OMB APPROVAL
OMB Number: 3235-0145
Expires: October 31, 1997
Estimated average burden
hours per form 14.90
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. )*
FREEPORT-McMoRan COPPER & GOLD INC.
(Name of Issuer)
CLASS A COMMON STOCK, PAR VALUE $0.10 PER SHARE
(Title of Class of Securities)
35671D 10 5
(CUSIP Number)
Fried, Frank, Harris, Shriver & Jacobson
One New York Plaza
New York, New York 10004
Attn: Allen I. Isaacson
(Name, Address and Telephone Number of Person Authorized to
Receive Notices and Communications)
MAY 12, 1995
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule
13G to report the acquisition which is the subject of this
Schedule 13D, and is filing this schedule because of Rule 13d-
1(b)(3) or (4), check the following box [ ].
Check the following box if a fee is being paid with the statement
[x] (A fee is not required only if the reporting person: (1)
has a previous statement on file reporting beneficial ownership of
more than five percent of the class of securities described in
Item 1; and (2) has filed no amendment subsequent thereto
reporting beneficial ownership of five percent or less of such
class.) (See Rule 13d-7.)
Note: Six copies of this statement, including all exhibits,
should be filed with the Commission. See Rule 13d-1(a) for other
parties to whom copies are to be sent.
*The remainder of this cover page shall be filled out for a
reporting person's initial filing on this form with respect to the
subject class of securities, and for any subsequent amendment
containing information which would alter disclosures provided in a
prior cover page.
The information required on the remainder of this cover page shall
not be deemed to be "filed" for the purpose of Section 18 of the
Securities Exchange Act of 1934 ("Act") or otherwise subject to
the liabilities of that section of the Act but shall be subject to
all other provisions of the Act (however, see the Notes).
<PAGE>
SCHEDULE 13D
CUSIP NO. 35671D 10 5
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
RTZ INDONESIA LIMITED
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) [ ]
(b) [ ]
3 SEC USE ONLY
4 SOURCE OF FUNDS*
AF, OO
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) OR 2(e) [ ]
6 CITIZENSHIP OR PLACE OF ORGANIZATION
ENGLAND
NUMBER OF 7 SOLE VOTING POWER
SHARES NONE
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY 21,531,100
EACH
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON NONE
WITH 10 SHARED DISPOSITIVE POWER
21,531,100
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
25,119,617
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES* [ ]
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
28.3%
14 TYPE OF REPORTING PERSON*
CO
- -2-
<PAGE>
SCHEDULE 13D
CUSIP No. 35671D 10 5
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
THE RTZ CORPORATION PLC
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) [ ]
(b) [ ]
3 SEC USE ONLY
4 SOURCE OF FUNDS*
WC, AF, OO
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS
REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e) [ ]
6 CITIZENSHIP OR PLACE OF ORGANIZATION
ENGLAND
NUMBER OF 7 SOLE VOTING POWER
SHARES NONE
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY 21,531,100
EACH
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON NONE
WITH 10 SHARED DISPOSITIVE POWER
21,531,100
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH
REPORTING PERSON
25,119,617
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11)
EXCLUDES CERTAIN SHARES* [ ]
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
28.3%
14 TYPE OF REPORTING PERSON*
CO
- -3-
<PAGE>
ITEM 1. Security and Issuer
This Statement on Schedule 13D relates to the Class A
Common Stock, par value $0.10 per share ("FCX Class A Common
Stock"), of Freeport-McMoRan Copper & Gold Inc., a Delaware
Corporation ("FCX"). The principal executive offices of FCX are
located at First Interstate Bank Building, One East First Street,
Suite 1600, Reno, Nevada 89501.
ITEM 2. Identity and Background
This Statement is being filed by RTZ Indonesia Limited
("RTZI"), a company organized under the laws of England and an
indirect wholly owned subsidiary of The RTZ Corporation PLC
("RTZ"), a company organized under the laws of England, and by
RTZ. (RTZI is wholly owned by R.T.Z. Overseas Holdings Limited,
which is wholly owned by Overseas Minerals Limited, which is
wholly owned by R.T.Z. International Holdings Limited, which is
wholly owned by RTZ.) The business address of each of RTZI and
RTZ is 6 St. James's Square, London SW1Y 4LD, England. RTZ and
RTZI have entered into a Joint Filing Agreement, dated May 22,
1995, attached hereto as Exhibit (1).
RTZ is one of the world's leading international mining
companies. RTZ's substantial interests in mining include: copper,
gold, iron ore, aluminum, zinc and silver in metals; coal and
uranium in energy; and borates, titanium dioxide feedstock, talc,
diamonds and zircon in other minerals. RTZI, which was formed to
acquire the shares of FCX Class A Common Stock, is an indirect
wholly owned subsidiary of RTZ.
The name, business address, principal occupation or
employment and citizenship of each of the directors and executive
officers of RTZI and of RTZ are set forth on Schedule I and are
incorporated herein by reference.
During the last five years, neither RTZ nor RTZI nor,
to the best knowledge of RTZ and RTZI, any of the persons listed
on Schedule I hereto, (i) has been convicted in a criminal
proceeding (excluding traffic violations and similar misdemeanors)
or (ii) has been a party to a civil proceeding of a judicial or
administrative body of competent jurisdiction and as a result of
such proceeding was or is subject to a judgment, decree or final
order enjoining future violations of, or prohibiting or mandating
activities subject to, federal or state securities laws or finding
any violation with respect to such laws.
ITEM 3. Source and Amount of Funds or Other Consideration
The total consideration for the acquisition of
21,531,100 shares of FCX Class A Common Stock is $450 million. No
separate consideration was paid for the grant to RTZI by Freeport-
McMoRan Inc., a Delaware corporation ("FTX"), of an option to
purchase 3,588,517 shares of FCX Class A Common Stock (the
"Option"). Approximately $200 million of the funds to acquire the
shares of FCX Class A Common Stock acquired by RTZI came from
working capital of RTZ. The balance came from the public
commercial paper program of RTZ America, Inc. ("RTZA"), a Delaware
corporation and wholly owned subsidiary of RTZ. (Such commercial
paper is guaranteed by RTZ.) The funds from both RTZ and RTZA
were then made available to RTZI through a series of intra-group
transactions among RTZ and its wholly-owned subsidiaries.
- -4-
<PAGE>
ITEM 4. Purpose of Transaction
Purchase Agreement. Pursuant to an Agreement dated as of May 2,
1995 (the "Purchase Agreement"), between RTZI, RTZ and RTZA, on
the one hand, and FTX and FCX, on the other hand, on May 12, 1995,
RTZI purchased 21,531,100 shares of FCX Class A Common Stock from
FTX.
The Purchase Agreement also provides for certain
transactions in connection with the planned restructuring of FTX
and FCX described in FCX's Consent Solicitation Statement, dated
February 7, 1995, pursuant to which shares of Class B Common
Stock, par value $.10 per share, of FCX (the "FCX Class B Common
Stock") held by FTX at the time of distribution will be
distributed (the "Spin-Off") pro rata to holders of Common Stock,
par value $.10 per share, of FTX (the "FTX Common Stock").
Pursuant to the terms of the Purchase Agreement, RTZI
also received the Option (which, under certain circumstances, as
set forth in the Purchase Agreement, must be exercised) to acquire
from FTX prior to the Spin-Off up to 3,588,517 additional shares
of FCX Class A Common Stock (the "Class A Common Stock"; together
with the FCX Class A Common Stock, the "FCX Common Stock") at
$20.90 per share.
The Purchase Agreement also requires that FTX call its
6.55% Convertible Subordinated Notes, due 2001 (the "6.55%
Notes"), for redemption. If requested by FTX, RTZA is required by
the Purchase Agreement to make an all-cash tender offer (the
"Tender Offer") for such 6.55% Notes for a price and on such other
terms mutually acceptable to FTX and RTZA and to convert any such
6.55% Notes acquired in the Tender Offer into FTX Common Stock.
If RTZA acquires any such FTX Common Stock and holds it at the
time of the Spin-Off, it would receive shares of FCX Class B
Common Stock in connection with the Spin-Off.
Under certain circumstances, as set forth in the
Purchase Agreement, RTZI may be required to purchase additional
shares of FCX Class A Common Stock from FTX, at $20.90 per share.
The maximum amount that RTZI may be required to spend with respect
to such purchases is the amount equal to the aggregate redemption
price (including accrued and unpaid interest) for all 6.55% Notes,
reduced by the aggregate redemption price (including accrued and
unpaid interest) of any 6.55% Notes previously converted into FTX
Common Stock, and by other potential deductions referred to in the
Purchase Agreement.
Representations and Warranties and Conduct of Business
Prior to and Following the Spin-Off. The Purchase Agreement
provides for customary covenants of each of RTZ, RTZI, RTZA, FTX
and FCX in respect of the period prior to the Spin-Off and for
customary representations and warranties. In addition, FTX agreed
not to sell or otherwise dispose of shares of FCX Class A Common
Stock or FCX Class B Common Stock prior to the Spin-Off without
the consent of RTZ for a purchase price per share of less than
$20.90.
Acquisition and Disposition of Shares of FCX Common
Stock. Pursuant to the Purchase Agreement, RTZ, RTZA, RTZI, and
their affiliates may not without the consent of FCX or FTX, as the
case may be, acquire any shares of FTX's $4.375 Convertible
Exchangeable Preferred Stock, par value $1.00 per share,
FTX Common Stock or shares of any capital stock of FCX
entitled to vote for the election of directors
("FCX Voting Stock") during the period from the date of
- -5-
<PAGE>
the Purchase Agreement to the date the FCX Class B Common Stock is
distributed in the Spin-Off, except as provided in the Purchase
Agreement.
In addition, during the five-year period following the
Spin-Off (i) RTZ and RTZA may not sell, exchange, transfer or
otherwise dispose of any shares of FTX Common Stock received upon
conversion of the 6.55% Notes or any shares of FCX Class B Common
Stock received in the Spin-Off, and (ii) RTZ, RTZA and their
affiliates may not acquire shares of FCX Class B Common Stock, in
each case subject to certain exceptions set forth in the Purchase
Agreement.
Pursuant to the Purchase Agreement, RTZI has been
granted certain pre-emptive rights, subject to certain exceptions,
in the event FCX issues, sells or grants shares of FCX Common
Stock or securities convertible into or exchangeable for, or
warrants, options or other rights to purchase, shares of FCX
Common Stock, whether by public offering or otherwise.
In the event that any such issuance, sale or grant
does not involve a public offering and the consideration is not
securities or assets of another company, RTZI will have the right
to purchase (i) a proportionate number of such securities or (ii)
all of such securities subject to the approval of the board of
directors of FCX under certain circumstances.
In the event of any such proposed issuance, sale or
grant of such securities (i) in connection with any acquisition of
securities or assets of another company or otherwise, or (ii) in a
public offering, RTZI will have the right to purchase up to a
proportionate number of such securities. Any issuance, sale or
grant by FCX to RTZI pursuant to such provisions will be on terms
no less favorable than that of the proposed issuance, sale or
grant and, with respect to securities offered in a public
offering, for a price equal to the public offering price per
share. In the event of any transaction for consideration other
than cash, the purchase price will be based on the public market
price or, if the security is not publicly traded, will be agreed
between the parties or determined by an independent appraiser.
In the event RTZ and its affiliates fail to
beneficially own, in the aggregate, at least 5% of the then
outstanding shares of FCX Common Stock, the pre-emptive rights
provisions described in the three foregoing paragraphs terminate.
The Purchase Agreement provides that to the extent the
transactions contemplated thereby result in RTZ or any of its
affiliates becoming an "interested stockholder" as defined in the
Delaware General Corporation Law 203 ("DGCL 203") of FTX or
FCX, the boards of directors of FTX and FCX have approved such
transactions for the purposes of DGCL 203.
The Purchase Agreement also provides that, except as
described above, RTZ and its affiliates will not be directly or
indirectly restricted from future acquisitions of shares of FCX
Voting Stock, except that approval of FCX's board of directors
will be required for RTZ or its affiliates, alone or acting in
concert with others, to acquire beneficial ownership of shares of
FCX Voting Stock as will elect a majority of the directors of FCX.
The board of directors of each of FTX and FCX has agreed pursuant
to the Purchase Agreement that if FCX adopts a "rights plan,"
"poison pill" or other plan or arrangement which provides for the
distribution to its shareholders, by way of dividend or otherwise,
of shares of capital stock of FCX, warrants, options or other
rights to purchase shares of capital stock of FCX, or securities
convertible into or exchangeable for shares of capital stock of
FCX, upon the occurrence of specified events, then any
- -6-
<PAGE>
transactions between FCX and any of its affiliates, on the one
hand, and RTZ and any of its affiliates, on the other hand, and
any transactions by RTZ or its affiliates relating to shares of
the capital stock of FCX, or warrants, options or other rights to
purchase shares of capital stock of FCX, or securities convertible
into or exchangeable for shares of capital stock of FCX, shall be
excluded from such specified events, unless such transactions
result in the acquisition by RTZ and its affiliates of beneficial
ownership of shares of FCX Voting Stock as will elect a majority
of the directors of FCX. The board of directors of FCX has also
approved any future acquisitions by RTZ and its affiliates of FCX
Voting Stock for the purposes of DGCL 203 to the extent such
acquisitions do not result in the acquisition by RTZ and its
affiliates of beneficial ownership of shares of FCX Voting Stock
as will elect a majority of the directors of FCX.
Voting and Board of Directors. The Purchase Agreement
provides that following the completion of RTZI's purchase of
21,531,100 shares of FCX Class A Common Stock pursuant to the
Purchase Agreement, RTZI and RTZA will have the right to nominate
for submission to FCX's stockholders the number of directors which
is proportionately equal to the aggregate percentage ownership of
RTZI and RTZA of all outstanding shares of FCX Class A Common
Stock and FCX Class B Common Stock, subject to certain
limitations. FCX has agreed to include such individuals nominated
by RTZA and RTZI with the directors recommended by the management
of FCX and to not take any actions which may be inconsistent with,
conflict with, or otherwise hinder, the election of such
individuals. Pursuant to the Purchase Agreement, no later than
the earlier of 60 days after the Spin-Off Date or January 2, 1996,
FCX will appoint the persons nominated by RTZA and RTZI as interim
directors to take office until the following stockholders' meeting
or consent solicitation for the election of directors. If the
number of directors of FCX is reduced to less than 10, RTZA and
RTZI will have the right to nominate no less than one director to
be elected by holders of FCX Class A Common Stock for submission
to FCX's stockholders, provided that RTZI continues to hold
substantially all of the shares of FCX Class A Common Stock
purchased pursuant to the Purchase Agreement.
In the event RTZ and its affiliates fail to
beneficially own, in the aggregate, at least 5% of the then
outstanding shares of FCX Common Stock, the rights and obligations
described in the foregoing paragraph shall terminate.
Pursuant to the Purchase Agreement, RTZ, RTZA and RTZI
have agreed that for as long as they and their affiliates
beneficially own, in the aggregate, more than 5% of the
outstanding shares of FCX Voting Stock, and directors nominated by
RTZA and RTZI as described in the second preceding paragraph
continue to serve as directors of FCX, then RTZ, RTZA and RTZI
will cause such FCX Voting Stock to (i) be represented in person
or proxy at each stockholder meeting or consent solicitation, and
(ii) vote its shares for the election of the slate of directors
recommended by a majority of the board of directors of FCX, which
will include the nominees of RTZA and RTZI.
Registration Rights Agreement. Pursuant to the Purchase
Agreement, FCX has entered into a Registration Rights Agreement
with RTZ, RTZA and RTZI (the "FCX Registration Rights Agreement"),
pursuant to which RTZ has the right to request five times that FCX
effect a registered public offering of, and RTZI and RTZA have the
right to participate in a registered public offering by FCX or by
another stockholder by selling in such offering, shares of FCX
- -7-
<PAGE>
Common Stock acquired by RTZI and RTZA pursuant to the Purchase
Agreement. The rights are exercisable at any time after the
earlier of the Spin-Off and December 31, 1995, and expire on
December 31, 2021.
Implementation Agreement. FCX and RTZ have entered into an
Implementation Agreement, dated as of May 2, 1995 (the
"Implementation Agreement"), pursuant to which, among other
things, affiliates of FCX and FTX will enter into a Participation
Agreement and a non-recourse Credit Facility in the form attached
to the Implementation Agreement, subject to such changes as may be
agreed.
The Implementation Agreement provides that FCX will
promptly establish an operating committee, one of the three
members of which will be appointed by RTZ.
PT-FI Joint Venture. The Participation Agreement
provides for the establishment of exploration joint ventures
involving the Contract of Work ("COW") held by P.T. Freeport
Indonesia Company ("PT-FI"), a subsidiary of FCX. Under the
exploration joint venture arrangements, an affiliate of RTZ to be
organized under the laws of Indonesia ("PT-RTZ") will acquire a
40% undivided interest in the COW held by PT-FI, but excluding any
interest in PT-FI's current mining and milling operations. Under
the joint venture arrangements, PT-FI will establish Operating and
Exploration Committees on which representatives of PT-RTZ will
serve to approve exploration expenditures in the COW and PT-RTZ
will pay all further exploration costs approved by the committees
until PT-RTZ (or an affiliate) has paid an aggregate of $100
million in respect of exploration expenses related to the COW held
by PT-FI and related to the COW held by P.T.-Irja as discussed
below.
By virtue of these arrangements, PT-RTZ will acquire a
40% undivided interest in future approved expansion projects in
Block A of PT-FI's COW, where the existing mining and milling
interests are located, and affiliates of RTZ will provide up to a
maximum of $750 million of funding to develop such projects (of
which up to $450 million will be provided pursuant to the non-
recourse Credit Facility). Affiliates of RTZ will receive 100% of
incremental cash flow attributed to the expansion projects until
they have received an amount equal to the funds they have provided
for approved expansion projects plus interest based on RTZ's cost
of borrowing. Subsequently, the parties will share ratably in
incremental cash flow with 60% to PT-FI and 40% to PT-RTZ. Future
expansion projects in Block A of PT-FI's COW will exclude any
interest in future production equivalent to FCX's expanded 118,000
tonnes of ore per day milling operations based on its proved and
probable ore reserves as at December 31, 1994.
Apart from RTZ's provision of the $750 million for
Block A expansions, all costs of development projects mutually
agreed upon will be shared ratably in proportion to the parties'
ownership interests therein.
PT-Irja Joint Venture. The Implementation Agreement
provides that each of FCX and RTZ will negotiate in good faith
with a view to agreeing as soon as practicable one or more
agreements in respect of the COW held by P.T. Irja Eastern
Minerals Corporation, an indirect subsidiary of FCX, in
substantially the form of the Participation Agreement, as modified
to reflect the parties' intentions as set out in the letter of
intent, dated March 7, 1995, between FCX and RTZ, or otherwise to
provide an alternative structure which achieves the same business
- -8-
<PAGE>
objective on a mutually more favorable basis from tax, accounting,
corporate and regulatory perspectives.
Spanish Acquisitions. The Implementation Agreement
provides that each of FCX and RTZ will negotiate in good faith
with a view to agreeing as soon as practicable one or more
agreements in respect of the acquisition by RTZ and its
subsidiaries of a 25% interest in the Huelva smelter of Rio Tinto
Minera S.A. ("RTM") and certain exploration rights of RTM and its
subsidiaries in Spain at a price pro rata to FCX's cost of
acquisition, or otherwise to provide an alternative structure
which achieves the same business objective on a mutually more
favorable basis from tax, accounting, corporate and regulatory
perspectives.
Alternative Structure. If the Participation Agreement
does not become effective by December 31, 1996, RTZ is entitled
either to terminate the Implementation Agreement or to restructure
it in a specified manner with a view toward preserving equivalent
financial benefits for both parties.
The foregoing descriptions of the Purchase Agreement,
the FCX Registration Rights Agreement and the Implementation
Agreement are not intended to be complete and are qualified in
their entirety by the complete text of each of such documents, all
of which are incorporated herein by reference. Copies of such
documents are being filed herewith as Exhibits (2), (3) and (4),
respectively.
ITEM 5. Interest in Securities of the Issuer
(a) As of May 19, 1995, RTZ and RTZI beneficially
owned 25,119,617 shares of Class A Common Stock, representing
12.2% of all shares of FCX Common Stock outstanding and 28.3% of
the shares of FCX Class A Common Stock outstanding. (Such
calculation is based on 85,183,908 shares of FCX Class A Common
Stock issued and outstanding as of May 19, 1995, and 205,443,231
shares of FCX Common Stock issued and outstanding as of May 19,
1995, which information was provided by FCX.) Of such 25,119,617
shares of FCX Class A Common Stock beneficially owned by RTZ and
RTZI, 21,531,100 shares are directly owned by RTZI and 3,588,517
shares are subject to the Option granted to RTZI.
(b) RTZI has the power, and RTZ may be deemed to
share the power, to vote and dispose of the 21,531,100 shares of
FCX Class A Common Stock. Upon the exercise in full of the
Option, RTZI would have the power, and RTZ may be deemed to share
the power, to vote and dispose of an additional 3,588,517 shares
of FCX Class A Common Stock.
(c) Except for the purchase of 21,531,100 shares of
FCX Class A Common Stock and the receipt of the Option to purchase
3,588,517 shares of FCX Class A Common Stock as set forth herein,
and the other potential transactions provided for in the Purchase
Agreement, no transactions in shares of FCX Class A Common Stock
were effected during the past 60 days by RTZI, RTZ or any person
listed on Schedule I. To the knowledge of RTZ and RTZI, none of
the persons listed on Schedule I beneficially owns any shares of
FCX Class A Common Stock.
(d) No other person is known by RTZ or RTZI to have
the right to receive or the power to direct the receipt of
dividends from, or the proceeds from the sale of, any shares of
FCX Class A Common Stock beneficially owned by them, except that
- -9-
<PAGE>
FTX has such power and such right with respect to the shares
subject to the Option, subject to the terms of the Purchase
Agreement.
ITEM 6. Contracts, Arrangements, Understandings or Relationships
with Respect to Securities of the Issuer
The response to Item 4 is incorporated by reference
herein. Except as described in Item 4, none of RTZ or RTZI or, to
the knowledge of RTZ and RTZI, any of the persons listed on
Schedule I hereto, is a party to any contract, arrangement,
understanding or relationship with respect to any securities of
FCX.
ITEM 7. Material to be Filed as Exhibits
(1) Joint Filing Agreement, dated May 22, 1995, between The RTZ
Corporation PLC and RTZ Indonesia Limited.
(2) Agreement, dated as of May 2, 1995, by and between Freeport-
McMoRan Inc. and Freeport-McMoRan Copper & Gold Inc., on the one
hand, and The RTZ Corporation PLC, RTZ Indonesia Limited and RTZ
America, Inc., on the other hand, including Exhibits C, D and
8.1.15 thereto, the Schedules thereto and Registration Rights
Agreement entered into pursuant thereto between Freeport-McMoRan
Inc., The RTZ Corporation PLC and RTZ America, Inc., dated May 12,
1995.
(3) Registration Rights Agreement, dated as of May 12, 1995,
between Freeport-McMoRan Copper & Gold Inc., on the one hand, and
The RTZ Corporation PLC, RTZ Indonesia Limited and RTZ America,
Inc., on the other hand, entered into pursuant to the Agreement
referred to in (2) above.
(4) Implementation Agreement, dated as of May 2, 1995, between
Freeport-McMoRan Copper & Gold Inc. and The RTZ Corporation PLC,
including form of Participation Agreement to be entered into
between P.T. Freeport Indonesia Company and an affiliate of The
RTZ Corporation PLC to be organized under the laws of Indonesia,
and form of Loan Agreement to be entered into between P.T.
Freeport Indonesia, Company and an affiliate of The RTZ
Corporation PLC organized under the laws of England.
- -10-
<PAGE>
SIGNATURE
After reasonable inquiry and to the best of my
knowledge and belief, I certify that the information set forth in
this statement is true, complete and correct.
Dated: May 22, 1995
RTZ INDONESIA LIMITED
By:/s/ John S. Bradley
Name: John S. Bradley
Title: Director
RTZ CORPORATION PLC
By:/s/ John S. Bradley
Name: John S. Bradley
Title: Secretary
- -11-
<PAGE>
Schedule I
DIRECTORS AND OFFICERS OF
THE RTZ CORPORATION PLC ("RTZ")
Executive Directors*
Name Title/Principal Occupation
R.P. Wilson Chief Executive of RTZ
R. Adams Director of Planning and
Development of RTZ
C.R.H. Bull Finance Director of RTZ
R.L. Clifford Mining Director of RTZ
The Lord Holme of Cheltenham CBE Director of External Affairs &
Human Resources of RTZ
J.C.A. Leslie Mining Director of RTZ
G.H. Sage Industrial Minerals Director of
RTZ
Officers
J.S. Bradley Secretary of RTZ
Each of the foregoing directors and officers of RTZ is a
citizen of the United Kingdom. The business address of each is:
The RTZ Corporation PLC, 6 St. James's Square, London, SW1Y 4LD,
England.
Non-Executive Directors
Principal Business Address
of Corporation in which
Principal Occupation is
Name Principal Occupation Conducted
Sir Derek Birkin TD Non-Executive Chairman 6 St. James's Square
of RTZ, a group which London, SW1Y 4LD
mines metals and England
industrial minerals
worldwide.
The Lord Alexander of Chairman of National 41 Lothbury,
Weedon QC Westminster Bank PLC, a London, EC2P 2BP
London based group which England
provides an extensive range
of banking and financial
services, both domestic and
international.
The Lord Armstrong of Non-Executive director of New Court
Ilminster GCB CVO N M Rothschild & Sons St. Swithin's Lane
Limited, a UK merchant London, EC4P 4DU,
bank. England
- -12-
<PAGE>
R.V. Giordano KBE Chairman of British Gas Rivermill House,
plc, a group which 152 Grosvenor Road,
purchases, transmits, London, SW1V 3JL,
distributes and supplies England
gas in the UK.
Sir Denys Henderson Chairman of The Rank 6 Connaught Place
Organisation plc, a group London, W2 2EZ,
which supplies products England
and services to the film
and television industries,
and operates recreation and
leisure facilities in the UK
and overseas.
Sir Martin Jacomb Chairman of the British 10 Spring Gardens,
Council, a government London, SW1A 2BN,
sponsored organisation to England
promote British culture.
Each of the foregoing non-executive directors of RTZ is a
citizen of the United Kingdom, other than Mr. R.V. Giordano KBE,
who is a citizen of the United States.
DIRECTORS AND OFFICERS OF
RTZ INDONESIA LIMITED
Name Title Principal Occupation
J.S. Bradley Director Secretary of RTZ
S.F. McAdam Director Chief Accountant of
RTZ
I.C. Ratnage Director Treasurer of RTZ
M.M. Freeman Director Deputy Secretary of
RTZ
G.C. Lloyd-Davis Director and Assistant Secretary
Secretary of RTZ
Each of the foregoing directors and officers of RTZ
Indonesia Limited is a citizen of the United Kingdom. The
business address of each of the foregoing is: 6 St. James's
Square, London, SW1Y 4LD, England.
- -13-
<PAGE>
DIRECTORS AND OFFICERS OF
R.T.Z. INTERNATIONAL HOLDINGS LIMITED
Name Title* Principal Occupation
J.S. Bradley Director Secretary of RTZ
S.F. McAdam Director Chief Accountant of
RTZ
I.C. Ratnage Director Treasurer of RTZ
M.M. Freeman Director Deputy Secretary of
RTZ
G.C. Lloyd-Davis Director and Assistant Secretary
Secretary of RTZ
Each of the foregoing directors and officers of R.T.Z.
International Holdings Limited is a citizen of the United Kingdom.
The business address of each of the foregoing is: 6 St. James's
Square, London, SW1Y 4LD, England.
DIRECTORS AND OFFICERS OF
R.T.Z. OVERSEAS LIMITED
Name Title* Principal Occupation
J.S. Bradley Director Secretary of RTZ
S.F. McAdam Director Chief Accountant of
RTZ
I.C. Ratnage Director Treasurer of RTZ
M.M. Freeman Director Deputy Secretary of
RTZ
C. Lenon Director Head of Taxation of
RTZ
G.C. Lloyd-Davis Director and Assistant Secretary
Secretary of RTZ
Each of the foregoing directors and officers of R.T.Z.
Overseas Limited is a citizen of the United Kingdom. The business
address of each of the foregoing is: 6 St. James's Square,
London, SW1Y 4LD, England.
DIRECTORS AND OFFICERS OF
OVERSEAS MINERALS LIMITED
Name Title* Principal Occupation
M.M. Freeman Director Deputy Secretary of
RTZ
B.G. Gale Director Assistant Secretary
of RTZ
C. Lenon Director Head of Taxation of
RTZ
G.C. Lloyd-Davis Director Assistant Secretary
of RTZ
- -14-
<PAGE>
Officers
Ms. T.J. Barclay Secretary Secretarial Assistant
of RTZ
Each of the foregoing directors and officers of Overseas
Minerals Limited is a citizen of the United Kingdom. The business
address of each of the foregoing is: 6 St. James's Square,
London, SW1Y 4LD, England.*
* In the United Kingdom, executive directors also serve as
officers.
- -15-
<PAGE>
INDEX OF EXHIBITS
(1) Joint Filing Agreement, dated May 22, 1995, between The RTZ
Corporation PLC and RTZ Indonesia Limited.
(2) Agreement, dated as of May 2, 1995, by and between Freeport-
McMoRan Inc. and Freeport-McMoRan Copper & Gold Inc., on the
one hand, and The RTZ Corporation PLC, RTZ Indonesia Limited
and RTZ America, Inc., on the other hand, including Exhibits
C, D and 8.1.15 thereto, the Schedules thereto and
Registration Rights Agreement entered into pursuant thereto
between Freeport-McMoRan Inc., The RTZ Corporation PLC and
RTZ America, Inc., dated May 12, 1995.
(3) Registration Rights Agreement, dated as of May 12, 1995,
between Freeport-McMoRan Copper & Gold Inc., on the one
hand, and The RTZ Corporation PLC, RTZ Indonesia Limited and
RTZ America, Inc., on the other hand, entered into pursuant
to the Agreement referred to in (2) above.
(4) Implementation Agreement, dated as of May 2, 1995, between
Freeport-McMoRan Copper & Gold Inc. and The RTZ Corporation
PLC, including form of Participation Agreement to be entered
into between P.T. Freeport Indonesia Company and an
affiliate of The RTZ Corporation PLC to be organized under
the laws of Indonesia, and form of Loan Agreement to be
entered into between P.T. Freeport Indonesia Company and an
affiliate of The RTZ Corporation PLC organized under the
laws of England.
*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
______________________
* In the United Kingdom, executive directors also serve as officers.
JOINT FILING AGREEMENT
In accordance with Rule 13d-1(f) promulgated under the
Securities Exchange Act of 1934, the undersigned agree to the
joint filing of a Statement on Schedule 13D (including any and all
amendments thereto) with respect to the shares of common stock,
par value $0.10 per share, of Freeport-McMoRan Copper & Gold Inc.,
and further agree that this Joint Filing Agreement be included as
an Exhibit thereto. In addition, each party to this Agreement
expressly authorizes each other party to this Agreement to file on
its behalf any and all amendments to such Statement.
Date: May 22, 1995
THE RTZ CORPORATION PLC
By:/s/ John S. Bradley
Name: John S. Bradley
Title: Secretary
RTZ INDONESIA LIMITED
By:/s/ John S. Bradley
Name: John S. Bradley
Title: Director
AGREEMENT
DATED AS OF MAY 2, 1995
by and between
FREEPORT-McMoRan INC.
and
FREEPORT-McMoRan COPPER & GOLD INC.,
on the one hand,
and
The RTZ CORPORATION PLC,
RTZ INDONESIA LIMITED
and
RTZ AMERICA, INC.,
on the other hand
<PAGE>
AGREEMENT, dated as of May 2, 1995, by and between
Freeport-McMoRan Inc., a Delaware corporation ("Parent"), and
Freeport-McMoRan Copper & Gold Inc., a Delaware corporation (the
"Company"), on the one hand, and The RTZ Corporation PLC, a
company organized under the laws of England ("RTZ"), RTZ Indonesia
Limited, a company organized under the laws of England (the
"Purchaser") and a subsidiary of RTZ, and RTZ America, Inc., a
Delaware corporation ("RTZA") and a subsidiary of RTZ, on the
other hand. Capitalized terms that are used herein are defined in
this Agreement.
RECITALS
WHEREAS, the parties desire to effect certain
transactions relating to the restructuring of Parent and the
Company and to the distribution by Parent of all of the shares of
Class B Common Stock owned by Parent as of the distribution date
thereof, in the form of a stock dividend to the holders of Parent
Common Stock (the "Spin-Off").
NOW, THEREFORE, in consideration of the terms and
conditions set forth herein and other good and valuable
consideration, the receipt and adequacy of which are hereby
acknowledged, the parties hereto agree as follows:
1. Definitions.
1.1 "ABC Debentures" means Zero Coupon
Convertible Subordinated Debentures due 2006 of Parent.
1.2 "ABC Redemption Date" shall have the
meaning set forth in Section 4.1(a).
1.3 "Additional Purchase Notice" shall have
the meaning set forth in Section 6.1(a).
1.4 "Additional Shares" shall have the meaning
set forth in Section 6.1(a).
1.5 "Additional Stock Closing" shall have the
meaning set forth in Section 6.3(a).
1.6 "Additional Stock Closing Date" shall have
the meaning set forth in Section 6.3(a).
1.7 "Affiliate" means, with respect to any
Person, any other Person controlling, controlled by or under
common control with such Person.
<PAGE>
1.8 "Affiliate Agreements" shall have the
meaning set forth in Section 9.1.4.
1.9 "business day" shall mean any day other
than a Saturday, Sunday or a day which shall be in the City of
London or the City of New York a legal holiday or a day on which
banking institutions are authorized or obligated by law or other
government action to close.
1.10 "Class A Common Stock" means the Class A
Common Stock, par value $.10 per share, of the Company.
1.11 "Class A Directors" shall mean the
directors elected by the holders of Class A Common Stock.
1.12 "Class B Common Stock" means the Class B
Common Stock, par value $.10 per share, of the Company.
1.13 "Class B Directors" shall mean the
directors elected by the holders of Class B Common Stock.
1.14 "Code" means the Internal Revenue Code of
1986, as amended.
1.15 "Company" or "FCX" means Freeport-McMoRan
Copper & Gold Inc., a Delaware corporation.
1.16 "Company Common Stock" means Class A
Common Stock, Class B Common Stock and any other shares of common
equity of the Company.
1.17 "Company Material Adverse Effect" shall
mean any adverse effect or change (alone or taken together with
others) in the business, condition (financial or otherwise),
assets, Liabilities, properties, operations or results of
operations of the Company or its subsidiaries material to the
Company and its subsidiaries taken as a whole, provided that no
Company Material Adverse Effect shall be deemed to result from
general changes in economic conditions or any change affecting
copper or gold mining companies generally (including laws and
regulations applicable to such companies, other than such laws and
regulations of any governmental or regulatory authority in
Indonesia).
1.18 "Company Notice" shall have the meaning
set forth in Section 11(a).
1.19 "Company Registration Rights Agreement"
shall mean the Registration Rights Agreement substantially in the
form attached hereto as Exhibit A.
- -2
<PAGE>
1.20 "Company Voting Stock" shall mean any
capital stock of the Company which is then entitled to vote for
the election of directors.
1.21 "Consent Solicitation Statement" means the
Consent Solicitation Statement of the Company, dated February 7,
1995 relating to, among other things, approval of the Merger and
New Certificate of Incorporation.
1.22 "Debt Issues" shall have the meaning set
forth in Section 4.1(a).
1.23 "Declaration Date" shall mean the date
upon which Parent shall declare the record date for the Spin-Off.
1.24 "DGCL" means the Delaware General
Corporation Law, as amended.
1.25 "Distribution Date" shall have the meaning
set forth in Section 7(a).
1.26 "Exchange Act" means the Securities
Exchange Act of 1934, as amended, or any successor federal
statute, and the rules and regulations of the SEC thereunder, all
as the same shall be in effect at the time.
1.27 "Facilitating Company" means FM
Facilitating Company, Inc., a Delaware corporation.
1.28 "$4.375 Parent Preferred Stock" means
$4.375 Convertible Exchangeable Preferred Stock, par value $1.00
per share, of Parent.
1.29 "GAAP" means United States generally
accepted accounting principles.
1.30 "governmental or regulatory authority"
means any government or political subdivision thereof, whether
Federal, state, local or foreign, or any agency or instrumentality
of any such government or political subdivision.
1.31 "including" and "including, without
limitation," and other forms of such terms, with respect to any
matter or thing, shall be construed to mean "including but not
limited to" such matter or thing.
1.32 "Indemnified Party" shall have the meaning
set forth in Section 13.4(d).
- -3
<PAGE>
1.33 "Indemnifying Party" shall have the
meaning set forth in Section 13.4(d).
1.34 "Indenture" means the Indenture between
Freeport-McMoRan Inc. and Chemical Bank, as Trustee, dated as of
November 9, 1990, as supplemented by Supplemental Indenture No. 1
and Supplemental Indenture No. 2.
1.35 "IRS" means the Internal Revenue Service
of the United States of America.
1.36 "Laws" shall mean any foreign or domestic
(Federal, state or local) law, statute, ordinance, rule or
regulation or bodies of law.
1.37 "Liabilities" means any direct or indirect
indebtedness, liability, claim, loss, damage, deficiency,
obligation or responsibility, fixed or unfixed, choate or
inchoate, liquidated or unliquidated, secured or unsecured,
accrued, absolute, contingent or otherwise, of a kind required by
GAAP to be set forth on a financial statement (including the notes
thereto).
1.38 "Majority Shares" means the number of
shares of Company Voting Stock as will elect a majority of the
directors of the Company; provided that, solely for purposes of
such calculation, the shares of Company Voting Stock issuable upon
exercise of warrants, options or other rights, or upon conversion
or exchange of convertible or exchangeable securities, owned by
RTZ and its Affiliates, shall be treated as outstanding Company
Voting Stock.
1.39 "Merger" means the merger of Facilitating
Company with and into the Company pursuant to the Merger
Agreement.
1.40 "Merger Agreement" means the Agreement and
Plan of Merger, dated February 7, 1995, between the Company and
Facilitating Company.
1.41 "New By-laws" means the By-laws of the
Company substantially in the form attached as Exhibit 2 to Annex I
to the Consent Solicitation Statement.
1.42 "New Certificate of Incorporation" means
the Certificate of Incorporation of the Company substantially in
the form attached as Exhibit 1 to Annex I to the Consent
Solicitation Statement.
1.43 "NYSE" means The New York Stock Exchange,
Inc.
1.44 "Offer Price" shall have the meaning set
forth in Section 11(a).
- -4
<PAGE>
1.45 "Option" shall have the meaning set forth
in Section 6.2(a).
1.46 "Option Notice" shall have the meaning set
forth in Section 6.2(a).
1.47 "Option Shares" shall have the meaning set
forth in Section 6.2(a).
1.48 "Parent" or "FTX" means Freeport-McMoRan
Inc., a Delaware corporation.
1.49 "Parent Common Stock" means the Common
Stock, par value $.10 per share, of Parent and any other shares of
common equity of Parent.
1.50 "Parent Material Adverse Effect" shall
mean any adverse effect or change (alone or taken together with
others) in the business, condition (financial or otherwise),
assets, Liabilities, properties, operations or results of
operations of Parent or its subsidiaries material to Parent and
its subsidiaries taken as a whole, provided that no Parent
Material Adverse Effect shall be deemed to result from general
changes in economic conditions or any change affecting
agrichemical or copper or gold mining companies generally
(including laws and regulations applicable to such companies,
other than such laws and regulations of any governmental or
regulatory authority in Indonesia).
1.51 "Parent Registration Rights Agreement"
shall mean the Registration Rights Agreement substantially in the
form attached hereto as Exhibit B.
1.52 "Permits" means all licenses, permits,
orders, approvals, registrations, authorizations, qualifications
and filings with and under all Federal, state, local or foreign
Laws and governmental or regulatory authorities and all industry
or other nongovernmental self-regulatory organizations that are
necessary for the conduct of the applicable Person's business and
the ownership of its properties.
1.53 "Person" means a corporation, an
association, a partnership, an organization, a business, an
individual, a governmental or political subdivision thereof or a
governmental or regulatory authority.
1.54 "Proposed Closing Date" shall have the
meaning set forth in Section 3.2(a).
1.55 "Public Offering" shall have the meaning
set forth in Section 11(b).
1.56 "Purchaser" means RTZ Indonesia Limited, a
company organized under the laws of England and a subsidiary of
RTZ.
- -5
<PAGE>
1.57 "Purchaser Notice" shall have the meaning
set forth in Section 11(f).
1.58 "Related Agreements" means, individually
and collectively, the Company Registration Rights Agreement and
the Parent Registration Rights Agreement.
1.59 "RTZ" means The RTZ Corporation PLC, a
company organized under the laws of England.
1.60 "RTZA" means RTZ America, Inc., a Delaware
corporation and a subsidiary of RTZ.
1.61 "Schedule 14D-1" shall have the meaning
set forth in Section 5.1(b).
1.62 "Schedule 14D-9" shall have the meaning
set forth in Section 5.1(d).
1.63 "SEC" means the Securities and Exchange
Commission.
1.64 "SEC Reports" shall have the meaning set
forth in Section 8.1.8(a).
1.65 "Securities Act" means the Securities Act
of 1933, as amended, or any successor federal statute, and the
rules and regulations of the SEC thereunder, all as the same shall
be in effect at the time.
