Agent and, in connection with such
enforcement or protection, the reasonable fees and
disbursements of other counsel for any Bank. Each of the
Guarantors and FI further agree, jointly and severally, that
it shall indemnify the Banks, the Agent, the Collateral
Agent and the FI Trustee from and hold them harmless against
any documentary taxes, assessments or charges made by any
Governmental Authority by reason of the execution and
delivery of or in connection with the performance of this
Agreement, any of the Promissory Notes or any of the other
Loan Documents. Further, each of the Guarantors and FI
agrees to pay, and to protect, indemnify and save harmless
each Bank, the Agent, the Collateral Agent and the FI
Trustee and each of their respective officers, directors,
shareholders, employees, agents and servants from and
against, any and all losses, liabilities (including liabili-
ties for penalties), actions, suits, judgments, demands,
damages, costs or expenses (including, without limitation,
attorneys' fees and expenses in connection with any investi-
gative, administrative or judicial proceeding, whether or
not such Bank or the Agent shall be designated a party
thereto) of any nature arising from or relating to the
issuance or delivery of Promissory Notes or in connection
with the enforcement of this Agreement or the other Loan
Documents or relating to the use of proceeds of Loans
hereunder for the purpose of acquiring equity securities of
any other Person; provided, however, that FI and the
Guarantors shall have no obligation to protect, indemnify
and save harmless any Bank, the Agent, the Collateral Agent
or the FI Trustee or any other Person otherwise entitled to
indemnity hereunder with respect to any loss, liability,
action, suit, judgment, demand, damage, cost or expense
resulting from or attributable to the gross negligence or
wilful misconduct of such Bank, the Agent, the Collateral
Agent or the FI Trustee or such other Person. If any
action, suit or proceeding arising from any of the foregoing
is brought against any Bank, the Agent, the Collateral Agent
or the FI Trustee or any other Person indemnified or
intended to be indemnified pursuant to this Section 10.4, FI
and the Guarantors, to the extent and in the manner directed
by such indemnified party, will resist and defend such
action, suit or proceeding or cause the same to be resisted
and defended by counsel designated by FTX (which counsel
shall be satisfactory to such Bank, the Agent, the
Collateral Agent or the FI Trustee or other Person indemni-
fied or intended to be indemnified). If either Guarantor or
FI shall fail to do any act or thing which it has covenanted
to do hereunder or any representation or warranty on the
part of such Guarantor or FI contained in this Agreement
shall be breached, any Bank, the Agent, the Collateral Agent
or the FI Trustee may (but shall not be obligated to) do the
same or cause it to be done or remedy any such breach, and
may expend its funds for such purpose. Any and all amounts
so expended by any Bank, the Agent, the Collateral Agent or
the FI Trustee shall be repayable to it by such Guarantor or
FI immediately upon such Bank's or the Agent's demand
therefor.
(b) The provisions of this Section 10.4 shall
remain operative and in full force and effect regardless of
the expiration of the term of this Agreement or the FTX
Credit Agreement, the consummation of the transactions
contemplated hereby or thereby, the repayment of any of the
Corporate Group Loans or any Corporate Group Notes, the
invalidity or unenforceability of any term or provision of
this Agreement or the FTX Credit Agreement or any Corporate
Group Note, or any investigation made by or on behalf of any
Bank, the Agent, any FTX Lender or the FTX Agent. All
amounts due under this Section 10.4 shall be payable on
written demand therefor.
SECTION 10.5. Right of Setoff. If an Event of
Default shall have occurred and be continuing and any Bank
shall have requested the Agent to declare the Promissory
Notes immediately due and payable pursuant to Article VII,
then each Bank is hereby authorized at any time and from
time to time, to the fullest extent permitted by law, to set
off and apply any and all deposits (general or special, time
or demand, provisional or final) at any time held and other
indebtedness at any time owing by such Bank to or for the
credit or the account of FI against any of and all the
obligations of FI now or hereafter existing under this
Agreement and the Promissory Notes held by such Bank,
irrespective of whether or not such Bank shall have made any
demand under this Agreement or such Promissory Notes and
although such obligations may be unmatured. Each Bank
agrees promptly to notify Fi after any such setoff and
application made by such Bank, but the failure to give such
notice shall not affect the validity of such setoff and
application. The rights of each Bank under this Section are
in addition to other rights and remedies (including, without
limitation, other rights of setoff) which such Bank may
have.