1.66 "6.55% Notes" means the 6.55% Convertible
Subordinated Notes due January 15, 2001, of Parent.
1.67 "6.55% Redemption Date" shall have the
meaning set forth in Section 4.1(a).
1.68 "6.55% Redemption Price" shall have the
meaning set forth in Section 6.1(b).
1.69 "6.55% Remainder" shall have the meaning
set forth in Section 6.1(b).
1.70 "Spin-Off" shall have the meaning set
forth in the Recitals.
- -6
<PAGE>
1.71 "Spin-Off Private Letter Ruling" means the
private letter ruling to Parent from the IRS dated November 21,
1994 concerning the Spin-Off, together with any supplements and
amendments thereto.
1.72 "Stock Closing" shall have the meaning set
forth in Section 3.2(b).
1.73 "Stock Closing Date" shall have the
meaning set forth in Section 3.2(b).
1.74 "Supplemental Indenture No. 1" means
Freeport-McMoRan Inc. Supplemental Indenture No. 1, dated as of
February 5, 1991, relating to the Series of 6.55% Convertible
Subordinated Notes due January 15, 2001.
1.75 "Supplemental Indenture No. 2" means
Freeport-McMoRan Inc. Supplemental Indenture No. 2, dated as of
July 15, 1991, relating to the Series of Zero Coupon Convertible
Subordinated Debentures due 2006 (ABC Securities).
1.76 "Tender Offer" shall have the meaning set
forth in Section 5.1(b).
1.77 "Termination Notice" shall have the
meaning set forth in Section 6.1(c).
1.78 "Trustee" means Chemical Bank, as trustee
under the Indenture.
2. Registration Rights Agreements.
Simultaneously with the Stock Closing (i) the
Company and the Purchaser shall execute and deliver the Company
Registration Rights Agreement, and (ii) Parent and RTZA shall
execute and deliver the Parent Registration Rights Agreement.
3. Purchases of Class A Common Stock.
3.1 Sale of Shares.
Upon the terms and subject to the conditions
set forth in this Agreement, at the Stock Closing, Parent shall
sell to the Purchaser, and the Purchaser shall purchase,
21,531,100 shares of Class A Common Stock, free and clear of any
and all liens, encumbrances, equities or adverse claims, at a
purchase price per share of $20.90, the total purchase price being
rounded to $450,000,000.
- -7
<PAGE>
3.2 Stock Closing.
(a) No later than 5 business days prior
to the Stock Closing, Parent shall deliver written notice to the
Purchaser stating the proposed date for the Stock Closing (the
"Proposed Closing Date").
(b) Upon the terms and subject to the
conditions of this Agreement, the closing of the transactions
contemplated by this Article 3 (the "Stock Closing") shall take
place at the offices of Fried, Frank, Harris, Shriver & Jacobson,
One New York Plaza, New York, New York, commencing at 10:00 a.m.
(New York local time) on the Proposed Closing Date, or as soon as
possible thereafter, upon satisfaction or waiver of the applicable
conditions set forth in Article 10 hereof, or at such other time
and/or place and/or on such other date as the parties may mutually
agree (the "Stock Closing Date"). No later than 3 business days
prior to the Stock Closing Date, Parent shall provide written
notice to the Purchaser specifying the accounts to which payment
shall be made.
(c) At the Stock Closing (i) Parent
shall deliver to the Purchaser the certificates representing
21,531,100 shares of Class A Common Stock purchased in accordance
with this Article 3, duly endorsed in blank or accompanied by
stock powers or other instruments of transfer duly executed in
blank, with all necessary transfer tax and other documentary
stamps affixed thereto, (ii) the Purchaser shall pay to Parent in
consideration for the shares being purchased, by wire transfer of
immediately available funds, the aggregate purchase price equal to
$450,000,000, and (iii) the parties hereto shall execute and
deliver such certificates, documents and instruments as may be
required to be executed or delivered pursuant to the terms hereof.
4. Certain Actions by Parent.
4.1 Redemption of the 6.55% Notes and the ABC
Debentures.
(a) Parent shall redeem the 6.55% Notes
and the ABC Debentures (the "Debt Issues") as soon as is
reasonably practicable after consummation of the Stock Closing,
and in any case, prior to the Spin-Off; provided that Parent shall
give notice of the redemption of one of the Debt Issues within 24
hours after the Stock Closing and notice of the redemption of the
other Debt Issue as soon as is reasonably practicable thereafter.
The redemption date specified in such notice with respect to the
6.55% Notes is herein called the "6.55% Redemption Date" and that
with respect to the ABC Debentures is herein called the "ABC
Redemption Date".
(b) If Parent causes RTZA to commence
the Tender Offer in accordance with Section 5.1(a) hereof, the
6.55% Redemption Date shall be midnight
- -8
<PAGE>
on the Sunday following the expiration of
the Tender Offer, which shall occur at 5:00 p.m. (New York City
time) on the prior Friday.
(c) Prior to mailing the notice of
redemption in respect of the 6.55% Notes and in respect of the ABC
Debentures, Parent shall have obtained, and furnished to RTZA a
copy of, the consent of the Trustee in writing that the notice to
the Trustee with respect to the 6.55% Notes and the notice to the
Trustee with respect to the ABC Debentures, respectively, as
contemplated by this Agreement, each constitutes sufficient notice
for purposes of the respective Indenture.
5. Tender Offer for, and Conversion of, 6.55%
Notes.
5.1 Tender Offer.
(a) No later than 5 business days prior
to sending a notice of redemption with respect to the 6.55% Notes,
Parent shall deliver written notice to RTZA stating whether or not
Parent elects to cause RTZA to commence the Tender Offer in
accordance with this Article 5.
(b) If Parent requests in accordance
with Section 5.1(a) hereof that RTZA commence a tender offer,
Parent and RTZA shall at such time agree on the price to be
offered in, and the conditions to, such all-cash tender offer for
all outstanding 6.55% Notes (the "Tender Offer") and, thereafter,
subject to Sections 5.1(c), (e) and (f) hereof and to the receipt
of the written consent referred to in Section 8.1.8(c), RTZA shall
commence the Tender Offer. In connection therewith, RTZA shall
take, or cause to be taken, all actions and do, or cause to be
done, all things necessary, proper or advisable to cause the
consummation of the Tender Offer, including the filing with the
SEC, the NYSE and any other applicable governmental or regulatory
authorities of a Tender Offer Statement on Schedule 14D-1 and any
amendments thereto and any other offering documents required to be
filed therewith (the "Schedule 14D-1"). The expiration of the
Tender Offer shall occur at 5:00 p.m. (New York local time) on the
twenty-first business day, or if such twenty-first business day is
not a Friday, on the first Friday following the twenty-first
business day, following the commencement thereof (unless extended
with the consent of the parties hereto), whereupon, subject to the
satisfaction of the conditions to the Tender Offer, RTZA shall
purchase the 6.55% Notes tendered therein in accordance with the
terms of the Tender Offer.
(c) RTZA shall not be obligated to
commence the Tender Offer unless prior thereto it shall have
received a certificate from the chief financial officer of Parent,
dated no earlier than the date the notice of redemption of the
6.55% Notes is mailed to the Trustee and to the holders thereof in
accordance with Article 4 hereof, to the effect that, to the best
of his knowledge, no event has occurred or is
- -9
<PAGE>
contemplated by this Agreement which
causes Parent to believe that the nonrecognition provisions of
Code Section 355(a)(1) and (c) shall not apply with respect to the
Spin-Off, other than as a result of Code Section 367(e).
(d) No later than the date on which the
Schedule 14D-1 is filed with the SEC (i) Parent shall file with
the SEC, the NYSE and any other applicable governmental or
regulatory authorities a Solicitation/Recommendation Statement on
Schedule 14D-9 and any other necessary or appropriate
documentation (the "Schedule 14D-9"), and (ii) Parent shall mail
to holders of record of 6.55% Notes the Schedule 14D-1, the
Schedule 14D-9 and related documents.
(e) If Parent requests that RTZA
commence the Tender Offer, Parent and RTZA will also agree at such
time upon the terms mutually acceptable to Parent and RTZA upon
which RTZA will have the right to acquire shares of Parent Common
Stock upon conversion of the 6.55% Notes purchased in the Tender
Offer. In connection therewith, Parent shall take, or cause to be
taken, all actions and do, or cause to be done, all things
necessary, proper or advisable to permit such acquisition of
Parent Common Stock.
(f) Parent and RTZA shall enter into an
agreement with the Trustee and Mellon Securities Trust Company
pursuant to which all 6.55% Notes validly tendered and purchased
in the Tender Offer shall be converted into Parent Common Stock,
upon the terms referred to in Section 5.1(e), immediately upon
expiration of the Tender Offer and prior to the 6.55% Redemption
Date.
(g) As promptly as practicable after the
6.55% Redemption Date, Parent shall provide written notice to the
Purchaser of the aggregate principal amount of 6.55% Notes
redeemed by Parent.
5.2 Conversion of 6.55% Notes.
In accordance with the terms of Section
5.1(f), all 6.55% Notes purchased by RTZA in the Tender Offer
shall be converted into shares of Parent Common Stock upon the
terms referred to in Section 5.1(e), and, no later than the day
following the expiration of the Tender Offer, RTZA shall become
the holder of record of such shares. As soon as practicable
following expiration of the Tender Offer, Parent shall cause to be
issued and delivered to RTZA certificates representing the shares
of Parent Common Stock issuable in connection with such
conversion.
5.3 Transfer of Shares Issued Upon Conversion.
Except to the extent such sales occur on the
NYSE, RTZA shall not, prior to the Distribution Date, sell or
transfer any shares of Parent Common Stock received upon
conversion of the 6.55% Notes unless the purchaser or transferee
thereof shall have represented to RTZA in
- -10
<PAGE>
writing that such purchaser or transferee (i) is
a "United States person" as defined in Code Section 7701(a)(30),
(ii) is not an entity controlled by any person other than a United
States person, (iii) has no plan or intention to sell, prior to
the Spin-Off, any shares of Parent Common Stock to a person that
is (A) not a United States person or (B) an entity controlled by a
person that is not a United States person, and (iv) if such
purchaser or transferee is or becomes, prior to the Distribution
Date, a holder of at least 5% of the Parent Common Stock, will
represent that it has no plan or intention to sell, exchange,
transfer or otherwise dispose of, following the Spin-Off, such
shares of Parent Common Stock or any shares of Class B Common
Stock which such purchaser or transferee may receive in the Spin-
Off. Notwithstanding the foregoing, RTZA shall not sell on the
public market any shares of Parent Common Stock during the period
commencing on the date on which the Parent Common Stock trades
"ex-dividend" (i.e., without the Class B Common Stock which would
be distributed to the holder of such stock pursuant to the Spin-
Off) and ending on the Distribution Date.
5.4 Code Section 367(e) Indemnification.
(a) If RTZA or any Affiliate of RTZA
owns shares of Parent Common Stock as of the Distribution Date,
RTZA will indemnify Parent for 50% of any Section 367(e) Tax Cost.
The "Section 367(e) Tax Cost" shall mean the sum of (a) any
federal, state and local income and franchise taxes based in whole
or in part on net income ("Income Tax or Income Taxes") paid by
Parent to the extent resulting from a determination by Parent
(subject to the provisions of Section 5.4(h) or (i), if
applicable) or a Taxing Authority that Code Section 367(e) applies
to any Class B Common Stock received by RTZA or any Affiliate of
RTZA in the Spin-Off and (b) any interest and penalties paid by
Parent related thereto. The amount described in (a) of the
preceding sentence shall equal the excess of (i) the sum of the
Income Taxes actually paid by Parent with respect to the taxable
year in which the Spin-Off occurred (the "Spin-Off Year"), over
(ii) the total amount of Income Taxes that would have been paid
with respect to the Spin-Off Year if there had been no
determination that Code Section 367(e) applies to any Class B
Common Stock received by RTZA or any Affiliate of RTZA in the
Spin-Off. In calculating the Section 367(e) Tax Cost, the Income
Taxes actually paid by Parent with respect to the Spin-Off Year
shall reflect such carryovers of net operating losses, tax credits
and other tax attributes as are available to Parent as of the end
of the Spin-Off Year. Notwithstanding anything to the contrary
contained in this Section 5.4, the tax attributes to which Parent
becomes entitled after the Spin-Off Year that are attributable to
taxable years after the Spin-Off Year shall not be taken into
account in calculating the Section 367(e) Tax Cost.
Notwithstanding anything contained in this Section 5.4 to the
contrary, Parent shall determine, in its reasonable good faith
discretion, the position that it shall take on its Income Taxes
returns submitted to any Taxing Authority. RTZA shall not
challenge, using the dispute resolution procedure set forth in
Section 5.4(c), the
- -11
<PAGE>
appropriateness, but not the calculation
of, the filing positions adopted by Parent on its Income Taxes
returns.
(b) Parent shall provide a certificate
of its chief financial officer notifying RTZA of any obligation to
indemnify Parent pursuant to this Section 5.4 at least 30 days
prior to the date specified in such certificate on which Parent
intends to pay the Section 367(e) Tax Cost to which such
obligation to indemnify Parent relates, together with a statement
from a "Big Six" accounting firm (which may be Parent's
independent auditor) setting forth in detail a calculation of the
Section 367(e) Tax Cost. Notwithstanding anything contained in
Section 5.4(c) to the contrary, RTZA shall pay the amount shown
due on such officer's certificate no later than 5 days prior to
the date that Parent specified in such officer's certificate as
the date on which it intends to pay such Section 367(e) Tax Cost.
Within 5 days after the date of payment specified in such
officer's certificate, Parent shall provide RTZA with a second
certificate of its chief financial officer stating that payment of
the Section 367(e) Tax Cost giving rise to the indemnification
obligation has been made, specifying the date and amount of
payment, or return such indemnification payment to RTZA. If
Parent is required to make a payment to RTZA as a result of its
receipt of a refund of a previously paid Section 367(e) Tax Cost
in accordance with Section 5.4(d) or the resolution of a dispute
in RTZA's favor in accordance with Section 5.4(c), Parent shall
make such payment within 5 days of the receipt of the refund or
the resolution of the dispute.
(c) In the event that a dispute arises
as to the calculation of the Section 367(e) Tax Cost, an
independent "Big Six" accounting firm mutually acceptable to RTZA
and Parent shall be selected to resolve the dispute (the costs of
which shall be shared equally by RTZA and Parent).
(d) If, subsequent to the date on which
RTZA first indemnifies Parent, Parent is informed by a Taxing
Authority of the need to pay an additional Section 367(e) Tax Cost
or receives a refund of a previously paid Section 367(e) Tax Cost,
Parent shall promptly notify RTZA in writing, the Section 367(e)
Tax Cost shall be recomputed, any excess of the amount previously
paid by RTZA over 50% of such recomputed Section 367(e) Tax Cost
shall be repaid to RTZA, and any excess of 50% of such recomputed
Section 367(e) Tax Cost over the amount previously paid by RTZA
shall be paid by RTZA in each case in accordance with the
procedures of Section 5.4(b).
(e) Parent will notify RTZA promptly in
writing if any taxing agency makes, orally or in writing, any
assertion that Section 367(e) applies to any Class B Common Stock
received by RTZA or any Affiliate of RTZA in the Spin-Off (a
"Section 367(e) Issue"). Parent shall (i) keep RTZA fully
apprised, on a timely basis, of any developments relating to its
contest of a Section 367(e) Issue, (ii) consult RTZA with
- -12
<PAGE>
respect to the contest of such issue, and
(iii) after such issue has been referred to an IRS Appeals
Officer, permit RTZA to participate, at RTZA's sole cost and
expense, in meetings (including telephonic conferences) regarding
a Section 367(e) Issue.
(f) An "Open Issue" shall mean an issue
in connection with which Parent or any Consolidated Subsidiary may
be liable for Income Taxes, interest and penalties, and which has
not been settled or otherwise resolved pursuant to a
Determination. A "Determination" shall mean, with respect to
federal income taxes, a determination under Code Section 1313,
and, with respect to Income Taxes other than federal income taxes,
any final determination of the liability in respect of an Income
Tax that, under applicable law, is not subject to further appeal,
review or modification through administrative or judicial
proceedings or otherwise. A "Material Open Issue" shall mean an
Open Issue or a number of Open Issues in the aggregate, with
respect to which the potential tax liability of Parent or any
Consolidated Subsidiary exceeds $5,000,000 exclusive of interest
and penalties, except for Section 367(e) Issues. A "Consolidated
Subsidiary" shall mean any corporation which files a consolidated
return with Parent for federal income tax purposes in the Spin-Off
Year or a Related Year. A "Related Year" shall mean any taxable
year which is audited by a governmental authority responsible for
levying, auditing or otherwise supervising the administration of
Income Taxes (a "Taxing Authority"), in conjunction with the Spin-
Off Year. A "Settling Party" shall be whichever of RTZA or Parent
is willing to settle a Section 367(e) Issue on certain terms
acceptable to a Taxing Authority and a "Contesting Party" shall be
the other party if it is unwilling to so settle.
(g) Parent shall choose the forum in
which a Section 367(e) Issue is to be contested; provided that
RTZA shall choose such forum if (i) a Taxing Authority has
proposed a settlement on certain terms, (ii) RTZA has become the
Contesting Party, (iii) Parent has become the Settling Party, and
(iv) there is no Material Open Issue for the Spin-Off Year or any
Related Year.
(h) Parent shall have the right to
settle a Section 367(e) Issue at any time; provided that in
determining whether to settle, Parent (i) shall exercise its
reasonable business judgment in good faith, taking into account
the merits of the Section 367(e) Issue, the interests of Parent
and RTZA, the risks and potential costs and benefits of further
contesting the Section 367(e) Issue, and such other criteria as
Parent shall consider to be appropriate, and (ii) shall not make a
concession on or "trade" any issue that has an effect on the
amount of the Section 367(e) Issue for a concession by a Taxing
Authority on an issue that does not affect RTZA and its
Affiliates. Notwithstanding the foregoing, Parent shall not
settle a Section 367(e) Issue if (i) RTZA has requested that
Parent not settle such issue, (ii) RTZA has become the Contesting
Party, (iii) Parent has become the Settling Party, and (iv) there
is no Material Open Issue with respect to the Spin-Off Year or any
Related Year.
- -13
<PAGE>
(i) Notwithstanding anything contained
in this Section 5.4 to the contrary, the provisions of this
Section 5.4(i) shall apply if (A) either Parent or RTZA has become
the Settling Party, (B) the other party has become the Contesting
Party, and (C) Parent has not settled the Section 367(e) Issue.
If the provisions of this Section 5.4(i) apply, (i) the Contesting
Party shall thereafter pay all costs and expenses of pursuing any
courses of action in connection with the Section 367(e) Issue
(including, without limitation, the costs of participating in
administrative and judicial proceedings to challenge the Taxing
Authority's position with respect to such issue), (ii) if the
Contesting Party is RTZA, RTZA shall indemnify Parent for a total
amount equal to the RTZA Contesting Tax Cost, and (iii) if the
Contesting Party is Parent, RTZA shall indemnify Parent for a
total amount equal to the RTZA Settling Tax Cost, in each of (ii)
and (iii) with appropriate adjustment for any amounts previously
paid pursuant to Sections 5.4(b) and (d). If the provisions of
this Section 5.4(i) apply, RTZA or Parent, as the case may be,
shall promptly remit to the other party, after a Determination has
been reached, (i) an amount such that RTZA shall have indemnified
Parent in total for an amount equal to the RTZA Contesting Tax
Cost or the RTZA Settling Tax Cost, as the case may be, or (ii) if
the Parent Settling Tax Cost exceeds the Final Section 367(e) Tax
Cost, an amount such that Parent shall have paid to the Taxing
Authorities and to RTZA in the aggregate an amount equal to such
Parent Settling Tax Cost. The RTZA Contesting Tax Cost shall be
the excess, if any, of (I) the Section 367(e) Tax Cost computed on
the basis of a Determination with respect to each of the Income
Taxes (the "Final Section 367(e) Tax Cost"), over (II) the sum of
(a) 50% of the amount which the Final Section 367(e) Tax Cost
would have been if the Section 367(e) Issue had been settled on
the terms upon which, and at the time at which, Parent and the
Taxing Authority had been willing to settle and (b) interest on
the unpaid amount thereof at the rate applicable to overpayments
under Code Section 6621, calculated for the period beginning on
the date that RTZA became the Contesting Party and ending on the
date of the Determination which is the basis for indemnification
under this Section 5.4(i) (the sum described in (II) shall be
denoted as the "Parent Settling Tax Cost"). The RTZA Settling Tax
Cost shall be the sum of (a) 50% of the amount which the Final
Section 367(e) Tax Cost would have been if the Section 367(e)
Issue had been settled on the terms upon which, and at the time at
which, RTZA and the Taxing Authority had been willing to settle
and (b) interest on the unpaid amount thereof at the rate
applicable to overpayments under Code Section 6621, calculated for
the period beginning on the date that Parent became the Contesting
Party and ending on the date of the Determination which is the
basis for indemnification under this Section 5.4(i). If pursuant
to this Section 5.4(i), a Contesting Party contests a Section
367(e) Issue by paying Income Taxes and seeking a refund thereof,
it shall fund the full amount of such payment less the excess, if
any, of (i) the amount the Settling Party would have paid, had the
Section 367(e) Issue been settled on the terms upon which, and at
the time at which, the Settling Party and the Taxing Authority had
been willing to settle, over
- -14
<PAGE>
(ii) the amounts already paid by the
Settling Party; provided that, if the Contesting Party is RTZA,
RTZA shall fund such payment by extending an interest-free loan to
Parent.
(j) Each of the parties hereto and their
Affiliates shall furnish or cause to be furnished to Parent or
RTZA, as the case may be, upon request, as promptly as
practicable, such reasonable information and reasonable assistance
relating to a Section 367(e) Issue as is reasonably necessary for
Parent's filing of its Income Taxes returns, provision of
information requested by a Taxing authority, preparation for any
audit covering the Spin-Off Year or a Related Year, and Parent's
or RTZA's prosecution or defense of any claim, suit or proceeding
relating to a Section 367(e) Issue. Each of the parties hereto
and their Affiliates shall cooperate with Parent or RTZA, as the
case may be, in the conduct of any audit or proceeding relating to
a Section 367(e) Issue, and shall execute and deliver such powers
of attorney and other documents as are necessary to carry out the
intent of this Section 5.4(j). Nothing in this Section 5.4(j)
shall be construed to require the parties hereto, or their
Affiliates, to make any representations or warranties not
expressly contemplated by this Agreement.
6. Purchase of Additional Shares and Option Shares.
6.1 Request to Purchase Additional Shares.
(a) Upon the terms and subject to the
conditions set forth in this Agreement, if Parent redeems any
6.55% Notes in accordance with Article 4 hereof, then (whether or
not a Tender Offer has occurred) provided that the rights granted
to holders in connection with the redemption of the 6.55% Notes
are acceptable to Purchaser, Parent may request, by the delivery
to the Purchaser of a written notice (the "Additional Purchase
Notice") or a copy of the Escrow Notice referred to in Section
6.1(d) at any time after the later of the ABC Redemption Date and
the 6.55% Redemption Date, that the Purchaser purchase, and the
Purchaser shall purchase from Parent, that number of shares of
Class A Common Stock set forth in the Additional Purchase Notice
(the "Additional Shares"), at a purchase price per share of
$20.90, on the date provided in the Additional Purchase Notice or
the Escrow Notice, but, in the case of the Additional Purchase
Notice, no earlier than the date 3 business days thereafter and no
later than the date 5 business days prior to the Distribution
Date; provided that, (x) if the 6.55% Redemption Date is scheduled
to occur prior to the ABC Redemption Date and (y) the ABC
Conversion Value is an amount which is less than 85% of the ABC
Redemption Value (the "Article 6 Event"), then the Additional
Purchase Notice or Escrow Notice, as the case may be, may be
delivered to the Purchaser at any time after the receipt by
Purchaser of the notice specified in Section 5.1(g). The "ABC
Conversion Value" means the product of the number of shares of
Parent Common Stock issuable upon conversion of $1000 principal
amount of ABC Debentures, times the Average Trading Price. The
"Average Trading Price" means the average daily stock price of
Parent Common Stock
- -15
<PAGE>
for the ten trading days immediately prior
to the 6.55% Redemption Date. The "ABC Redemption Value" means
the redemption price for the ABC Debentures per $1,000 principal
amount of the ABC Debentures (including any accrued interest
component thereof).
(b) Notwithstanding anything contained
herein to the contrary, in no event shall the aggregate purchase
price paid by the Purchaser for the Additional Shares pursuant to
Section 6.1(a) exceed the amount equal to the excess of (I) the
sum of (x) the product of the 6.55% Redemption Price per $1,000 of
face value of the 6.55% Notes times the quotient of (A) the 6.55%
Remainder divided by (B) $1,000, plus (y) accrued and unpaid
interest on the 6.55% Remainder to and including the 6.55%
Redemption Date, over (II) the aggregate accreted value of ABC
Debentures, if any, surrendered for conversion by the holders
thereof; provided, that if the Article 6 Event shall have occurred
and the ABC Redemption Date shall not yet have occurred, the
aggregate accreted value of ABC Debentures surrendered for
conversion shall be deemed to be zero for purposes of this clause
(II). The term "6.55% Remainder" means the aggregate principal
amount of the 6.55% Notes redeemed by Parent in accordance with
Section 4.1 hereof. The "6.55% Redemption Price" shall mean the
redemption price for the 6.55% Notes as determined in accordance
with the Indenture, which redemption price is $912.14 per $1,000
of face value of the 6.55% Notes for the twelve-month period
commencing January 15, 1995.
(c) In the event Parent determines not
to exercise its right to cause Purchaser to purchase Additional
Shares in accordance with this Section 6.1, Parent shall deliver
written notice (the "Termination Notice") to the Purchaser of such
determination as promptly as practicable after such determination
is made, but no later than 8 business days prior to the
Distribution Date, whereupon the obligation of Purchaser to
purchase any shares of Class A Common Stock in accordance with
this Section 6.1 shall terminate.
(d) In the event the 6.55% Redemption
Date is scheduled to occur prior to the ABC Redemption Date, at
any time after receipt by the Purchaser of the notice specified in
Section 5.1(g), Parent may by written notice request (the "Escrow
Request") that Purchaser deposit with the Escrow Agent (as defined
below) the funds referred to in this Section 6.1(d) on a date no
earlier than three business days following the date of such
request. No later than such date specified in such request (i)
Purchaser shall, in accordance with an escrow agreement reasonably
acceptable to Parent and Purchaser, deposit with an Escrow Agent
(the "Escrow Agent") mutually acceptable to Purchaser and Parent
(it being agreed that the Trustee is mutually acceptable) an
amount equal to the sum of (x) the product of the 6.55% Redemption
Price times the 6.55% Remainder, plus (y) accrued and unpaid
interest on the 6.55% Remainder to and including the 6.55%
Redemption Date, and (ii) Parent shall deposit with such Escrow
- -16
<PAGE>
Agent the number of shares of Class A
Common Stock, (together with stock powers duly executed in blank)
equal to the amount of funds deposited by Purchaser pursuant to
clause (i) above divided by $20.90. Such Escrow Agent shall hold
such funds and stock in escrow pending receipt of notice from
Parent (the "Escrow Notice"), pursuant to which Parent shall
instruct the Escrow Agent to transfer, and the Escrow Agent shall
transfer, to Parent from the funds deposited by Purchaser an
amount not greater than the amount calculated in accordance with
Section 6.1(b) hereof (the "Section 6.1(d) Amount"); provided
that, if the Article 6 Event has occurred, the Escrow Notice may
be delivered at any time and, if the Article 6 Event has not
occurred, the Escrow Notice may be delivered no earlier than the
next business day following the ABC Redemption Date, but in either
case, no later than the date 8 business days prior to the
Distribution Date. The escrow agreement shall provide that,
simultaneously with such transfer to Parent of such funds, the
Escrow Agent shall (I) transfer to Purchaser the excess, if any,
of the amount deposited by Purchaser (including any interest
earned) over the Section 6.1(d) Amount; (II) transfer and deliver
to Purchaser the number of shares of Class A Common Stock equal to
the Section 6.1(d) Amount divided by $20.90 (together with such
executed stock powers effecting the transfer to Purchaser of such
number of shares of Class A Common Stock); and (III) deliver to
Parent the remainder of the shares of Class A Common Stock, if
any, not transferred and delivered to Purchaser in accordance with
clause II above. The escrow agreement shall further provide for
the return to Purchaser of the funds deposited (plus any interest
earned thereon) and the return to Parent of the shares of Class A
Common Stock deposited, if the Escrow Notice has not been given
within 60 days after the date of the Escrow Request referred to in
the first sentence of this Section 6.1(d).
6.2 Option to Purchase Class A Common Stock.
(a) The Purchaser shall have the option
(the "Option") to purchase from Parent, and Parent shall sell to
the Purchaser, the number of shares of Class A Common Stock set
forth in the Option Notice (the "Option Shares"), at a purchase
price per share of $20.90, provided that the number of Option
Shares shall not exceed 3,588,517 shares of Class A Common Stock.
No later than the fifth business day following receipt of the
Additional Purchase Notice, the Escrow Notice or the Termination
Notice, as the case may be, the Purchaser shall deliver written
notice to Parent (the "Option Notice"), which shall state the
number of shares of Class A Common Stock in respect of which the
Option is being exercised or, subject to Section 6.2(b), if none,
that the Purchaser elects not to exercise the Option.
(b) If RTZA has not acquired any 6.55%
Notes pursuant to the terms hereof, and Parent has previously
delivered the Termination Notice, the Purchaser shall, in the
Option Notice, exercise the Option to purchase 3,588,517 shares of
Class A Common Stock at a purchase price per share of $20.90 in
accordance with this Article 6.
- -17
<PAGE>
6.3 Purchase of Additional Shares and Option
Shares.
(a) Upon the terms and subject to the
conditions of this Agreement, the closings of the transactions
contemplated by Section 6.1 and Section 6.2 (each, an "Additional
Stock Closing") shall take place at the offices of Fried, Frank,
Harris, Shriver & Jacobson, One New York Plaza, New York, New
York, commencing at 10:00 a.m. (New York local time), in the case
of the purchase of the Additional Shares, on the date specified in
the Additional Purchase Notice or the Escrow Notice in accordance
with Section 6.1(a) and, in the case of the purchase of the Option
Shares, on the third business day following the delivery of the
Option Notice or, in either case, at such other time and/or place
and/or on such other dates as the parties may mutually agree
(each, an "Additional Stock Closing Date"). No later than 2
business days prior to an Additional Stock Closing Date, Parent
shall provide written notice to the Purchaser and the Escrow Agent
specifying the accounts to which payment shall be made on such
Additional Stock Closing Date.
(b) At an Additional Stock Closing (i)
Parent shall deliver, or cause to be delivered, to the Purchaser
the certificates representing the number of shares of Class A
Common Stock purchased in accordance with Section 6.1 and/or
Section 6.2, as the case may be, duly endorsed in blank or
accompanied by stock powers or other instruments of transfer duly
executed in blank, with all necessary transfer tax and other
documentary stamps affixed thereto, (ii) the Purchaser shall pay,
or cause to be paid, to Parent in consideration for the shares
being purchased, by wire transfer of immediately available funds,
the aggregate purchase price equal to the sum of (x) subject to
the provisions of Section 6.1(b), the product of $20.90 times the
number of Additional Shares, if any, plus (y) the product of
$20.90 times the number of Option Shares, if any, and (iii) the
parties hereto shall execute and deliver such certificates,
documents and instruments as may be required to be executed or
delivered pursuant to the terms hereof.
7. Spin-Off and Merger.
(a) As promptly as it deems practicable after
the latest to occur of the 6.55% Redemption Date, the ABC
Redemption Date and (if (i) an Option Notice pursuant to which the
Purchaser elects to purchase shares, or (ii) an Additional
Purchase Notice or Escrow Notice, in either case, has been
delivered in accordance with Article 6) the final Additional Stock
Closing, to the extent not otherwise prohibited by applicable Law
or regulation or a judgment, injunction, order or decree of a
proper governmental or regulatory authority of competent
jurisdiction, Parent shall declare the record date for the Spin-
Off, which shall also be the date on which the shares of Class B
Common Stock will be distributed to holders of Parent Common Stock
(the "Distribution Date"); provided that,
- -18
<PAGE>
(i) if Parent requests RTZA to commence the
Tender Offer and RTZA acquires any 6.55% Notes in
connection with the Tender Offer, then Parent shall
delay the Declaration Date a reasonable period of time
(it being agreed that a delay of 60 business days is
reasonable for purposes of this Section 7(a)(i)),
(ii) if the Purchaser elects not to exercise
the Option with respect to all 3,588,517 shares of
Class A Common Stock, or if Parent otherwise wishes to
sell shares of Class A Common Stock prior to the Spin-
Off, then Parent may delay the Declaration Date a
reasonable period of time in order to permit it to
sell any Class A Common Stock that it desires to sell,
and
(iii) prior to the Spin-Off, Parent shall have
received satisfactory confirmation that the
nonrecognition provisions of Code Section 355(a)(1)
and (c) shall apply, such that no gain or loss shall
be recognized to Parent or its shareholders, other
than as a result of Code Section 367(e).
(b) In accordance with the terms of the
Consent Solicitation Statement, no later than the business day
immediately preceding the Distribution Date, the Company and
Facilitating Company will file a certificate of merger with the
Secretary of State of the State of Delaware, which certificate
will state that the Merger shall become effective upon the filing
thereof with the Secretary of State of the State of Delaware, and
make all other filings or recordings required by Delaware Law in
connection with the Merger.
8. Representations and Warranties.
8.1 Representations and Warranties of Parent
and the Company
. Parent severally with respect to
representations and warranties as to Parent and its subsidiaries
and Affiliates (other than the Company and its direct and indirect
subsidiaries), and the Company severally with respect to
representations and warranties as to the Company and its direct
and indirect subsidiaries, represent and warrant to RTZ, RTZA and
the Purchaser as follows:
8.1.1 Organization and Qualifications
. Each of Parent, the Company and their
respective material subsidiaries is a corporation duly organized,
validly existing, and in good standing under the laws of the
jurisdiction of its incorporation and has the requisite corporate
power and authority to own and operate its properties and to carry
on its business as it is now being conducted. Each of Parent, the
Company and their respective material subsidiaries is duly
qualified to do business as a foreign corporation and is in good
standing in every jurisdiction in which the nature of the business
conducted or properties owned or leased or the nature of its
activities makes
- -19
<PAGE>
such qualification necessary, except for
those jurisdictions where the failure to be so qualified would
not, individually or in the aggregate, have a Parent Material
Adverse Effect or a Company Material Adverse Effect.
8.1.2 Capitalization.
(a) Schedule 8.1.2 sets forth the
authorized capital stock of each of Parent and the Company and the
number of outstanding shares of capital stock of each of Parent
and the Company as of April 30, 1995. All of the outstanding
shares of capital stock of each of Parent and the Company have
been duly authorized and validly issued and are fully paid and
non-assessable. Except as set forth on Schedule 8.1.2, there are
no shares of capital stock of either Parent or the Company
authorized, issued or outstanding, and except as set forth on
Schedule 8.1.2., there are no outstanding subscriptions, options,
warrants, rights, convertible or exchangeable securities or other
agreements or commitments of any character relating to the issued
or unissued capital stock or other securities of the Company or
Parent obligating the Company or Parent to issue, deliver or sell,
or cause to be issued, delivered or sold, or to make any payments
based upon the value of, shares of capital stock or other
securities of the Company or Parent or obligating the Company or
Parent to grant, extend or enter into any subscription, warrant,
right, convertible or exchangeable security or other similar
agreement or commitment. There are no voting trusts or other
agreements or understandings to which either Parent or the Company
is a party with respect to the voting of capital stock of Parent
or the Company. Parent and the Company have furnished to the
Purchaser and RTZA all agreements, commitments and understandings
to which any of Parent, the Company or their respective
subsidiaries is a party and which relate to the capital stock of
Parent, the Company or any of their respective subsidiaries.
(b) The shares of Class A Common
Stock purchased by the Purchaser at the Stock Closing, the shares
of Class A Common Stock purchased by the Purchaser at an
Additional Stock Closing, if any, the shares of Parent Common
Stock issued to RTZA upon conversion of the 6.55% Notes, if any,
and the shares of Class B Common Stock, if any, received by RTZA
in the Spin-Off, will have been duly authorized and, upon the
issuance thereof, will be validly issued, fully paid and non-
assessable with no personal liability attaching to the ownership
thereof. The issuance to the Purchaser of the shares of Class A
Common Stock at the Stock Closing, the issuance to the Purchaser
of the shares of Class A Common Stock at an Additional Stock
Closing, if any, the issuance to RTZA of the shares of Parent
Common Stock upon conversion of the 6.55% Notes, if any, and the
distribution of the shares of Class B Common Stock, if any, to
RTZA in the Spin-Off, is not and will not be subject to preemptive
rights of any Person.
- -20
<PAGE>
8.1.3 Authority.
(a) Each of Parent and the Company
has the requisite corporate power and authority to enter into this
Agreement and the Related Agreements to which either Parent or the
Company is or will be a party and to perform its obligations
hereunder and thereunder. The execution and delivery of this
Agreement and the Related Agreements to which either Parent or the
Company is or will be a party and the consummation of the
transactions contemplated hereby and thereby have been duly
authorized and approved by each of Parent's and the Company's
Board of Directors and, except as set forth on Schedule 8.1.3, no
other corporate proceedings on the part of Parent or the Company
are necessary to authorize this Agreement or the Related
Agreements to which either of them is or will be a party or the
transactions contemplated hereby and thereby, except for the
approval of stockholders specified in paragraphs (b) and (c) of
this Section 8.1.3, which have been obtained. This Agreement has
been, and the Related Agreements, when executed and delivered by
each of Parent and the Company pursuant to Article 2 hereof, will
be, duly and validly executed and delivered by each of Parent and
the Company, respectively. This Agreement constitutes, and the
Related Agreements, when executed and delivered by each of Parent
and the Company pursuant to Article 2 hereof, will constitute, a
valid and binding agreement of Parent and the Company,
respectively, enforceable against Parent and the Company,
respectively, in accordance with their respective terms, subject
to bankruptcy, reorganization, insolvency, moratorium and other
Laws affecting the enforcement of creditors' rights generally and
subject to general equitable principles.
(b) Each of the New Certificate of
Incorporation and the New By-laws has been approved by the Board
of Directors of the Company and the New Certificate of
Incorporation has been approved by the stockholders of the
Company; and no other corporate proceedings on the part of the
Company are necessary to authorize and adopt the New Certificate
of Incorporation or the New By-laws.
(c) The Merger Agreement has been
approved by the Board of Directors of each of Parent, the Company
and Facilitating Company and the stockholders of the Company and
Facilitating Company; and no other corporate proceedings on the
part of Parent, the Company or Facilitating Company are necessary
to authorize and consummate the transactions contemplated thereby.
(d) The Spin-Off has been approved
by the Board of Directors of Parent; and, except as set forth on
Schedule 8.1.3, no other corporate proceedings on the part of
Parent or the Company are necessary to authorize and consummate
the transactions contemplated thereby.
- -21
<PAGE>
(e) To the extent the transactions
contemplated by this Agreement result in RTZ or its Affiliates
becoming an "interested stockholder" (as defined in DGCL 203) of
Parent or the Company, the Board of Directors of Parent and the
Company, respectively, have approved the transactions contemplated
by this Agreement for purposes of DGCL 203. To the extent the
transactions contemplated by this Agreement result in RTZ or its
Affiliates becoming an "Interested Party" (as defined in the New
Certificate of Incorporation), the Board of Directors has approved
the transactions contemplated by this Agreement for purposes of
paragraph (a) of Article SEVENTH of the New Certificate of
Incorporation. The Board of Directors of each of Parent and the
Company have approved, for purposes of such 203 and Article
SEVENTH, any subsequent acquisitions in one or more transactions
by RTZ or its Affiliates of shares of Company Common Stock or
warrants, options or other rights to purchase shares of Company
Common Stock, or securities convertible into or exchangeable for
shares of Company Common Stock, provided that as a result of such
acquisitions the shares of Company Common Stock beneficially owned
by RTZ and its Affiliates does not equal or exceed the number of
Majority Shares.
8.1.4 Title
. Parent has good and valid title to any
shares of Class B Common Stock beneficially owned by it which
shall be exchanged pursuant to Section 9.2.2, and has good and
valid title to the shares of Class B Common Stock beneficially
owned by it which shall be distributed to RTZA in the Spin-Off, in
each case, free and clear of all liens, encumbrances, equities or
adverse claims. Parent shall have good and valid title to the
shares of Class A Common Stock received upon the exchange pursuant
to Section 9.2.2 and sold to the Purchaser pursuant to Article 3
and/or Article 6 hereof, free and clear of all liens,
encumbrances, equities or adverse claims.
8.1.5 Compliance with Other Instruments
. Neither Parent, the Company nor any of
their respective material subsidiaries is in violation of any term
of its certificate of incorporation or by-laws, as in effect on
the date hereof. None of the execution, delivery and performance
of this Agreement or any Related Agreement to which Parent, the
Company or any of their respective subsidiaries is a party or any
of the transactions contemplated hereby or thereby, does or will,
with or without the passage of time or the giving of notice or
both, (i) violate, conflict with, or result in a breach of, or
default under, any agreement, obligation or commitment to which
Parent, the Company or any of their respective subsidiaries is a
party or by which Parent, the Company or any of their respective
subsidiaries is bound, (ii) assuming the transfers, consents,
licenses, approvals, waivers, expirations of waiting periods,
authorizations, declarations and filings, if any, set forth in
Schedule 8.1.6 are obtained or made, violate any provision of any
applicable Law or Permit to which Parent, the Company or any of
their respective subsidiaries is subject, (iii) violate any order,
judgment or decree applicable to Parent, the Company or any of
their respective subsidiaries, (iv) conflict with, or result in a
breach of, or default under, any term of Parent's, the Company's
or any of their respective
- -22
<PAGE>
material subsidiaries' certificate of
incorporation or by-laws in effect on the date hereof or the New
Certificate of Incorporation or New By-laws, or (v) result in the
creation of any mortgage, pledge, lien, encumbrance, or charge
upon any of the properties or assets of Parent, the Company or any
of their respective subsidiaries except, in the case of clauses
(i), (ii), (iii) and (v), for any such items which, individually
or in the aggregate, would not reasonably be expected (x) to have
or result in a Company Material Adverse Effect or a Parent
Material Adverse Effect, (y) to materially impair the ability of
the Company or Parent to consummate the transactions contemplated
by this Agreement or the Related Agreements, or (z) to materially
impair the ability of RTZ, RTZA or the Purchaser to receive the
benefits of the transactions contemplated by this Agreement or the
Related Agreements.
8.1.6 Consents
. Except as set forth on Schedule 8.1.6,
no transfer, consent, license, approval, waiver, expiration of
waiting period, authorization or declaration of, and no filing or
registration with, any governmental or regulatory authority or
other third party is required to be obtained or made by Parent,
the Company or any of their respective subsidiaries in connection
with the execution, delivery and performance of this Agreement or
any Related Agreement or the consummation of the transactions
contemplated hereby and thereby, other than such other transfers,
consents, licenses, approvals, waivers, expirations of waiting
periods, authorizations, declarations or filings, which if not
obtained or made, individually or in the aggregate, would not
reasonably be expected (x) to have or result in a Company Material
Adverse Effect or a Parent Material Adverse Effect, (y) to
materially impair the ability of the Company or Parent to
consummate the transactions contemplated by this Agreement or the
Related Agreements, or (z) to materially impair the ability of
RTZ, RTZA or the Purchaser to receive the benefits of the
transactions contemplated by this Agreement or the Related
Agreements.
8.1.7 Actions Pending
. There is no action, suit, investigation
or proceeding pending or (to the knowledge of Parent or the
Company) threatened against Parent, the Company or any of their
respective subsidiaries or any of their respective properties or
assets by or before any court, arbitrator or governmental or
regulatory authority, department, commission, board, bureau,
agency or instrumentality, which questions the validity or
enforceability of, or seeks to enjoin or invalidate, this
Agreement or any Related Agreement or any action taken or to be
taken pursuant hereto or thereto, or which has had or is
reasonably likely to have or result in a Parent Material Adverse
Effect or Company Material Adverse Effect, and neither Parent, the
Company nor any of their respective subsidiaries is in default in
any material respect with respect to any material judgment, order,
writ, injunction, decree or award.
- -23
<PAGE>
8.1.8 SEC Reports.
(a) Each of Parent and the Company
has filed all registration statements, proxy statements, annual
and quarterly reports and other documents required to be filed by
it under the Securities Act or Exchange Act since December 31,
1992. Each of the Parent and the Company has delivered to the
Purchaser and RTZA its Annual Reports on Form 10-K for the year
ended December 31, 1994, and all registration statements, proxy
statements, consent solicitation statements and reports under the
Securities Act or Exchange Act filed by the Company after such
date, each as filed with the SEC (collectively, the "SEC
Reports"). Each SEC Report complied as to form in all material
respects with the requirements of its respective report form and
on the date of filing did not, and any registration statement,
report, proxy statement or information statement filed by Parent
or the Company with the SEC prior to the Distribution Date will
not, contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary
to make the statements made therein, in light of the circumstances
under which they were made, not misleading.
(b) Except as otherwise disclosed
in the SEC Reports (i) there are no material agreements,
obligations or commitments among any of Parent, the Company or any
of their respective subsidiaries, Affiliates or stockholders, (ii)
Parent, Company and their respective subsidiaries are in
compliance in all material respects with all applicable federal,
state, local and foreign laws and regulations relating to
protection of the environment and human health, and are in
compliance with all other applicable federal, state, local and
foreign laws and regulations, including, without limitation, those
relating to equal employment opportunity, employee safety and
health and welfare, except, in either case, where the failure to
comply, individually or in the aggregate, has not had or would not
reasonably be expected to have or result in a Company Material
Adverse Effect or a Parent Material Adverse Effect and (iii) there
are no claims, notices, civil, criminal or administrative actions,
suits, hearings, investigations, inquiries or proceedings pending
or, to the best knowledge of Parent or the Company, threatened,
against Parent, the Company or any of their respective
subsidiaries that are based on or related to any material
environmental matters, including any disposal of hazardous
substances at any place, or the failure to have any required
environmental permits, and there are no past or present conditions
that Parent or the Company has reason to believe are likely to
give rise to any material liability or other material obligations
of Parent, the Company or any of their respective subsidiaries
under any environmental laws.
(c) With respect solely to
information describing Parent and the Company, at the time the
Schedule 14D-1 (and any amendment thereto) is filed, if ever, the
Schedule 14D-1 (or any amendment thereto) shall not contain any
untrue statement of a material fact or omit to state a material
fact required to be stated therein or
- -24
<PAGE>
necessary to make the statements
made therein, in light of the circumstances under which they were
made, not misleading, provided that Parent and the Company shall
have given their prior written consent to any such description
prior to the filing of the Schedule 14D-1 (or any amendment
thereto).
8.1.9 Financial Statements.
The financial statements of Parent and
the Company (including any related schedules and/or notes)
included in the SEC Reports have been prepared in accordance with
GAAP consistently followed (except as indicated in the notes
thereto) throughout the periods involved and fairly present the
consolidated financial condition, results of operations and
changes in stockholders' equity of Parent and the Company,
respectively, as of the dates thereof and for the periods ended on
such dates (in each case subject, as to interim statements, to
changes resulting from year-end adjustments, none of which will be
material in amount or effect), and neither Parent nor the Company
has any material Liabilities not reflected in Parent's or the
Company's balance sheet as of December 31, 1994, included in the
SEC Reports, other than any such liabilities incurred in the
ordinary course of business since December 31, 1994 or as set
forth on Schedule 8.1.9. Except as otherwise contemplated by this
Agreement, any Related Agreement, any Affiliate Agreement or the
Consent Solicitation Statement, since December 31, 1994, each of
Parent, the Company and their respective subsidiaries have
operated their respective businesses only in the ordinary course
and there has been no event or events which, individually or in
the aggregate, have had or would reasonably be expected to have or
result in a Parent Material Adverse Effect or a Company Material
Adverse Effect.
8.1.10 Compliance with Laws; Permits.
Except as set forth on Schedule 8.1.10,
each of Parent, the Company and their respective subsidiaries is
in compliance with all Laws, except where noncompliance,
individually or in the aggregate, has not had or would not
reasonably be expected to have or result in a Parent Material
Adverse Effect or a Company Material Adverse Effect. Except as
set forth on Schedule 8.1.10, none of Parent, the Company or any
of their respective subsidiaries has received any notice of any
alleged violation of Law applicable to it or any of their
respective Affiliates from a governmental or regulatory authority
of proper jurisdiction, or any formal notice of any alleged
violation of Law applicable to it or any of their respective
Affiliates from any other Person, other than any alleged
violation, which if proven, would not reasonably be expected to
have or result in a Company Material Adverse Effect or a Parent
Material Adverse Effect. Except as set forth on Schedule 8.1.10,
each of Parent, the Company and their respective subsidiaries has
all Permits required for the conduct of its business as presently
conducted and the ownership, maintenance or operation of its
properties and assets ("Material Permits," which shall not include
any such Permits, the failure of which to have, individually or in
the aggregate, would not reasonably be expected to have or result
in a Company Material Adverse Effect or a Parent Material Adverse
Effect). All of such Material Permits are valid and in full
- -25
<PAGE>
force and effect. The holder of each
Permit has duly performed and is in compliance with all of its
obligations under such Permits, except to the extent that
noncompliance, individually or in the aggregate, would not
reasonably be expected to have or result in a Company Material
Adverse Effect or a Parent Material Adverse Effect. No event has
occurred with respect to the Material Permits which allows, or
after notice or lapse of time or both would allow, the suspension,
limitation, revocation, non-renewal or termination thereof or
would result in any other material impairment of the rights of the
holder thereof in and under any of the Material Permits, and no
terminations thereof or proceedings to suspend, limit, revoke or
terminate any Material Permit (to the knowledge of Parent or the
Company) have been threatened.
8.1.11 Books and Records.
All the books, records and accounts of
Parent, the Company and their respective subsidiaries are in all
material respects true and complete, are maintained in accordance
with good business practice and all Laws applicable to its
business, and accurately present and reflect in all material
respects all of the transactions therein described.
8.1.12 Financial Advisors and Brokers.
Other than PaineWebber Incorporated,
whose fees and expenses will be paid by Parent, none of Parent,
the Company or any of their respective subsidiaries has employed
any investment banker, broker or finder or incurred any liability
for any financial advisory fees, brokerage fees, commissions,
finders' fees or similar payment in connection with the
transactions contemplated hereby.
8.1.13 Accuracy of Information.
All documents delivered by or on behalf
of Parent, the Company or their respective subsidiaries in
connection with this Agreement are true and correct in all
material respects. To the best of the knowledge of Parent and the
Company, neither this Agreement nor any Related Agreement nor any
certificate, information, documents or other written disclosure
document referred to herein or furnished to RTZ or any of its
Affiliates pursuant to this Agreement or any Related Agreement or
in connection with the transactions contemplated hereby or thereby
contains an untrue statement of a material fact or omits to state
a material fact required to be stated therein or necessary to make
the statements made, in the context in which made, not materially
false or misleading. To the best knowledge of Parent and the
Company, there is no fact that has not been disclosed to RTZ that
could reasonably be expected to impair the ability of Parent, the
Company or their respective subsidiaries to perform this Agreement
or any Related Agreement and the transactions contemplated hereby
and thereby or to materially impair the ability of RTZ, RTZA or
the Purchaser to receive the benefits of the transactions
contemplated by this Agreement or the Related Agreements.
8.1.14 Consolidated Group.
For federal income tax purposes, the
Company is not and will not be a member of a consolidated return
group of
- -26
<PAGE>
which Parent is a member in the tax year
in which the Spin-Off occurs. Except as set forth on Schedule
8.1.14, which exceptions relate to (i) consolidated, combined or
unitary return positions required on audit or other administrative
review, or (ii) in the case of returns as filed in which Parent
has reported the foreign metals business as a separate line of
business, for state and local income tax purposes, the Company is
not and will not be a member of a consolidated or combined or
unitary return group of which Parent is a member in the tax year
in which the Spin-Off occurs.
8.1.15 Tax Sharing Agreement.
Except (i) as set forth on Schedule
8.1.15, which exceptions pertain solely to continuing obligations
with respect to years prior to the year in which the Spin-Off
occurs or (ii) with respect to the provisions of the Distribution
Agreement, as described in Exhibit 8.1.15, neither the Company nor
any of its subsidiaries is a party to, and neither has any rights
or obligations under, any tax sharing agreement or arrangement or
similar understanding to which Parent is a member or to any
contract which would otherwise subject the Company or any of its
subsidiaries to any liability for taxes (including interest and
penalties) of Parent or any of its Affiliates (other than the
Company and its subsidiaries).
8.2 Representations and Warranties of RTZ, the
Purchaser and RTZA.
Each of RTZ, the Purchaser and RTZA represents
and warrants to Parent and the Company as follows:
8.2.1 Organization.
Each of RTZ, RTZA and the Purchaser is a
company duly organized, validly existing, and in good standing
under the laws of the jurisdiction of its organization.
8.2.2 Authority.
Each of RTZ, the Purchaser and RTZA has
the requisite corporate power and authority to enter into this
Agreement and the Related Agreements to which it is or will be a
party and to perform its obligations hereunder and thereunder.
The execution and delivery of this Agreement and the Related
Agreements to which it is or will be a party and the consummation
of the transactions contemplated hereby and thereby have been duly
authorized by each of RTZ's, the Purchaser's and RTZA's Board of
Directors and no other corporate proceedings on the part of RTZ,
the Purchaser or RTZA are necessary to authorize this Agreement or
the Related Agreements to which it is or will be a party or the
transactions contemplated hereby and thereby. This Agreement has
been, and the Related Agreements, when executed and delivered by
each of RTZ, the Purchaser and RTZA, as the case may be, pursuant
to Article 2 hereof, will be, duly and validly executed and
delivered by each of RTZ, the Purchaser and RTZA, respectively.
This Agreement constitutes, and the Related Agreements, when
executed and delivered by each of RTZ, the Purchaser and RTZA, as
the case may be, pursuant to Article 2 hereof, will constitute, a
valid and binding agreement of each of RTZ, the Purchaser and
RTZA, respectively, enforceable
- -27
<PAGE>
against RTZ, the Purchaser and RTZA,
respectively, in accordance with their respective terms, subject
to bankruptcy, reorganization, insolvency, moratorium and other
Laws affecting the enforcement of creditors' rights generally and
subject to general equitable principles.
8.2.3 Compliance with Other Instruments.
None of the execution, delivery and
performance of this Agreement or any Related Agreement to which
RTZ, RTZA or the Purchaser or any of their respective subsidiaries
is a party or any of the transactions contemplated hereby or
thereby, does or will, with or without the passage of time or the
giving of notice or both, (i) violate, conflict with, or result in
a breach of, or default under, any agreement, obligation or
commitment to which RTZ, RTZA or the Purchaser or any of their
respective subsidiaries is a party or by which RTZ, RTZA or the
Purchaser or any of their respective subsidiaries is bound, (ii)
assuming the transfers, consents, licenses, approvals, waivers,
expirations of waiting periods, authorizations, declarations and
filings, if any, set forth in Schedule 8.2.4 are obtained or made,
violate any provision of any applicable Law or Permit to which
RTZ, RTZA or the Purchaser or any of their respective subsidiaries
is subject, (iii) violate any order, judgment, or decree
applicable to RTZ, RTZA or the Purchaser or any of their
respective subsidiaries, or (iv) conflict with, or result in a
breach of or default under, any term of RTZ's, RTZA's or the
Purchaser's or any of their respective material subsidiaries'
constituent documents in effect on the date hereof, except, in the
case of clause (i), (ii) or (iii), for any such items which,
individually or in the aggregate, would not reasonably be expected
to materially impair the ability of RTZ, RTZA or the Purchaser to
consummate the transactions contemplated by this Agreement or the
Related Agreements.
8.2.4 Consents.
Except as set forth on Schedule 8.2.4,
no transfer, consent, license, approval, waiver, expiration of
waiting period, authorization or declaration of, and no filing or
registration with, any governmental or regulatory authority is
required to be obtained or made by RTZ, the Purchaser or RTZA in
connection with the execution, delivery and performance of this
Agreement or any Related Agreement or the transactions
contemplated hereby or thereby, other than such other transfers,
consents, licenses, approvals, waivers, expirations of waiting
periods, authorizations, declarations or filings, which if not
obtained or made, individually or in the aggregate, would not
reasonably be expected to materially impair the ability of RTZ,
RTZA or the Purchaser to consummate the transactions contemplated
by this Agreement or the Related Agreements.
8.2.5 Actions Pending.
There is no action, suit, investigation
or proceeding pending or (to the knowledge of RTZ, the Purchaser
or RTZA) threatened against RTZ, the Purchaser or RTZA or any of
their respective subsidiaries by or before any court, arbitrator
or governmental or regulatory authority, department, commission,
board, bureau, agency or instrumentality, which questions the
- -28
<PAGE>
validity or enforceability of, or seeks to
enjoin or invalidate, this Agreement or any Related Agreement or
any action taken or to be taken pursuant hereto or thereto.
8.2.6 Investment Representations.
The Purchaser is acquiring the shares of
Class A Common Stock pursuant to this Agreement for its own
account, solely for investment purposes and not with a view to, or
for resale in connection with, the distribution thereof in
violation of federal or applicable state securities laws.
8.2.7 Financial Advisors and Brokers.
Other than Lehman Brothers, Inc., whose
fees and expenses will be paid by RTZ, RTZA and/or the Purchaser,
neither the Purchaser nor RTZA has employed any investment banker,
broker or finder or incurred any liability for any financial
advisory fees, brokerage fees, commissions, finders' fees or
similar payment in connection with the transactions contemplated
hereby.
8.2.8 Ownership of Securities of Parent
and the Company.
As of the date of this Agreement, RTZ,
RTZA, the Purchaser and their respective Affiliates do not
together own more than 1% of the outstanding capital stock of
Parent or of the Company.
8.2.9 Accuracy of Information.
To the best of the knowledge of RTZ,
RTZA and the Purchaser, no representation or warranty of RTZ, RTZA
or the Purchaser contained in this Agreement, any Related
Agreement or in any Schedule or Exhibit hereto or thereto contains
an untrue statement of a material fact or omits to state a
material fact required to be stated therein or necessary to make
the statements made, in the context in which made, not materially
false or misleading.
9. Covenants.
9.1 Covenants of All Parties.
Each of the parties hereto covenants and
agrees as follows:
9.1.1 Cooperation.
The parties hereto shall use their
respective reasonable efforts, and shall cooperate with each
other, to take, or cause to be taken, all actions, and to do, or
cause to be done, all things necessary, proper or advisable, to
cause the conditions set forth in Article 10 to be satisfied and
to cause the consummation of the transactions contemplated by this
Agreement and the Related Agreements in accordance with the terms
and conditions hereof and thereof.
9.1.2 Breach of Representations and
Warranties.
None of the parties hereto will
knowingly or voluntarily take any action which would cause or
constitute a material breach of any of the representations or
warranties set forth in Article 8 hereof, or which would cause any
of such respective representations and
- -29
<PAGE>
warranties to be materially inaccurate.
Each of the parties will, in the event of, and promptly after
becoming aware of the occurrence of, or the pending or threatened
occurrence of, such a material breach or inaccuracy, notify the
other parties of such breach or inaccuracy in reasonable detail
and will use its reasonable efforts to prevent or promptly remedy
such breach or inaccuracy.
9.1.3 Communications with Regulators.
(a) With respect to the
transactions contemplated by this Agreement and the Related
Agreements, but except with respect to the IRS, each of Parent and
the Company on the one hand, and each of the Purchaser and RTZA,
on the other hand, shall notify the other parties promptly of the
receipt by it of any comments from the SEC, the NYSE or any other
governmental or regulatory authority (other than the IRS) or their
respective staffs and of any request by the SEC, the NYSE or any
other governmental or regulatory authority (other than the IRS)
for amendments or supplements to any filings made by or on behalf
of it or for additional information and will supply the other
parties with copies of all correspondence between it and its
representatives, on the one hand, and the SEC, the NYSE or any
other governmental or regulatory authority (other than the IRS) or
the members of their respective staffs or any other governmental
officials (other than the IRS), on the other hand, with respect to
any filings made by or on behalf of it.
(b) Each of Parent and the Company
(i) shall notify RTZA promptly of the receipt by Parent or the
Company of any comments from the IRS or its staff regarding the
Spin-Off and of any request by the IRS for amendments or
supplements to the Spin-Off Private Letter Ruling or for
additional information, (ii) shall supply RTZA with draft copies
of all written correspondence from it or its representatives in
sufficient time so as to give RTZA and its representatives an
opportunity to comment on such correspondence, shall consider all
such comments in good faith and, in particular, shall not make any
representations about RTZ or its Affiliates without RTZ's written
consent, (iii) shall supply RTZA with copies of all correspondence
between it and its representatives, on the one hand, and the IRS
or the members of its staff or any other governmental officials,
on the other hand, with respect to the Spin-Off Private Letter
Ruling, and (iv) shall advise RTZA of any proposed meetings
(including telephonic conferences) with the IRS in advance thereof
and permit, to the extent practicable, determined in Parent's or
the Company's good faith judgment, as the case may be, a
representative of RTZA to attend such meetings (including
telephonic conferences) and to participate therein to the extent
such meetings discuss RTZ or any of its Affiliates; provided,
however, to the extent that it is not practicable for RTZA to
attend any such meetings, Parent or Company, as the case may be,
shall promptly notify RTZA of the content of such meetings
(including telephonic conferences).
- -30
<PAGE>
9.1.4 Affiliate Agreements.
Each of Parent and the Company shall
take, or cause to be taken, all actions and do, or cause to be
done, all things, and shall cause their respective Affiliates to
take, or cause to be taken, all actions and do, or cause to be
done, all things, necessary or appropriate pursuant to any
agreement between Parent, the Company or any of their respective
Affiliates, on the one hand, and RTZ, the Purchaser, RTZA or any
of their respective Affiliates, on the other hand (collectively,
the "Affiliate Agreements"), and each of RTZ, the Purchaser and
RTZA shall take, or cause to be taken, all actions and do, or
cause to be done all things, and shall cause their respective
Affiliates to take, or cause to be taken, all actions and do, or
cause to be done, all things, necessary or appropriate pursuant to
any Affiliate Agreements.
9.1.5 Certain Specified Actions.
Each of Parent, Company, RTZ, RTZA and
the Purchaser shall not take any of the actions specified on
Schedule 9.1.5 during the periods specified therein.
9.2 Covenants of Parent and the Company.
In addition to the covenants and agreements in
Section 9.1 hereof, each of Parent and the Company covenants and
agrees as follows:
9.2.1 Conduct of Business Pending the
Spin-Off.
Except as otherwise contemplated by this
Agreement, the Consent Solicitation Statement or any Affiliate
Agreement or as specified in Schedule 9.2.1, from and after the
date hereof and prior to completion of the Spin-Off, neither
Parent nor the Company shall, without the prior written consent of
the Purchaser and RTZA, enter into any transaction, contract,
agreement, commitment, plan or arrangement which would reasonably
be expected to have or result in a Parent Material Adverse Effect
or a Company Material Adverse Effect or would materially impair or
materially adversely affect the ability of Parent, the Company or
any of their respective Affiliates or the Purchaser, RTZA or any
of their respective Affiliates to consummate the transactions
contemplated by this Agreement, the Consent Solicitation Statement
or any Affiliate Agreement or would reasonably be expected to
materially impair the ability of RTZ, RTZA or the Purchaser to
receive the benefits of the transactions contemplated by this
Agreement or any Affiliate Agreement (including any transaction,
contract, agreement, commitment, plan, arrangement or other action
which might impair or adversely affect the Spin-Off Private Letter
Ruling). As of the date of the Spin-Off, the representations
referred to in Exhibit 8.1.15 shall be reaffirmed between Parent
and the Company pursuant to the Distribution Agreement.
Subsequent to the completion of the Spin-Off, neither Parent nor
the Company shall, without the prior written consent of RTZA, take
any prohibited actions described in Exhibit 8.1.15.
Notwithstanding anything to the contrary contained in this Section
9.2.1, Parent and the Company shall have the right to take any
action described in this Section 9.2.1 (including activities
described in Exhibit 8.1.15) if they first obtain either a
- -31
<PAGE>
supplemental private letter ruling from
the IRS or an opinion of nationally recognized tax counsel,
reasonably satisfactory to RTZ, that such action shall not
adversely affect the tax-free nature of the Spin-Off or the
ability of Parent to rely on the Spin-Off Private Letter Ruling.
9.2.2 Exchange of Shares.
On or prior to the Stock Closing Date
and each Additional Stock Closing Date, the Company shall issue
and deliver to Parent, in exchange for shares of Class B Common
Stock owned by Parent, a sufficient number of shares of Class A
Common Stock to permit Parent to consummate the applicable
transactions on such closing date as contemplated by Article 3 or
Article 6 hereof, as the case may be.
9.2.3 Certain Arrangements Following the
Spin-Off.
As promptly as practicable after the
date hereof, Parent and the Company shall enter into (i) a Benefit
Allocation Agreement containing substantially the same terms set
forth in Exhibit C and (ii) a Transition Management Services
Agreement containing substantially the same terms set forth in
Exhibit D.
9.3 Covenants of Parent.
In addition to the covenants and agreements in
Section 9.1 and 9.2 hereof, Parent covenants and agrees as
follows:
9.3.1 Minimum Price of Sales.
From and after the date hereof and prior
to completion of the Spin-Off, without the prior written consent
of RTZ, Parent shall not sell, transfer, assign, exchange or
otherwise dispose of any shares of Class A Common Stock or Class B
Common Stock owned by it, or grant any option or right to purchase
such shares or any legal or beneficial interest therein for a
purchase price per share of less than $20.90.
9.4 Covenants of the Company.
In addition to the covenants and agreements
set forth in Section 9.1 and 9.2, the Company covenants and agrees
as follows:
9.4.1 Right to Nominate Directors.
After completion of the Purchaser's
purchase of Class A Common Shares pursuant to Article 3, the
Purchaser and RTZA will have the right to nominate for submission
to the Company's stockholders at stockholders' meetings or in
connection with any consent solicitation for the election of
directors, the number of directors (rounded to the nearest whole
number) (which nominees may be nominees for Class A Directors or
Class B Directors) which is proportionately equal to the aggregate
percentage ownership of the Purchaser and RTZA of all outstanding
shares of Class A Common Stock and Class B Common Stock; provided,
that the percentage that the number of Class B Directors nominated
by the Purchaser and RTZA bears to the total number of Class B
Directors shall not exceed the
- -32
<PAGE>
percentage that the number of shares of
Class B Common Stock owned by the Purchaser and RTZA bears to the
total number of outstanding shares of Class B Common Stock
(rounded down to the nearest whole number). The Company shall
include the directors nominated pursuant to the foregoing sentence
in the directors recommended by management, and shall not take any
actions which may be inconsistent with, conflict with, or
otherwise hinder, the election of such individuals. No later than
the earlier of 60 days after the Distribution Date or January 2,
1996, the Company shall appoint the number of persons nominated by
the Purchaser and RTZA in accordance with the foregoing sentence
as interim directors to take office until the next stockholders'
meeting or consent solicitation for the election of directors.
Notwithstanding anything contained herein to the contrary, (i) if
the number of directors of the Company is less than ten, the
Purchaser and RTZA will have the right to so nominate for
submission to the Company's stockholders, no less than one Class A
Director, provided that the Purchaser continues to hold
substantially all the shares of Class A Common Stock purchased
hereunder, and (ii) if at any time the Company shall no longer be
subject to the reporting requirements of the Exchange Act, the
Company shall cause the directors nominated by the Purchaser and
RTZA in accordance with this Section 9.4.1 to be elected as
directors.
9.5 Covenants of RTZ, RTZA and the Purchaser.
In addition to the covenants and agreements
set forth in Section 9.1, RTZA covenants and agrees as follows:
9.5.1 Lack of Certain Stock Ownership.
Except as a result of the transactions
described in this Agreement, RTZ, RTZA, the Purchaser and their
Affiliates will not acquire any shares of $4.375 Parent Preferred
Stock, Parent Common Stock or Company Voting Stock at any point
during the period from and including the date hereof to and
including the Distribution Date.
9.5.2 Certain Specified Actions.
Each of RTZ, RTZA and the Purchaser
shall not take any of the actions specified on Schedule 9.5.2
during the periods specified therein.
9.6 Additional Covenants.
9.6.1 Future Acquisitions.
RTZ and its Affiliates will not be
directly or indirectly restricted from future acquisitions of
shares of Company Voting Stock, except that approval of the
Company Board of Directors will be required for RTZ or its
Affiliates, alone or acting in concert with others, to acquire
beneficial ownership of shares of Company Voting Stock equal to
the Majority Shares. Without limiting the generality of the
foregoing, the Board of Directors of each of Parent and the
Company hereby agree that if the Company adopts a "rights plan,"
"poison pill" or other plan or arrangement which provides for the
distribution to its shareholders, by way of dividend or
- -33
<PAGE>
otherwise, of shares of capital stock of
the Company, warrants, options or other rights to purchase shares
of capital stock of the Company, or securities convertible into or
exchangeable for shares of capital stock of the Company, upon the
occurrence of specified events, then any transactions between the
Company and any of its Affiliates, on the one hand, and RTZ and
any of its Affiliates, on the other hand, and any transactions by
RTZ or its Affiliates relating to shares of the capital stock of
the Company, or warrants, options or other rights to purchase
shares of capital stock of the Company, or securities convertible
into or exchangeable for shares of capital stock of the Company
shall be excluded from such specified events, unless such
transactions result in the acquisition by RTZ and its Affiliates
of beneficial ownership of shares of Company Voting Stock equal to
the Majority Shares.
9.6.2 Voting.
RTZ, RTZA and the Purchaser agree that
if at any time, and for so long as, RTZ, RTZA, the Purchaser or
their Affiliates beneficially own, in the aggregate, more than 5%
of the outstanding shares of Company Voting Stock, and directors
nominated pursuant to Section 9.4.1 (or replacements therefor)
continue to serve as directors of the Company, RTZ, RTZA and the
Purchaser (i) shall cause all such Company Voting Stock as of the
record date of each stockholder meeting or consent of stockholders
of the Company to be represented, in person or by proxy, at each
such meeting or in such consent, and (ii) shall, with respect to
any action at any stockholder meeting or by consent of the
stockholders of the Company which action relates solely to the
electing of directors, cause all such Company Voting Stock to be
voted at each such meeting or by such consent for election of the
slate of directors as affirmatively recommended by a majority of
the Board of Directors of the Company, which will include the
nominees of the Purchaser and RTZA pursuant to Section 9.4.1
hereof.
10. Conditions to Stock Closings.
10.1 Conditions to Stock Closing.
10.1.1 Conditions to the Obligations of
All Parties.
The obligations of each of the parties
hereto to consummate the Stock Closing shall be subject to the
satisfaction (or waiver by each of the parties hereto) at or prior
to the Stock Closing of each of the following conditions:
(a) The consummation of the Stock
Closing and the consummation of the other transactions
contemplated by this Agreement or any Affiliate Agreement shall
not be prohibited by any order or injunction of a United States
federal or state court of competent jurisdiction, or other
governmental or regulatory authority of competent jurisdiction of
the United States, the United Kingdom, Indonesia, or Spain, and
there shall not have been any action taken or any statute, rule or
regulation enacted, promulgated or deemed applicable to the Stock
Closing or the other transactions
- -34
<PAGE>
contemplated by this Agreement or
any Affiliate Agreement by any United States federal or state
government or governmental agency or other governmental or
regulatory authority of competent jurisdiction of the United
States, the United Kingdom, Indonesia, or Spain, that makes
consummation of the Stock Closing or such transactions illegal.
(b) Each other party and its
Affiliates shall have complied in all material respects with its
agreements and covenants contained herein or in any Affiliate
Agreement to be performed on or prior to the Stock Closing, and
all representations and warranties of each other party and its
Affiliates contained herein or in any Affiliate Agreement shall be
true and correct in all material respects on and as of the Stock
Closing with the same effect as though made on and as of the Stock
Closing Date.
(c) All consents, approvals,
authorizations, exemptions and waivers from governmental agencies
as specified in Schedules 8.1.6 and 8.2.4 and required to
consummate the transactions contemplated by this Agreement and any
Affiliate Agreement shall have been obtained (except for such
consents, approvals, authorizations, exemptions and waivers, the
absence of which would not prohibit such sale or render such sale
illegal).
10.1.2 Conditions to Obligations of the
Purchaser.
The obligations of the Purchaser to
consummate the Stock Closing shall be subject to the satisfaction
(or waiver by the Purchaser) of each of the following additional
conditions:
(a) The Purchaser shall have
received the opinion of Davis Polk & Wardwell, counsel for Parent
and the Company, in form and substance reasonably requested by
Purchaser.
(b) Each of Parent and the Company
shall have delivered to the Purchaser a certificate of the
President and the chief financial officer of each of Parent and
the Company, dated the Stock Closing Date, satisfactory in form
and substance to the Purchaser and its counsel, certifying that
(i) each of Parent and the Company has complied in all material
respects with its agreements and covenants contained herein to be
performed on or prior to the Stock Closing, and (ii) all
representations and warranties of Parent and the Company set forth
in Article 8 hereof are true and correct in all material respects
on and as of the Stock Closing with the same effect as though made
on and as of the Stock Closing Date.
(c) Each of Parent and the Company
shall have delivered to the Purchaser resolutions of the Board of
Directors of Parent and the Company, respectively, duly certified
by the Secretary of Parent and the Company, respectively,
authorizing and approving the transactions contemplated hereby.
- -35
<PAGE>
(d) No event shall have occurred
or be threatened which is reasonably likely to make impossible or
impracticable the satisfaction of any express condition to the
effectiveness of or closing under any Affiliate Agreement.
(e) Purchaser shall have received
a certificate of the chief financial officer of Parent, dated the
date of the Stock Closing, to the effect that, to the best of his
knowledge, no event has occurred or is contemplated by this
Agreement which causes Parent to believe that the nonrecognition
provisions of Code Section 355(a)(1) and (c) shall not apply with
respect to the Spin-Off, other than as a result of Code Section
367(e).
(f) Each of Parent and the Company
shall have received the consent of the banks party to Parent's
current credit facilities, in form and substance reasonably
satisfactory to Parent and the Company, and such consents shall
not have been revoked or Parent and the Company shall have
received assurances satisfactory to Parent and the Company that
such consents will be forthcoming.
10.1.3 Conditions to Obligations of
Parent.
The obligations of Parent to consummate
the Stock Closing shall be subject to the satisfaction or waiver
by Parent to each of the following additional conditions:
(a) Parent shall have received the
opinion of Fried, Frank, Harris, Shriver & Jacobson, counsel for
RTZ, the Purchaser and RTZA, and the opinion of C.H.H. Lawton,
Esq. of RTZ, in each case, in form and substance reasonably
requested by Parent.
(b) Each of RTZ, the Purchaser and
RTZA shall have delivered to Parent a certificate of the President
and the chief financial officer of each of the Purchaser and RTZA,
dated the Stock Closing Date, satisfactory in form and substance
to Parent and its counsel, certifying that (i) each of RTZ, the
Purchaser and RTZA has complied in all material respects with its
agreements and covenants contained herein to be performed on or
prior to the Stock Closing and (ii) all representations and
warranties of each of RTZ, the Purchaser and RTZA set forth in
Article 8 hereof are true and correct in all material respects on
and as of the Stock Closing with the same effect as though made on
and as of the Stock Closing Date.
(c) No event shall have occurred
or be threatened which is reasonably likely to make impossible or
impracticable the satisfaction of any express condition to the
effectiveness of or closing under any Affiliate Agreement.
(d) Nothing shall have occurred
which causes Parent to believe that the nonrecognition provisions
of Code Section 355(a)(1) and (c) shall not apply with respect to
the Spin-Off, other than as a result of Code Section 367(e).
- -36
<PAGE>
10.2 Conditions to Additional Stock Closings.
10.2.1 Conditions to the Obligations of
All Parties.
The obligations of each of the parties
hereto to consummate each Additional Stock Closing shall be
subject to the satisfaction or waiver by each of the parties
hereto of each of the following conditions:
(a) The Stock Closing shall have
been consummated.
(b) The consummation of such
Additional Stock Closing shall not be prohibited by any order or
injunction of a United States federal or state court of competent
jurisdiction, or other governmental or regulatory authority of
competent jurisdiction of the United States, the United Kingdom,
Indonesia, or Spain, and there shall not have been any action
taken or any statute, rule or regulation enacted, promulgated or
deemed applicable to such Additional Stock Closing by any United
States federal or state government or governmental agency or other
governmental or regulatory authority of competent jurisdiction of
the United States, the United Kingdom, Indonesia, or Spain, that
makes consummation of such Additional Stock Closing illegal.
10.2.2 Conditions to Obligations of the
Purchaser.
The obligations of the Purchaser
to consummate each Additional Stock Closing shall be subject to
the satisfaction (or waiver by the Purchaser) of each of the
following conditions: prior to the date the notice of redemption
of the 6.55% Notes is sent to the Trustee and the holders thereof,
(i) there shall have occurred no Company Material Adverse Effect
or Parent Material Adverse Effect and (ii) no change (or any
condition, event or development) shall have occurred which, with
or without the giving of notice or lapse of time, is reasonably
likely to result in a Company Material Adverse Effect or Parent
Material Adverse Effect.
11. Preemptive Rights; Rights of First Offer.
(a) In case of the proposed issuance, sale or
grant by the Company of shares of Company Common Stock or
securities convertible into or exchangeable for, or warrants,
options or other rights to purchase, shares of Company Common
Stock, the Company shall deliver to the Purchaser written notice
of its intent to issue, sell or grant such securities, which shall
specify the number and kind of securities proposed to be issued,
sold or granted, whether such issuance, sale or grant will be
effected through a transaction involving a Public Offering or
otherwise, and, if the transaction does not involve a Public
Offering, the amount and type of consideration which the Company
proposes to be paid for such securities (the "Offer Price"), and
the
- -37
<PAGE>
other material terms and conditions of the
proposed issuance, sale or grant (the "Company Notice").
(b) In the event of any such proposed
issuance, sale or grant in any transaction involving a Public
Offering, the Purchaser shall have the right, exercisable by
written notice to the Company in accordance with Section 11(e), to
purchase up to such number of shares of Company Common Stock, or
securities, warrants, options or rights as will preserve the
Purchaser's and RTZA's then existing percentage ownership of the
outstanding shares of Company Common Stock as at a record date not
more than 30 days prior to such issuance, sale or grant; provided
that any such purchases made by the Purchaser pursuant to this
Section 11(b) shall be made (i) at the time of the closing with
respect to such Public Offering and in accordance with the
Purchaser Notice given prior to the effective date of the
registration statement related thereto, (ii) pursuant to an
exemption from the registration requirements of the Securities Act
and (iii) at a price equal to the public offering price of such
shares of Company Common Stock or such securities, warrants,
options or rights. The term "Public Offering" means an offering
of any such securities pursuant to a registration statement under
the Securities Act which results in the widespread distribution of
such securities to the public.
(c) Subject to Section 11(d), in the event of
any such proposed issuance, sale or grant in any transaction not
involving a Public Offering, the Purchaser shall have the right,
exercisable by written notice to the Company in accordance with
Section 11(e), to purchase (i) such number of shares of Company
Common Stock, or securities, warrants, options or rights, as will
preserve the Purchaser's and RTZA's then existing percentage
ownership of the outstanding shares of Company Common Stock as at
a record date not more than 30 days prior to such issuance, sale
or grant, or (ii) all of such shares of Company Common Stock,
securities, warrants, options or rights, provided that approval of
the Company Board of Directors will be required to the extent that
as a result of such purchases the shares of Company Voting Stock
beneficially owned by RTZ and its Affiliates, alone or acting in
concert with others, equals or exceeds the number of Majority
Shares.
(d) In the event of any such proposed
issuance, sale or grant of any such securities in connection with
any acquisition of securities or assets of another company or
otherwise, the Purchaser shall have the right, exercisable by
written notice to the Company in accordance with Section 11(e), to
purchase up to such number of shares of Company Common Stock, or
securities, warrants, options or rights as will preserve the
Purchaser's and RTZA's then existing percentage ownership of the
outstanding shares of Company Common Stock as at a record date not
more than 30 days prior to such issuance, sale or grant.
- -38
<PAGE>
(e) Any issuance, sale or grant by the Company
to the Purchaser pursuant to this Section 11 shall be on terms no
less favorable than that of the proposed issuance, sale or grant
and for a price in cash and, with respect to securities offered
pursuant to Section 11(b) hereof, for a price equal to the public
offering price per share, and, with respect to securities offered
pursuant to Section 11(c) or Section 11(d) hereof, for a price no
greater than the Offer Price; provided that in the event of any
transaction contemplated by Section 11(b) or Section 11(c) for
consideration other than cash or any transaction contemplated by
Section 11.1(d), the purchase price per share of such securities
purchased by the Purchaser shall be in cash and shall be no
greater than the average of the closing prices of such securities
on the NYSE or other national securities exchange on which such
securities are listed or quoted for the 10 business days preceding
the announcement of such transaction, or if the security is not so
listed or authorized for quotation, the product of the average of
the closing bid and asked prices reported by the National
Association of Securities Dealers Automated Quotation System for
the ten business days preceding the announcement of such
transaction, or if not so listed or authorized for quotation, the
fair market value of the securities as agreed between the
Purchaser and the Company or, failing agreement within 10 days
from the establishment of the Offer Price, as determined by an
independent appraiser mutually acceptable to the Purchaser and the
Company.
(f) Within 10 business days after the date of
receipt by the Purchaser of the Company Notice, the Purchaser
shall send the Purchaser Notice to the Company. The term
"Purchaser Notice" means any written notice given by the
Purchaser, pursuant to which the Purchaser elects whether to
purchase securities in accordance with this Section 11 and, in the
case of a transaction contemplated by Section 11(c), which states
whether the Purchaser elects to purchase its proportionate share
or all of the securities. The Purchaser Notice shall be deemed to
be an irrevocable commitment to purchase from the Company the
number of securities which the Purchaser specifies in the
Purchaser Notice. The closing of any purchase of securities
pursuant to this Article 11 shall occur as promptly as practicable
after receipt by the Company of the Purchaser Notice, on such date
and at such time as the Purchaser and the Company shall agree;
provided that such closing will not take place earlier than the
date of the issuance, sale or grant giving rise to the Purchaser's
rights under this Article 11. Such closing shall take place at
the offices of Fried, Frank, Harris, Shriver & Jacobson, presently
at One New York Plaza, New York, New York 10004, or at such other
place as the Purchaser and the Company shall agree.