SECTION 10.6. APPLICABLE LAW. THIS AGREEMENT AND
THE PROMISSORY NOTES SHALL BE CONSTRUED IN ACCORDANCE WITH
AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK.
SECTION 10.7. Waivers; Amendments. (a) No
failure or delay of any Bank, the Agent or the FI Trustee in
exercising any power or right hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise of
any such right or power, or any abandonment or
discontinuance of steps to enforce such a right or power,
preclude any other or further exercise thereof or the
exercise of any other right or power. The rights and
remedies of the Banks, the Agent and the FI Trustee
hereunder and under the other documents and agreements
entered into in connection herewith are cumulative and not
exclusive of any rights or remedies which they would other-
wise have. No waiver of any provision of this Agreement or
any Promissory Note or any other such document or agreement
or consent to any departure by FI therefrom shall in any
event be effective unless the same shall be authorized as
provided in paragraph (b) below, and then such waiver or
consent shall be effective only in the specific instance and
for the purpose for which given. No notice or demand on FI
in any case shall entitle FI to any other or further notice
or demand in similar or other circumstances. Each holder of
any of the Promissory Notes shall be bound by any amendment,
modification, waiver or consent authorized as provided
herein, whether or not such Promissory Note shall have been
marked to indicate such amendment, modification, waiver or
consent.
(b) Neither this Agreement nor any provision
hereof may be waived, amended or modified except pursuant to
an agreement or agreements in writing entered into by FI and
the Required Banks; provided, however, that no such
agreement shall (i) change the principal amount of, or
extend or advance the maturity of or any date for the
payment of any principal of or interest on, any Promissory
Note (including, without limitation, any such payment
pursuant to Section 3.8 or paragraphs (b), (c) or (d) of
Section 3.10), or waive or excuse any such payment or any
part thereof, or change the rate of interest on any
Promissory Note, without the written consent of each holder
affected thereby, (ii) change the Commitment of any Bank
without the written consent of such Bank, or change any fees
to be paid to any Bank or the Agent hereunder without the
written consent of such Bank or the Agent, as applicable,
(iii) amend or modify the provisions of this Section,
Sections 3.9 through 3.16 or Section 10.4 or Article IX
or the definition of "Required Banks" or "Required Borrowing
Base Banks", without the written consent of each Bank,
(iv) release the collateral granted as security for the
FI Obligations (except as expressly contemplated hereby),
without the written consent of each Bank or (v) release
any Guarantor of its obligations hereunder without the
written consent of each Bank; and provided further that
no such agreement shall amend, modify or otherwise affect
the rights or duties of the Agent hereunder without the
written consent of the Agent. Each Bank and holder of
any Promissory Note shall be bound by any modification or
amendment authorized by this Section regardless of whether
its Promissory Notes shall be marked to make reference
thereto, and any consent by any Bank or holder of a
Promissory Note pursuant to this Section shall bind any
person subsequently acquiring a Promissory Note from it,
whether or not such Promissory Note shall be so marked.
SECTION 10.8. Severability. In the event any one
or more of the provisions contained in this Agreement or in
the Promissory Notes should be held invalid, illegal or
unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions contained herein
or therein shall not in any way be affected or impaired
thereby. The parties shall endeavor in good-faith negotia-
tions to replace the invalid, illegal or unenforceable
provisions with valid provisions the economic effect of
which comes as close as possible to that of the invalid,
illegal or unenforceable provisions.
SECTION 10.9. Counterparts. This Agreement may
be executed in two or more counterparts, each of which shall
constitute an original but all of which when taken together
shall constitute but one contract, and shall become effec-
tive when copies hereof which, when taken together, bear the
signatures of each of the parties hereto shall be delivered
or mailed to the Agent and FI.
SECTION 10.10. Headings. Article and Section
headings and the Table of Contents used herein are for
convenience of reference only and are not to affect the
construction of, or to be taken into consideration in
interpreting, this Agreement.