(g) If the Purchaser fails to deliver the
Purchaser Notice within 10 business days after receipt of the
Company Notice, or if in the Purchaser Notice the Purchaser elects
not to purchase securities in accordance with this Article 11,
then the Company (i) shall be under no obligation to sell any of
the securities proposed to be issued, sold or granted to the
Purchaser, and (ii) may, within a period of six months from
- -39
<PAGE>
the date of the Company Notice, sell all the
securities proposed to be issued, sold or granted to one or more
third parties for cash at a price per share which, with respect to
shares offered pursuant to Section 11(b) hereof, shall be not less
than the public offering price per share, and, with respect to
securities offered pursuant to Section 11(c) or Section 11(d)
hereof, shall be not less than the Offer Price.
(h) The provisions of Section 11 shall not
apply to any of the following transactions: (i) the grant of
stock options to any director, officer or employee of the Company,
or any consultant or advisor who is receiving cash compensation
from the Company; (ii) the issuance of shares of Company Common
Stock upon the exercise of any of the options specified in clause
(i) above; and (iii) the issuance of shares of Company Common
Stock issued pursuant to the terms of warrants, options, rights or
convertible or exchangeable securities (x) as set forth on
Schedule 8.1.2 or (y) issued, sold or granted in compliance with
the provisions of this Article 11.
12. Termination.
12.1 Termination Prior to Stock Closing.
This Agreement may be terminated and the
transactions contemplated by this Agreement and the Related
Agreements may be abandoned at any time prior to the Stock
Closing:
(i) by the mutual written consent of the
parties hereto; or
(ii) by any party hereto, if there is a
failure of any of the conditions specified in Section 10.1.1
hereof or the Stock Closing has not taken place on or prior to
December 31, 1995.
12.2 Effect of Termination.
In the event this Agreement is terminated
pursuant to Section 12.1.1, all further obligations of the parties
hereunder shall terminate, except that nothing in this Article 12
shall relieve any party hereto of any liability for breach of this
Agreement.
13. Miscellaneous.
13.1 Transfer Taxes.
Parent and the Company jointly and severally
agree that it will pay, and will hold the Purchaser and RTZA
harmless from, any and all liability with respect to any United
States federal, state and local stamp or similar transfer taxes
which may be determined to be payable in connection with the
execution and delivery and performance of this Agreement or any
Related Agreement and the transactions described herein and
therein or any modification, amendment or alteration of the terms
or provisions of this Agreement or any Related Agreement and the
transactions described herein and therein.
- -40
<PAGE>
13.2 Survival of Representations, Warranties
and Agreements, Etc.
All representations and warranties contained
herein or made in writing by any party in connection herewith
shall survive the execution and delivery of this Agreement, except
that the representations and warranties contained in Sections
8.1.7, 8.1.8, 8.1.9, 8.1.10, 8.1.11, 8.1.13, 8.2.5 and 8.2.9
hereof shall survive the execution and delivery of this Agreement
only until the date which is 2 years after the Distribution Date.
All statements contained in any certificate or other instrument
delivered by Parent or the Company pursuant to this Agreement or
any Related Agreement or in connection with the transactions
contemplated hereby or thereby shall constitute representations
and warranties by the Parent or the Company under this Agreement.
All agreements contained herein shall survive indefinitely until,
by their respective terms, they are no longer operative.
13.3 Expenses.
Except as otherwise provided herein, each of
Parent, the Company, RTZ, the Purchaser and RTZA shall pay all
costs and expenses incurred by it or on its behalf in connection
with this Agreement, any Related Agreement and the transactions
contemplated hereby and thereby, including, without limiting the
generality of the foregoing, fees and expenses of its own
financial consultants, accountants and counsel.
13.4 Indemnification.
(a) Parent shall indemnify, defend and
hold harmless RTZ, the Purchaser and RTZA against all liability,
loss or damage, together with all reasonable costs and expenses
related thereto (including reasonable legal and accounting fees
and expenses) ("RTZ Damages") incurred or suffered by RTZ, the
Purchaser or RTZA, arising from the untruth, inaccuracy or breach
of any of the representations, warranties, covenants or agreements
made by Parent herein.
(b) The Company shall indemnify,
defend and hold harmless RTZ, the Purchaser and RTZA against all
RTZ Damages incurred or suffered by RTZ, the Purchaser or RTZA,
arising from the untruth, inaccuracy or breach of any of the
representations, warranties, covenants or agreements made by the
Company herein.
(c) RTZ, the Purchaser and RTZA,
jointly and severally, shall indemnify, defend and hold harmless
Parent and the Company against all liability, loss or damage,
together with all reasonable costs and expenses related thereto
(including reasonable legal and accounting fees and expenses),
incurred or suffered by Parent or the Company arising from the
untruth, inaccuracy or breach of any of the representations,
warranties, covenants or agreements made by each of them herein.
- -41
<PAGE>
(d) Any party seeking indemnification
hereunder (the "Indemnified Party") (i) shall promptly notify the
other party (the "Indemnifying Party") of the pendency of any
claim or proceeding asserted by any third party against the
Indemnified Party pursuant to which indemnity may be sought
hereunder, (ii) shall permit the Indemnifying Party to assume the
defense of the Indemnified Party with respect to any such claim or
proceeding at the Indemnifying Party's sole cost and expense, and
(iii) shall not settle any claim or proceeding for which indemnity
may be sought hereunder without the consent of the Indemnifying
Party. Except as otherwise provided for in this Agreement
(including without limitation Section 13.8 hereof), this Section
13.4 shall provide the exclusive remedy for any misrepresentation
or breach of warranty, covenant, or agreement arising out of this
Agreement or the transactions contemplated hereby.
13.5 Termination of Certain Provisions.
(a) In the event that RTZ and its
Affiliates fail to beneficially own in the aggregate, at any time
after the Stock Closing Date, at least 5% of the then outstanding
shares of the Company Common Stock, Section 9.4.1 and Article 11
hereof shall terminate and have no further force and effect and
all rights and obligations of the parties hereto under the
provisions of such sections shall thereafter cease.
(b) Notwithstanding anything herein to
the contrary, except as otherwise agreed by RTZ, RTZA and the
Purchaser, the Company and Parent will not be entitled to deliver
the notice pursuant to Section 5.1(a), the notice pursuant to
Section 6.1(c), the request pursuant to Section 6.1(d) or any
Additional Purchase Notice pursuant to Section 6.1(a) after
December 31, 1995; provided further that any such notice, whenever
given, shall not provide for, or otherwise result in, the
obligation of RTZA and/or Purchaser, as the case may be, to
commence the Tender Offer, to purchase Additional Shares or to
purchase Option Shares, in each case, after June 30, 1996.
13.6 Further Assurances.
Each party hereto shall do and perform or
cause to be done and performed all further acts and things and
shall execute and deliver all other agreements, certificates,
instruments, and documents as any other party hereto reasonably
may request in order to carry out the intent and accomplish the
purposes of this Agreement and the Related Agreements and the
consummation of the transactions contemplated hereby and thereby.
13.7 Governing Law.
This Agreement and the rights and obligations
of the parties hereto shall be governed by, and construed and
enforced in accordance with, the laws of the State of New York,
without giving effect to the principles of conflicts of law
thereof. Each party hereto hereby irrevocably and unconditionally
consents to submit to the exclusive jurisdiction (except for the
purposes
- -42
<PAGE>
of or proceedings regarding enforcement) of
courts of the State of New York located in the Borough of
Manhattan in The City of New York and of the United States
District Court for the Southern District of New York (the "New
York Courts") for any litigation arising out of or relating to
this Agreement or any Related Agreement and the transactions
contemplated hereby and thereby (and agrees not to commence any
litigation relating thereto except in such courts), waives any
objection to the laying of venue of any such litigation in the New
York Courts and agrees not to plead or claim in any New York Court
that such litigation brought therein has been brought in an
inconvenient forum.
13.8 Specific Performance.
The parties hereto agree that money damages or
other remedy at law would not be sufficient or adequate remedy for
any breach or violation of, or a default under, this Agreement by
them and that in addition to all other remedies available to them,
each of them shall be entitled to the fullest extent permitted by
law to an injunction restraining such breach, violation or default
or threatened breach, violation or default and to any other
equitable relief, including without limitation specific
performance, without bond or other security being required.
13.9 Notice.
All notices and other communications hereunder
shall be in writing and, unless otherwise provided herein, shall
be deemed to have been given when received by the party to whom
such notice is to be given at its address set forth below, or such
other address for the party as shall be specified by notice given
pursuant hereto:
(a)If to Parent or the Company, to it at:
Freeport-McMoRan
1615 Poydras Street
New Orleans, Louisiana 70112
Attn:General Counsel
Fax:(504) 585-3513
with a copy to:
Davis Polk & Wardwell
450 Lexington Avenue
New York, New York 10017
Attn:E. Deane Leonard, Esq.
and David W. Ferguson, Esq.
Fax:(212) 450-4800
- -43
<PAGE>
(b) If to RTZ or the Purchaser to:
The RTZ Corporation PLC
6 St. James's Square
London SWIY 4LD
England
Attn: The Company Secretary
with a copy to:
Fried, Frank, Harris, Shriver
& Jacobson
One New York Plaza
New York, New York 10004
Attn: Allen I. Isaacson, P.C.
(c) If to RTZA to:
RTZ America, Inc.
100 Quentin Roosevelt Blvd.
Suite 503
Garden City, NY 11530
Attn: The Company Secretary
with a copy to:
Fried, Frank, Harris, Shriver
& Jacobson
One New York Plaza
New York, New York 10004
Attn: Allen I. Isaacson, P.C.
13.10 Binding Effect; Assignment.
This Agreement shall inure to the benefit of
and shall be binding upon the parties hereto and their respective
heirs, legal representatives, successors and assigns. Neither
this Agreement nor any of the rights hereunder may be assigned by
any of the parties hereto without the consent of the other
parties.
13.11 Amendment and Modification.
This Agreement may be amended, modified,
supplemented or waived only by written agreement of the party
against whom enforcement of such amendment, modification,
supplement or waiver is sought.
13.12 Headings; References; Execution in
Counterparts; Interpretation.
The headings and captions contained herein are
for convenience only and shall not control or affect the meaning
or construction of any provision hereof. All article, section,
schedule, exhibit and paragraph references are to this Agreement,
unless otherwise expressly provided. This Agreement may be
executed in any number of counterparts, each of which shall be
deemed to be an original and which together shall constitute one
and the same instrument. In this Agreement, unless the context
otherwise requires, words in the singular number or in the plural
number shall each include the singular number and the plural
number.
13.13 Entire Agreement.
This Agreement, the Schedules and Exhibits
attached hereto, constitute the entire agreement, and supersede
all prior agreements and understandings, oral and written, between
the parties hereto with respect to the subject matter hereof.
13.14 Publicity.
Promptly following the execution and delivery
of the Agreement, the parties hereto shall issue a press release
in an agreed form. Thereafter the parties hereto shall consult
regarding the content and timing of any formal disclosure to be
made at any time after the date hereof. Notwithstanding the
foregoing, each of the parties hereto may, in documents required
to be filed by it with any governmental or regulatory authority,
make such statements with respect to the transactions contemplated
hereby as each may be advised is legally necessary upon advice of
its counsel.
- -44-
<PAGE>
PAGE 45 INTENTIONALLY OMITTED
- -45-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed
this Agreement on the date first above written.
FREEPORT-McMoRan INC.
By: /s/ James R. Moffet
Name: James R. Moffett
Title: Chairman of the Board
FREEPORT-McMoRan COPPER & GOLD INC.
By: /s/ George A. Mealey
Name: George A. Mealey
Title: President
THE RTZ CORPORATION PLC
By: /s/ R. Adams
Name: Robert Adams
Title: Director
RTZ INDONESIA LIMITED
By /s/ G.C. Lloyd-Davis
Name: G.C. Lloyd-Davis
Title: Director, Secretary
RTZ AMERICA, INC.
By /s/ C. Lenon
Name: C. Lenon
Title: President
- -46
<PAGE>
TABLE OF CONTENTS
Page
1. Definitions................................................1
2. Registration Rights Agreements.............................7
3. Purchases of Class A Common Stock..........................7
3.1 Sale of Shares.......................................7
3.2 Stock Closing........................................7
4. Certain Actions by Parent..................................8
4.1 Redemption of the 6.55% Notes and the ABC Debentures. 8
5. Tender Offer for, and Conversion of, 6.55% Notes...........9
5.1 Tender Offer.........................................9
5.2 Conversion of 6.55% Notes...........................10
5.3 Transfer of Shares Issued Upon Conversion...........10
5.4 Code Section 367(e) Indemnification.................11
6. Purchase of Additional Shares and Option Shares...........15
6.1 Request to Purchase Additional Shares...............15
6.2 Option to Purchase Class A Common Stock.............17
6.3 Purchase of Additional Shares and Option Shares.....17
7. Spin-Off and Merger.......................................18
8. Representations and Warranties............................19
8.1 Representations and Warranties of Parent and the
............Company.............................................19
8.1.1 Organization and Qualifications.............19
8.1.2 Capitalization..............................19
8.1.3 Authority...................................20
- - i -
<PAGE>
Page
8.1.4 Title......................................21
8.1.5...Compliance with Other Instruments..........22
8.1.6 Consents...................................22
8.1.7 Actions Pending............................23
8.1.8 SEC Reports................................23
8.1.9 Financial Statements.......................24
8.1.10 Compliance with Laws; Permits.............24
8.1.11 Books and Records.........................25
8.1.12 Financial Advisors and Brokers............25
8.1.13 Accuracy of Information...................25
8.1.14 Consolidated Group........................26
8.1.15 Tax Sharing Agreement.....................26
8.2 Representations and Warranties of RTZ, the Purchaser
and RTZA............................................26
8.2.1 Organization................................26
8.2.2 Authority...................................26
8.2.3 Compliance with Other Instruments...........27
8.2.4 Consents....................................27
8.2.5 Actions Pending.............................28
8.2.6 Investment Representations..................28
8.2.7 Financial Advisors and Brokers..............28
8.2.8 Ownership of Securities of Parent and the
Company.............................................28
8.2.9 Accuracy of Information.....................28
- - ii -
<PAGE>
Page
9. Covenants.................................................28
9.1 Covenants of All Parties............................28
9.1.1 Cooperation.................................28
9.1.2 Breach of Representations and Warranties....29
9.1.3 Communications with Regulators..............29
9.1.4 Affiliate Agreements........................30
9.1.5 Certain Specified Actions...................30
9.2 Covenants of Parent and the Company.................30
9.2.1 Conduct of Business Pending the Spin-Off....30
9.2.2 Exchange of Shares..........................31
9.2.3 Certain Arrangements Following the Spin-Off. 31
9.3 Covenants of Parent.................................31
9.3.1 Minimum Price of Sales......................31
9.4 Covenants of the Company............................31
9.4.1 Right to Nominate Directors.................31
9.5 Covenants of RTZ, RTZA and the Purchaser............32
9.5.1 Lack of Certain Stock Ownership.............32
9.5.2 Certain Specified Actions...................32
9.6 Additional Covenants................................32
9.6.1 Future Acquisitions.........................32
9.6.2 Voting......................................33
10. Conditions to Stock Closings..............................33
10.1 Conditions to Stock Closing........................33
- - iii -
<PAGE>
Page
10.1.1 Conditions to the Obligations of All
Parties....................................33
10.1.2 Conditions to Obligations of the Purchaser.34
10.1.3 Conditions to Obligations of Parent........35
10.2 Conditions to Additional Stock Closings.............35
10.2.1 Conditions to the Obligations of All
Parties....................................35
10.2.2 Conditions to Obligations of the Purchaser.36
11. Preemptive Rights; Rights of First Offer..................36
12. Termination...............................................39
12.1 Termination Prior to Stock Closing..................39
12.2 Effect of Termination...............................39
13. Miscellaneous.............................................39
13.1 Transfer Taxes.....................................39
13.2 Survival of Representations, Warranties and
Agreements, Etc....................................39
13.3 Expenses...........................................40
13.4 Indemnification....................................40
13.5 Termination of Certain Provisions..................41
13.6 Further Assurances.................................41
13.7 Governing Law......................................41
13.8 Specific Performance...............................41
13.9 Notice.............................................42
13.10 Binding Effect; Assignment........................43
13.11 Amendment and Modification........................43
13.12 Headings; References; Execution in Counterparts;
Interpretation....................................43
- - v -
<PAGE>
Page
13.13 Entire Agreement..................................43
13.14 Publicity.........................................43
- - v -
<PAGE>
List of Exhibits
Exhibit A Form of Company Registration Rights Agreement
Exhibit B Form of Parent Registration Rights Agreement
Exhibit C Term Sheet for Benefit Allocation Agreement
Exhibit D Term Sheet for Transaction Management Services
Agreement
Exhibit 8.1.15 Certain Actions
<PAGE>
List of Schedules
Schedule 8.1.2 -- Capitalization
Schedule 8.1.3 -- Authority
Schedule 8.1.6 -- Consents
Schedule 8.1.9 -- Financial Statements
Schedule 8.1.10 -- Compliance with Laws; Permits
Schedule 8.1.14 -- Consolidated Group
Schedule 8.1.15 -- Tax Sharing Agreements
Schedule 8.2.4 -- Consents
Schedule 9.1.5 -- Maintenance of the Voting Structure of the
Company
Schedule 9.2.1 -- Conduct of Business Pending the Spin-Off
Schedule 9.5.2 -- Certain Disallowed Transactions
EXHIBIT C
Term Sheet for Benefit Allocation Agreement
Retiree Medical, Dental and Life Insurance (FAS 106) Liability
Liabilities for all current retirees to remain with FTX.
Liabilities for all current employees to follow the
employees (i.e., FTX to retain liability for those employees
who remain with FTX; liability transferred to FCX for
employees who go with FCX). Liabilities for dual employees
to go to the "primary" employer in each case.
FCX to make a "true-up" payment to FTX to cover FCX's share
of the retiree medical liability for those employees who
provided services to FCX.
SECAP, EBP and Deferred VCIP/AIP/PIAP/LTPIP
Liabilities for all current retirees to remain with FTX.
Liabilities for all current employees to follow the
employees. Liabilities for dual employees to be split on a
pro-rata basis.
FCX to be paid an amount by FTX equal to the liability
assumed by FCX.
Pension Plan Liabilities
Liabilities and corresponding plan assets for all current
retirees to remain with FTX.
Liabilities and corresponding plan assets for all current
employees to follow the employees. Liabilities/Assets for
dual employees to be split on a pro-rata basis.
Stock Options, Stock Appreciation Rights, Stock Incentive Units
Upon the FTX/FCX split, the exercise price of existing FTX
options/SARs/SIUs will be adjusted and new FCX
options/SARs/SIUs will be granted in accordance with the
terms of the FCX Adjusted Stock Award Plan.
FCX to be paid an amount by FTX equal to the liability
assumed by FCX.
<PAGE>
EXHIBIT D
Term Sheet for Transition Management Services Agreement
Overview
The management services agreement in effect as of the date first
above written and containing substantially the terms set forth
below shall remain in effect following the Distribution Date.
Under the Spin-Off Private Letter Ruling, management services will
be transitioned over to the Company within one year of the
Distribution Date.
Parent Supplied Administrative Services
Parent furnishes to the Company, as the Company may request or
require from time to time, the following services:
1. periodic advice and consultation
2. accounting, financial, legal, tax and insurance
3. employee personnel
4. research and development
5. systems and communication
6. geological, engineering, design, procurement,
environmental and construction management
7. sales and marketing
8. such other services as are customarily provided by the
Parent to the Company as of the Distribution Date.
Company Supplied Services
The Company provides Parent with the use of its employees with
expertise in mineral exploration and development.
Costs
The services provided by the Company or Parent, as the case may
be, are performed for an amount equal to the fully allocated cost
basis and are charged to the Company or Parent, as the case may
be, in accordance with reasonable policies and procedures which
are in effect from time to time for intercompany allocation of
costs.
Technology
Parent has granted to the Company the non-exclusive right and
license, subject to certain conditions, to use certain
technologies relating to the processing of copper.
<PAGE>
EXHIBIT 8.1.15
The following are certain actions which Parent and the
Company would agree not to take, unless they first obtained either
an opinion of nationally recognized tax counsel or a supplemental
private letter ruling from the IRS that the contemplated action
would not adversely affect the tax-free nature of the Spin-Off or
the ability of Parent to rely on the Spin-Off Private Letter
Ruling, under the Distribution Agreement to be signed between
Parent and the Company. Capitalized terms used herein and not
otherwise defined have the meaning ascribed to them in the
Agreement Dated as of May 2, 1995 by and between Freeport McMoRan
Inc. and Freeport McMoRan Copper & Gold Inc., on the one hand, and
The RTZ Corporation PLC, RTZ Indonesia Limited and RTZ America,
Inc., on the other hand.
Parent and the Company will not initiate or support
any action during the five-year period following the
Spin-Off that would in any way change the ability of
the holders of the Class B Common Stock to elect at
least 80% of the members of the Board of Directors of
the Company and the ability of the holders of the
Class A Common Stock and the Preferred Stock of the
Company to elect the remaining members of the Board,
including without limitation, voting to combine the
Class A Common Stock and Class B Common Stock.
During the two-year period following the Spin-Off (the
"Two-Year Period"), the Company will not issue shares
of any preferred stock that would not entitle the
holders to vote together with the Class A Common Stock
and the existing classes of Preferred Stock in the
election of the members of the Board of the Company.
During the Two-Year Period, the Company will not
dispose of any of its direct interests in P.T.
Freeport Indonesia Company ("PT-FI").
Except for any transactions that are contemplated in
the Participation Agreement, the Loan Agreement, the
Implementation Agreement and any other agreement
between the Company, RTZ and their respective
subsidiaries, the Company will use its best efforts to
cause PT-FI to continue the conduct of its copper and
gold business in a substantially unchanged manner
during the Two-Year Period as such business is
operated prior thereto and to use its business assets
in such business.
During the Two-Year Period, Parent will not dispose of
its direct or indirect interests in Freeport-McMoRan
Resource Partners, Limited Partnership ("FRP").
PAGE>
During the Two-Year Period, Parent, FRP, the Company
and PT-FI will not take affirmative steps to merge
into another corporation, to liquidate or to sell or
otherwise dispose of any of their assets except for
asset dispositions made in the ordinary course of
business.
Parent and the Company will not directly or indirectly
redeem or otherwise reacquire shares of their Common
Stock and Class B Common Stock, respectively, during
the Two-Year Period, except to the extent that (i) a
corporate business purpose supports such redemption or
reacquisition, (ii) the redeemed or reacquired stock
is widely held, (iii) the redemption or reacquistion
is made in the open market, (iv) to the best of the
knowledge of Parent or the Company, as the case may
be, the redemption or reacquisition is not made from
(a) directors or officers or (b) any shareholder
owning 1% or more of the outstanding stock of the
corporation, and (v) Parent and the Company will have
no plan or intention, as of the date of the Spin-Off,
that the aggregate amount of stock repurchased would
equal or exceed 20% of the outstanding stock of the
relevant corporation. Furthermore, neither Parent nor
the Company will initiate a periodic stock redemption
program during the Two-year Period unless such program
would be expected to comply with the requirements
described in (i) through (v) above.
The Company will not redeem or otherwise reacquire
share of its Class B Common Stock during the Two-Year
Period, to the extent that such redemption or
reacquisition would result in the Class B Common Stock
representing less than 50% of the common equity of the
Company.
The Transitional Management Services Agreement will
last for no more than one year.
Except for the temporary supply of certain
administrative services for one year, each of Parent
and the Company will arrange for the provision of the
administrative services requisite to the conduct of
its business.
Each of Parent and the Company will reaffirm, as of
the date of the Spin-Off, that all of the
representations set forth in the Spin-Off Private
Letter Ruling secured from the IRS remain valid.
SCHEDULE 8.1.2
FCX Capitalization as of April 30, 1995
Authorized Outstanding
Class B Common Stock 200,000,000 139,980,763
Special Stock(1)
Class A Common Stock(2) 88,600,000 65,804,268
Special Preference(3) 26,400,000 26,341,176
Undesignated Special Stock 135,000,000 0
Total Special Stock 250,000,000 92,145,444
Preferred Stock
Step-Up Convertible Preferred(4) 700,000 700,000
Gold-Denominated Preferred(5) 300,000 300,000
Gold-Denominated Preferred Series II(6) 215,279 215,279
Silver-Denominated Preferred(7) 119,000 119,000
Undesignated Preferred Stock 48,665,721 0
Total Preferred Stock 50,000,000 1,334,279
(1) The Board of Directors of FCX has the right to designate authorized
and unissued shares of Special Stock as additional Class A Common
Shares or as one or more additional series of capital stock. The
currently designated shares of Special Shares are 88,600,000 Class
A Shares and 26,400,000 Special Preference Shares.
(2) In addition to the currently outstanding Class A Common Shares,
additional Class A Common Shares have been authorized for the
issuance upon conversion of the Special Preferences Shares (9.1
million Class A Shares) and upon conversion of the Step-Up
Convertible Preferred Shares (11.7 million Class A Shares).
Reflects FCX purchases of 168,300 shares of Class A stock pursuant
to its share repurchase (purchases through April 30, 1995) program
including 81,200 shares which will not settle until after April 30,
1995.
(3) The Special Preference Shares currently are represented by an
aggregate of 8,956,000 Depositary Shares, each representing 2-16/17
Special Preference Shares.
(4) The Step-Up Convertible Preferred Shares are represented by an
aggregate of 14,000,000 Depositary Shares, each representing 0.05
Step-Up Convertible Preferred Shares.
(5) The Gold-Denominated Preferred Shares are represented by an
aggregate of 6,000,000 Depositary Shares, each representing 0.05
Gold-Denominated Preferred Shares.
(6) The Gold-Denominated Preferred Series II Shares are represented by
an aggregate of 4,305,580 Depositary Shares, each representing 0.05
Gold-Denominated Preferred Series II Shares.
(7) The Silver-Denominated Preferred Shares are represented by an
aggregate of 4,760,000 Depositary Shares, each initially
representing 0.025 Silver-Denominated Preferred Shares.
<PAGE>
FTX Capitalization as of April 30, 1995
Authorized Outstanding
Common Stock(1)(2) 300,000,000 147,935,714
Preferred Stock
$4.375 Convertible Exchangeable(3) 5,000,000 1,001,690
Undesignated Preferred Stock 45,000,000 0
Total Preferred Stock 50,000,000 1,001,690
(1) Outstanding shares do not include (i) 13.9 million shares of common
stock authorized for issuance under FTX's stock option plans
(including 2.4 million available for future grants) of which 7.8
million shares were issuable upon exercise of stock options
outstanding at March 31, 1995, excluding stock appreciation rights
outstanding at March 31, 1995 (see Note 2), (ii) 11 million shares
authorized for issuance upon conversion of FTX's Zero Coupon
Convertible Subordinated Debentures (ABC's), (iii) 18.4 million
shares authorized for issuance upon conversion of FTX's 6.55%
Convertible Subordinated Notes, and (iv) 2.4 million shares
authorized for issuance upon exchange of FTX's $4.375 Convertible
Exchangeable Preferred Stock (see Note 2).
(2) This schedule does not take into account exercises of stock options
by employees which may occur between April 30 and the date of
signing of the Stock Purchase Agreement.
(3) In accordance with an exchange offer, FTX accepted for exchange
3,998,310 shares of its $4.375 Convertible Exchangeable Preferred
Stock for 11,395,181 shares of its common stock. Each of the
remaining shares of $4.375 Convertible Exchangeable Preferred Stock
is convertible into FTX common stock at a conversion price of
$21.26 per share or the equivalent of 2.35 shares of FTX common
stock.
- -2-
<PAGE>
SCHEDULE 8.1.3
AUTHORITY
NONE
<PAGE>
SCHEDULE 8.1.6
CONSENTS
1. In accordance with the provisions of the existing Chemical
Bank credit facilities, certain consents are required. However,
Chemical Bank, as Agent under the existing credit facilities, has agreed
in a letter agreement dated as of April 27, 1995 to underwrite such
consents.
<PAGE>
SCHEDULE 8.1.9
FINANCIAL STATEMENTS
NONE
<PAGE>
SCHEDULE 8.1.10
COMPLIANCE WITH LAWS; PERMITS
NONE
<PAGE>
SCHEDULE 8.1.14
California
Kansas
Minnesota
Montana
Nebraska
North Dakota
<PAGE>
SCHEDULE 8.1.15
TAX SHARING AGREEMENT
Section 4 of the Management Services Agreement dated as of May 1, 1988
between Freeport-McMoRan Copper Company, Inc., Freeport Indonesia,
Incorporated and Freeport-McMoRan Inc. contains a tax sharing agreement
for the period during which the companies were members of an affiliated
group that filed a consolidated federal income tax return.
<PAGE>
SCHEDULE 8.2.4
CONSENTS
NONE
SCHEDULE 9.1.5
MAINTENANCE OF THE VOTING STRUCTURE OF THE COMPANY
Parent, the Company, RTZA, RTZ, the Purchaser and each of their
Affiliates shall not initiate or support any action during the
five-year period following the Spin-Off that would in any way
change the ability of the holders of the Class B Common Stock to
elect at least 80% of the members of the Board of Directors of the
Company and the ability of the holders of the Class A Common Stock
and the Preferred Stock of the Company to elect the remaining
members of the Board of Directors, including without limitation
voting to combine the Class A Common Stock and Class B Common
Stock.
<PAGE>
SCHEDULE 9.2.1
CONDUCT OF BUSINESS PENDING THE SPIN-OFF
NONE
<PAGE>
SCHEDULE 9.5.2
CERTAIN DISALLOWED TRANSACTIONS
RTZA and RTZ will not during the five-year period following the
Spin-Off sell, exchange, transfer or otherwise dispose of any
shares of Parent Common Stock received upon the conversion of the
6.55% Notes or any shares of the Class B Common Stock received in
the Spin-Off with respect thereto unless they first obtain either
a supplemental private letter ruling from the IRS or an opinion of
nationally recognized tax counsel, reasonably satisfactory to
Parent, that such disposition will not adversely affect the tax-
free nature of the Spin-Off or the ability of Parent to rely on
the Spin-Off Private Letter Ruling, in each case other than with
respect to Section 367(e). RTZA, RTZ and their Affiliates shall
not acquire Class B Common Stock (whether by effecting open market
transactions, initiating a tender offer for such stock or
otherwise) in a transaction that is not described in this
Agreement during the five-year period following the Spin-Off,
unless they first obtain either a supplemental private letter
ruling from the IRS or an opinion of nationally recognized tax
counsel, reasonably satisfactory to Parent, that such acquisition
shall not adversely affect the tax-free nature of the Spin-Off or
the ability of Parent to rely on the Spin-Off Private Letter
Ruling.
REGISTRATION RIGHTS AGREEMENT
between
FREEPORT-McMoRan INC.,
on the one hand,
and
THE RTZ CORPORATION PLC, and
RTZ AMERICA, INC.,
on the other hand
Dated as of May 12, 1995
<PAGE>
REGISTRATION RIGHTS AGREEMENT, dated as of May 12, 1995,
between FREEPORT-McMoRan INC., a Delaware corporation (the
"Company"), The RTZ CORPORATION PLC, a company organized under the
laws of England ("RTZ"), and RTZ AMERICA, INC., a Delaware
corporation ("RTZA") and a subsidiary of RTZ.
1. Definitions. As used herein, unless the context
otherwise requires, the following terms have the following
respective meanings:
1.1 "Affiliate" shall have the meaning ascribed to
such term in Rule 12b-2 of the General Rules and Regulations under
the Exchange Act.
1.2 [Reserved]
1.3 [Reserved]
1.4 "Common Stock" means the common stock, par value
$.10 per share, of the Company.
1.5 "Commission" means the Securities and Exchange
Commission or any other federal agency at the time administering
the Securities Act.
1.6 "Exchange Act" means the Securities Exchange Act
of 1934, as amended, or any similar federal statute, and the rules
and regulations of the Commission thereunder, all as the same
shall be in effect at the time. Reference to a particular section
of the Securities Exchange Act of 1934, as amended, shall include
a reference to the comparable section, if any, of any such similar
Federal statute.
1.7 "Person" means a corporation, an association, a
partnership, an organization, a business, an individual, a
governmental or political subdivision thereof or a governmental
agency.
1.8 "Purchase Agreement" shall have the meaning set
forth in Section 2.
1.9 "Registration Expenses" means all expenses incident to the
Company's performance of or compliance with Section 3, including,
without limitation, all registration, filing and NASD fees, all
listing fees, all fees and expenses of complying with securities
or blue sky laws (including, without limitation, reasonable fees
and disbursements of counsel for the underwriters in connection
with blue sky qualifications of the Registrable Securities), all
word processing, duplicating and printing expenses, messenger and
delivery expenses, the fees and disbursements of counsel for the
Company and of its independent public accountants, including the
expenses of "cold comfort" letters required by or incident to such
performance and compliance, any fees and disbursements of
underwriters (including, without limitation, fees and expenses of
<PAGE>
counsel to the underwriters) customarily paid by issuers or
sellers of securities; provided, however, that Registration
Expenses shall exclude, and RTZ shall pay, or cause to be paid,
all underwriters' fees and underwriting discounts and commissions
and transfer taxes in respect of the Registrable Securities being
registered and the fees and expenses of counsel to RTZ and RTZA.
1.10 "Registrable Securities" means the shares of
Common Stock acquired by RTZA in connection with the transactions
contemplated by the Purchase Agreement, and any other securities
issued in respect of, in exchange for, or in substitution of, such
shares of Common Stock acquired by RTZA in connection with the
transactions contemplated by the Purchase Agreement, whether by
reorganization, recapitalization, reclassification, merger,
consolidation, spin-off, partial or complete liquidation, stock
dividend, split-up, sale of assets, distribution to stockholders
or combination of the shares or any other change in the Company's
capital structure, or otherwise. As to any particular Registrable
Securities, once issued such securities shall cease to be
Registrable Securities when (a) a registration statement with
respect to the sale of such securities shall have become effective
under the Securities Act and such securities shall have been
disposed of in accordance with such registration statement, (b)
they shall have been sold as permitted by, and in compliance with,
Rule 144 (or successor provision) promulgated under the Securities
Act, or (c) they shall have ceased to be outstanding.
1.11 "Required Number of Shares" means Registrable
Securities having at the time of a request for registration under
Section 3.1 a minimum anticipated offering price (before
underwriters' commissions and discounts) of at least $50,000,000;
provided, that if RTZA then owns Registrable Securities having
such a minimum anticipated offering price of less than $50,000,000
the term "Required Number of Shares" shall mean such number of
shares of Registrable Securities then owned by RTZA.
1.12 [Reserved]
1.13 "Section 3.1 Sale Amount" shall have the meaning
set forth in Section 3.1(g).
1.14 "Section 3.2 Sale Amount" shall have the meaning
set forth in Section 3.2(c).
1.15 "Securities Act" means the Securities Act of
1933, or any similar federal statute, and the rules and
regulations of the Commission thereunder, all as the same shall be
in effect at the time. References to a particular section of the
Securities Act of 1933 shall include a reference to the comparable
section, if any, of any such similar federal statute.
- -2-
<PAGE>
2. Background. Pursuant to an Agreement dated as of May
2, 1995 (the "Purchase Agreement"), between the Company, Freeport-
McMoRan Inc., RTZ, RTZ Indonesia Limited, and RTZA and the
transactions contemplated thereby, RTZA may acquire shares of
Common Stock.
3. Registration Under the Securities Act, etc.
3.1. Registration on Request.
(a) Request. At any time prior to December
31, 2021 upon the written request of RTZ that the Company effect
the registration under the Securities Act of the Required Number
of Shares (as defined in Section 1), the Company will use its best
efforts to effect the registration under the Securities Act of the
Registrable Securities which the Company has been so requested to
register by RTZ.
(b) Registration of Other Securities.
Whenever the Company shall effect a registration pursuant to this
Section 3.1 in connection with an underwritten offering requested
by RTZ, no securities other than Registrable Securities of RTZA
shall be included among the securities covered by such
registration unless (a) the managing underwriter of such offering
shall have advised RTZ in writing that the inclusion of such other
securities would not adversely affect such offering, and (b) RTZ
shall have consented in writing to the inclusion of such other
securities, which consent may be subject to terms and conditions
determined by RTZ in its sole reasonable discretion (any Person in
respect of whose securities the managing underwriter and RTZ so
consents is referred to as a "Selling Holder").
(c) Registration Statement Form.
Registrations under this Section 3.1 shall be on such appropriate
registration form of the Commission as shall be selected by the
Company or by means of a shelf registration pursuant to Rule 415
under the Securities Act, if so requested by RTZ and if the
Company is then eligible to use such a registration.
(d) Expenses. The Company will pay the
Registration Expenses in connection with any registration
requested pursuant to this Section 3.1.
(e) Effective Registration Statement. Subject
to Section 3.1(i), a registration requested pursuant to this
Section 3.1 shall not be deemed to have been effected (i) unless a
registration statement with respect thereto has become effective
and has been kept continuously effective for a period of at least
120 days (or such shorter period which will terminate when all the
Registrable Securities covered by such registration statement have
been sold pursuant thereto), (ii) if after it has become
effective, such registration is interfered with by any stop order,
injunction or other order or requirement of the Commission or
other governmental agency or court for any reason
- -4-
<PAGE>
not attributable to RTZA and has not thereafter
become effective, or (iii) if the conditions to closing specified
in the underwriting agreement, if any, entered into in connection
with such registration are not satisfied or waived, other than by
reason of a failure on the part of RTZA.
(f) Selection of Underwriters. The
underwriter or underwriters of each underwritten offering of the
Registrable Securities so to be registered shall be selected by
RTZ and the managing underwriter(s) shall be reasonably acceptable
to the Company.
(g) Priority in Requested Registration. If
the managing underwriter of any underwritten offering shall advise
the Company in writing (with a copy to RTZ) that, in its opinion,
the number of Registrable Securities and other securities (if any)
requested to be included in such registration exceeds the number
which can be sold in an orderly manner in such offering within a
price range acceptable to RTZ (the "Section 3.1 Sale Amount"),
the Company will include in such registration: (i) first, the
Registrable Securities requested by RTZ to be included in such
registration; and (ii) second, to the extent the number of
Registrable Securities requested by RTZ to be included in such
registration is less than the Section 3.1 Sale Amount, the shares
of Common Stock requested to be included by such other Selling
Holders, with the reasonable consent of RTZ.
(h) Limitations on Registration on Request.
Notwithstanding anything in this Section 3.1 to the contrary, in
no event will the Company be required to effect, in the aggregate
pursuant to this Section 3.1, more than five registrations
pursuant to this Agreement.
(i) Right to Withdraw. RTZ shall have the
right to notify the Company in writing that it has determined that
the registration statement prepared pursuant to this Section 3.1
be abandoned or withdrawn, provided that such request shall be
irrevocable and
(i) if the Company receives such a
request from RTZ after a registration statement with
respect to such Registrable Securities has been filed,
then (A) RTZ's request shall be counted for purposes
of the requests for which RTZ is entitled pursuant to
this Section 3.1 and (B) the Company shall pay all
Registration Expenses in connection with such request
for registration; and
(ii) if the Company receives such a
request from RTZ before a registration statement with
respect to such Registrable Securities has been filed,
then (A) RTZ's request shall not be counted for
purposes of
- -4-
<PAGE>
the requests for registration to which RTZ is
entitled pursuant to this Section 3.1 and (B) RTZ
shall pay all Registration Expenses in connection with
such request for registration;
provided, further, however, that if because of a material adverse
change in the business of the Company the managing underwriter
shall have advised RTZ that the Registrable Securities covered by
the registration statement cannot be sold in an orderly manner in
an offering within a price range reasonably acceptable to RTZ,
then (A) RTZ's request shall not be counted for purposes of the
requests for registration to which RTZ is entitled pursuant to
this Section 3.1 and (B) the Company shall pay all Registration
Expenses in connection with such request for registration;
provided, further, if upon the fifth request for registration made
by RTZ pursuant to this Section 3.1 (excluding requests that are
not counted pursuant to this Section 3.1(i)) the managing
underwriter of any underwritten offering shall advise RTZ that the
Registrable Securities covered by the registration statement
cannot be sold in an orderly manner in such offering within a
price range reasonably acceptable to RTZ because of any reason
other than a material adverse change in the business of the
Company, then RTZ shall have the one-time right to notify the
Company in writing that it has determined that the registration
statement be abandoned or withdrawn and to make the election
described in the following sentence. Upon such notice pursuant to
the last proviso of the preceding sentence, at the election of
RTZ, either (a) RTZ's request shall be counted for purposes of the
requests for which RTZ is entitled pursuant to this Section 3.1
and the Company shall pay all Registration Expenses in connection
with such request for registration or (b) RTZ shall pay all
Registration Expenses in connection with such request for
registration and RTZ's request shall not be counted for purposes
of the requests for registration to which RTZ is entitled pursuant
to this Section 3.1.
3.2. Incidental Registration.
(a) Right to Include Registrable Securities.
If the Company proposes at any time to register any of its
securities under the Securities Act by registration on Forms S-1,
S-2 or S-3 or any successor or similar form(s) (except
registrations on such Forms or similar form(s) solely for
registration of securities in connection with an employee benefit
plan or dividend reinvestment plan or an acquisition, merger,
reorganization, or consolidation), whether or not for sale for its
own account, it will each such time give prompt written notice to
RTZ of its intention to do so; provided that this Section 3.2
shall not apply to any registration of securities of the Company
after December 31, 2021. Upon the written request of RTZ made as
promptly as practicable and in any event within 30 days after the
receipt of any such notice (15 days if the Company states in such
written notice or gives telephonic notice to RTZ, with written
confirmation to follow promptly thereafter, that (i) such
registration will be on Form S-3 and (ii) such shorter period of
time is required because of a planned filing date)
- -5-
<PAGE>
(which request shall specify the Registrable
Securities intended to be disposed of by RTZA), the Company will
use its best efforts to effect the registration under the
Securities Act of all Registrable Securities which the Company has
been so requested to register by RTZ; provided, however, that if,
at any time after giving written notice of its intention to
register any securities and prior to the effective date of the
registration statement filed in connection with such registration,
the Company shall determine for any reason not to register or to
delay registration of such securities, the Company shall give
written notice of such determination to RTZ and (i) in the case of
a determination not to register, shall be relieved of its
obligation to register any Registrable Securities in connection
with such registration (but not from any obligation of the Company
to pay the Registration Expenses in connection therewith), without
prejudice, however, to the rights of RTZ to request that such
registration be effected as a registration under Section 3.1 and
(ii) in the case of a determination to delay registering, shall be
permitted to delay registering any Registrable Securities for the
same period as the delay in registering such other securities. No
registration effected under this Section 3.2 shall relieve the
Company of its obligation to effect any registration upon request
under Section 3.1. If a registration is to cover an underwritten
offering, such Registrable Securities shall be included in the
underwriting on the same terms and conditions as the securities
otherwise being sold through the underwriters.
(b) Expenses. The Company will pay all
Registration Expenses in connection with registration of
Registrable Securities requested pursuant to this Section 3.2.
(c) Priority in Incidental Registrations. If
the managing underwriter of any underwritten offering shall inform
the Company of its belief that the number or type of Registrable
Securities and other securities (if any) requested to be included
in such registration would materially adversely affect such
offering, then the Company will include in such registration, to
the extent of the number and type which the Company is so advised
can be sold in (or during the time of) such offering ("Section 3.2
Sale Amount"), (i) first, in the case of an offering initiated by
a stockholder who has been granted registration rights in
accordance with Section 6, those of such stockholder or, in the
case of an offering initiated by the Company, those for the
Company's account, and (ii) second, to the extent the Section 3.2
Sale Amount is not exceeded, such Registrable Securities requested
by RTZ to be included in such registration.
(d) Selection of Managing Underwriter. The
managing underwriter of any underwritten offering pursuant to this
Section 3.2 shall be selected by the Company at its sole
discretion.
(e) Right to Withdraw. RTZ shall have the
right to withdraw its request for inclusion of its Registrable
Securities in any registration statement pursuant to
- -6-
<PAGE>
this Section 3.2 by giving written notice to the
Company of its request to withdraw, as soon as reasonably
practicable, and in any case, prior to the execution of the
underwriting agreement, in the case of an underwritten offering,
or at any time, in all other cases, provided that any such
withdrawal request shall be irrevocable and, after making such a
request, the Company shall not be obligated to include Registrable
Securities of RTZA in such registration; provided further that RTZ
shall reimburse the Company for the applicable share of filing
fees paid by the Company with respect to the Registered Securities
of RTZA.
3.3. Registration Procedures. If and whenever the
Company is required to use its best efforts to effect the
registration of any Registrable Securities under the Securities
Act as provided in Section 3.1 and 3.2, the Company will use its
best efforts to effect the registration and the sale of such
Registrable Securities in accordance with the intended method of
disposition thereof and will as expeditiously as possible:
(i) prepare and (as soon as practicable, and
in any event within 75 days in the case of Forms S-1
or S-2 and 45 days in the case of a registration
requested on Form S-3 after the end of the period
within which requests for registration may be given to
the Company) file with the Commission the requisite
registration statement to effect such registration and
thereafter use its best efforts to cause such
registration statement to become effective; provided
that before filing a registration statement or
prospectus or any amendments or supplements thereto,
or comparable statements under securities or blue sky
laws of any jurisdiction, the Company will furnish to
the counsel of RTZ and the underwriters, if any,
copies of all such documents proposed to be filed
(including all exhibits thereto), which documents will
be subject to the reasonable review of such counsel
and the Company will give consideration to the
reasonable suggestions of such counsel;
(ii) prepare and file with the Commission such
amendments and supplements to such registration
statement and the prospectus used in connection
therewith as may be necessary to keep such
registration statement effective and to comply with
the provisions of the Securities Act with respect to
the disposition of all Registrable Securities and
other securities covered by such registration
statement for such period as shall be required for the
disposition of all of such Registrable Securities and
other securities, provided that such period need not
exceed 120 days;
(iii) furnish, without charge, to RTZ and each
underwriter such number of conformed copies of such
registration statement and of each such amendment and
supplement thereto (in each case including all
exhibits),
- -7-
<PAGE>
such number of copies of the prospectus
contained in such registration statement (including
each preliminary prospectus and any summary
prospectus) and any other prospectus filed under Rule
424 under the Securities Act, in conformity with the
requirements of the Securities Act, and such other
documents, as RTZ and such underwriters may reasonably
request;
(iv) for up to 120 days after the effective
date of the registration statement for such
Registrable Securities to use its best efforts (x) to
register or qualify all Registrable Securities and
other securities covered by such registration
statement under such other securities or blue sky laws
of such States of the United States of America where
an exemption is not available and as RTZ shall
reasonably request, (y) to keep such registration or
qualification in effect for so long as such
registration statement remains in effect, and (z) to
take any other action which may be reasonably
necessary or advisable to enable such sellers to
consummate the disposition in such jurisdictions of
the securities to be sold by RTZA, except that the
Company shall not for any such purpose be required to
qualify generally to do business as a foreign
corporation in any jurisdiction wherein it would not
but for the requirements of this subdivision (iv) be
obligated to be so qualified or to consent to general
service of process in any such jurisdiction;
(v) furnish to RTZ, RTZA and each underwriter,
if any, participating in the offering of the
securities covered by such registration statement, a
signed counterpart of
(x) an opinion of counsel for the
Company, and
(y) a "comfort" letter signed by the
independent public accountants who have
certified the Company's financial statements
included or incorporated by reference in such
registration statement
covering substantially the same matters with respect
to such registration statement (and the prospectus
included therein) and, in the case of the accountant's
comfort letter, with respect to events subsequent to
the date of such financial statements, as are
customarily covered in opinions of issuer's counsel
and in accountants' comfort letters delivered to the
underwriters in underwritten public offerings of
securities (and dated the dates such opinions and
comfort letters are customarily dated);
- -8-
<PAGE>
(vi) notify RTZ, RTZA and each managing
underwriter, if any, participating in the offering of
the securities covered by such registration statement,
(a) at any time when a prospectus
relating thereto is required to be delivered under the
Securities Act, upon discovery that, or upon the
happening of any event as a result of which, in the
judgment of the Company, the prospectus included in
such registration statement, as then in effect,
includes an untrue statement of a material fact or
omits to state any material fact required to be stated
therein or necessary to make the statements therein
not misleading, in the light of the circumstances
under which they were made, and at the request of any
such seller promptly prepare and furnish to it a
reasonable number of copies of a supplement to or an
amendment of such prospectus as may be necessary so
that, in the judgment of the Company, as thereafter
delivered to the purchasers of such securities, such
prospectus shall not include an untrue statement of a
material fact or omit to state a material fact
required to be stated therein or necessary to make the
statements therein not misleading in the light of the
circumstances under which they were made,
(b) when the prospectus or any
supplement or post-effective amendment has been filed,
and, with respect to the registration statement or any
post-effective amendment thereto, when the same has
become effective,
(c) of any request by the Commission for
amendments or supplements to the registration
statement or the prospectus or for additional
information (and deliver promptly to RTZ (or its
counsel) and each managing underwriter, if any, copies
of all correspondence between the Commission and the
Company, its counsel or auditors and all memoranda
relating to discussions with the Commission or its
staff with respect to such registration statement),
(d) of the issuance by the Commission of
any stop order suspending the effectiveness of the
registration statement or the initiation of any
proceedings for that purpose,
(e) if at any time the representations
and warranties of the Company contemplated by Section
3.4 below cease to be accurate in all material
respects, and
- -9-
<PAGE>
(f) of the receipt by the Company of any
notification with respect to the suspension of the
qualification of the Registrable Securities or other
securities covered by the registration statement for
sale in any jurisdiction or the initiation or
threatening of any proceeding of such purpose;
(vii) otherwise use its best efforts to comply
with all applicable rules and regulations of the
Commission, and make available to its security
holders, as soon as reasonably practicable, an
earnings statement covering the period of at least
twelve months, but not more than eighteen months,
beginning with the first full calendar month after the
effective date of such registration statement, which
earnings statement shall satisfy the provisions of
Section 11(a) of the Securities Act and Rule 158
promulgated thereunder, and promptly furnish to RTZ
and each underwriter a copy of any amendment or
supplement to such registration statement or
prospectus;
(viii) provide and cause to be maintained a
transfer agent and registrar for all Registrable
Securities and other securities covered by such
registration statement from and after a date not later
than the effective date of such registration;
(ix) use its best efforts to list all
Registrable Securities and other securities covered by
such registration statement on any national securities
exchange or national quotations system on which
Registrable Securities of the same class covered by
such registration statement are then listed and, if
not so listed, to be listed on a national securities
exchange or, failing that, to be designated as
qualified for trading on the NASD automated quotation
system and, if designated as qualified for trading on
the NASD automated quotation system, use its best
efforts to secure designation of all such Registrable
Securities covered by such registration statement as a
NASDAQ "national market system security" within the
meaning of Rule 11Aa2-1 under the Exchange Act or,
failing that, to secure NASDAQ authorization for such
Registrable Securities and, without limiting the
generality of the foregoing, to arrange for at least
two market makers to register as such with respect to
such Registrable Securities with the NASD;
(x) in the event of the issuance of any stop
order suspending the effectiveness of a registration
statement, or of any order suspending or preventing
the use of any related prospectus or suspending the
qualification of any Registrable Securities or other
securities included in such registration statement for
sale in any jurisdiction, use its best efforts
promptly to obtain the withdrawal of such order; and
- -10-
<PAGE>
(xi) take all such other actions as are
customary, necessary or advisable in order to expedite
or facilitate the disposition of such Registrable
Securities.
The Company may require RTZA to furnish the Company in
writing as promptly as reasonably practicable such information
regarding RTZA and the distribution of such securities as the
Company may from time to time reasonably request in writing.
RTZ agrees that upon receipt of any notice from the Company
of the happening of any event of the kind described in
subparagraph (vii)(a) or (vii)(d) of this Section 3.3, RTZ will
cause RTZA forthwith to discontinue such holder's disposition of
Registrable Securities pursuant to the registration statement
relating to such Registrable Securities until receipt by RTZ and
RTZA of the copies of the supplemented or amended prospectus
contemplated by subparagraph (vii)(a) of this Section 3.3 and, if
so directed by the Company, will deliver to the Company (at the
Company's expense) all copies, other than permanent file copies,
then in the possession of RTZ and RTZA, of the prospectus relating
to such Registrable Securities current at the time of receipt of
such notice. If the disposition by RTZA of its securities is
discontinued pursuant to the foregoing sentence, the Company shall
extend the period of effectiveness of the registration statement
by the number of days during the period from and including the
date of the giving of notice to and including the date when RTZ
and RTZA shall have received copies of the supplemented or amended
prospectus contemplated by subparagraph (vii)(a) of this Section
3.3 (or such shorter period which shall terminate when all the
Registrable Securities covered by such registration statement have
been sold pursuant thereto); and, if the Company shall not so
extend such period, RTZ's request pursuant to which such
registration statement was filed shall not be counted for purposes
of the requests for registration to which RTZ is entitled pursuant
to Section 3.1 hereof.
3.4. Underwritten Offerings.
(a) Requested Underwritten Offerings. If
requested by the underwriters for any underwritten offering
pursuant to a registration requested under Section 3.1, the
Company will enter into an underwriting agreement with such
underwriters for such offering, such agreement to be reasonably
satisfactory in substance and form to the Company, RTZ, RTZA and
the underwriters and to contain such representations and
warranties by the Company and such other terms as are generally
prevailing in agreements of that type, including, without
limitation, indemnities to such underwriters and persons who
control (within the meaning of the Securities Act) such
underwriters to the effect and to the extent provided in Section
3.7. Each of RTZ and RTZA will cooperate with the Company in the
negotiation of the underwriting agreement and will give
consideration to the reasonable suggestions of the Company
regarding the form thereof. RTZA shall be a party to such
underwriting agreement and may, at its
- -11-
<PAGE>
option, require that any or all of the
representations and warranties by, and the other agreements on the
part of, the Company to and for the benefit of such underwriters
shall also be made to and for the benefit of RTZA and that any or
all of the conditions precedent to the obligations of such
underwriters under such underwriting agreement be conditions
precedent to the obligations of RTZA. RTZA shall not be required
to make any representations or warranties to or agreements with
the Company or the underwriters other than representations,
warranties or agreements regarding RTZA, its ownership of and
title to its Registrable Securities, its intended method of
distribution and any other representations required by law;
provided, however, that the liabilities of RTZ and RTZA to any
underwriter or any other Person under such underwriting agreement
shall be limited to liabilities arising from misstatements in
RTZA's representations and warranties and shall in no event
exceed, in the aggregate, the amount of net proceeds received by
RTZA from the sale of Registrable Securities in the offering to
which such underwriting agreement relates.
(b) Incidental Underwritten Offerings. If the
Company proposes to register any of its securities under the
Securities Act as contemplated by Section 3.2 and such securities
are to be distributed by or through one or more underwriters, the
Company will, if requested by RTZ and subject to Section 3.2(c),
arrange for such underwriters to include all the Registrable
Securities to be offered and sold by RTZA to be distributed by
such underwriters. RTZA shall be a party to the underwriting
agreement between the Company and such underwriters and may, at
its option, require that any or all of the representations and
warranties by, and the other agreements including, without
limitation, indemnities to such underwriters and persons who
control (within the meaning of the Securities Act) such
underwriters to the effect and to the extent provided in Section
3.7 on the part of, the Company to and for the benefit of such
underwriters shall also be made to and for the benefit of RTZA and
that any or all of the conditions precedent to the obligations of
such underwriters under such underwriting agreement be conditions
precedent to the obligations of RTZA. RTZA shall not be required
to make any representations or warranties to or agreements with
the Company or the underwriters other than representations,
warranties or agreements regarding RTZA, its ownership of and
title to its Registrable Securities and its intended method of
distribution or any other representations required by law;
provided, however, that the liabilities of RTZ and RTZA to any
underwriter or any other Person under such underwriting agreement
shall be limited to liabilities arising from misstatements in
RTZA's representations and warranties and shall in no event
exceed, in the aggregate, the amount of net proceeds received by
RTZA from the sale of Registrable Securities in the offering to
which such underwriting agreement relates.
(c) Holdback Agreements. (i) Each of RTZ and
RTZA agrees not to effect any public disposition of any
Registrable Securities, and not to effect any such disposition of
any other equity security of the Company of the same class as the
- -12-
<PAGE>
Registrable Securities or of any security
convertible into or exchangeable or exercisable for any equity
security of the Company of the same class as the Registrable
Securities, including dispositions pursuant to Rule 144 under the
Securities Act, during the 15 days prior to, and during the 120-
day period beginning on, the effective date of any registration
statement pertaining to securities of the Company of the same
class as the Registrable Securities or securities convertible into
or exchangeable or exercisable for any equity security of the
Company of the same class as the Registrable Securities (except as
part of such registration or if such registration is made with
respect to an employee benefit, employee stock option, dividend
reinvestment or any other benefit plan or with respect to the
registration of securities in connection with any acquisition,
merger, reorganization or consolidation) ; provided that RTZ and
RTZA has received written notice from the Company of such
registration and a good faith estimate of the effective date
thereof, and provided, further that any Person to whom
registration rights have been granted after the date of the
Purchase Agreement to the extent permitted by Section 6 and any
other Person selling securities in such offering shall have agreed
not to effect any such disposition during a period no shorter than
the period referred to in this Section 3.4(c)(i). If the
foregoing restriction on public dispositions by RTZ and RTZA
applies (other than as a result of an underwritten public offering
in which RTZA sells Registrable Securities), during the period of
effectiveness of any registration statement covering Registrable
Securities requested by RTZ to be registered pursuant to Section
3.1, the Company shall extend the period of effectiveness of such
registration statement by the number of days during which such
restriction applied; and, if the Company shall not so extend such
period, RTZ's request pursuant to which such registration
statement was filed shall not be counted for purposes of the
requests for registration to which RTZ is entitled pursuant to
Section 3.1 hereof.
(ii) If any registration of Registrable
Securities pursuant to Section 3.1 shall be in connection with an
underwritten public offering, the Company agrees (i) not to effect
any public sale or distribution of any of its equity securities of
the same class as the Registrable Securities or of any security
convertible into or exchangeable or exercisable for any equity
security of the Company of the same class as the Registrable
Securities (other than any such sale or distribution of such
securities in connection with any acquisition, merger,
reorganization or consolidation by the Company or any subsidiary
of the Company or in connection with an employee benefit, employee
stock option, dividend reinvestment or other benefit plan) during
the period after RTZ requests such registration pursuant to
Section 3.1 (but not more than 15 days prior to the Company's good
faith estimate of the effective date of such Registration
Statement) to the date which is 120-days after the effective date
of such registration statement (except as part of such
registration) and (ii) that any agreement entered into after the
date of the Purchase Agreement pursuant to which the Company
issues or agrees to issue any privately placed equity securities
shall contain a provision under which holders of such
- -13-
<PAGE>
securities agree not to effect any public sale
or distribution of any such securities during the period referred
to in the foregoing clause (i), including any sale pursuant to
Rule 144 under the Securities Act (except as part of such
registration, if permitted).
3.5. Preparation: Reasonable Investigation. In
connection with the preparation and filing of each registration
statement under the Securities Act pursuant to this Agreement, the
Company will give RTZ, RTZA, their underwriters, if any, and their
respective counsel and accountants the opportunity to participate
in the preparation of such registration statement, each prospectus
included therein or filed with the Commission, and, to the extent
practicable, each amendment thereof or supplement thereto, and
give each of them such access to its books and records (to the
extent customarily given to underwriters of the Company's
securities) and such opportunities to discuss the business of the
Company with its officers and the independent public accountants
who have certified its financial statements as shall be necessary,
in the opinion of such holders' and such underwriters' respective
counsel, to conduct a reasonable investigation within the meaning
of the Securities Act; provided, that RTZ, RTZA and their
respective assignees hereunder shall use their reasonable best
efforts to coordinate any such investigation of the books and
records at the Company and any such discussions with the Company's
officers and accountants so that all such investigations occur at
the same time and all such discussions occur at the same time.
3.6. Limitations, Conditions and Qualifications to
Obligations under Registration Covenants. The obligation of the
Company to use its best efforts to cause the Registrable
Securities to be registered under the Securities Act is subject to
the following limitations, conditions and qualifications. The
Company shall be entitled to postpone for a reasonable period of
time (but not exceeding 150 days and no more than once in any
twelve month period) the filing of any registration statement
otherwise required to be prepared and filed by it pursuant to
Section 3.1 if the Company determines, in its reasonable judgment,
that such registration and offering would interfere with any
material financing, acquisition, merger, consolidation or other
material transaction involving the Company or any of its
Affiliates or would require premature disclosure of any of the
foregoing transactions or at a time when audited financial
statements are not available or when the Company is in possession
of material information which, in the exercise of its reasonable
judgment, the Company deems advisable not to disclose in a
registration statement, and promptly gives RTZ, RTZA and each
managing underwriter, if any, written notice of such delay,
including a general statement of the reasons for such postponement
and an approximation of the anticipated delay. If the Company
shall so postpone the filing of a registration statement, RTZ
shall have the right to withdraw the request for registration by
giving written notice to the Company within 30 days after receipt
of the notice of postponement and, in the event of such
withdrawal, such request shall not be counted for purposes of the
requests for registration to which RTZ is entitled pursuant to
Section 3.1 hereof.
- -14-
<PAGE>
3.7. Indemnification.
(a)Indemnification by the Company. In the event of any registration of any
securities of the Company under the Securities Act, the Company will, and
hereby does, indemnify and hold harmless, in the case of any registration
statement filed pursuant to Section 3.1 or 3.2, RTZ and RTZA and their
respective directors, officers, and each other Person who participates as an
underwriter (as defined in the Securities Act) in the offering or sale of such
securities and each other Person, if any, who controls such seller or any such
underwriter within the meaning of the Securities Act (a "Controlling Person")
or participates in the offering of such securities (a "Participating Person"),
against any losses, claims, damages or liabilities, joint or several, to which
RTZ, RTZA or any such director, officer, underwriter, Controlling Person or
Participating Person may become subject under the Securities Act or otherwise,
insofar as losses, claims, damages or liabilities (or actions or proceedings,
whether commenced or threatened, in respect thereof) arise out of or are based
upon (i) any untrue statement or alleged untrue statement of any material
fact contained in any registration statement under which such securities were
registered under the Securities Act, any preliminary prospectus, final
prospectus or summary prospectus contained therein, or any amendment or
supplement thereto, (ii) any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the
statements therein in light of the circumstances in which they were made not
misleading, or (iii) any violation by the Company of any federal, state or
common law rule or regulation applicable to the Company and relating to action
required of or inaction by the Company in connection with any such
registration, and, subject to Section 3.7(c), the Company will reimburse RTZ,
RTZA and each such director, officer, underwriter, Controlling Person or
Participating Person for any legal or any other expenses reasonably incurred
by them in connection with investigating or defending any such loss, claim,
liability, action or proceeding; provided, that the Company shall not be
liable in any such case to the extent that any such loss, claim, damage,
liability (or action or proceeding in respect thereof) or expense arises out
of or is based upon an untrue statement or alleged untrue statement or
omission or alleged omission made in such registration statement, any such
preliminary prospectus, final prospectus, summary prospectus, amendment or
supplement in reliance upon and in conformity with written information
furnished to the Company through an instrument executed by or on behalf of
such seller or underwriter, as the case may be, specifically stating that it
is for use in the preparation thereof; and provided, further, that the Company
shall not be liable to any Person who participates as an underwriter in the
offering or sale of Registrable Securities or any other Person, if any, who
controls such underwriter within the meaning of the Securities Act, in any
such case to the extent that any such loss, claim, damage, liability (or
action or proceeding in respect thereof) or expense arises out of such
Person's failure to send or give a copy of the final prospectus, as the same
may be then supplemented or amended, to the Person asserting an untrue
- -15-
<PAGE>
statement or alleged untrue statement or
omission or alleged omission at or prior to the written
confirmation of the sale of Registrable Securities to such Person
if such statement or omission was corrected in such final
prospectus so long as such final prospectus, and any amendments or
supplements thereto, have been furnished to such underwriter.
Such indemnity shall remain in full force and effect regardless of
any investigation made by or on behalf of such seller or any such
director, officer, partner, Controlling Person or Participating
Person and shall survive the transfer of such securities by RTZA.
(b) Indemnification by RTZ. As a condition to
including any Registrable Securities in any registration
statement, the Company shall have received an undertaking
satisfactory to it from RTZA and RTZ to jointly and severally
indemnify and hold harmless (in the same manner and to the same
extent as set forth in subdivision (a) of this Section 3.7) the
Company, and each director of the Company, each officer of the
Company and each other Person, if any, who controls the Company
within the meaning of the Securities Act or participates in the
offering of such securities, with respect to any statement or
alleged statement in or omission or alleged omission from such
registration statement, any preliminary prospectus, final
prospectus or summary prospectus contained therein, or any
amendment or supplement thereto, but only to the extent such
statement or alleged statement or omission or alleged omission was
made in reliance upon and in conformity with written information
furnished to the Company through an instrument duly executed by or
on behalf of RTZA specifically stating that it is for use in the
preparation of such registration statement, preliminary
prospectus, final prospectus, summary prospectus, amendment or
supplement; provided, however, that the liability of RTZ and RTZA
under this Section 3.7(b) and Section 3.7(d) shall be limited, in
the aggregate, to the amount of net proceeds received by RTZA from
the sale of Registrable Securities in the offering giving rise to
such liability. Such indemnity shall remain in full force and
effect, regardless of any investigation made by or on behalf of
the Company or any such director, officer or controlling Person
and shall survive the transfer of such securities by RTZA.
(c)Notices of Claims, etc. Promptly after receipt by an indemnified party of
notice of the commencement of any action or proceeding involving a claim
referred to in the preceding subdivisions of this Section 3.7, such
indemnified party will, if a claim in respect thereof is to be made against an
indemnifying party, give written notice to the latter of the commencement of
such action; provided, however, that the failure of any indemnified party to
give notice as provided herein shall not relieve the indemnifying party of its
obligations under the preceding subdivisions of this Section 3.7, except to
the extent that the indemnifying party is actually prejudiced by such failure
to give notice. In case any such action is brought against an indemnified
party, unless in such indemnified party's reasonable judgment a conflict of
interest between such indemnified and indemnifying parties is reasonably
likely to exist in respect of such claim, the indemnifying party shall be
entitled to participate in and, to assume the defense
- -16-
<PAGE>
thereof, jointly with any other indemnifying
party similarly notified to the extent that it may wish, with
counsel reasonably satisfactory to such indemnified party, and
after notice from the indemnifying party to such indemnified party
of its election so to assume the defense thereof, the indemnifying
party shall not be liable to such indemnified party for any legal
or other expenses subsequently incurred by the latter in
connection with the defense thereof other than reasonable costs of
investigation unless in such indemnified party's reasonable
judgment a conflict of interest between such indemnified and
indemnifying parties arises in respect of such claim after the
assumption of the defense thereof and the indemnified party
notifies the indemnifying party of such indemnified party's
judgment and the basis therefor. No indemnifying party shall be
liable for any settlement of any action or proceeding effected
without its written consent, which consent shall not be
unreasonably withheld. No indemnifying party shall, without the
consent of the indemnified party, consent to entry of any judgment
or enter into any settlement which does not include as an
unconditional term thereof the giving by the claimant or plaintiff
to such indemnified party of a release from all liability in
respect of such claim or litigation.
(d) Contribution. If the indemnification
provided for in this Section 3.7 shall for any reason be held by a
court to be unavailable to an indemnified party under subparagraph
(a) or (b) hereof in respect of any loss, claim, damage or
liability, or any action or proceeding in respect thereof, then,
in lieu of the amount paid or payable under subparagraph (a) or
(b) hereof, the indemnified party and the indemnifying party under
subparagraph (a) or (b) hereof shall contribute to the aggregate
losses, claims, damages and liabilities (including legal or other
expenses reasonably incurred in connection with investigating the
same), (i) in such proportion as is appropriate to reflect the
relative fault of the indemnifying party, on the one hand, and the
indemnified party, on the other hand, which resulted in such loss,
claims, damage or liability, or action or proceeding in respect
thereof, with respect to the statements or omissions which
resulted in such loss, claim, damage or liability, or action or
proceeding in respect thereof, as well as any other relevant
equitable considerations or (ii) if the allocation provided by
clause (i) above is not permitted by applicable law, in such
proportion as shall be appropriate to reflect the relative
benefits received by the indemnifying party and the indemnified
party from the offering of the securities covered by such
registration statement, as well as any other relevant equitable
considerations. No Person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) shall
be entitled to contribution from any Person who was not guilty of
such fraudulent misrepresentation. In addition, no Person shall
be obligated to contribute hereunder any amounts in payment for
any settlement of any action or claim effected without such
Person's consent, which consent shall not be unreasonably
withheld. Notwithstanding anything in this Section 3.7(d) to the
contrary, the liability of RTZ and RTZA under this Section 3.7(d)
and Section 3.7(b) shall be limited, in the aggregate, to the any
amount of net proceeds
- -17-
<PAGE>
received by RTZA from the sale of Registrable
Securities in the offering giving rise to such liability.
(e) Other Indemnification. Indemnification
and contribution similar to that specified in the preceding
subdivisions of this Section 3.7 (with appropriate modifications)
shall be given by the Company, RTZ and RTZA with respect to any
required registration or other qualification of securities under
any federal or state law or regulation of any governmental
authority other than the Securities Act. The indemnification
agreements contained in this Section 3.7 shall be in addition to
any other rights to indemnification or contribution which any
indemnified party may have pursuant to law or contract.
(f) Indemnification Payments. The
indemnification and contribution required by this Section 3.7
shall be made by periodic payments of the amount thereof during
the course of the investigation or defense, as and when bills are
received or expense, loss, damage or liability is incurred. In
any case in which it shall be judicially determined that a party
is not entitled to indemnification or contribution, any payments
previously received by such party hereunder shall be promptly
reimbursed.
4. Rule 144. The Company shall take all actions
reasonably necessary to enable holders of Registrable Securities
to sell such securities without registration under the Securities
Act within the limitation of the exemptions provided by (a) Rule
144 under the Securities Act, as such Rule may be amended from
time to time, or (b) any similar rule or regulation hereafter
adopted by the Commission including, without limiting the
generality of the foregoing, filing on a timely basis all reports
required to be filed by the Exchange Act. Upon the request of RTZ
or RTZA, the Company will deliver to it a written statement as to
whether it has complied with such requirements.
5. Nominees for Beneficial Owners. In the event that any
Registrable Securities are held by a nominee for the beneficial
owner thereof, the beneficial owner thereof may, at its election
in writing delivered to the Company, be treated as the holder of
such Registrable Securities for purposes of any request or other
action by any holder or holders of Registrable Securities pursuant
to this Agreement or any determination of any number or percentage
of Registrable Securities held by any holder or holders of
Registrable Securities contemplated by this Agreement. If the
beneficial owner of any Registrable Securities so elects, the
Company may require assurances reasonably satisfactory to it of
such owner's beneficial ownership of such Registrable Securities.
6. No Inconsistent Agreements. The Company will not, on
or after the date of this Agreement, enter into any agreement with
respect to its securities which is inconsistent with the rights
granted to RTZ and RTZA in this Agreement or otherwise conflicts
with the provisions hereof, other than any lock-up agreement with
the
- -18-
<PAGE>
underwriters in connection with any registered offering
effected hereunder, pursuant to which the Company shall agree not
to register for sale, and the Company shall agree not to sell or
otherwise dispose of, Common Stock or any securities convertible
into or exercisable or exchangeable for Common Stock, for a
specified period following the registered offering. The Company
has not previously entered into any agreement with respect to its
securities granting any registration rights to any Person. The
rights granted to RTZ and RTZA hereunder do not in way conflict
with and are not inconsistent with any other agreements to which
the Company is a party or by which it is bound.
7. No Required Sale. Nothing in this Agreement shall be
deemed to create an independent obligation on the part of RTZ or
RTZA to sell any Registrable Securities pursuant to any effective
registration statement.
8. Adjustments. In the event that any capital stock or
other securities are issued in respect of, in exchange for, or in
substitution of, any Registrable Securities by reason of any
reorganization, recapitalization, reclassification, merger,
consolidation, spin-off, partial or complete liquidation, stock
dividend, split-up, sale of assets, distribution to stockholders
or combination of the shares of Registrable Securities or any
other change in the Company's capital structure, appropriate
adjustments shall be made in this Agreement so as to fairly and
equitably preserve, as far as practicable, the original rights and
obligations of the parties hereto under this Agreement. The
Company agrees that it shall not effect or permit to occur any
combination or subdivision of shares which would adversely affect
the ability of RTZ or RTZA to include any Registrable Securities
in any registration contemplated by this Agreement or the
marketability of such Registrable Securities in any such
registration.
9. Further Assurances. Each party hereto shall do and
perform or cause to be done and performed all further acts and
things and shall execute and deliver all other agreements,
certificates, instruments, and documents as any other party hereto
reasonably may request in order to carry out the intent and
accomplish the purposes of this Agreement and the consummation of
the transactions contemplated hereby.
10. Governing Law. This Agreement and the rights and obligations of the
parties hereto shall be governed by, and construed and enforced in accordance
with, the laws of the State of New York, without giving effect to the
principles of conflicts of law thereof. Each party hereto hereby irrevocably
and unconditionally consents to submit to the exclusive jurisdiction of courts
of the State of New York located in the Borough of Manhattan in The City of
New York and of the United States District Court for the Southern District of
New York (the "New York Courts") for any litigation arising out of or relating
to this Agreement and the transactions contemplated hereby (and agrees not to
commence any litigation relating thereto except in such courts), waives any
objection to the laying of venue of any such litigation in the New York Courts
and agrees not to plead
- -19-
<PAGE>
or claim in any New York Court that such litigation brought
therein has been brought in an inconvenient forum.
11. Specific Performance. The parties hereto agree that
money damages or other remedy at law would not be sufficient or
adequate remedy for any breach or violation of, or a default
under, this Agreement by them and that in addition to all other
remedies available to them, each of them shall be entitled to the
fullest extent permitted by law to an injunction restraining such
breach, violation or default or threatened breach, violation or
default and to any other equitable relief, including without
limitation specific performance, without bond or other security
being required.
12. Notice. All notices and other communications
hereunder shall be in writing and, unless otherwise provided
herein, shall be deemed to have been given when received by the
party to whom such notice is to be given at its address set forth
below, or such other address for the party as shall be specified
by notice given pursuant hereto:
(a) If to the Company, to it at:
Freeport-McMoRan Inc.
1615 Poydras Street
New Orleans, Louisiana 70112
Attn: General Counsel
Fax: (504) 585-3513
with a copy to:
Davis Polk & Wardwell
450 Lexington Avenue
New York, New York 10017
Attn: E. Deane Leonard, Esq.
and David W. Ferguson, Esq.
Fax: (212) 450-4800
(c) If to RTZ to:
The RTZ Corporation PLC
6 St. James's Square
London SW1Y 4LD
England
Attn: The Corporate Secretary
Fax: 011-44-171-930-3249
- -20-
<PAGE>
with a copy to:
Fried, Frank, Harris, Shriver
& Jacobson
One New York Plaza
New York, New York 10004
Attention: Allen I. Isaacson, P.C.
Fax: (212) 859-4000
(d) If to RTZA to:
RTZ America, Inc.
100 Quentin Roosevelt Blvd.
Suite 503
Garden City, NY 11530
Attn: The Corporate Secretary
Fax: (516) 794-5073
with a copy to:
Fried, Frank, Harris, Shriver
& Jacobson
One New York Plaza
New York, New York 10004
Attention: Allen I. Isaacson, P.C.
Fax: (212) 859-4000
13. Binding Effect; Assignment. This Agreement shall
inure to the benefit of and shall be binding upon the parties
hereto and their respective heirs, legal representatives,
successors and assigns. Neither this Agreement nor any of the
rights hereunder may be assigned by any of the parties hereto
without the consent of the other parties, except that RTZ and RTZA
may assign all or part of its rights under this Agreement (subject
to an appropriate assumption of related obligations under this
Agreement) to any person to whom or which RTZA sells or transfers
any Registrable Securities, and such transferees may similarly
assign such rights.
14. Amendment and Modification. This Agreement may be amended, modified,
supplemented or waived only by written agreement of the party against whom
enforcement of such amendment, modification, supplement or waiver is sought.
- -21-
<PAGE>
15. Headings; References; Execution in Counterparts;
Interpretation. The headings and captions contained herein are
for convenience only and shall not control or affect the meaning
or construction of any provision hereof. All article, section,
schedule, exhibit and paragraph references are to this Agreement,
unless otherwise expressly provided. This Agreement may be
executed in any number of counterparts, each of which shall be
deemed to be an original and which together shall constitute one
and the same instrument. The use of the word "including" in this
Agreement shall be by way of example rather than by limitation.
In this Agreement, unless the context otherwise requires, words in
the singular number or in the plural number shall each include the
singular number and the plural number.
16. Entire Agreement. This Agreement constitutes the
entire agreement, and supersedes all prior agreements and
understandings, oral and written, between the parties hereto with
respect to the subject matter hereof.
17. Invalidity of Provision. The invalidity or
unenforceability of any provision of this Agreement in any
jurisdiction shall not affect the validity or enforceability of
the remainder of this Agreement in that jurisdiction or the
validity or enforceability of this Agreement, including that
provision, in any other jurisdiction. If any restriction or
provision of this Agreement is held unreasonable, unlawful or
unenforceable in any respect, such restriction or provision shall
be interpreted, revised or applied in the manner that renders it
lawful and enforceable to the fullest extent possible under law.
- -22-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement on the date first above written.
FREEPORT-McMoRan INC.
By /s/ Michael C. Kilanowski, Jr.
Name: Michael C. Kilanowski, Jr.
Title: Secretary
THE RTZ CORPORATION PLC
By /s/ Allen I. Isaacson
Name: Allen I. Isaacson, P.C.
Title: Attorney-In-Fact
RTZ AMERICA, INC.
By /s/ William M. Higgins
Name: William M. Higgins
Title: Vice President
- -23-
REGISTRATION RIGHTS AGREEMENT
between
FREEPORT-McMoRan COPPER & GOLD INC.,
on the one hand,
and
THE RTZ CORPORATION PLC,
RTZ AMERICA, INC. and
RTZ INDONESIA LIMITED,
on the other hand
Dated as of May 12, 1995
<PAGE>
REGISTRATION RIGHTS AGREEMENT, dated as of May 12, 1995,
between FREEPORT-McMoRan COPPER & GOLD INC., a Delaware
corporation (the "Company"), The RTZ CORPORATION PLC, a company
organized under the laws of England ("RTZ"), and RTZ INDONESIA
LIMITED, a company organized under the laws of England ("RTZ
Subsidiary") and a subsidiary of RTZ, and RTZ AMERICA, INC., a
Delaware corporation ("RTZA") and a subsidiary of RTZ.
1. Definitions. As used herein, unless the context otherwise
requires, the following terms have the following respective
meanings:
1.1 "Affiliate" shall have the meaning ascribed to
such term in Rule 12b-2 of the General Rules and Regulations under
the Exchange Act.
1.2 "Class A Common Stock" shall have the meaning
set forth in Section 2.
1.3 "Class B Common Stock" shall have the meaning
set forth in Section 2.
1.4 "Common Stock" means, individually and
collectively, Class A Common Stock and Class B Common Stock.
1.5 "Commission" means the Securities and Exchange
Commission or any other federal agency at the time administering
the Securities Act.
1.6 "Exchange Act" means the Securities Exchange Act
of 1934, as amended, or any similar federal statute, and the rules
and regulations of the Commission thereunder, all as the same
shall be in effect at the time. Reference to a particular section
of the Securities Exchange Act of 1934, as amended, shall include
a reference to the comparable section, if any, of any such similar
Federal statute.
1.7 "Person" means a corporation, an association, a
partnership, an organization, a business, an individual, a
governmental or political subdivision thereof or a governmental
agency.
1.8 "Purchase Agreement" shall have the meaning set
forth in Section 2.
1.9 "Registration Expenses" means all expenses
incident to the Company's performance of or compliance with
Section 3, including, without limitation, all registration, filing
and NASD fees, all listing fees, all fees and expenses of
complying with securities or blue sky laws (including, without
limitation, reasonable fees and disbursements of counsel for the
underwriters in connection with blue sky qualifications of the
Registrable Securities), all word processing, duplicating and
printing expenses,
<PAGE>
messenger and delivery expenses, the fees and disbursements of
counsel for the Company and of its independent public accountants,
including the expenses of "cold comfort" letters required by or
incident to such performance and compliance, any fees and
disbursements of underwriters (including, without limitation, fees
and expenses of counsel to the underwriters) customarily paid by
issuers or sellers of securities; provided, however, that
Registration Expenses shall exclude, and RTZ shall pay, or cause
to be paid, all underwriters' fees and underwriting discounts and
commissions and transfer taxes in respect of the Registrable
Securities being registered and the fees and expenses of counsel
to RTZ and all RTZ Selling Stockholders.
1.10 "Registrable Securities" means the shares of
Common Stock acquired by RTZ Subsidiary and/or RTZA in connection
with the transactions contemplated by the Purchase Agreement, and
any other securities issued in respect of, in exchange for, or in
substitution of, such shares of Common Stock acquired by RTZ
Subsidiary and/or RTZA in connection with the transactions
contemplated by the Purchase Agreement, whether by reorganization,
recapitalization, reclassification, merger, consolidation, spin-
off, partial or complete liquidation, stock dividend, split-up,
sale of assets, distribution to stockholders or combination of the
shares or any other change in the Company's capital structure, or
otherwise. As to any particular Registrable Securities, once
issued such securities shall cease to be Registrable Securities
when (a) a registration statement with respect to the sale of such
securities shall have become effective under the Securities Act
and such securities shall have been disposed of in accordance with
such registration statement, (b) they shall have been sold as
permitted by, and in compliance with, Rule 144 (or successor
provision) promulgated under the Securities Act, or (c) they shall
have ceased to be outstanding.
1.11 "Required Number of Shares" means Registrable
Securities having at the time of a request for registration under
Section 3.1 a minimum anticipated offering price (before
underwriters' commissions and discounts) of at least $50,000,000;
provided, that if RTZ Subsidiary and RTZA then own in the
aggregate Registrable Securities having such a minimum anticipated
offering price of less than $50,000,000 the term "Required Number
of Shares" shall mean such number of shares of Registrable
Securities then owned in the aggregate by RTZ Subsidiary and RTZA.