SECTION 10.11. Entire Agreement. The Corporate
Group Facility, the fee letters between the Agent and FTX
and the exhibits and schedules hereto contain the entire
agreement among the parties hereto with respect to the Loans
and the related transactions. Any previous agreement among
the parties with respect to the subject matter hereof is
superseded by the Corporate Group Facility, such fee letters
and the agreements set forth as exhibits hereto. Nothing in
the Corporate Group Facility or in such other documents,
expressed or implied, is intended to confer upon any party
other than the parties hereto any rights, remedies,
obligations or liabilities under or by reason of this
Agreement, such fee letters or the agreements set forth as
exhibits hereto.
SECTION 10.12. Amendment Closing Date. This
Agreement, as amended herein, shall be effective on the
Amendment Closing Date.
SECTION 10.13. WAIVER OF JURY TRIAL, ETC.
(a) EXCEPT AS PROHIBITED BY LAW, EACH PARTY HERETO HEREBY
WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT
OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF,
UNDER OR IN CONNECTION WITH THIS AGREEMENT, ANY DOCUMENT OR
AGREEMENT ENTERED INTO IN CONNECTION HEREWITH AND ANY OF THE
TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.
(b) Except as prohibited by law, each party
hereto hereby waives any right it may have to claim or
recover in any litigation referred to in paragraph (a) of
this Section any special, indirect, exemplary, punitive or
consequential damages or any damages other than, or in
addition to, actual damages.
(c) Each party hereto (i) certifies that no
representative, agent or attorney of any Bank has repre-
sented, expressly or otherwise, that such Bank would not, in
the event of litigation, seek to enforce the foregoing
waivers and (ii) acknowledges that it has been induced to
enter into this Agreement or any other document, as appli-
cable, by, among other things, the mutual waivers and
certifications herein.
SECTION 10.14. Interest Rate Limitation. Not-
withstanding anything herein or in the Promissory Notes to
the contrary, if at any time the applicable interest rate,
together with all fees and charges which are treated as
interest under applicable law (collectively the "Charges"),
as provided for herein or in any other document executed in
connection herewith, or otherwise contracted for, charged,
received, taken or reserved by any Bank, shall exceed the
maximum lawful rate (the "Maximum Rate") which may be
contracted for, charged, taken, received or reserved by such
Bank in accordance with applicable law, the rate of interest
payable under the Promissory Note held by such Bank, toge-
ther with all Charges payable to such Bank, shall be limited
to the Maximum Rate.
SECTION 10.15. JURISDICTION; CONSENT TO SERVICE
OF PROCESS. (a) EACH GUARANTOR AND FI HEREBY IRREVOCABLY
AND UNCONDITIONALLY SUBMITS, FOR ITSELF AND ITS PROPERTY, TO
THE NONEXCLUSIVE JURISDICTION OF ANY NEW YORK STATE COURT OR
FEDERAL COURT OF THE UNITED STATES OF AMERICA SITTING IN NEW
YORK CITY, AND ANY APPELLATE COURT FROM ANY THEREOF, IN ANY
ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS
AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY, OR FOR
RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT, AND EACH OF THE
PARTIES HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY AGREES
THAT ALL CLAIMS IN RESPECT OF ANY SUCH ACTION OR PROCEEDING
MAY BE HEARD AND DETERMINED IN SUCH NEW YORK STATE OR, TO
THE EXTENT PERMITTED BY LAW, IN SUCH FEDERAL COURT. EACH OF
THE PARTIES HERETO AGREES THAT A FINAL JUDGMENT IN ANY SUCH
ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED
IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY
OTHER MANNER PROVIDED BY LAW. NOTHING IN THIS AGREEMENT
SHALL AFFECT ANY RIGHT THAT ANY BANK, THE AGENT OR THE FI
TRUSTEE MAY OTHERWISE HAVE TO BRING ANY ACTION OR PROCEEDING
RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED
HEREBY AGAINST FI OR EITHER GUARANTOR OR ITS PROPERTIES IN
THE COURTS OF ANY JURISDICTION.