1.12 "RTZ Selling Stockholders" means, individually
and collectively, RTZA, if Registrable Securities owned by RTZA
are proposed to be sold pursuant to Section 3.1 or Section 3.2,
and RTZ Subsidiary, if Registrable Securities owned by RTZ
Subsidiary are proposed to be sold pursuant to Section 3.1 or
Section 3.2.
1.13 "Section 3.1 Sale Amount" shall have the meaning
set forth in Section 3.1(g).
- -2-
<PAGE>
1.14 "Section 3.2 Sale Amount" shall have the meaning
set forth in Section 3.2(c).
1.15 "Securities Act" means the Securities Act of
1933, or any similar federal statute, and the rules and
regulations of the Commission thereunder, all as the same shall be
in effect at the time. References to a particular section of the
Securities Act of 1933 shall include a reference to the comparable
section, if any, of any such similar federal statute.
2. Background. Pursuant to an Agreement dated as of May
2, 1995 (the "Purchase Agreement"), between the Company, Freeport-
McMoRan Inc., RTZ, RTZ Subsidiary, and RTZA and the transactions
contemplated thereby, RTZ Subsidiary is acquiring shares of Class
A Common Stock, $.10 par value per share, of the Company ("Class A
Common Stock"), RTZ Subsidiary may acquire additional shares of
Class A Common Stock and RTZA may acquire shares of Class B Common
Stock, $.10 par value per share, of the Company ("Class B Common
Stock").
3. Registration Under the Securities Act, etc.
3.1. Registration on Request.
(a) Request. At any (i) time after the
Distribution Date (as defined in the Purchase Agreement) or, if
the Distribution Date shall not have occurred prior to December
31, 1995, from and after December 31, 1995, but (ii) prior to
December 31, 2021 upon the written request of RTZ that the Company
effect the registration under the Securities Act of the Required
Number of Shares (as defined in Section 1), the Company will use
its best efforts to effect the registration under the Securities
Act of the Registrable Securities which the Company has been so
requested to register by RTZ.
(b) Registration of Other Securities.
Whenever the Company shall effect a registration pursuant to this
Section 3.1 in connection with an underwritten offering requested
by RTZ, no securities other than Registrable Securities of any RTZ
Selling Stockholder shall be included among the securities covered
by such registration unless (a) the managing underwriter of such
offering shall have advised RTZ in writing that the inclusion of
such other securities would not adversely affect such offering,
and (b) RTZ shall have consented in writing to the inclusion of
such other securities, which consent may be subject to terms and
conditions determined by RTZ in its sole reasonable discretion
(any Person in respect of whose securities the managing
underwriter and RTZ so consents is referred to as a "Selling
Holder").
(c) Registration Statement Form.
Registrations under this Section 3.1 shall be on such appropriate
registration form of the Commission as shall be
- -3-
<PAGE>
selected by the Company or by means of a shelf registration
pursuant to Rule 415 under the Securities Act, if so requested by
RTZ and if the Company is then eligible to use such a
registration.
(d) Expenses. The Company will pay the
Registration Expenses in connection with any registration
requested pursuant to this Section 3.1.
(e) Effective Registration Statement. Subject
to Section 3.1(i), a registration requested pursuant to this
Section 3.1 shall not be deemed to have been effected (i) unless a
registration statement with respect thereto has become effective
and has been kept continuously effective for a period of at least
120 days (or such shorter period which will terminate when all the
Registrable Securities covered by such registration statement have
been sold pursuant thereto), (ii) if after it has become
effective, such registration is interfered with by any stop order,
injunction or other order or requirement of the Commission or
other governmental agency or court for any reason not attributable
to any RTZ Selling Stockholder and has not thereafter become
effective, or (iii) if the conditions to closing specified in the
underwriting agreement, if any, entered into in connection with
such registration are not satisfied or waived, other than by
reason of a failure on the part of any RTZ Selling Stockholder.
(f) Selection of Underwriters. The
underwriter or underwriters of each underwritten offering of the
Registrable Securities so to be registered shall be selected by
RTZ and the managing underwriter(s) shall be reasonably acceptable
to the Company.
(g) Priority in Requested Registration. If the managing
underwriter of any underwritten offering shall advise the Company
in writing (with a copy to RTZ) that, in its opinion, the number
of Registrable Securities and other securities (if any) requested
to be included in such registration exceeds the number which can
be sold in an orderly manner in such offering within a price range
acceptable to RTZ (the "Section 3.1 Sale Amount"), the Company
will include in such registration: (i) first, the Registrable
Securities requested by RTZ to be included in such registration;
and (ii) second, to the extent the number of Registrable
Securities requested by RTZ to be included in such registration is
less than the Section 3.1 Sale Amount, the shares of Common Stock
requested to be included by such other Selling Holders, with the
reasonable consent of RTZ.
(h) Limitations on Registration on Request.
Notwithstanding anything in this Section 3.1 to the contrary, in
no event will the Company be required to effect, in the aggregate
pursuant to this Section 3.1, more than five registrations
pursuant to this Agreement.
- -4-
<PAGE>
(i) Right to Withdraw. RTZ shall have the
right to notify the Company in writing that it has determined that
the registration statement prepared pursuant to this Section 3.1
be abandoned or withdrawn, provided that such request shall be
irrevocable and
(i) if the Company receives such a
request from RTZ after a registration statement with
respect to such Registrable Securities has been filed,
then (A) RTZ's request shall be counted for purposes
of the requests for which RTZ is entitled pursuant to
this Section 3.1 and (B) the Company shall pay all
Registration Expenses in connection with such request
for registration; and
(ii) if the Company receives such a
request from RTZ before a registration statement with
respect to such Registrable Securities has been filed,
then (A) RTZ's request shall not be counted for
purposes of the requests for registration to which RTZ
is entitled pursuant to this Section 3.1 and (B) RTZ
shall pay all Registration Expenses in connection with
such request for registration;
provided, further, however, that if because of a material adverse
change in the business of the Company the managing underwriter
shall have advised RTZ that the Registrable Securities covered by
the registration statement cannot be sold in an orderly manner in
an offering within a price range reasonably acceptable to RTZ,
then (A) RTZ's request shall not be counted for purposes of the
requests for registration to which RTZ is entitled pursuant to
this Section 3.1 and (B) the Company shall pay all Registration
Expenses in connection with such request for registration;
provided, further, if upon the fifth request for registration made
by RTZ pursuant to this Section 3.1 (excluding requests that are
not counted pursuant to this Section 3.1(i)) the managing
underwriter of any underwritten offering shall advise RTZ that the
Registrable Securities covered by the registration statement
cannot be sold in an orderly manner in such offering within a
price range reasonably acceptable to RTZ because of any reason
other than a material adverse change in the business of the
Company, then RTZ shall have the one-time right to notify the
Company in writing that it has determined that the registration
statement be abandoned or withdrawn and to make the election
described in the following sentence. Upon such notice pursuant to
the last proviso of the preceding sentence, at the election of
RTZ, either (a) RTZ's request shall be counted for purposes of the
requests for which RTZ is entitled pursuant to this Section 3.1
and the Company shall pay all Registration Expenses in connection
with such request for registration or (b) RTZ shall pay all
Registration Expenses in connection with such request for
registration and RTZ's request shall not be counted for purposes
of the requests for registration to which RTZ is entitled pursuant
to this Section 3.1.
- -5-
<PAGE>
3.2. Incidental Registration.
(a) Right to Include Registrable Securities.
If the Company proposes at any time to register any of its
securities under the Securities Act by registration on Forms S-1,
S-2 or S-3 or any successor or similar form(s) (except
registrations on such Forms or similar form(s) solely for
registration of securities in connection with an employee benefit
plan or dividend reinvestment plan or an acquisition, merger,
reorganization, or consolidation), whether or not for sale for its
own account, it will each such time give prompt written notice to
RTZ of its intention to do so; provided that this Section 3.2
shall not apply to any registration of securities of the Company
after December 31, 2021. Upon the written request of RTZ made as
promptly as practicable and in any event within 30 days after the
receipt of any such notice (15 days if the Company states in such
written notice or gives telephonic notice to RTZ, with written
confirmation to follow promptly thereafter, that (i) such
registration will be on Form S-3 and (ii) such shorter period of
time is required because of a planned filing date) (which request
shall specify the Registrable Securities intended to be disposed
of by any RTZ Selling Stockholder), the Company will use its best
efforts to effect the registration under the Securities Act of all
Registrable Securities which the Company has been so requested to
register by RTZ; provided, however, that if, at any time after
giving written notice of its intention to register any securities
and prior to the effective date of the registration statement
filed in connection with such registration, the Company shall
determine for any reason not to register or to delay registration
of such securities, the Company shall give written notice of such
determination to RTZ and (i) in the case of a determination not to
register, shall be relieved of its obligation to register any
Registrable Securities in connection with such registration (but
not from any obligation of the Company to pay the Registration
Expenses in connection therewith), without prejudice, however, to
the rights of RTZ to request that such registration be effected as
a registration under Section 3.1 and (ii) in the case of a
determination to delay registering, shall be permitted to delay
registering any Registrable Securities for the same period as the
delay in registering such other securities. No registration
effected under this Section 3.2 shall relieve the Company of its
obligation to effect any registration upon request under Section
3.1. If a registration is to cover an underwritten offering, such
Registrable Securities shall be included in the underwriting on
the same terms and conditions as the securities otherwise being
sold through the underwriters.
(b) Expenses. The Company will pay all
Registration Expenses in connection with registration of
Registrable Securities requested pursuant to this Section 3.2.
(c) Priority in Incidental Registrations. If
the managing underwriter of any underwritten offering shall inform
the Company of its belief that the number or type of Registrable
Securities and other securities (if any) requested to be
- -6-
<PAGE>
included in such registration would materially adversely affect
such offering, then the Company will include in such registration,
to the extent of the number and type which the Company is so
advised can be sold in (or during the time of) such offering
("Section 3.2 Sale Amount"), (i) first, in the case of an offering
initiated by a stockholder who has been granted registration
rights in accordance with Section 6, those of such stockholder or,
in the case of an offering initiated by the Company, those for the
Company's account, and (ii) second, to the extent the Section 3.2
Sale Amount is not exceeded, such Registrable Securities requested
by RTZ to be included in such registration.
(d) Selection of Managing Underwriter. The
managing underwriter of any underwritten offering pursuant to this
Section 3.2 shall be selected by the Company at its sole
discretion.
(e) Right to Withdraw. RTZ shall have the
right to withdraw its request for inclusion of its Registrable
Securities in any registration statement pursuant to this Section
3.2 by giving written notice to the Company of its request to
withdraw, as soon as reasonably practicable, and in any case,
prior to the execution of the underwriting agreement, in the case
of an underwritten offering, or at any time, in all other cases,
provided that any such withdrawal request shall be irrevocable
and, after making such a request, the Company shall not be
obligated to include Registrable Securities of any RTZ Selling
Stockholder in such registration; provided further that RTZ shall
reimburse the Company for the applicable share of filing fees paid
by the Company with respect to the Registered Securities of any
such RTZ Selling Stockholder.
3.3. Registration Procedures. If and whenever the
Company is required to use its best efforts to effect the
registration of any Registrable Securities under the Securities
Act as provided in Section 3.1 and 3.2, the Company will use its
best efforts to effect the registration and the sale of such
Registrable Securities in accordance with the intended method of
disposition thereof and will as expeditiously as possible:
(i) prepare and (as soon as practicable, and
in any event within 75 days in the case of Forms S-1
or S-2 and 45 days in the case of a registration
requested on Form S-3 after the end of the period
within which requests for registration may be given to
the Company) file with the Commission the requisite
registration statement to effect such registration and
thereafter use its best efforts to cause such
registration statement to become effective; provided,
that before filing a registration statement or
prospectus or any amendments or supplements thereto,
or comparable statements under securities or blue sky
laws of any jurisdiction, the Company will furnish to
the counsel of RTZ and the underwriters, if any,
copies of all such documents proposed to be filed
(including all exhibits thereto), which documents will
be subject to the reasonable review of such
- -7-
<PAGE>
counsel and the Company will give consideration to the
reasonable suggestions of such counsel;
(ii) prepare and file with the Commission such
amendments and supplements to such registration
statement and the prospectus used in connection
therewith as may be necessary to keep such
registration statement effective and to comply with
the provisions of the Securities Act with respect to
the disposition of all Registrable Securities and
other securities covered by such registration
statement for such period as shall be required for the
disposition of all of such Registrable Securities and
other securities, provided, that such period need not
exceed 120 days;
(iii) furnish, without charge, to RTZ and each
underwriter such number of conformed copies of such
registration statement and of each such amendment and
supplement thereto (in each case including all
exhibits), such number of copies of the prospectus
contained in such registration statement (including
each preliminary prospectus and any summary
prospectus) and any other prospectus filed under Rule
424 under the Securities Act, in conformity with the
requirements of the Securities Act, and such other
documents, as RTZ and such underwriters may reasonably
request;
(iv) for up to 120 days after the effective
date of the registration statement for such
Registrable Securities to use its best efforts (x) to
register or qualify all Registrable Securities and
other securities covered by such registration
statement under such other securities or blue sky laws
of such States of the United States of America where
an exemption is not available and as RTZ shall
reasonably request, (y) to keep such registration or
qualification in effect for so long as such
registration statement remains in effect, and (z) to
take any other action which may be reasonably
necessary or advisable to enable such sellers to
consummate the disposition in such jurisdictions of
the securities to be sold by any RTZ Selling
Stockholder, except that the Company shall not for any
such purpose be required to qualify generally to do
business as a foreign corporation in any jurisdiction
wherein it would not but for the requirements of this
subdivision (iv) be obligated to be so qualified or to
consent to general service of process in any such
jurisdiction;
(v) furnish to RTZ, each RTZ Selling
Stockholder and each underwriter, if any,
participating in the offering of the securities
covered by such registration statement, a signed
counterpart of
- -8-
<PAGE>
(x) an opinion of counsel for the
Company, and
(y) a "comfort" letter signed by the
independent public accountants who have
certified the Company's financial statements
included or incorporated by reference in such
registration statement
covering substantially the same matters with respect
to such registration statement (and the prospectus
included therein) and, in the case of the accountant's
comfort letter, with respect to events subsequent to
the date of such financial statements, as are
customarily covered in opinions of issuer's counsel
and in accountants' comfort letters delivered to the
underwriters in underwritten public offerings of
securities (and dated the dates such opinions and
comfort letters are customarily dated);
(vi) notify RTZ, each RTZ Selling Stockholder
and each managing underwriter, if any, participating
in the offering of the securities covered by such
registration statement,
(a) at any time when a prospectus
relating thereto is required to be delivered under the
Securities Act, upon discovery that, or upon the
happening of any event as a result of which, in the
judgment of the Company, the prospectus included in
such registration statement, as then in effect,
includes an untrue statement of a material fact or
omits to state any material fact required to be stated
therein or necessary to make the statements therein
not misleading, in the light of the circumstances
under which they were made, and at the request of any
such seller promptly prepare and furnish to it a
reasonable number of copies of a supplement to or an
amendment of such prospectus as may be necessary so
that, in the judgment of the Company, as thereafter
delivered to the purchasers of such securities, such
prospectus shall not include an untrue statement of a
material fact or omit to state a material fact
required to be stated therein or necessary to make the
statements therein not misleading in the light of the
circumstances under which they were made,
(b) when the prospectus or any
supplement or post-effective amendment has been filed,
and, with respect to the registration statement or any
post-effective amendment thereto, when the same has
become effective,
(c) of any request by the Commission for
amendments or supplements to the registration
statement or the prospectus or for additional
information (and deliver promptly to RTZ (or its
counsel) and each
- -9-
<PAGE>
managing underwriter, if any, copies of all
correspondence between the Commission and the Company,
its counsel or auditors and all memoranda relating to
discussions with the Commission or its staff with
respect to such registration statement),
(d) of the issuance by the Commission of
any stop order suspending the effectiveness of the
registration statement or the initiation of any
proceedings for that purpose,
(e) if at any time the representations
and warranties of the Company contemplated by Section
3.4 below cease to be accurate in all material
respects, and
(f) of the receipt by the Company of any
notification with respect to the suspension of the
qualification of the Registrable Securities or other
securities covered by the registration statement for
sale in any jurisdiction or the initiation or
threatening of any proceeding of such purpose;
(vii) otherwise use its best efforts to comply
with all applicable rules and regulations of the
Commission, and make available to its security
holders, as soon as reasonably practicable, an
earnings statement covering the period of at least
twelve months, but not more than eighteen months,
beginning with the first full calendar month after the
effective date of such registration statement, which
earnings statement shall satisfy the provisions of
Section 11(a) of the Securities Act and Rule 158
promulgated thereunder, and promptly furnish to RTZ
and each underwriter a copy of any amendment or
supplement to such registration statement or
prospectus;
(viii) provide and cause to be maintained a
transfer agent and registrar for all Registrable
Securities and other securities covered by such
registration statement from and after a date not later
than the effective date of such registration;
(ix) use its best efforts to list all
Registrable Securities and other securities covered by
such registration statement on any national securities
exchange or national quotations system on which
Registrable Securities of the same class covered by
such registration statement are then listed and, if
not so listed, to be listed on a national securities
exchange or, failing that, to be designated as
qualified for trading on the NASD automated quotation
system and, if designated as qualified for trading on
the NASD automated quotation system, use its best
efforts to secure designation of all such
- -10-
<PAGE>
Registrable Securities covered by such
registration statement as a NASDAQ "national market
system security" within the meaning of Rule 11Aa2-1
under the Exchange Act or, failing that, to secure
NASDAQ authorization for such Registrable Securities
and, without limiting the generality of the foregoing,
to arrange for at least two market makers to register
as such with respect to such Registrable Securities
with the NASD;
(x) in the event of the issuance of any stop
order suspending the effectiveness of a registration
statement, or of any order suspending or preventing
the use of any related prospectus or suspending the
qualification of any Registrable Securities or other
securities included in such registration statement for
sale in any jurisdiction, use its best efforts
promptly to obtain the withdrawal of such order; and
(xi) take all such other actions as are
customary, necessary or advisable in order to expedite
or facilitate the disposition of such Registrable
Securities.
The Company may require each RTZ Selling Stockholder to
furnish the Company in writing as promptly as reasonably
practicable such information regarding such RTZ Selling
Stockholder and the distribution of such securities as the Company
may from time to time reasonably request in writing.
RTZ agrees that upon receipt of any notice from the Company
of the happening of any event of the kind described in
subparagraph (vii)(a) or (vii)(d) of this Section 3.3, RTZ will
cause each RTZ Selling Stockholder forthwith to discontinue such
holder's disposition of Registrable Securities pursuant to the
registration statement relating to such Registrable Securities
until receipt by RTZ and each RTZ Selling Stockholder of the
copies of the supplemented or amended prospectus contemplated by
subparagraph (vii)(a) of this Section 3.3 and, if so directed by
the Company, will deliver to the Company (at the Company's
expense) all copies, other than permanent file copies, then in the
possession of RTZ and each RTZ Selling Stockholder, of the
prospectus relating to such Registrable Securities current at the
time of receipt of such notice. If the disposition by the RTZ
Selling Stockholders of their securities is discontinued pursuant
to the foregoing sentence, the Company shall extend the period of
effectiveness of the registration statement by the number of days
during the period from and including the date of the giving of
notice to and including the date when RTZ and each RTZ Selling
Stockholder shall have received copies of the supplemented or
amended prospectus contemplated by subparagraph (vii)(a) of this
Section 3.3 (or such shorter period which shall terminate when all
the Registrable Securities covered by such registration statement
have been sold pursuant thereto); and, if the Company shall not so
extend such period, RTZ's request pursuant to which such
- -11-
<PAGE>
registration statement was filed shall not be counted for purposes
of the requests for registration to which RTZ is entitled pursuant
to Section 3.1 hereof.
3.4. Underwritten Offerings.
(a) Requested Underwritten Offerings. If
requested by the underwriters for any underwritten offering
pursuant to a registration requested under Section 3.1, the
Company will enter into an underwriting agreement with such
underwriters for such offering, such agreement to be reasonably
satisfactory in substance and form to the Company, RTZ, each RTZ
Selling Stockholder and the underwriters and to contain such
representations and warranties by the Company and such other terms
as are generally prevailing in agreements of that type, including,
without limitation, indemnities to such underwriters and persons
who control (within the meaning of the Securities Act) such
underwriters to the effect and to the extent provided in Section
3.7. Each of RTZ and each RTZ Selling Stockholder will cooperate
with the Company in the negotiation of the underwriting agreement
and will give consideration to the reasonable suggestions of the
Company regarding the form thereof. Each RTZ Selling Stockholder
shall be a party to such underwriting agreement and may, at its
option, require that any or all of the representations and
warranties by, and the other agreements on the part of, the
Company to and for the benefit of such underwriters shall also be
made to and for the benefit of such RTZ Selling Stockholder and
that any or all of the conditions precedent to the obligations of
such underwriters under such underwriting agreement be conditions
precedent to the obligations of such RTZ Selling Stockholder.
None of the RTZ Selling Stockholders shall be required to make any
representations or warranties to or agreements with the Company or
the underwriters other than representations, warranties or
agreements regarding such RTZ Selling Stockholder, its ownership
of and title to its Registrable Securities, its intended method of
distribution and any other representations required by law;
provided, however, that the liabilities of RTZ and all RTZ Selling
Stockholders to any underwriter or any other Person under such
underwriting agreement shall be limited to liabilities arising
from misstatements in the RTZ Selling Stockholders'
representations and warranties and shall in no event exceed, in
the aggregate, the amount of net proceeds received by all RTZ
Selling Stockholders from the sale of Registrable Securities in
the offering to which such underwriting agreement relates.
(b) Incidental Underwritten Offerings. If the
Company proposes to register any of its securities under the
Securities Act as contemplated by Section 3.2 and such securities
are to be distributed by or through one or more underwriters, the
Company will, if requested by RTZ and subject to Section 3.2(c),
arrange for such underwriters to include all the Registrable
Securities to be offered and sold by any RTZ Selling Stockholder
to be distributed by such underwriters. Each RTZ Selling
Stockholder shall be a party to the underwriting agreement between
the Company and such underwriters and may, at its option, require
that any or all of the representations and
- -12-
<PAGE>
warranties by, and the other agreements including, without
limitation, indemnities to such underwriters and persons who
control (within the meaning of the Securities Act) such
underwriters to the effect and to the extent provided in Section
3.7 on the part of, the Company to and for the benefit of such
underwriters shall also be made to and for the benefit of such RTZ
Selling Stockholder and that any or all of the conditions
precedent to the obligations of such underwriters under such
underwriting agreement be conditions precedent to the obligations
of such RTZ Selling Stockholder. None of the RTZ Selling
Stockholders shall be required to make any representations or
warranties to or agreements with the Company or the underwriters
other than representations, warranties or agreements regarding
such RTZ Selling Stockholder, its ownership of and title to its
Registrable Securities and its intended method of distribution or
any other representations required by law; provided, however, that
the liabilities of RTZ and all RTZ Selling Stockholders to any
underwriter or any other Person under such underwriting agreement
shall be limited to liabilities arising from misstatements in the
RTZ Selling Stockholders' representations and warranties and shall
in no event exceed, in the aggregate, the amount of net proceeds
received by all RTZ Selling Stockholders from the sale of
Registrable Securities in the offering to which such underwriting
agreement relates.
(c) Holdback Agreements. (i) Each of RTZ,
RTZ Subsidiary and RTZA agrees not to effect any public
disposition of any Registrable Securities, and not to effect any
such disposition of any other equity security of the Company of
the same class as the Registrable Securities or of any security
convertible into or exchangeable or exercisable for any equity
security of the Company of the same class as the Registrable
Securities, including dispositions pursuant to Rule 144 under the
Securities Act, during the 15 days prior to, and during the 120-
day period beginning on, the effective date of any registration
statement pertaining to securities of the Company of the same
class as the Registrable Securities or securities convertible into
or exchangeable or exercisable for any equity security of the
Company of the same class as the Registrable Securities (except as
part of such registration or if such registration is made with
respect to an employee benefit, employee stock option, dividend
reinvestment or any other benefit plan or with respect to the
registration of securities in connection with any acquisition,
merger, reorganization or consolidation); provided that RTZ, RTZ
Subsidiary and RTZA has received written notice from the Company
of such registration and a good faith estimate of the effective
date thereof, and provided, further that any Person to whom
registration rights have been granted after the date of the
Purchase Agreement to the extent permitted by Section 6 and any
other Person selling securities in such offering shall have agreed
not to effect any such disposition during a period no shorter than
the period referred to in this Section 3.4(c)(i). If the
foregoing restriction on public dispositions by RTZ, RTZ
Subsidiary and RTZA applies (other than as a result of an
underwritten public offering in which any RTZ Selling Stockholder
sells Registrable Securities), during the period of effectiveness
of any registration statement covering Registrable Securities
requested by
- -13-
<PAGE>
RTZ to be registered pursuant to Section 3.1, the Company shall
extend the period of effectiveness of such registration statement
by the number of days during which such restriction applied; and,
if the Company shall not so extend such period, RTZ's request
pursuant to which such registration statement was filed shall not
be counted for purposes of the requests for registration to which
RTZ is entitled pursuant to Section 3.1 hereof.
(ii) If any registration of Registrable
Securities pursuant to Section 3.1 shall be in connection with an
underwritten public offering, the Company agrees (i) not to effect
any public sale or distribution of any of its equity securities of
the same class as the Registrable Securities or of any security
convertible into or exchangeable or exercisable for any equity
security of the Company of the same class as the Registrable
Securities (other than any such sale or distribution of such
securities in connection with any acquisition, merger,
reorganization or consolidation by the Company or any subsidiary
of the Company or in connection with an employee benefit, employee
stock option, dividend reinvestment or other benefit plan) during
the period after RTZ requests such registration pursuant to
Section 3.1 (but not more than 15 days prior to the Company's good
faith estimate of the effective date of such Registration
Statement) to the date which is 120-days after the effective date
of such registration statement (except as part of such
registration) and (ii) that any agreement entered into after the
date of the Purchase Agreement pursuant to which the Company
issues or agrees to issue any privately placed equity securities
shall contain a provision under which holders of such securities
agree not to effect any public sale or distribution of any such
securities during the period referred to in the foregoing clause
(i), including any sale pursuant to Rule 144 under the Securities
Act (except as part of such registration, if permitted).
3.5. Preparation: Reasonable Investigation. In
connection with the preparation and filing of each registration
statement under the Securities Act pursuant to this Agreement, the
Company will give RTZ, each RTZ Selling Stockholder, their
underwriters, if any, and their respective counsel and accountants
the opportunity to participate in the preparation of such
registration statement, each prospectus included therein or filed
with the Commission, and, to the extent practicable, each
amendment thereof or supplement thereto, and give each of them
such access to its books and records (to the extent customarily
given to underwriters of the Company's securities) and such
opportunities to discuss the business of the Company with its
officers and the independent public accountants who have certified
its financial statements as shall be necessary, in the opinion of
such holders' and such underwriters' respective counsel, to
conduct a reasonable investigation within the meaning of the
Securities Act; provided, that RTZ, each RTZ Selling Stockholder
and their respective assignees hereunder shall use their
reasonable best efforts to coordinate any such investigation of
the books and records at the Company and any such discussions with
the Company's officers and accountants so that all such
investigations occur at the same time and all such discussions
occur at the same time.
- -14-
<PAGE>
3.6. Limitations, Conditions and Qualifications to
Obligations under Registration Covenants. The obligation of the
Company to use its best efforts to cause the Registrable
Securities to be registered under the Securities Act is subject to
the following limitations, conditions and qualifications. The
Company shall be entitled to postpone for a reasonable period of
time (but not exceeding 150 days and no more than once in any
twelve month period) the filing of any registration statement
otherwise required to be prepared and filed by it pursuant to
Section 3.1 if the Company determines, in its reasonable judgment,
that such registration and offering would interfere with any
material financing, acquisition, merger, consolidation or other
material transaction involving the Company or any of its
Affiliates or would require premature disclosure of any of the
foregoing transactions or at a time when audited financial
statements are not available or when the Company is in possession
of material information which, in the exercise of its reasonable
judgment, the Company deems advisable not to disclose in a
registration statement, and promptly gives RTZ, each RTZ Selling
Stockholder and each managing underwriter, if any, written notice
of such delay, including a general statement of the reasons for
such postponement and an approximation of the anticipated delay.
If the Company shall so postpone the filing of a registration
statement, RTZ shall have the right to withdraw the request for
registration by giving written notice to the Company within 30
days after receipt of the notice of postponement and, in the event
of such withdrawal, such request shall not be counted for purposes
of the requests for registration to which RTZ is entitled pursuant
to Section 3.1 hereof.
3.7. Indemnification.
(a) Indemnification by the Company. In the
event of any registration of any securities of the Company under
the Securities Act, the Company will, and hereby does, indemnify
and hold harmless, in the case of any registration statement filed
pursuant to Section 3.1 or 3.2, RTZ and each RTZ Selling
Stockholder and their respective directors, officers, and each
other Person who participates as an underwriter (as defined in the
Securities Act) in the offering or sale of such securities and
each other Person, if any, who controls such seller or any such
underwriter within the meaning of the Securities Act (a
"Controlling Person") or participates in the offering of such
securities (a "Participating Person"), against any losses, claims,
damages or liabilities, joint or several, to which RTZ, each RTZ
Selling Stockholder or any such director, officer, underwriter,
Controlling Person or Participating Person may become subject
under the Securities Act or otherwise, insofar as losses, claims,
damages or liabilities (or actions or proceedings, whether
commenced or threatened, in respect thereof) arise out of or are
based upon (i) any untrue statement or alleged untrue statement of
any material fact contained in any registration statement under
which such securities were registered under the Securities Act,
any preliminary prospectus, final prospectus or summary prospectus
contained therein, or any amendment or supplement thereto, (ii)
any omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the
- -15-
<PAGE>
statements therein in light of the circumstances in which they
were made not misleading, or (iii) any violation by the Company of
any federal, state or common law rule or regulation applicable to
the Company and relating to action required of or inaction by the
Company in connection with any such registration, and, subject to
Section 3.7(c), the Company will reimburse RTZ, each RTZ Selling
Stockholder and each such director, officer, underwriter,
Controlling Person or Participating Person for any legal or any
other expenses reasonably incurred by them in connection with
investigating or defending any such loss, claim, liability, action
or proceeding; provided, that the Company shall not be liable in
any such case to the extent that any such loss, claim, damage,
liability (or action or proceeding in respect thereof) or expense
arises out of or is based upon an untrue statement or alleged
untrue statement or omission or alleged omission made in such
registration statement, any such preliminary prospectus, final
prospectus, summary prospectus, amendment or supplement in
reliance upon and in conformity with written information furnished
to the Company through an instrument executed by or on behalf of
such seller or underwriter, as the case may be, specifically
stating that it is for use in the preparation thereof; and
provided, further, that the Company shall not be liable to any
Person who participates as an underwriter in the offering or sale
of Registrable Securities or any other Person, if any, who
controls such underwriter within the meaning of the Securities
Act, in any such case to the extent that any such loss, claim,
damage, liability (or action or proceeding in respect thereof) or
expense arises out of such Person's failure to send or give a copy
of the final prospectus, as the same may be then supplemented or
amended, to the Person asserting an untrue statement or alleged
untrue statement or omission or alleged omission at or prior to
the written confirmation of the sale of Registrable Securities to
such Person if such statement or omission was corrected in such
final prospectus so long as such final prospectus, and any
amendments or supplements thereto, have been furnished to such
underwriter. Such indemnity shall remain in full force and effect
regardless of any investigation made by or on behalf of such
seller or any such director, officer, partner, Controlling Person
or Participating Person and shall survive the transfer of such
securities by any RTZ Selling Stockholder.
(b) Indemnification by RTZ. As a condition to
including any Registrable Securities in any registration
statement, the Company shall have received an undertaking
satisfactory to it from each RTZ Selling Stockholder and RTZ to
jointly and severally indemnify and hold harmless (in the same
manner and to the same extent as set forth in subdivision (a) of
this Section 3.7) the Company, and each director of the Company,
each officer of the Company and each other Person, if any, who
controls the Company within the meaning of the Securities Act or
participates in the offering of such securities, with respect to
any statement or alleged statement in or omission or alleged
omission from such registration statement, any preliminary
prospectus, final prospectus or summary prospectus contained
therein, or any amendment or supplement thereto, but only to the
extent such statement or alleged statement or omission or alleged
omission
- -16-
<PAGE>
was made in reliance upon and in conformity with written
information furnished to the Company through an instrument duly
executed by or on behalf of the RTZ Selling Stockholder
specifically stating that it is for use in the preparation of such
registration statement, preliminary prospectus, final prospectus,
summary prospectus, amendment or supplement; provided, however,
that the liability of RTZ and all RTZ Selling Stockholders under
this Section 3.7(b) and Section 3.7(d) shall be limited, in the
aggregate, to the amount of net proceeds received by all RTZ
Selling Stockholders from the sale of Registrable Securities in
the offering giving rise to such liability. Such indemnity shall
remain in full force and effect, regardless of any investigation
made by or on behalf of the Company or any such director, officer
or controlling Person and shall survive the transfer of such
securities by any RTZ Selling Stockholder.
(c) Notices of Claims, etc. Promptly after
receipt by an indemnified party of notice of the commencement of
any action or proceeding involving a claim referred to in the
preceding subdivisions of this Section 3.7, such indemnified party
will, if a claim in respect thereof is to be made against an
indemnifying party, give written notice to the latter of the
commencement of such action; provided, however, that the failure
of any indemnified party to give notice as provided herein shall
not relieve the indemnifying party of its obligations under the
preceding subdivisions of this Section 3.7, except to the extent
that the indemnifying party is actually prejudiced by such failure
to give notice. In case any such action is brought against an
indemnified party, unless in such indemnified party's reasonable
judgment a conflict of interest between such indemnified and
indemnifying parties is reasonably likely to exist in respect of
such claim, the indemnifying party shall be entitled to
participate in and, to assume the defense thereof, jointly with
any other indemnifying party similarly notified to the extent that
it may wish, with counsel reasonably satisfactory to such
indemnified party, and after notice from the indemnifying party to
such indemnified party of its election so to assume the defense
thereof, the indemnifying party shall not be liable to such
indemnified party for any legal or other expenses subsequently
incurred by the latter in connection with the defense thereof
other than reasonable costs of investigation unless in such
indemnified party's reasonable judgment a conflict of interest
between such indemnified and indemnifying parties arises in
respect of such claim after the assumption of the defense thereof
and the indemnified party notifies the indemnifying party of such
indemnified party's judgment and the basis therefor. No
indemnifying party shall be liable for any settlement of any
action or proceeding effected without its written consent, which
consent shall not be unreasonably withheld. No indemnifying party
shall, without the consent of the indemnified party, consent to
entry of any judgment or enter into any settlement which does not
include as an unconditional term thereof the giving by the
claimant or plaintiff to such indemnified party of a release from
all liability in respect of such claim or litigation.
- -17-
<PAGE>
(d) Contribution. If the indemnification
provided for in this Section 3.7 shall for any reason be held by a
court to be unavailable to an indemnified party under subparagraph
(a) or (b) hereof in respect of any loss, claim, damage or
liability, or any action or proceeding in respect thereof, then,
in lieu of the amount paid or payable under subparagraph (a) or
(b) hereof, the indemnified party and the indemnifying party under
subparagraph (a) or (b) hereof shall contribute to the aggregate
losses, claims, damages and liabilities (including legal or other
expenses reasonably incurred in connection with investigating the
same), (i) in such proportion as is appropriate to reflect the
relative fault of the indemnifying party, on the one hand, and the
indemnified party, on the other hand, which resulted in such loss,
claims, damage or liability, or action or proceeding in respect
thereof, with respect to the statements or omissions which
resulted in such loss, claim, damage or liability, or action or
proceeding in respect thereof, as well as any other relevant
equitable considerations or (ii) if the allocation provided by
clause (i) above is not permitted by applicable law, in such
proportion as shall be appropriate to reflect the relative
benefits received by the indemnifying party and the indemnified
party from the offering of the securities covered by such
registration statement, as well as any other relevant equitable
considerations. No Person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) shall
be entitled to contribution from any Person who was not guilty of
such fraudulent misrepresentation. In addition, no Person shall
be obligated to contribute hereunder any amounts in payment for
any settlement of any action or claim effected without such
Person's consent, which consent shall not be unreasonably
withheld. Notwithstanding anything in this Section 3.7(d) to the
contrary, the liability of RTZ and all RTZ Selling Stockholders
under this Section 3.7(d) and Section 3.7(b) shall be limited, in
the aggregate, to the any amount of net proceeds received by all
RTZ Selling Stockholders from the sale of Registrable Securities
in the offering giving rise to such liability.
(e) Other Indemnification. Indemnification
and contribution similar to that specified in the preceding
subdivisions of this Section 3.7 (with appropriate modifications)
shall be given by the Company, RTZ and each RTZ Selling
Stockholder with respect to any required registration or other
qualification of securities under any federal or state law or
regulation of any governmental authority other than the Securities
Act. The indemnification agreements contained in this Section 3.7
shall be in addition to any other rights to indemnification or
contribution which any indemnified party may have pursuant to law
or contract.
(f) Indemnification Payments. The
indemnification and contribution required by this Section 3.7
shall be made by periodic payments of the amount thereof during
the course of the investigation or defense, as and when bills are
received or expense, loss, damage or liability is incurred. In
any case in which it shall be judicially determined that a party
is not entitled to indemnification or contribution, any payments
previously received by such party hereunder shall be promptly
reimbursed.
- -18-
<PAGE>
4. Rule 144. The Company shall take all actions
reasonably necessary to enable holders of Registrable Securities
to sell such securities without registration under the Securities
Act within the limitation of the exemptions provided by (a) Rule
144 under the Securities Act, as such Rule may be amended from
time to time, or (b) any similar rule or regulation hereafter
adopted by the Commission including, without limiting the
generality of the foregoing, filing on a timely basis all reports
required to be filed by the Exchange Act. Upon the request of RTZ
or any RTZ Selling Stockholder, the Company will deliver to it a
written statement as to whether it has complied with such
requirements.
5. Nominees for Beneficial Owners. In the event that any
Registrable Securities are held by a nominee for the beneficial
owner thereof, the beneficial owner thereof may, at its election
in writing delivered to the Company, be treated as the holder of
such Registrable Securities for purposes of any request or other
action by any holder or holders of Registrable Securities pursuant
to this Agreement or any determination of any number or percentage
of Registrable Securities held by any holder or holders of
Registrable Securities contemplated by this Agreement. If the
beneficial owner of any Registrable Securities so elects, the
Company may require assurances reasonably satisfactory to it of
such owner's beneficial ownership of such Registrable Securities.
6. No Inconsistent Agreements. The Company will not, on
or after the date of this Agreement, enter into any agreement with
respect to its securities which is inconsistent with the rights
granted to RTZ, RTZ Subsidiary and RTZA in this Agreement or
otherwise conflicts with the provisions hereof, other than any
lock-up agreement with the underwriters in connection with any
registered offering effected hereunder, pursuant to which the
Company shall agree not to register for sale, and the Company
shall agree not to sell or otherwise dispose of, Common Stock or
any securities convertible into or exercisable or exchangeable for
Common Stock, for a specified period following the registered
offering. The Company has not previously entered into any
agreement with respect to its securities granting any registration
rights to any Person. The rights granted to RTZ, RTZ Subsidiary
and RTZA hereunder do not in way conflict with and are not
inconsistent with any other agreements to which the Company is a
party or by which it is bound.
7. No Required Sale. Nothing in this Agreement shall be
deemed to create an independent obligation on the part of any of
RTZ, RTZ Subsidiary or RTZA to sell any Registrable Securities
pursuant to any effective registration statement.
8. Adjustments. In the event that any capital stock or
other securities are issued in respect of, in exchange for, or in
substitution of, any Registrable Securities by reason of any
reorganization, recapitalization, reclassification, merger,
consolidation, spin-off, partial or complete liquidation, stock
dividend, split-up, sale of assets, distribution to stockholders
or combination of the shares of Registrable Securities or any
- -19-
<PAGE>
other change in the Company's capital structure, appropriate
adjustments shall be made in this Agreement so as to fairly and
equitably preserve, as far as practicable, the original rights and
obligations of the parties hereto under this Agreement. The
Company agrees that it shall not effect or permit to occur any
combination or subdivision of shares which would adversely affect
the ability of RTZ, RTZ Subsidiary or RTZA to include any
Registrable Securities in any registration contemplated by this
Agreement or the marketability of such Registrable Securities in
any such registration.
9. Further Assurances. Each party hereto shall do and
perform or cause to be done and performed all further acts and
things and shall execute and deliver all other agreements,
certificates, instruments, and documents as any other party hereto
reasonably may request in order to carry out the intent and
accomplish the purposes of this Agreement and the consummation of
the transactions contemplated hereby.
10. Governing Law. This Agreement and the rights and
obligations of the parties hereto shall be governed by, and
construed and enforced in accordance with, the laws of the State
of New York, without giving effect to the principles of conflicts
of law thereof. Each party hereto hereby irrevocably and
unconditionally consents to submit to the exclusive jurisdiction
of courts of the State of New York located in the Borough of
Manhattan in The City of New York and of the United States
District Court for the Southern District of New York (the "New
York Courts") for any litigation arising out of or relating to
this Agreement and the transactions contemplated hereby (and
agrees not to commence any litigation relating thereto except in
such courts), waives any objection to the laying of venue of any
such litigation in the New York Courts and agrees not to plead or
claim in any New York Court that such litigation brought therein
has been brought in an inconvenient forum.