(b) EACH GUARANTOR AND FI HEREBY IRREVOCABLY AND
UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT IT MAY LEGALLY
AND EFFECTIVELY DO SO, ANY OBJECTION WHICH IT MAY NOW OR
HERE-AFTER HAVE TO THE LAYING OF VENUE OF ANY SUIT, ACTION
OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT
OR THE TRANSACTIONS CONTEMPLATED HEREBY IN ANY NEW YORK
STATE OR FEDERAL COURT. EACH OF THE PARTIES HERETO HEREBY
IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW,
THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF
SUCH ACTION OR PROCEEDING IN ANY SUCH COURT.
(c) EACH PARTY TO THIS AGREEMENT IRREVOCABLY
CONSENTS TO SERVICE OF PROCESS IN THE MANNER PROVIDED FOR
NOTICES IN SECTION 10.01. NOTHING IN THIS AGREEMENT WILL
AFFECT THE RIGHT OF ANY PARTY TO THIS AGREEMENT TO SERVE
PROCESS IN ANY OTHER MANNER PERMITTED BY LAW.
SECTION 10.16. Confidentiality. Each Bank agrees
(which agreement shall survive the termination of this
Agreement) that financial information, information from
FTX's and its Subsidiaries' books and records, information
concerning FTX's and its Subsidiaries' trade secrets and
patents and any other information received from FTX and its
Subsidiaries hereunder shall be treated as confidential by
such Bank, and each Bank agrees to use its best efforts to
ensure that such information is not published, disclosed or
otherwise divulged to anyone other than employees or
officers of such Bank and its counsel and agents; provided
that it is understood that the foregoing shall not apply to:
(i) disclosure made with the prior written author-
ization of FTX;
(ii) disclosure of information (other than that
received from FTX and its Subsidiaries prior to or
under this Agreement) already known by, or in the
possession of, such Bank without restrictions on the
disclosure thereof at the time such information is
supplied to such Bank by FTX or a Subsidiary hereunder;
(iii) disclosure of information which is required by
applicable law or to a governmental agency having
supervisory authority over any party hereto;
(iv) disclosure of information in connection with
any suit, action or proceeding in connection with the
enforcement of rights hereunder or in connection with
the transaction contemplated hereby or thereby;
(v) disclosure to any bank (or other financial
institution) which may acquire a participation or other
interest in the Loans or rights of any Bank hereunder;
provided that such bank (or other financial institu-
tion) agrees to maintain any such information to be
received in accordance with the provisions of this
Section 10.16;
(vi) disclosure by any party hereto to any other
party hereto or their counsel or agents;
(vii) disclosure by any party hereto to any entity,
or to any subsidiary of such an entity, which owns,
directly or indirectly, more than 50% of the voting
stock of such party, or to any subsidiary of such an
entity; or
(viii) disclosure of information that prior to such
disclosure has become public knowledge through no
violation of this Agreement.
SECTION 10.17. Judgment Currency. The
specification of payment in Dollars and in New York City,
New York, with respect to amounts payable to any Bank (or
Transferee), the Agent or the FI Trustee hereunder and under
the other Loan Documents is of the essence, and Dollars
shall be the currency of account in all events. The payment
obligations of FI or either Guarantor under this Agreement
or any other Loan Document shall not be discharged by an
amount paid in another currency or in another place, whether
pursuant to a judgment or otherwise, to the extent that the
amount so paid on conversion to Dollars and transfer to New
York City under normal banking procedures does not yield the
amount of Dollars in New York City due hereunder. If for
the purpose of obtaining judgment in any court it is
necessary to convert a sum due hereunder in Dollars into
another currency (the "second currency"), the rate of
exchange which shall be applied shall be that at which in
accordance with normal banking procedures the Agent could
purchase Dollars with the second currency on the Business
Day next preceding that on which such judgment is rendered.
The obligation of FI and each Guarantor in respect of any
such sum due from it to the Agent, the FI Trustee or any
Bank (or Transferee) hereunder or under any other Loan
Document (an "entitled person") shall, notwithstanding the
rate of exchange actually applied in rendering such
judgment, be discharged only to the extent that on the
Business Day following receipt by such entitled person of
any sum adjudged to be due hereunder or under any other Loan
Document in the second currency such entitled person may in
accordance with normal banking procedures purchase in the
free market and transfer to New York City Dollars with the
amount of the second currency so adjudged to be due; and FI
and each Guarantor hereby agree, as a separate obligation
and notwithstanding any such judgment, jointly and severally
to indemnify such entitled person against, and to pay such
entitled person on demand, in Dollars in New York City, the
difference between the sum originally due to such entitled
person in Dollars and the amount of Dollars so purchased and
transferred.