11. Specific Performance. The parties hereto agree that
money damages or other remedy at law would not be sufficient or
adequate remedy for any breach or violation of, or a default
under, this Agreement by them and that in addition to all other
remedies available to them, each of them shall be entitled to the
fullest extent permitted by law to an injunction restraining such
breach, violation or default or threatened breach, violation or
default and to any other equitable relief, including without
limitation specific performance, without bond or other security
being required.
12. Notice. All notices and other communications
hereunder shall be in writing and, unless otherwise provided
herein, shall be deemed to have been given when received by the
party to whom such notice is to be given at its address set forth
below, or such other address for the party as shall be specified
by notice given pursuant hereto:
(a) If to the Company, to it at:
- -20-
<PAGE>
Freeport-McMoRan Inc.
1615 Poydras Street
New Orleans, Louisiana 70112
Attn: General Counsel
Fax: (504) 585-3513
with a copy to:
Davis Polk & Wardwell
450 Lexington Avenue
New York, New York 10017
Attn: E. Deane Leonard, Esq.
and David W. Ferguson, Esq.
Fax: (212) 450-4800
(c) If to RTZ Subsidiary or RTZ to:
The RTZ Corporation PLC
6 St. James's Square
London SW1Y 4LD
England
Attn: The Corporate Secretary
Fax: 011-44-171-930-3249
with a copy to:
Fried, Frank, Harris, Shriver
& Jacobson
One New York Plaza
New York, New York 10004
Attention: Allen I. Isaacson, P.C.
Fax: (212) 859-4000
(d) If to RTZA to:
RTZ America, Inc.
100 Quentin Roosevelt Blvd.
Suite 503
Garden City, NY 11530
- -21-
<PAGE>
Attn: The Corporate Secretary
Fax: (516) 794-5073
with a copy to:
Fried, Frank, Harris, Shriver
& Jacobson
One New York Plaza
New York, New York 10004
Attention: Allen I. Isaacson, P.C.
Fax: (212) 859-4000
13. Binding Effect; Assignment. This Agreement shall
inure to the benefit of and shall be binding upon the parties
hereto and their respective heirs, legal representatives,
successors and assigns. Neither this Agreement nor any of the
rights hereunder may be assigned by any of the parties hereto
without the consent of the other parties, except that RTZ, RTZ
Subsidiary and/or RTZA may assign all or part of its rights under
this Agreement (subject to an appropriate assumption of related
obligations under this Agreement) to any person to whom or which
RTZ Subsidiary or RTZA sells or transfers any Registrable
Securities, and such transferees may similarly assign such rights.
14. Amendment and Modification. This Agreement may be
amended, modified, supplemented or waived only by written
agreement of the party against whom enforcement of such amendment,
modification, supplement or waiver is sought.
15. Headings; References; Execution in Counterparts;
Interpretation. The headings and captions contained herein are
for convenience only and shall not control or affect the meaning
or construction of any provision hereof. All article, section,
schedule, exhibit and paragraph references are to this Agreement,
unless otherwise expressly provided. This Agreement may be
executed in any number of counterparts, each of which shall be
deemed to be an original and which together shall constitute one
and the same instrument. The use of the word "including" in this
Agreement shall be by way of example rather than by limitation.
In this Agreement, unless the context otherwise requires, words in
the singular number or in the plural number shall each include the
singular number and the plural number.
16. Entire Agreement. This Agreement constitutes the
entire agreement, and supersedes all prior agreements and
understandings, oral and written, between the parties hereto with
respect to the subject matter hereof.
- -22-
<PAGE>
17. Invalidity of Provision. The invalidity or
unenforceability of any provision of this Agreement in any
jurisdiction shall not affect the validity or enforceability of
the remainder of this Agreement in that jurisdiction or the
validity or enforceability of this Agreement, including that
provision, in any other jurisdiction. If any restriction or
provision of this Agreement is held unreasonable, unlawful or
unenforceable in any respect, such restriction or provision shall
be interpreted, revised or applied in the manner that renders it
lawful and enforceable to the fullest extent possible under law.
- -23-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement on the date first above written.
FREEPORT-McMoRan COPPER & GOLD INC.
By /s/ Michael C. Kilanowski, Jr.
Name: Michael C. Kilanowski, Jr.
Title: Secretary
THE RTZ CORPORATION PLC
By /s/ Allen I. Isaacson
Name: Allen I. Isaacson, P.C.
Title: Attorney-In-Fact
RTZ INDONESIA LIMITED
By /s/ Allen I. Isaacson
Name: Allen I. Isaacson, P.C.
Title: Attorney-In-Fact
RTZ AMERICA, INC.
By /s/ William M. Higgins
Name: William M. Higgins
Title: Vice President
- -24-
<PAGE>
Dated 1995
FREEPORT-McMoRan COPPER & GOLD INC.
and
THE RTZ CORPORATION PLC
IMPLEMENTATION AGREEMENT
RTZ Legal Department
6 St James's Square
London SW1Y 4LD
PSW/Agrts/A-455(9)
- -1-
<PAGE>
THIS IMPLEMENTATION AGREEMENT is made as of 2 May 1995
BETWEEN:
(1) FREEPORT-McMoRan COPPER & GOLD INC. of 1615 Poydras Street,
New Orleans, LA 70112, U.S.A. ("FCX") and
(2) THE RTZ CORPORATION PLC of 6 St. James's Square, London SW1Y
4LD ("RTZ")
WHEREAS
(A) By a letter of intent dated March 7, 1995 from FCX to RTZ
and signed by RTZ as of March 7, 1995 (the "Letter of
Intent"), FCX and RTZ confirmed their mutual intention with
respect to participation by RTZ or one or more of its
subsidiaries in certain transactions relating to operations
of FCX and its subsidiaries
(B) The transactions referred to in the Letter of Intent
include, among other things,
(i) the establishment of joint ventures, and certain
financing arrangements in connection therewith, to
explore and develop within the Contract Areas covered
by the PT-FI Contract of Work and the PT-IRJA Contract
of Work
(ii) the purchase by RTZ or one or more subsidiaries of RTZ
of 25% of the Huelva smelter of Rio Tinto Minera S.A.
("RTM"), FCX's wholly-owned Spanish subsidiary, and of
the RTM group's related Spanish exploration rights at
a price pro rata to FCX's cost of acquisition
(iii) the establishment by FCX of an operating committee
which will include representatives of FCX and
RTZ and which will, among other things, be
involved generally in day-to-day operations of
the businesses of FCX and its operating
subsidiaries
(C) The transactions referred to in (i) of Recital (B) above
will involve the incorporation by RTZ in Indonesia of one or
more limited liability subsidiaries
(D) The parties wish to record in a legally binding agreement
the steps they will take in order to implement the
transactions referred to in Recital (B) above and have
agreed to guarantee the obligations of their respective
subsidiaries under the Transaction Agreements
IT IS AGREED as follows:
- -2-
<PAGE>
DEFINITIONS
1. (1) Capitalised terms used in this Agreement that are not
defined in this Agreement shall have the respective meanings given
to them in the PT-FI Participation Agreement (including the
annexes thereto).
(2) In this Agreement unless the context otherwise
requires, the following terms shall have the following meanings:
(a) "Eastern Minerals Contract Area" means the
Contract Area as defined in the PT-IRJA Contract
of Work
(b) "Effective Date" has the meaning assigned to
that expression in the PT-FI Participation
Agreement
(c) "Exploration Obligation" means the obligation on
the part of RTZ contained in Clause 6(1)
(d) "Government" means The Government of the
Republic of Indonesia
(e) "Indonesian Closing" means the closing of the
transactions contemplated by Clause 4(1)
(f) "Indonesian Documents" means the PT-FI
Participation Agreement, the RTZ Loan Agreement,
the Security Agreements and the documents to be
executed in connection therewith pursuant to
the terms thereof
(g) "Indonesian Operations" means together the
operations of PT-FI in the PT-FI Contract Area
and the operations of PT-IRJA in the Eastern
Minerals Contract Area
(h) "Intercreditor Agreement" means the agreement to
be entered into between, among others, the
Banks, RTZ Lender, PT-RTZ and the trustee under
the Security Agreements, in form and substance
satisfactory to the parties thereto and FCX,
containing provisions reflecting the Bank
Consent Letters attached to this Agreement as
Exhibit B
(i) "Letter of Intent" means the letter of intent
referred to in recital (A)
(j) "PT-FI" means P.T. Freeport Indonesia Company, a
limited liability company organised under the
laws of the Republic of Indonesia and
domesticated in the State of Delaware, USA
- -3-
<PAGE>
(k) "PT-FI Contract Area" means the Contract Area as
defined in the PT-FI Contract of Work,
comprising Contract Area Block A and Contract
Area Block B
(l) "PT-FI Contract of Work" means the Contract of
Work dated 30 December 1991 between the
Government and PT-FI whereby the Government
appointed PT-FI as the sole contractor for the
Government with respect to the PT-FI Contract
Area, with the sole rights to explore, mine,
process, store, transport, market, sell and
dispose of Products (as defined in the PT-FI
Contract of Work) in the PT-FI Contract Area
(m) "PT-FI Participation Agreement" means the
participation agreement between PT-FI and PT-RTZ
(including all annexes and schedules thereto) in
relation to the PT-FI Contract Area in the form
set out in Schedule 1 to this Agreement or as
the same may be amended by mutual agreement
(n) "PT-IRJA" means P.T. IRJA Eastern Minerals
Corporation, a limited liability company
organised under the laws of the Republic of
Indonesia
(o) "PT-IRJA Agreements" means the agreement(s)
referred to in Clause 5(1)
(p) "P.T. IRJA Closing" means the closing of the
transactions contemplated by Clause 5(1)
(q) "PT-IRJA Contract of Work" means the Contract of
Work dated 15 August 1994 between the Government
and PT-IRJA whereby the Government appointed PT-
IRJA as the sole contractor for the Government
with respect to the Eastern Minerals Contract
Area, with the sole rights to explore, mine,
process, store, transport, market, sell and
dispose of Products (as defined in the PT-IRJA
Contract of Work) in the Eastern Minerals
Contract Area
(r) "PT-RTZ" means the limited liability company in
Indonesia first mentioned in Clause 3 which
shall be party to the PT-FI Participation
Agreement
(s) "RTM" means Rio Tinto Minera S.A.
(t) "RTZ-Approved Costs" has the meaning assigned to
that expression in Clause 6(3)
- -4-
<PAGE>
(u) "RTZ Lender" means the wholly-owned subsidiary
of RTZ organised or to be organised under the
laws of England which RTZ designates as the
lender under the RTZ Loan Agreement
(v) "RTZ Loan Agreement" means the agreement
(including all annexes and schedules thereto)
between PT-FI and RTZ Lender whereby RTZ Lender
agrees to make available to PT-FI a facility of
up to $450,000,000 to fund one or more Approved
Expansion Projects in the form set out in
Schedule 2 to this Agreement or as the same may
be amended by mutual agreement
(w) "Security Agreements" means the Trust Agreement
to be executed by PT-FI in order, inter alia, to
provide security for the RTZ Loan as provided in
and scheduled to the RTZ Loan Agreement
(including the Trust Arrangements described in
Exhibit A to this Agreement together with the
power of attorney and any other documents
referred to therein)
(x) "Spanish Closing" means the closing of the
transactions contemplated by Clause 5(2)
(y) "Spanish Documents" means the agreements as
referred to in Clause 5(2)
(z) "Stock Purchase Agreement" means the Agreement
of even date between Freeport-McMoRan Inc. and
FCX, on the one hand, and RTZ, RTZ Indonesia
Limited and RTZ America, Inc., on the other hand
(aa) "subsidiary" has the meaning assigned to that
expression in Section 736 of the Companies Act
1985 of Great Britain
(bb) "Transaction Agreements" means any one or more
of the following agreements, namely the
Indonesian Documents, the PT-IRJA Agreements and
the Spanish Documents.
(3) In this Agreement
(a) references to any document or agreement includes
such document or agreement as amended, novated,
substituted, varied, supplemented or replaced
from time to time
(b) references to any statute, code, decree,
regulation or ordinance or to any provision
thereof includes any modification or re-
enactment thereof or any provision substituted
therefor and all statutory or other instruments
issued thereunder
- -5-
<PAGE>
(c) headings to clauses, sub-clauses, Schedules or
Annexes are for convenience only and shall not
affect the interpretation of this Agreement.
OPERATING COMMITTEE OF FCX
2. (1) FCX shall, promptly following the date of this
Agreement, establish an Operating Committee, among other things
to:
(a) monitor progress towards meeting the conditions
precedent to the various closings referred to in
this Agreement
(b) receive reports on the operations from time to
time of FCX and its operating subsidiaries
(c) design appropriate actions for presentation to
and consideration by the board of directors of
FCX respecting the operating subsidiaries of FCX
(d) develop plans and make recommendations to the
board of directors of FCX
(e) monitor execution of plans approved by the board
of directors of FCX and the incurring of
Exploration Costs contemplated in Clause
6(1)(a), and
(f) subject to the control of the board of directors
of FCX, be involved generally in day-to-day
operations of the businesses of FCX and its
operating subsidiaries.
(2) The Operating Committee referred to in Clause 2(1)
above will have the following members and, unless otherwise agreed
between FCX and RTZ, no others:
(a) the President and Chief Operating Officer of
FCX, as Chairman
(b) one member appointed by RTZ
(c) the General Manager of the mining operations of
PT-FI.
Each of FCX, PT-FI and RTZ may appoint one or more alternates to
act in the absence of the regular member appointed by it. Any
alternate so acting shall be deemed a member of the Operating
Committee. Appointments shall be made or changed by written
notice to the other Committee members.
- -6-
<PAGE>
ESTABLISHMENT OF INDONESIAN SUBSIDIARY(IES)
3. As soon as practicable after the date of this Agreement, RTZ
shall use its best endeavours to procure that there is established
a limited liability company in Indonesia which is an indirect
wholly-owned subsidiary of RTZ and, subject to the conditions
contained herein, RTZ will procure that such company will enter
into the PT-FI Participation Agreement and become a Participant
(as defined in the PT-FI Participation Agreement) with the rights
and obligations with respect to the PT-FI Contract of Work and the
PT-FI Contract Area therein contained. Should the PT-IRJA
Agreements require or RTZ elect to have as the RTZ party thereto a
limited liability company established in Indonesia which is other
than P.T.-RTZ, RTZ shall use its best endeavours to procure that
such a limited liability company is established as soon as
practicable (such other limited liability company being hereafter
referred to as PT-RTZ2). FCX shall render to RTZ all such
assistance as RTZ may reasonably require to facilitate the
establishment of the limited liability company(ies) referred to in
this Clause 3.
INDONESIAN CLOSING
4. The Indonesian Closing shall take place at RTZ's offices in
London, England on the fifth Business Day after the last of the
conditions precedent referred to in Clauses 9(1)(a), 9(2) and 9(3)
to be satisfied or waived shall have been satisfied or waived by
the party or parties entitled to waive the same as provided in the
paragraphs concerned of such sub-clauses (or at such other place
or places and/or on such other date as FCX and RTZ may agree) when
the following shall occur:
(a) FCX shall procure that PT-FI shall execute each of the
following agreements:
(i) the PT-FI Participation Agreement
(ii) the Assignment of an Interest in the Contract of
Work scheduled to the PT-FI Participation
Agreement
(iii) the RTZ Loan Agreement
(iv) the Security Agreements
(b) RTZ shall procure that P.T.-RTZ shall execute the
following agreements:
(i) the PT-FI Participation Agreement
(ii) the Assignment of an Interest in the Contract of
Work scheduled to the PT-FI Participation
Agreement
- -7-
<PAGE>
(c) RTZ shall procure that RTZ Lender shall execute each
of the following agreements:
(i) the RTZ Loan Agreement
(ii) the Security Agreements.
OTHER CLOSINGS
5. (1) As soon as practicable after the date of this
Agreement, each of FCX and RTZ shall negotiate in good faith with
a view to agreeing as soon as practicable one or more agreements
in respect of the Eastern Minerals Contract Area in substantially
the form of the PT-FI Participation Agreement as modified to
reflect the parties' intentions as set out in the Letter of Intent
or otherwise to provide an alternative structure which achieves
the same business objective on a mutually more favourable basis
from tax, accounting, corporate and regulatory perspectives. Each
of FCX and RTZ shall procure that, as soon as practicable after
the form and content of such agreement(s) are agreed, it will (if
itself a party to any such agreement) execute the same or procure
(in any other case) that its subsidiary or subsidiaries which is
or are to be party to any such agreement(s) execute the same. If
any such agreement(s) contain conditions precedent which are
required to be satisfied or fulfilled, each of FCX and RTZ shall
use its best endeavours to ensure satisfaction or fulfilment of
the same as soon as practicable.
(2) As soon as practicable after the date of this
Agreement, each of FCX and RTZ shall negotiate in good faith with
a view to agreeing as soon as practicable one or more agreements
in respect of the Spanish purchases referred to in paragraph (ii)
of Recital (B) which reflect their mutual intention in respect
thereof set out in the Letter of Intent or any alternative
structure which achieves the same business objective on a more
favourable basis from tax, accounting, corporate and regulatory
perspectives. Each of FCX and RTZ shall procure that, as soon as
practicable after the form and content of such agreement(s) are
agreed, it will (if itself a party to any such agreement) execute
the same or procure (in any other case) that its subsidiary or
subsidiaries which is or are to be party to any such agreement(s)
execute the same. If any such agreement(s) contain conditions
precedent which are required to be satisfied or fulfilled, each of
FCX and RTZ shall each use its best endeavours to ensure
satisfaction or fulfilment of the same as soon as practicable.
Failure by the parties hereto to reach agreement on the agreements
referred to in this Clause 5(2) shall not affect the validity or
enforceability of the remainder of this Agreement.
EXPLORATION OBLIGATION
6. (1) Subject to the Indonesian Closing occurring (except as
otherwise agreed to in writing by RTZ), RTZ shall procure that
P.T.-RTZ and the RTZ subsidiary party to the P.T. IRJA Agreements
(whether PT-RTZ2 or some other subsidiary of RTZ) shall:
- -8-
<PAGE>
(a) reimburse PT-FI and P.T. IRJA respectively for
all Exploration Costs (including, without
limitation, any costs incurred in respect of the
Feasibility Study referred to in Clause 8(2)(b))
which are incurred after the date of this
Agreement and up to the date of the Indonesian
Closing pursuant to PT-FI's or (as the case may
be) P.T. IRJA's respective existing Exploration
budgets for 1995 or regular annual Exploration
budgets for 1996 up to a maximum aggregate
amount of $50,000,000 (or such greater amount as
RTZ at its sole discretion may agree)
(b) after the Indonesian Closing, pay in accordance
with the terms of the PT-FI Participation
Agreement or the P.T. IRJA Agreements (as the
case may be) all Exploration Costs approved by
the relevant Exploration Committee incurred in
respect of the PT-FI Contract Area or (as the
case may be) the Eastern Minerals Contract Area
up to a maximum aggregate sum of $[100,000,000 -
A], where A is the aggregate sum reimbursed
pursuant to Clause 6(1)(a) above,
provided that not less than $40,000,000 of the aggregate sum
referred to above shall be reimbursed or paid by P.T.-RTZ in
respect of Contract Area Block A (as defined in the PT-FI Contract
of Work) and that not less than $10,000,000 of the aggregate sum
referred to above shall be reimbursed or paid by the RTZ
subsidiary party to the P.T. IRJA Agreements in respect of the
Eastern Minerals Contract Area.
(2) Subject to the Indonesian Closing occurring, should
RTZ-Approved Costs not equal or exceed $100,000,000 on the fifth
anniversary of the Effective Date, RTZ shall, at its option,
either pay to the Operator under the PT-FI Participation Agreement
the difference between $100,000,000 and the total of RTZ-Approved
Costs on the fifth anniversary of the Effective Date or procure
that there is re-assigned to PT-FI and to the FCX party to the
P.T.-IRJA Agreements all interests in the respective Contracts of
Work, revenues, assets and other property assigned to or owned by
P.T.-RTZ (in the case of the re-assignment to PT-FI) or the
subsidiary of RTZ party to the P.T.-IRJA Agreements (in the case
of the re-assignment to the FCX party to the P.T.-IRJA
Agreements), in the event of which re-assignments P.T.-RTZ and the
RTZ subsidiary party to the P.T.-IRJA Agreements will have no
further interest in or obligations in respect of the PT-FI
Participation Agreement or (as the case may be) the PT-IRJA
Agreements and all rights and obligations of all of the parties to
the Indonesian Documents and the P.T.-IRJA Agreements executed
prior to such re-assignments will terminate.
(3) In this Clause 6,
(a) "RTZ-Approved Costs" means together
(i) the aggregate of Exploration Costs
reimbursed by P.T.-RTZ and the RTZ
subsidiary party to the P.T.-IRJA
Agreements pursuant to Clause 6(1)(a) and
Exploration Costs incurred or
- -9-
<PAGE>
approved pursuant to the PT-FI
Participation Agreement or the P.T.-IRJA
Agreements and
(ii) costs or expenditure which are/is not
incurred but which are/is approved by RTZ
for expenditure (and in respect of which
RTZ or P.T.-RTZ or the RTZ subsidiary
party to the P.T.-IRJA Agreements had made
funds available to the Operator under the
PT-FI Contract of Work or the Operator
under the P.T.-IRJA Contract of Work at
such time or times over the period ending
on the fifth anniversary of the Effective
Date as such costs shall have been
approved by RTZ) on labour, supplies,
contract costs and other costs directly
attributable or allocable to Exploration
in the PT-FI Contract Area or the Eastern
Minerals Contract Area, including fully
loaded labour, logistical support costs,
facility and other miscellaneous costs
required to support these activities
(b) reference to approval by RTZ means approval
either by the board of directors of P.T.-RTZ or
(as the case may be) the subsidiary of RTZ party
to the PT-IRJA Agreements or by the
representative(s) on the relevant Exploration
Committee appointed or nominated by P.T.-RTZ
pursuant to the PT-FI Participation Agreement or
(as the case may be) the subsidiary of RTZ party
to the PT-IRJA Agreements.
REPRESENTATIONS AND WARRANTIES
7. (1) FCX represents and warrants to RTZ that, except as
mentioned in Schedule 3 to this Agreement:
(a) each of FCX and its subsidiaries which are to be
parties to any of the Transaction Agreements is,
or will be at the time of execution by any such
subsidiary of any of the Transaction Agreements,
a corporation duly organised, validly existing
and in good standing under the laws of the
jurisdiction of its incorporation and has, or
will have at the time of execution by it of any
of the Transaction Agreements, the requisite
corporate power and authority to own and operate
its properties and to carry on its business as
it is now being or will be conducted. Each of
FCX and such of its subsidiaries is, or will be
at the time of execution by it of any of the
Transaction Agreements, duly qualified to do
business as a foreign corporation and is, or
will be at the time of execution by it of any of
the Transaction Agreements, in good standing in
every jurisdiction in which the nature of the
business conducted or properties owned or leased
or the nature of its activities makes such
qualification necessary
- -10-
<PAGE>
(b) FCX has the requisite corporate power and
authority to enter into this Agreement and to
perform its obligations hereunder. The
execution and delivery of this Agreement and the
consummation of the transactions contemplated by
this Agreement have been duly authorised and
approved by FCX's board of directors and no
other corporate proceedings on the part of FCX
are necessary to authorise this Agreement or the
transactions contemplated hereby. This
Agreement constitutes a valid and binding
agreement of FCX, enforceable against it in
accordance with its terms, subject to
bankruptcy, reorganisation, insolvency,
moratorium or other laws affecting the
enforcement of creditors' rights generally and
subject to any limitations acts and to general
equitable principles
(c) the execution, delivery and performance by FCX
of this Agreement and by its subsidiaries which
are to be parties to any of the Transaction
Agreements of any of the Transaction Agreements
to which they are to be parties does not and
will not, with or without the passage of time or
the giving of notice or both (i) contravene,
conflict with, or result in a breach of or
default under, any agreement, obligation or
commitment to which FCX, or any of its
subsidiaries which are to be parties to any of
the Transaction Agreements is a party or by
which FCX, or any of its subsidiaries which are
to be parties to any of the Transaction
Agreements is bound, (ii) contravene any
provision of any applicable law or permit to
which FCX, or any of its subsidiaries which are
to be parties to any of the Transaction
Agreements is subject, (iii) contravene any
order, judgment or decree applicable to FCX, or
any of its subsidiaries which are to be parties
to any of the Transaction Agreements, (iv)
conflict with, or result in a breach under, any
term of the constitutional documents of FCX, or
any of its subsidiaries which are to be parties
to any of the Transaction Agreements or (v)
result in the creation of any mortgage, pledge,
lien, encumbrance or charge upon any of the
property or assets of FCX, or any of its
subsidiaries which are to be parties to any of
the Transaction Agreements except, in the case
of paragraphs (i), (ii), (iii) and (v), for any
such items which, individually or in the
aggregate, would not reasonably be expected (y)
materially to impair the ability of FCX or any
of its subsidiaries which are to be parties to
any of the Transaction Agreements to consummate
the transactions contemplated by this Agreement
or the Transaction Agreements, or (z) materially
to impair the ability of RTZ or any of its
subsidiaries which are to be parties to any of
the Transaction Agreements to receive the
benefit of the transactions contemplated by this
Agreement or the Transaction Agreements
- -11-
<PAGE>
(d) no transfer, consent, licence, approval, waiver,
authorisation or declaration of, and no filing
or registration with, any governmental or
regulatory authority or third party is required
to be obtained or made by FCX or any of its
subsidiaries which are to be parties to any of
the Transaction Agreements in connection with
the execution, delivery and performance of this
Agreement (in the case of FCX) or any of the
Transaction Agreements (in the case of its
subsidiaries which are to be parties to the
Transaction Agreements) or the consummation of
the transactions contemplated hereby or thereby,
other than such transfers, consents, licences,
approvals, waivers, authorisations,
declarations, filings or registrations, which,
if not obtained or made, individually or in the
aggregate, would not reasonably be expected (y)
materially to impair the ability of FCX or any
of its subsidiaries which are to be parties to
any of the Transaction Agreements to consummate
the transactions contemplated by this Agreement
or the Transaction Agreements, or (z) materially
to impair the ability of RTZ or any of its
subsidiaries which are to be parties to any of
the Transaction Agreements to receive the
benefit of the transactions contemplated by this
Agreement or the Transaction Agreements
(e) there is no action, suit, investigation or
proceeding pending or (to the knowledge of FCX)
threatened against FCX or any of its
subsidiaries which are to be parties to any of
the Transaction Agreements or any of their
respective properties or assets by or before any
court, arbitrator or governmental or regulatory
authority, department, commission, board,
bureau, agency or instrumentality, which
questions the validity or enforceability of, or
seeks to invalidate, this Agreement or any of
the Transaction Agreements or any action taken
or to be taken pursuant to this Agreement or any
of the Transaction Agreements, or which has or
is reasonably likely to have a material adverse
effect on the ability of FCX or any of its
subsidiaries which are to be parties to any of
the Transaction Agreements to perform its or
their respective obligations under this
Agreement or any of the Transaction Agreements
and none of FCX and its subsidiaries which are
to be parties to the Transaction Agreements is
in default in any material respect with respect
to any material judgment, order, writ,
injunction, decree or award
(f) each of FCX and its subsidiaries which are to be
parties to the Transaction Agreements is in
compliance in all material respects with all
applicable laws, except where non-compliance,
individually or in the aggregate, would or does
not have or result in a material adverse effect
on the ability of FCX or any of its subsidiaries
which are to be parties to any of the
Transaction Agreements to perform its or their
respective obligations under this Agreement or
any of the
- -12-
<PAGE>
Transaction Agreements. None of FCX and its
subsidiaries which are to be parties to the
Transaction Agreements has received any notice
of any alleged violation of law applicable to it
from a governmental or regulatory authority of
proper jurisdiction or any formal notice of any
alleged violation of law applicable to it or any
such subsidiaries from any other person, other
than any alleged violation, which if proven,
would not reasonably be expected to have or
result in a material adverse effect on the
ability of FCX or any of its subsidiaries which
are to be parties to any of the Transaction
Agreements to perform its or their respective
obligations under this Agreement or any of the
Transaction Agreements
(g) FCX is the sole registered and beneficial owner
of 81.28% of the outstanding shares of PT-FI,
49% of the shares of P.T. Indocopper Investama
(an Indonesian Company which owns 9.36% of the
shares of PT-FI) and 100% of the shares of
Eastern Mining Company Inc., a Delaware
corporation which owns 80% of the shares of P.T.
IRJA and FCX represents and warrants to RTZ that
Eastern Mining Company Inc. is the sole
registered and beneficial owner of 80% of the
shares of P.T. IRJA and that it is the indirect
owner of 100% of the shares of RTM. All such
shares have been duly issued and are fully-paid
or properly credited as fully-paid and are
beneficially owned by FCX or the companies
mentioned in the immediately preceding sentence
free from all security interests, options,
equities, claims, powers of attorney or other
third party rights (including without
limitation, rights of pre-emption) of any nature
whatsoever. Without prejudice to the generality
of the foregoing, no third party has any right
to vote such shares (whether in whole or in
part) or to exercise or enjoy any other rights
(including a right to dividends or to appoint
directors) in relation to such shares
(h) FCX has delivered to or made available to RTZ or
its affiliates all geological data and other
similar information in FCX's possession or
control derived from PT-FI's, P.T. IRJA's or
RTM's activities in the PT-FI Contract Area or,
as the case may be, the Eastern Minerals
Contract Area or, as the case may be, Spain
which any person interested in acquiring a
participating interest in any of such areas
would reasonably be expected to wish to see and
all other information reasonably requested by
RTZ or its Affiliates in FCX's possession or
control concerning the PT-FI Contract of Work,
the P.T. IRJA Contract of Work, PT-FI's
operations in the PT-FI Contract Area, P.T.
IRJA's operations under the P.T. IRJA Contract
of Work, RTM's area of operations and the
disposal of Products
- -13-
<PAGE>
(i) FCX is not a party to any agreement or under any
other obligation under or pursuant to which it
agrees to procure that PT-FI shall create or
give or permit to subsist in favour of any third
party any Encumbrance over P.T.-RTZ's share of
the Joint Account Assets or over any revenues
allocated to PT-RTZ (or to which P.T.-RTZ is
entitled) under the PT-FI Participation
Agreement.
(2) RTZ represents and warrants to FCX that, except as
mentioned in Schedule 4:
(a) each of RTZ and its subsidiaries which are to be
parties to any of the Transaction Agreements is,
or will be at the time of execution by any such
subsidiary of any of the Transaction Agreements,
a corporation duly organised, validly existing
and in good standing under the laws of the
jurisdiction of its incorporation and has, or
will have at the time of execution by it of any
of the Transaction Agreements, the requisite
corporate power and authority to own and operate
its properties and to carry on its business as
it is now being or will be conducted
(b) RTZ has the requisite corporate power and
authority to enter into this Agreement and to
perform its obligations hereunder. The
execution and delivery of this Agreement and the
consummation of the transactions contemplated by
this Agreement have been duly authorised and
approved by RTZ's board of directors and no
other corporate proceedings on the part of RTZ
are necessary to authorise this Agreement or the
transactions contemplated hereby. This
Agreement constitutes a valid and binding
agreement of RTZ, enforceable against it in
accordance with its terms, subject to
bankruptcy, reorganisation, insolvency,
moratorium or other laws affecting the
enforcement of creditors' rights generally and
subject to any limitations acts and to general
equitable principles
(c) the execution, delivery and performance by RTZ
of this Agreement and by its subsidiaries which
are to be parties to any of the Transaction
Agreements of any of the Transaction Agreements
to which they are to be parties does not and
will not, with or without the passage of time or
the giving of notice or both (i) contravene,
conflict with, or result in a breach of or
default under, any agreement, obligation or
commitment to which RTZ, or any of its
subsidiaries which are to be parties to any of
the Transaction Agreements is a party or by
which RTZ, or any of its subsidiaries which are
to be parties to any of the Transaction
Agreements is bound, (ii) contravene any
provision of any applicable law or permit to
which RTZ, or any of its subsidiaries which are
to be parties to any of the Transaction
Agreements is subject, (iii) contravene any
- -14-
<PAGE>
order, judgment or decree applicable to RTZ, or
any of its subsidiaries which are to be parties
to any of the Transaction Agreements, (iv)
conflict with, or result in a breach under, any
term of the constitutional documents of RTZ, or
any of its subsidiaries which are to be parties
to any of the Transaction Agreements or (v)
result in the creation of any mortgage, pledge,
lien, encumbrance or charge upon any of the
property or assets of RTZ, or any of its
subsidiaries which are to be parties to any of
the Transaction Agreements except, in the case
of paragraphs (i), (ii), (iii) and (v), for any
such items which, individually or in the
aggregate would not reasonably be expected (y)
materially to impair the ability of RTZ or any
of its subsidiaries which are to be parties to
any of the Transaction Agreements to consummate
the transactions contemplated by this Agreement
or the Transaction Agreements, or (z) materially
to impair the ability of FCX or any of its
subsidiaries which are to be parties to any of
the Transaction Agreements to receive the
benefit of the transactions contemplated by this
Agreement or the Transaction Agreements
(d) no transfer, consent, licence, approval, waiver,
authorisation or declaration of, and no filing
or registration with, any governmental or
regulatory authority or third party is required
to be obtained or made by RTZ or any of its
subsidiaries which are to be parties to the
Transaction Agreements in connection with the
execution, delivery and performance of this
Agreement or any of the Transaction Agreements
(as the case may be) or the consummation of the
transactions contemplated hereby or thereby,
other than such transfers, consents, licences,
approvals, waivers, authorisations,
declarations, filings or registrations, which if
not obtained or made, individually or in the
aggregate, would not reasonably be expected (y)
materially to impair the ability of RTZ or any
of its subsidiaries which are to be parties to
any of the Transaction Agreements to consummate
the transactions contemplated by this Agreement
or the Transaction Agreements, or (z) materially
to impair the ability of FCX or any of its
subsidiaries which are to be parties to any of
the Transaction Agreements to receive the
benefit of the transactions contemplated by this
Agreement or the Transaction Agreements
(e) there is no action, suit, investigation or
proceeding pending or (to the knowledge of RTZ)
threatened against RTZ or any of its
subsidiaries which are to be parties to any of
the Transaction Agreements or any of their
respective properties or assets by or before any
court, arbitrator or governmental or regulatory
authority, department, commission, board,
bureau, agency or instrumentality, which
questions the validity or enforceability of, or
seeks to invalidate, this Agreement or any of
the Transaction Agreements or
- -15-
<PAGE>
any action taken or to be taken pursuant to this
Agreement or any of the Transaction Agreements,
or which has or is reasonably likely to have a
material adverse effect on the ability of RTZ or
any of its subsidiaries which are to be parties
to any of the Transaction Agreements to perform
its or their respective obligations under this
Agreement or any of the Transaction Agreements
and none of RTZ and its subsidiaries which are
to be parties to the Transaction Agreements is
in default in any material respect with respect
to any material judgment, order, writ,
injunction, decree or award
(f) each of RTZ and its subsidiaries which are to be
parties to the Transaction Agreements is in
compliance in all material respects with all
applicable laws, except where non-compliance,
individually or in the aggregate, would or does
not have or result in a material adverse effect
on the ability of RTZ or any of its subsidiaries
which are to be parties to any of the
Transaction Agreements to perform its or their
respective obligations under this Agreement or
any of the Transaction Agreements. None of RTZ
and its subsidiaries which are to be parties to
the Transaction Agreements has received any
notice of any alleged violation of law
applicable to it from a governmental or
regulatory authority of proper jurisdiction or
any formal notice of any alleged violation of
law applicable to it or any such subsidiaries
from any other person, other than any alleged
violation, which if proven, would not reasonably
be expected to have or result in a material
adverse effect on the ability of RTZ or any of
its subsidiaries which are to be parties to any
of the Transaction Agreements to perform its or
their respective obligations under this
Agreement or any of the Transaction Agreements.
(3) Each of FCX and RTZ represents and warrants to the
other that, to the best of its knowledge, it is unaware of any
facts or circumstances which have not been disclosed in this
Agreement and which should have been disclosed to the other party
in order to prevent the representations and warranties given by it
in this Clause 7 from being materially misleading.
COVENANTS
8. (1) Each of FCX and RTZ covenants and agrees with the
other of them as follows:
(a) It shall use its best endeavours and shall co-
operate with the other of them to take or cause
to be taken all acts and to do or cause to be
done all things necessary, proper or desirable
to enable the conditions set out in Clause 9 to
be satisfied as soon as practicable after the
date of this Agreement and to cause the
consummation of
- -16-
<PAGE>
the transactions contemplated by this Agreement
in accordance with the terms and conditions of
this Agreement.
(b) It will not knowingly or voluntarily take any
action which could cause or constitute a breach
of any of the representations and warranties on
its part set out in Clause 7 or which would
cause any of such respective representations and
warranties to be materially inaccurate and in
the event of its becoming aware of the
occurrence of, or the pending or threatened
occurrence of any such breach or inaccuracy, it
will promptly notify the other of them of such
breach or inaccuracy and use its reasonable
efforts to prevent or remedy promptly such
breach or inaccuracy.
(c) It shall notify the other of them promptly of
the receipt by it of any written comments of or
other written notification fromany governmental
or regulatory authority which relates in a
material way to the other's interest in this
Agreement or any of the transactions
contemplated hereby and will supply the other of
them with copies of all correspondence with any
governmental or regulatory authority concerning
such matters.
(d) It shall, subject to obtaining the consent of
the other (which shall not be unreasonably
withheld), have the right to second a reasonable
number of its staff or the staff of its
Affiliates to the Affiliates of the other.
(2) In addition to the covenants and agreements set out in
Clause 8(1) above, FCX covenants and agrees with RTZ that,
(a) from and after the date of this Agreement,
(i) FCX shall not and FCX shall procure that
none of its Affiliates shall enter into
any agreement, contract, transaction,
commitment, plan or arrangement or do any
act or thing which may materially and
adversely impair or affect the ability of
any such or any other Affiliate of FCX to
consummate any of the transactions
contemplated by this Agreement
(ii) FCX shall procure that PT-FI shall comply
with the covenants and undertakings on its
part contained in Clauses 7.1, 7.2,
7.5.1.2, 9.4 and, except in respect of
transactions disclosed in the Stock
Purchase Agreement, 9.6 of the PT-FI
Participation Agreement and Clauses
8(1)(b) and 8(1)(c) of the RTZ Loan
Agreement in the same manner as if it had
- -17-
<PAGE>
executed each of the PT-FI Participation
Agreement and the RTZ Loan Agreement as of
the date of this Agreement and
(b) until the Effective Date, RTZ shall have the
sole right (i) to propose as the subject of a
Feasibility Study an Expansion Project which
satisfies the criteria specified in, or agreed
pursuant to, Clause 10.5 and which would be the
first Approved Expansion Project and (ii) to
determine that the Expansion Project which is
the subject of such Feasibility Study shall be
the first Approved Expansion Project, for which
purpose the approval of the board of directors
of FCX and the board of directors (and, if
required under its constituent documents, the
board of commissioners) of PT-FI shall be deemed
to have been given and
(c) without prejudice to the covenant on its part
contained in Clause 8(1)(a), it will use its
best endeavours to agree with RTZ a form of
Intercreditor Agreement and Trust Agreement
which protects the interests of the parties as
envisaged in the Indonesian Documents and which,
in the case of the Intercreditor Agreement,
contains provisions reflecting the Bank Consent
Letters attached to this Agreement as Exhibit B
and which, in the case of the Trust Agreement,
contains provisions reflecting the Trust
Arrangements as described in Exhibit A to this
Agreement and in the Bank Consent Letters, and
to co-operate with RTZ in persuading the other
parties to those Agreements to execute the same
in the forms agreed between PT-FI and RTZ.
CONDITIONS PRECEDENT
9. (1) The obligations of each of FCX and RTZ to consummate:
(a) the Indonesian Closing shall be subject to the
satisfaction (or waiver by each of FCX and RTZ)
at or prior to the Indonesian Closing of each of
the following conditions:
(i) the consummation of the Indonesian Closing
and the consummation of the transactions
contemplated by each of the Indonesian
Documents shall not be prohibited by any
order or injunction of a United States,
English or Indonesian federal, state,
national or provincial court of competent
jurisdiction or by the European Court of
Justice, or other governmental or
regulatory authority of the United States,
the European Union, the United Kingdom, or
Indonesia, and there shall not have been
any action taken or any statute, rule or
regulation enacted, promulgated or deemed
applicable to the Indonesian Closing or
the transactions contemplated by
- -18-
<PAGE>
any of the Indonesian Documents by any
United States, European, United Kingdom or
Indonesian federal, state, national or
provincial government or governmental
agency or other governmental or regulatory
authority of the United States, European
Union, the United Kingdom or Indonesia,
that makes consummation of the Indonesian
Closing or such transactions illegal or
unlawful;
(ii) each of the other party and its Affiliates
shall have complied in all material
respects with its agreements and covenants
contained in this Agreement to be
performed on or prior to the Indonesian
Closing, and all representations and
warranties of each of the other party and
its Affiliates contained in this Agreement
or in any of the Indonesian Documents
shall be true and correct in all material
respects on and as of the Indonesian
Closing with the same effect as though
made on and as of the date of the
Indonesian Closing by reference to the
facts and circumstances then existing;
(b) each of the P.T.-IRJA Closing and the Spanish
Closing shall be subject to the satisfaction (or
waiver by each of FCX and RTZ) at or prior to
such Closing of each of the following
conditions:
(i) the consummation of such Closing and the
consummation of the transactions
contemplated by each of the P.T.-IRJA
Agreements or, as appropriate, the Spanish
Documents shall not be prohibited by any
order or injunction of a United States,
English, Indonesian or Spanish federal,
state, national or provincial court of
competent jurisdiction or by the European
Court of Justice, or other governmental or
regulatory authority of the United States,
the European Union, the United Kingdom,
Indonesia or Spain, and there shall not
have been any action taken or any statute,
rule or regulation enacted, promulgated or
deemed applicable to such Closing or the
transactions contemplated by any of the
P.T.-IRJA Agreements or, as appropriate,
the Spanish Documents by any United
States, European, United Kingdom,
Indonesian or Spanish federal, state,
national or provincial government or
governmental agency or other governmental
or regulatory authority of the United
States, European Union, the United
Kingdom, Indonesia or Spain, that makes
consummation of such Closing or such
transactions illegal or unlawful;
(ii) each of the other party and its Affiliates
shall have complied in all material
respects with its agreements and covenants
- -19-
<PAGE>
contained in this Agreement to be
performed on or prior to such Closing, and
all representations and warranties of each
of the other party and its Affiliates
contained in this Agreement or in any of
the P.T.-IRJA Agreements or, as
appropriate, the Spanish Documents shall
be true and correct in all material
respects on and as of such Closing with
the same effect as though made on and as
of the date of such Closing by reference
to the facts and circumstances then
existing;
(iii) the prior occurrence of the Indonesian
Closing.