IN WITNESS WHEREOF, the parties hereto have caused
this Agreement to be executed by their respective officers
thereunto duly authorized, as of the date first above
written.
P.T. FREEPORT INDONESIA
INDONESIA COMPANY,
by
/s/_____________________
Name: Robert M. Wohleber
Title: Vice President and
Treasurer
1615 Poydras Street
New Orleans, Louisiana 70112
Attention: Robert M. Wohleber
Vice President and
Treasurer
Telex: 8109515386
Telephone: 504-582-1758
Telecopy: 504-582-4511
FREEPORT-McMoRan INC.,
by
/s/_____________________
Name: Robert M. Wohleber
Title: Vice President and
Treasurer
1615 Poydras Street
New Orleans, Louisiana 70112
Attention: Robert M.Wohleber
Vice President
and Treasurer
Telex: 8109515386
Telephone: 504-582-1758
Telecopy: 504-582-4511
FREEPORT-McMoRan COPPER & GOLD
INC.,
by
/s/_____________________
Name: Robert M. Wohleber
Title: Vice President and
Treasurer
1615 Poydras Street
New Orleans, Louisiana 70112
Attention: Robert M. Wohleber
Vice President and
Treasuer
Telex: 8109515386
Telephone: 504-582-1758
Telecopy: 504-582-4511
CHEMICAL BANK, individually and as
Agent,
by
/s/_____________________
Name: Mary Jo Woodford
Title: Vice President
Domestic Office and LIBOR Office:
270 Park Avenue
New York, New York 10017
Attention: Mary Jo Woodford
Telephone: 212-270-8895
with a copy to
John Gehebe
Chemical Bank
270 Park Avenue
New York, New York 10017
Telephone: 212-270-3531
Telecopy: 212-270-3871
with copies to:
Agent Bank Services
140 East 45th Street
New York, New York 10017
Attention: Hilma Gabbidon
Telephone: 212-622-0693
Telex: 353006 ABSCNYK
Telecopy: 212-622-0002
MORGAN GUARANTY TRUST COMPANY OF
NEW YORK (for purposes of
Article VIII only), as FI Trustee,
by
/s/_____________________
Name: P.J. Crowley
Title: Vice President
Exhibit 12.01
_____________
Years Ended December 31,
1993 1992 1991 1990 1989
(In Thousands)
Income from continuing
operations $ 60,670 $129,893 $101,962 $ 90,179 $ 98,927
Add:
Provision for income taxes 67,589 103,726 45,585 88,330 89,624
Minority interest share of net
income 9,134 31,075 12,199 13,726 17,415
Interest expense 15,327 18,897 21,451 13,517 187
Rental expense factor(a) 3,190 876 841 693 223
Earnings available for fixed
charges $155,910 $284,467 $182,038 $206,445 $206,376
Interest expense $ 15,327 $ 18,897 $ 21,451 $ 13,517 $ 187
Capitalized interest 24,519 23,974 18,276 8,244 7,074
Rental expense factor(a) 3,190 876 841 693 223
Fixed charges $ 43,036 $ 43,747 $ 40,568 $ 22,454 $ 7,484
Ratio of earnings to fixed
charges(b) 3.6x 6.5x 4.5x 9.2x 27.6x
a. Portion of rent which is deemed representative of interest.
b. For purposes of this calculation, earnings consist of income from
continuing operations before income taxes, minority interest and fixed
charges. Fixed charges include interest and that portion of rent deemed
representative of interest.
Exhibit 23.01
_____________
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent
to the use of our reports (and to all references to
our Firm) included in or made a part of this
registration statement filed by P.T. ALatieF Freeport
Finance Company B.V.
/s/ Arthur Andersen & Co.
New Orleans, Louisiana
March 25, 1994