(2) The obligations of RTZ to consummate the Indonesian
Closing shall be subject to the satisfaction (or waiver by RTZ) of
each of the following additional conditions:
Legal Opinions
(i) RTZ, P.T.-RTZ and RTZ Lender shall each
have received opinions of Indonesian
counsel for PT-FI in form and substance
reasonably requested by RTZ relating to
the Indonesian Documents and the
transactions contemplated thereby
(ii) RTZ, RTZ Lender and P.T.-RTZ shall each
have received the opinion of Cravath
Swaine & Moore, U.S. counsel for lenders
to the Banks in form and substance
reasonably requested by RTZ relating to
the Intercreditor Agreement and the
Security Agreements
Corporate Approvals
(iii) each of FCX and its subsidiaries which are
to be parties to the Indonesian
Documents shall have delivered to
RTZ resolutions of the boards of
directors (and, where required under
their constituent documents, the
boards of commissioners) of FCX and
its subsidiaries which are to be
parties to the Indonesian Documents
respectively, duly certified by the
Secretary or President-Director of
each such company respectively,
authorising and approving the
transactions contemplated in the
Indonesian Documents to which such
company is to be party and
authorising execution of the same
(iv) FCX shall have delivered to RTZ a
certificate of a Vice-President of FCX
dated the date of the Indonesian Closing,
- -20-
<PAGE>
satisfactory in form and substance to RTZ,
certifying that (1) FCX has complied in
all material respects with its agreements
and covenants contained in this Agreement
to be performed on or prior to the date of
the Indonesian Closing and (2) all
representations and warranties on the part
of FCX set out in Clause 7 of this
Agreement are true and correct in all
material respects on and as of the
Indonesian Closing with the same effect as
though made on and as of the date of the
Indonesian Closing by reference to the
facts and circumstances then existing
(v) each of the subsidiaries of FCX which are
to be parties to the Indonesian Documents
shall have delivered to RTZ a certificate
of a duly authorised Director of each
such subsidiary dated the date of the
Indonesian Closing, satisfactory in form
and substance to RTZ, certifying that all
(if any) representations and warranties
on their part set out in the Indonesian
Documents are true and accurate in all
material respects on and as of the
Indonesian Closing.
External Factors
(vi) from the date of this Agreement to the
Indonesian Closing, no change (or any
condition, event or development involving
a prospective change) shall have occurred
or be threatened in the business,
properties, assets, liabilities, condition
(financial or otherwise), results of
operations, or prospects of PT-FI, P.T.
IRJA or the Indonesian Operations which
may reasonably be expected to affect
materially and adversely the operation of
the PT-FI Participation Agreement,
including, without limitation the benefit
expected to be derived by RTZ therefrom
(vii) on or after the date of this Agreement
there shall not have occurred any
outbreak or escalation of
hostilities involving Indonesia or
the province of Irian Jaya or the
declaration by Indonesia of war or
an emergency in respect of any civil
or military insurrection occurring
nationally or in the province of
Irian Jaya
- -21-
<PAGE>
Incorporation of P.T.-RTZ
(viii) the incorporation of P.T.-RTZ in
form and substance satisfactory to
RTZ
Basis of Tax
(ix) RTZ shall have been satisfied that P.T.-
RTZ will be subject to Indonesian tax as
defined in the Convention between the
Government of Great Britain and Northern
Ireland and the Government of the Republic
of Indonesia for the Avoidance of Double
Taxation and the Prevention of Fiscal
Evasion with respect to Taxes on Income
and Capital Gains on its profits from
Indonesian Operations calculated in
accordance with the laws of Indonesia by
deducting from its proportionate share of
revenues from Indonesian Operations costs
and liabilities incurred in Indonesian
Operations or otherwise subject to the tax
payable in Indonesia (on profits from
Joint Operations calculated as above)
which will be allowed as a credit against
UK corporation tax under the provisions of
Section 790 of the Income and Corporation
Taxes Act 1988 of Great Britain
Indonesianisation
(x) RTZ shall have been satisfied that P.T.-
RTZ will be required to introduce
Indonesian shareholding into P.T.-RTZ in
accordance with Governmental Regulation
No.20 of 1994 (PP20) of the Republic of
Indonesia and not in the manner set out in
Article 24 of the PT-FI Contract of Work.
Governmental and Other Third Party Approvals
(xi) PT-FI shall have received the prior
written approval, in form and substance
satisfactory to RTZ, of the Minister of
Mines and Energy, acting for and on behalf
of the Government of the Republic of
Indonesia, to the Assignment of an
Interest in the PT-FI Contract of Work
(xii) RTZ shall have received such evidence as
it may require (including, without
limitation, the Intercreditor Agreement
duly executed by the parties thereto other
than P.T.-RTZ and RTZ Lender) that the
lenders and other creditors referred to in
Schedule 5 to this Agreement have
released, waived or consented to any and
all rights they may have to P.T.-RTZ's
share of the Joint Account Assets (as
defined in the PT-FI
- -22-
<PAGE>
Participation Agreement) or any part
thereof or over any revenues allocated to
P.T.-RTZ (or to which P.T.-RTZ is
entitled) under the PT-FI Participation
Agreement or to the P.T.-RTZ Assets (as
defined in the PT-FI Participation
Agreement) and to the execution by PT-FI
of the Assignment of an Interest in the
PT-FI Contract of Work or as otherwise
required in connection with the Security
Agreements
(xiii)RTZ shall have received the Security
Agreements duly executed by the parties
thereto other than PT-FI, RTZ Lender and
(if it is a party thereto) PT-RTZ
(xiv) each of FTX and FCX shall have received
the consent of the banks party to FTX's
current credit facilities, in form and
substance reasonably satisfactory to RTZ,
to the definitive Indonesian Documents,
and such consents shall not have been
revoked
(xv) PT-FI shall have received the approval, if
required, of the Co-ordinating Team for
Management of Offshore Commercial Loans
under Presidential Decree No.39 of 1991
and of Bank Indonesia in accordance with
the Foreign Capital Investment Law (No.1
of 1967) (as amended) to the RTZ Loan
Agreement
(xvi) RTZ shall have received in form and
substance satisfactory to it copies of any
and all other resolutions, authorisations,
approvals, consents and licences,
corporate, governmental or otherwise
necessary or desirable on the part of FCX,
PT-FI or any of FCX's other subsidiaries
which are to be parties to the Indonesian
Documents for the entry into and
performance by FCX, or, as the case may
be, PT-FI or any of FCX's other
subsidiaries which are to be parties to
the Indonesian Documents of its respective
obligations under the Indonesian Documents
to which it is to be party, for the
transactions and matters to be implemented
thereunder and/or for the validity and
enforceability against FCX or, as the case
may be, PT-FI or any of FCX's other
subsidiaries which are to be parties to
the Indonesian Documents of the Indonesian
Documents to which it is to be party
(3) The obligations of FCX to consummate the Indonesian
Closing shall be subject to the satisfaction (or waiver by FCX) of
each of the following additional conditions:
- -23-
<PAGE>
Legal Opinion(s)
(i) FCX shall have received the opinion of
Indonesian counsel for RTZ in form and
substance reasonably requested by FCX
relating to the PT-FI Participation
Agreement
Corporate Approvals
(ii) each of RTZ Lender and P.T.-RTZ shall have
delivered to FCX resolutions of the boards
of directors of RTZ Lender and P.T.-RTZ
respectively, duly certified by the
Secretary of RTZ Lender and the President
Director of P.T.-RTZ respectively,
authorising and approving the transactions
contemplated in the Indonesian Documents
to which such company is to be party and
authorising execution of the same
(iii) RTZ shall have delivered to FCX a
certificate of the Secretary of RTZ dated
the date of the Indonesian Closing,
satisfactory in form and substance to FCX,
certifying that (1) RTZ has complied in
all material respects with its agreements
and covenants contained in this Agreement
to be performed on or prior to the date of
the Indonesian Closing and (2) all
representations and warranties on the part
of RTZ set out in Clause 7 of this
Agreement are true and correct in all
material respects on and as of the
Indonesian Closing with the same effect as
though made on the date of the Indonesian
Closing by reference to the facts and
circumstances then existing
(iv) P.T.-RTZ shall have delivered to FCX a
certificate of the President Director of
P.T.-RTZ dated the date of the Indonesian
Closing, satisfactory in form and
substance to FCX, certifying that all of
the representations and warranties on its
part set out in the PT-FI Participation
Agreement are true and correct in all
material respects on and as of the
Indonesian Closing
Third Party Approvals
(v) FCX shall have received copies of the
releases, waivers or consents by the
Lenders and other creditors referred to in
Schedule 5 to this Agreement of any and
all rights they may have to P.T.-RTZ's
share of the Joint Account Assets (as
defined in the PT-FI Participation
Agreement) or any part thereof or over any
revenues allocated to P.T.-RTZ (or to
which P.T.-RTZ is entitled) under the PT-
FI Participation
- -24-
<PAGE>
Agreement or to the P.T.-RTZ Assets (as
defined in the PT-FI Participation
Agreement) and to the execution by PT-FI
of the Assignment of an Interest in the
PT-FI Contract of Work or as otherwise
required in connection with the Security
Agreements
(vi) each of FTX and FCX shall have received
the consent of the banks party to FTX's
current credit facilities, in form and
substance reasonably satisfactory to FCX,
to the definitive Indonesian Documents,
and such consents shall not have been
revoked.
(4) The obligation of FCX to cause PT-FI to execute and
deliver the Assignment of Interest in COW attached as Schedule 2
to the PT-FI Participation Agreement (and the obligation of PT-FI
to so execute and deliver such Assignment) shall be subject to the
satisfaction (or waiver by FCX) of the additional condition that
the necessary Indonesian governmental consents or approvals shall
have been obtained.
GUARANTEES
10. (1) (a) FCX hereby unconditionally and irrevocably
undertakes and agrees with RTZ to cause the due
and punctual performance, payment and observance
by each of its subsidiaries (including, without
limitation, PT-FI) which are parties to any of
the Transaction Agreements, in whatever
capacity, and its successors of all of the
terms, covenants, conditions, agreements and
undertakings on the part of each such subsidiary
to be performed or observed under and in
accordance with this Agreement or any of the
Transaction Agreements (all of such terms,
covenants, conditions, agreements and
undertakings on the part of such subsidiaries
being collectively the "FCX Guaranteed
Obligations") and agrees to indemnify RTZ and
each of RTZ's subsidiaries which are parties to
the Transaction Agreements against all loss,
damage, liability, costs and expenses which RTZ
or any such of RTZ's subsidiaries may suffer
through or arising from any breach by any of
FCX's subsidiaries which are parties to any of
the Transaction Agreements of any of the FCX
Guaranteed Obligations. Should any of FCX's
subsidiaries which are parties to any of the
Transaction Agreements fail for any reason in
any manner whatsoever to perform, pay or
observe, or shall be relieved, precluded or
excused for any reason (other than in accordance
with the express terms of this Agreement or any
of the Transaction Agreement) from performing,
paying or observing any of the FCX Guaranteed
Obligations when the same shall be required to
be performed, paid or observed under the terms
of this Agreement or any of the Transaction
Agreements, FCX shall itself duly and punctually
perform, pay or observe, or cause to be duly and
- -25-
<PAGE>
punctually performed, paid or observed, the
obligations that any of FCX's subsidiaries which
are parties to any of the Transaction Agreements
failed to perform, pay or observe or was so
relieved, precluded or excused (other than in
accordance with the express terms of this
Agreement or any of the Transaction Agreements).
The undertakings and agreements of FCX under
this Clause 10(1) are referred to as the "FCX
Guarantee".
(b) The obligations of FCX under the FCX Guarantee
shall be irrevocable, absolute and unconditional
and shall remain in full force and effect and
shall not be released, discharged or impaired in
any way for any reason, including, without
limitation, by reason of: (i) any lack of
validity or enforceability of, or the ability of
any of FCX's subsidiaries which are parties to
any of the Transaction Agreements or FCX to
perform, pay or observe, the FCX Guaranteed
Obligations or this Agreement (including the FCX
Guarantee), (ii) the absence of any action to
enforce the same, (iii) any waiver or consent by
any of FCX's subsidiaries which are parties to
any of the Transaction Agreements with respect
to any provisions of this Agreement or the
Transaction Agreements, (iv) the recovery of or
any failure to recover any judgment against any
of FCX's subsidiaries which are parties to any
of the Transaction Agreements, (v) any extension
of the time for performance of any FCX
Guaranteed Obligations or this Agreement, (vi)
the presence or absence of any action to enforce
the FCX Guaranteed Obligations or this Agreement
or (vii) any bankruptcy or reorganisation or
similar proceeding involving any of FCX's
subsidiaries which are parties to any of the
Transaction Agreements or FCX or the rejection
of this Agreement or any of the Transaction
Agreements in the course of or as a result of
such proceeding.
(c) If RTZ or any of RTZ's subsidiaries which are
parties to any of the Transaction Agreements is
required by any court or otherwise to return to
FCX, any Affiliate of FCX or any custodian
trustee, debtor in possession, liquidator or
other similar person, entity or official acting
in relation to FCX or any such Affiliate of FCX,
any amount paid by FCX or any such Affiliate of
FCX and FCX's obligations under the FCX
Guarantee, to the extent theretofore discharged,
shall be reinstated in full force and effect, as
though such payment by FCX or any such Affiliate
of FCX had not been made.
(d) FCX hereby irrevocably waives promptness,
diligence, notice of acceptance and any other
notice with respect to the FCX Guaranteed
Obligations, the FCX Guarantee and this
Agreement.
- -26-
<PAGE>
(e) FCX hereby irrevocably waives any requirement
that RTZ or any of RTZ's subsidiaries which are
parties to any of the Transaction Agreements
pursue or exhaust any right or take any action
whatsoever against or with respect to any other
person or any other security.
(2) (a) RTZ hereby unconditionally and irrevocably
undertakes and agrees with FCX to cause the due
and punctual performance, payment and observance
by each of its subsidiaries which are parties to
any of the Transaction Agreements, in whatever
capacity, and its successors of all of the
terms, covenants, conditions, agreements and
undertakings on the part of each such subsidiary
to be performed or observed under and in
accordance with this Agreement or any of the
Transaction Agreements (all of such terms,
covenants, conditions, agreements and
undertakings on the part of such subsidiaries
being collectively the "RTZ Guaranteed
Obligations") and agrees to indemnify FCX and
each of FCX's subsidiaries which are parties to
the Transaction Agreements against all loss,
damage, liability, costs and expenses which FCX
or any such of FCX's subsidiaries may suffer
through or arising from any breach by any of
RTZ's subsidiaries which are parties to any of
the Transaction Agreements of any of the RTZ
Guaranteed Obligations. Should any of RTZ's
subsidiaries which are parties to any of the
Transaction Agreements fail for any reason in
any manner whatsoever to perform, pay or
observe, or shall be relieved, precluded or
excused for any reason (other than in accordance
with the express terms of this Agreement or any
of the Transaction Agreements) from performing,
paying or observing any of the RTZ Guaranteed
Obligations when the same shall be required to
be performed, paid or observed under the terms
of this Agreement or any of the Transaction
Agreements, RTZ shall itself duly and punctually
perform, pay or observe, or cause to be duly and
punctually performed, paid or observed, the
obligations that any of RTZ's subsidiaries which
are parties to any of the Transaction Agreements
failed to perform, pay or observe or was so
relieved, precluded or excused (other than in
accordance with the express terms of this
Agreement or any of the Transaction Agreements).
The undertakings and agreements of RTZ under
this Clause 10(2) are referred to as the "RTZ
Guarantee".
(b) The obligations of RTZ under the RTZ Guarantee
shall be irrevocable, absolute and unconditional
and shall remain in full force and effect and
shall not be released, discharged or impaired in
any way for any reason, including, without
limitation, by reason of: (i) any lack of
validity or enforceability of, or the ability of
any of RTZ's subsidiaries which are parties to
any of the Transaction Agreements or RTZ to
perform, pay or observe, the RTZ
- -27-
<PAGE>
Guaranteed Obligations or this Agreement
(including the RTZ Guarantee), (ii) the absence
of any action to enforce the same, (iii) any
waiver or consent by any of RTZ's subsidiaries
which are parties to any of the Transaction
Agreements with respect to any provisions of
this Agreement or the Transaction Agreements,
(iv) the recovery of or any failure to recover
any judgment against any of RTZ's subsidiaries
which are parties to any of the Transaction
Agreements, (v) any extension of the time for
performance of any RTZ Guaranteed Obligations or
this Agreement, (vi) the presence or absence of
any action to enforce the RTZ Guaranteed
Obligations or this Agreement or (vii) any
bankruptcy or reorganisation or similar
proceeding involving any of RTZ's subsidiaries
which are parties to any of the Transaction
Agreements or RTZ or the rejection of this
Agreement or any of the Transaction Agreements
in the course of or as a result of such
proceeding.
(c) If FCX or any of FCX's subsidiaries which are
parties to any of the Transaction Agreements is
required by any court or otherwise to return to
RTZ, any Affiliate of RTZ or any custodian
trustee, debtor in possession, liquidator or
other similar person, entity or official acting
in relation to RTZ or any such Affiliate of RTZ,
any amount paid by RTZ or any such Affiliate of
RTZ and RTZ's obligations under the RTZ
Guarantee, to the extent theretofore discharged,
shall be reinstated in full force and effect, as
though such payment by RTZ or any such Affiliate
of RTZ had not been made.
(d) RTZ hereby irrevocably waives promptness,
diligence, notice of acceptance and any other
notice with respect to the RTZ Guaranteed
Obligations, the RTZ Guarantee and this
Agreement.
(e) RTZ hereby irrevocably waives any requirement
that FCX or any of FCX's subsidiaries which are
parties to any of the Transaction Agreements
pursue or exhaust any right or take any action
whatsoever against or with respect to any other
person or any other security.
ALTERNATIVE ARRANGEMENTS
11. (1) Should the Indonesian Closing not have occurred for
any reason prior to or on 31 December 1996, RTZ shall have the
option at its absolute discretion to elect by written notice to
FCX within a period of 30 days thereafter that
(a) this Agreement shall lapse in which event it
shall so lapse and neither party shall have any
further obligations to the other hereunder save
of any breaches of this Agreement occurring
prior to such time or
- -28-
<PAGE>
(b) (i) FCX shall enter into formal undertakings
providing that the parties will operate
under the Transaction Agreements and FCX
shall guarantee that RTZ and its
Affiliates will receive the equivalent
financial benefits which would have been
received by RTZ and its Affiliates
pursuant to the terms of the Transaction
Agreements and
(ii) the Exploration Obligation shall apply to
RTZ and RTZ shall in addition provide up
to $750,000,000 for Approved Expansion
Projects in accordance with the PT-FI
Participation Agreement through other
means (if necessary) and on such terms
reasonably satisfactory to RTZ and FCX
which provide the parties with the
equivalent financial benefits which would
have been received by RTZ, FCX and their
respective Affiliates pursuant to the
terms of the Indonesian Documents.
(2) Should PT-FI be unable to obtain Advances under the
RTZ Loan Agreement for reasons other than the operation of Clauses
4(2)(a) or 4(2)(b) of the RTZ Loan Agreement, RTZ will use all
reasonable endeavours to provide the funding which would have been
provided under the RTZ Loan Agreement through other means
reasonably satisfactory to RTZ and FCX. Any such funds will be
repayable solely through utilisation of 100% of Incremental
Expansion Cashflow resulting from Approved Expansion Projects as
defined in the PT-FI Participation Agreement.
SURVIVAL OF REPRESENTATIONS, WARRANTIES
AND AGREEMENTS, ETC
12. All representations and warranties contained herein or made
in writing by any party in connection herewith shall survive the
execution and delivery of this Agreement, except that the
representations and warranties contained in Clauses 7(1)(e),
7(1)(f), 7(1)(h), 7(2)(e) and 7(2)(f) shall survive the execution
and delivery of this Agreement only until the date which is two
years after the Effective Date. All statements contained in any
certificate or other instrument delivered by either party pursuant
to this Agreement or in connection with the transactions
contemplated hereby or thereby shall constitute representations
and warranties by such party under this Agreement. All agreements
contained in this Agreement shall survive indefinitely until, by
their respective terms, they are no longer operative.
EXPENSES
13. Except as otherwise provided herein, each of FCX and RTZ
shall pay all costs and expenses incurred by it or on its behalf
in connection with this Agreement and of the Indonesian Documents
or the Spanish Documents and the transactions contemplated hereby
or thereby, including, without limiting the generality of the
foregoing, fees and expenses of its own financial consultants,
accountants and counsel.
- -29-
<PAGE>
INDEMNITIES
14. FCX shall indemnify, defend and hold harmless RTZ against
all liability, loss or damage, together with all reasonable costs
and expenses related thereto (including legal and accounting fees
and expenses), arising from the untruth, inaccuracy or breach of
any of the representations, warranties, covenants or agreements
made by FCX in this Agreement. RTZ shall indemnify, defend and
hold harmless FCX against all liability, loss or damage, together
with all reasonable costs and expenses related thereto (including
legal and accounting fees and expenses), arising from the untruth,
inaccuracy or breach of any of the representations, warranties,
covenants or agreements made by RTZ in this Agreement.
CONFIDENTIALITY AND PUBLIC STATEMENTS
15. (1) Except as otherwise provided in this Clause 15, the
terms and conditions of this Agreement, and all data, reports,
records and other information of any kind treated or defined as
Confidential Information in any of the Transaction Agreements
(such terms, conditions, data, reports, records and information
being in this Clause 15 "Confidential Information") shall be
treated by the parties as confidential and neither party shall
reveal or otherwise disclose such Confidential Information to
third parties without the prior written consent of the other
party. The foregoing restrictions shall not apply to the
disclosure of Confidential Information pursuant to applicable law,
the PT-FI Contract of Work or the PT-IRJA Contract of Work, the
rules and regulations administered by the Securities & Exchange
Commission, the rules of London Stock Exchange or of any stock or
securities exchange on which the shares or stock of either of the
parties or any of its Affiliates may from time to time be listed
or as permitted by the terms of any of the Transaction Agreements
or to any Affiliate (other than CRA Limited and any of its
subsidiaries unless and until CRA Limited becomes a subsidiary of
RTZ), to any public or private financing agency or institution or
to any third party to which either party contemplates the
transfer, sale, encumbrance or other disposition of all or part of
its interest in the Indonesian Operations or RTM's Spanish
operations or in its subsidiaries having interests in the same
provided that in any such case only such Confidential Information
as such third party shall have a legitimate business need to know
shall be disclosed, and the person or company to whom disclosure
is made shall first undertake in writing to protect the
confidential nature of such information at least to the same
extent as the parties are obligated under this Clause 15. In
addition, (a) the foregoing restrictions shall not apply to
Confidential Information which otherwise comes into the public
domain and (b) notwithstanding anything to the contrary in this
Clause 15, each party is permitted to use and disclose data
arising from any of the operations the subject of this Agreement
or any of the Transaction Agreements in its annual audited
financial statements and notes thereto.
(2) Should either FCX or RTZ be required to disclose
Confidential Information to any government and appropriate
agencies and departments thereof, to the extent required by law,
the rules of the Securities & Exchange Commission or the London
Stock Exchange or otherwise in response to a legitimate request
for such Confidential
- -30-
<PAGE>
Information, the party so required shall immediately and prior to
any disclosure notify the other party hereto of such requirement
and the terms thereof prior to such submission.
(3) Except as may be required by applicable law or any
listing agreement with any national securities exchange or the
rules of the London Stock Exchange or of any stock exchange on
which the shares or stock of either of the parties or any of its
Affiliates may from time to time be listed, neither party to this
Agreement shall issue any press release or make any public
announcement or public disclosure with regard to any of the
operations the subject of this Agreement or any of the Transaction
Agreements including Confidential and non-Confidential
Information, unless either (i) a draft of the proposed press
release has been provided to the other party hereto at least
twenty-four hours prior to its proposed release in order to permit
such party to comment thereon or (ii) such press release or other
public statement contains factual information (or discussion or
analysis of or comment based upon such factual information)
previously provided to such party by the other party provided that
neither will present projections or forward-looking information
that is attributed to the other party or any of its Affiliates
without the prior written consent of the other party.
FURTHER ASSURANCES
16. Each party hereto shall do and perform or cause to be done
and performed all further acts and things and shall execute and
deliver all other agreements, certificates, instruments, and
documents as any other party hereto reasonably may request in
order to carry out the intent and accomplish the purposes of this
Agreement and the Indonesian Documents and the Spanish Documents
and the consummation of the transactions contemplated hereby and
thereby.
FORCE MAJEURE
17. The obligations of the parties to this Agreement, other than
the payment of money provided hereunder, shall be suspended and
any period of time mentioned in this Agreement shall be extended
to the extent and for the period that performance or the ability
of one or both of the parties to exercise rights or carry out
obligations or otherwise act as permitted by or in accordance with
this Agreement is prevented by any cause, whether foreseeable or
unforeseeable, beyond its reasonable control. The affected party
shall promptly give notice to the other party of the suspension of
performance, stating therein the nature of the suspension, the
reasons therefor and the expected duration thereof and the
affected party shall resume performance as soon as reasonably
possible.
GOVERNING LAW
18. This Agreement and the rights and obligations of the parties
hereto shall be governed by, and construed and enforced in
accordance with, the laws of the State of New York, without giving
effect to the principles of conflicts of law thereof. Each of FCX
and RTZ hereby irrevocably and unconditionally consents to submit
to the exclusive jurisdiction, except for the purposes of or
proceedings regarding enforcement, which may
- -31-
<PAGE>
take place in any relevant jurisdiction, of the courts of the
State of New York located in the Borough of Manhattan and of the
United States of America located in the Borough of Manhattan (the
"New York Courts") for any litigation arising out of or relating
to this Agreement, waives any objection to the laying of venue of
any such litigation in the New York Courts and agrees not to plead
or claim in any New York Court that such litigation brought
therein has been brought in an inconvenient forum.
SPECIFIC PERFORMANCE
19. The parties hereto agree that money damages or other remedy
at law would not be sufficient or adequate remedy for any breach
or violation of, or a default under, this Agreement by them and
that in addition to all other remedies available to them, each of
them shall be entitled to an injunction restraining such breach,
violation or default or threatened breach, violation or default
and to any other equitable relief, including without limitation
specific performance, without bond or other security being
required.
NOTICES
20. All notices and other communications hereunder shall be in
writing and, unless otherwise provided herein, shall be deemed to
have been given when received by the party to whom such notice is
to be given at its address set forth below, or such other address
for the party as shall be specified by notice given pursuant
hereto:
(a) If to FCX, to it at: 1615 Poydras Street
New Orleans
LA 70112
USA
Attention: General Counsel
with a copy to: Davis Polk & Wardwell
450 Lexington Avenue
New York
NY 10017
USA
Attention: E. Deane Leonard
(b) If to RTZ, to it at: 6 St. James's Square
London SW1Y 4LD
England
Attention: The Secretary
with a copy to: Fried, Frank, Harris, Shriver &
Jacobson
One New York Plaza
New York
New York 10004-1980
USA
- -32-
<PAGE>
Attention: Allen Isaacson
with a copy to: Arthur Robinson & Hedderwicks
Stock Exchange Centre
530 Collins Street
Melbourne
Australia
Attention: Bruce Johnston
BINDING EFFECT: ASSIGNMENT
21. This Agreement shall inure to the benefit of and shall be
binding upon the parties hereto and their respective heirs, legal
representatives, successors and permitted assigns. Neither this
Agreement nor any of the rights hereunder may be assigned by
either FCX or RTZ without the consent of the other of them.
AMENDMENT AND MODIFICATION
22. This Agreement may be amended, modified, supplemented or
waived only by written agreement of the party against whom
enforcement of such amendment, modification, supplement or waiver
is sought.
HEADINGS; REFERENCES; EXECUTION IN COUNTERPARTS;
INTERPRETATION
23. All article, section, schedule, exhibit and paragraph
references are to this Agreement, unless otherwise expressly
provided. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original and
which together shall constitute one and the same instrument.
ENTIRE AGREEMENT
24. This Agreement, the Schedules and Exhibits attached hereto
constitute the entire agreement, and supersede all prior
agreements and understandings, oral and written, between the
parties hereto with respect to the subject matter hereof.
SEVERABILITY
25. If part of this Agreement is, or is found to be, illegal,
invalid or unenforceable under applicable law and either the
Indonesian Closing has taken place or, notwithstanding such
illegality, invalidity or unenforceability, the Indonesian Closing
may still take place, then the remaining clauses of this Agreement
shall continue in full force and effect.
- -33-
<PAGE>
IN WITNESS whereof the parties have executed this Agreement the
day and year first before written.
- -34-
<PAGE>
SCHEDULE 1
PT-FI Participation Agreement
See the document attached and marked "X".
- -35-
<PAGE>
SCHEDULE 2
RTZ Loan Agreement
See the document attached and marked "Y".
- -36-
<PAGE>
SCHEDULE 3
Exceptions to Representations and Warranties of FCX
7(1)(c)(i)
1. PT-FI and PR-IRJA will require the approval of the Minister
of Mines and Energy of the Government of the Republic of
Indonesia in accordance with the provisions of Article 29 of
their respective COWs prior to execution and delivery of the
"Deed of Assignment of Interest in COW" in respect of such
COWs.
2. Substantially all of PT-FI's assets have been pledged to the
banks under the existing Chemical credit facilities.
However, agreements in principle have been reached with the
bank agent under the current corporate credit facilities
(and FCX's and PT-FI's agents under new corporate credit
facilities to be entered into after the "Spin-off") pursuant
to which they have agreed to underwrite the existing and
proposed new credit facilities, subject to (i) their consent
to final terms of the PT-FI Participation Agreement, the RTZ
Loan Agreement and all other documentation related thereto,
(ii) their consent to the form and substance of the trust
and intercreditor agreements related thereto, and (iii) the
amendment of the current corporate credit facility
documentation in conformity with the bank lenders' letters
of consent.
3. For purposes of this schedule, consents will be required
from the lenders under the Term Loan and Working Capital
Agreement among Rio Tinto Metal, S.A., the lenders party
thereto and Barclays Bank PLC as agent, and under related
documents.
7(1)(c) (ii)
None.
7(1)(c)(iii)
None.
7(1)(c)(iv)
None.
7(1)(c)(v)
None, other than as created by the Transaction Agreements.
7(1)(d)
- -37-
<PAGE>
1. PT-FI and PT-IRJA will require the approval of the Minister
of Mines and Energy of the Government of the Republic of
Indonesia in accordance with the provisions of Article 29 of
their respective COWs prior to execution and delivery of the
"Deed of Assignment of Interest in COW" in respect of such
COWs.
2. Governmental and/or regulatory consents may be needed in
respect of the Spanish Documents, depending upon the
structure of the transactions.
3. For bank consents, see 7(1)(c)(i) above.
7(1)(g)
1. The PT-FI shares owned by FCX will be pledged to the bank
lenders under the corporate credit facility to be entered
into after the "Spin-off" and under which FCX and PT-FI will
be the borrowers and under the proposed new FM Properties
Operating Company ("FMPO") credit facility as security for
FCX's guarantee of a portion of FMPO's debt. Agreements in
principle regarding the RTZ transaction have been executed
as of April 27, 1995 with the agents for the lenders under
the new proposed credit facilities pursuant to which such
agents have agreed to underwrite the new credit facilities
subject to: (i) approval of the final terms of the PT-FI
Participation Agreement, the RTZ Loan Agreement and all
documentation related thereto, (ii) consent to the form and
substance of the trust and intercreditor agreements related
thereto, and (iii) amendment of the current credit
facilities in conformity with the bank lenders' letters of
consent.
2. Pursuant to its guarantee of the 9% Senior Secured Notes of
P.T. AlatieF Freeport Finance Company B.V. due 2001, FCX has
pledged its PT-FI stock equally and ratably with the other
secured parties.
3. Pursuant to a contemplated amendment to the Note Agreement
dated as of June 11, 1992, as amended and restated, between
FMPO and certain lenders (the Pel-Tex Note), FCX will
guarantee a portion of the debt of FMPO under the Pel-Tex
Note and will secure such guarantee by a pledge of the
shares of PT-FI held by FCX.
4. Pursuant to a contemplated amendment to the Credit Agreement
dated February 6, 1992 between Circle C Land Corp. and Texas
Commerce Bank, as amended, FCX will guarantee a portion of
the debt of Circle C Land Corp. under this Credit Agreement
and will secure such guarantee by a pledge of the shares of
PT-FI held by FCX.
5. Pursuant to that certain letter agreement dated July 1,
1976, the Government of the Republic of Indonesia has a pre-
emptive right to purchase such proportion of any new shares
issued by PT-FI as is necessary to maintain the same
percentage ownership of all issued and outstanding PT-FI
shares as it had immediately prior to the issuance of such
new shares.
- -38-
<PAGE>
6. Pursuant to that certain letter agreement, dated November
11, 1993 between PT-FI and PT Indocopper Investama
Corporation (PTIIC), PTIIC has a five-year option to
purchase PT-FI shares from FCX under certain conditions
should PTIIC wish to restore the 10% ownership of PT-FI it
had prior to the issuance in December, 1993 and January,
1994 of new PT-FI shares to FCX.
7. The Articles of Association of PT-IRJA provide pre-emptive
rights for each shareholder to purchase such proportion of
any new share issued by PT-IRJA as is necessary to maintain
the same percentage ownership of all issued and outstanding
PT-IRJA shares as it had immediately prior to the issuance
of such new shares.
- -39-
<PAGE>
SCHEDULE 4
Exceptions to Representations and Warranties of RTZ
1. Indonesia
(a) 7(2)(a), 7(2)(c)(ii), 7(2)(d) and 7(2)(f)
The following approvals and other actions are required
for the due formation of each of PT-RTZ and PT-RTZ2
and to enable each of them to execute, deliver and
perform its obligations under the Transaction
Agreements to which it is to be party, to consummate
the transactions contemplated thereby and to carry on
its business in compliance with applicable laws:
(i) the approval and recommendation of the Minister
of Mines and Energy of the Republic of
Indonesia to the investments proposed to
be made by it pursuant to the Transaction
Agreements;
(ii) the approval and recommendation of the Capital
Investment Board of the Republic of Indonesia to
the investments proposed to be made by it
pursuant to the Transaction Agreements;
(iii) the grant of an investment licence pursuant to
the Foreign Capital Investment Law of the
Republic of Indonesia (No 1 of 1967) as
amended);
(iv) the approval to the Articles of Association of
that company (as contained in its Deed of
Establishment) of the Minister of Justice
of the Republic of Indonesia, the
registration of that Deed of Establishment
at the District Court of the company's
domicile and the publication of those
Articles of Association in the State
Gazette of the Republic of Indonesia.
(b) 7(2)(c)(ii), 7(2)(d) and 7(2)(f)
The following further approvals and other actions are
required in order that each of PT-RTZ and PT-RTZ2 may
execute, deliver and perform its obligations under the
Transaction Agreements to which it is party, to
consummate the transactions contemplated thereby and
to carry on its business in compliance with applicable
laws:
(i) the issue of a tax registration number in
accordance with the Income Tax Law (1983);
(ii) the issue of certain operating and business
licences under applicable regulations;
- -40-
<PAGE>
(iii) the approval of Bank Indonesia to borrowings
undertaken by it for these purposes;
(iv) the prior approval of the Minister of Mines and
Energy of the Republic of Indonesia in
accordance with the provisions of the PT-
FI Contract of Work and the PT-IRJA
Contract of Work to the execution and
delivery of the Assignment of Interest in
the Contract of Work in relation thereto;
(v) (in relation to the RTZ Loan) the approval (if
required) of the Co-ordinating Team for
Management of Offshore Commercial Loans
under Presidential Decree No 39 of 1991
and of Bank Indonesia in accordance with
the Foreign Capital Investment Law (No 1
of 1967) as amended of the Republic of
Indonesia.
(c) 7(2)(d) and 7(2)(f)
If RTZ is to participate in the PT-IRJA Agreements by
way of a shareholding in PT-IRJA, particulars of that
shareholding must be reported to the Capital
Investment Board of the Republic of Indonesia and, in
accordance with applicable policy, the prior approval
of the Minister of Mines and Energy is required.
2. Spain
Governmental and/or regulatory consents may be needed in
respect of the Spanish Documents, depending upon the
structure of the transactions.
- -41-
<PAGE>
SCHEDULE 5
Lenders and Other Creditors whose consent/release is required
1. Under the Amended and Restated Credit Agreement dated as of
June 1, 1993 among FTX, FRP, the Banks party thereto and
Chemical Bank as Agent; the Credit Agreement dated as of
October 27, 1989, as amended and restated as of June 1, 1993
among PT-FI, FTX, FCX, the Banks party thereto, First Trust,
National Association, as trustee, and Chemical Bank, as
Agent; the Credit Agreement dated as of June 11, 1992, as
amended, among FMPO, FTX, the Banks party thereto and
Chemical Bank as Agent and Collateral Agent for the Banks,
substantially all or PT-FI's assets have been pledged to the
bank group. However, agreements in principle regarding the
RTZ transaction have been executed as of April 27, 1995 with
Chemical Bank, as Agent for the existing and proposed new
credit facilities, and Chase Manhattan Bank (National
Association), as the Agent for the proposed credit
facilities, pursuant to which such Agents have agreed to
underwrite such agreement in principle.
2. PT-FI's current bank lenders under its corporate credit
facility (and FCX's and PT-FI's lenders under new corporate
credit facilities to be entered into after the "Spin-off")
have reserved the right (i) to consent to the PT-FI
Participation Agreement, the RTZ Loan Agreement and all
other documentation related thereto, (ii) to consent to the
form and substance of the trust and intercreditor agreements
related thereto, (iii) to obtain a security interest in
FCX's and PT-FI's interests in the PT-FI Participation
Agreement, the RTZ Loan Agreement and all other
documentation related thereto, and (iv) to approve the
amendment of the current PT-FI corporate credit facility
documentation in conformity with the bank lenders' letters
of consent.
3. Such other lenders, creditors and other third parties whose
contracts with PT-FI and/or FCX prohibit or restrict:
(a) the execution and delivery by PT-FI of the PT-FI
Participation Agreement and the consummation of the
transactions contemplated thereby, including without
limitation, (i) the execution and delivery of the
Assignment of an Interest in the Contract of Work,
(ii) the formation of the Participation, (iii) all
Joint Account Assets being held by the Operator in the
name of PT-FI but being and remaining the property of
PT-FI and PT-RTZ severally in proportion to their
respective Participating Interests, (iv) the making
available to the Participation, of, among other
things, the interest of PT-FI in the PT-FI Contract of
Work, PT-FI's share of the Joint Account Assets and
the PT-FI Available Assets and (v) the allocation by
PT-FI of rights in relation to Incremental Expansion
Cashflow;
(b) the Disposal by PT-FI, on an unencumbered basis, of
any present or future property or assets or any
interests in them;
- -42-
<PAGE>
(c) the granting by PT-FI of Encumbrances over any of its
property or assets, in particular, on a first priority
basis.
- -43-
<PAGE>
FREEPORT-McMoRan COPPER & GOLD INC.
By /s/ George A. Mealey
Name: George A. Mealey
Title: President
THE RTZ CORPORATION PLC
By /s/ R. Adams
Name: Robert Adams
Title: Director
- 46 -
Dated 1995
(1) P.T. FREEPORT INDONESIA COMPANY
(2) [PT-RTZ]
PARTICIPATION AGREEMENT
with respect to the Contract Area
The RTZ Corporation PLC
Legal Department 6 St James's Square
London
SW1Y 4LD
Tele: 0171 930 2399
<PAGE>
TABLE OF CONTENTS
Page No.
CLAUSE 1 DEFINITIONS..........................................1
1.2 Interpretation................................10
1.3 Headings......................................10
CLAUSE 2 PURPOSES AND TERM...................................10
2.1 General.......................................10
2.2 Purposes......................................11
2.3 Assignment of COW.............................11
2.4 Term..........................................11
2.5 Termination...................................12
CLAUSE 3 RELATIONSHIP OF THE PARTICIPANTS....................13
3.1 Contribution of Use of Assets.................13
3.2 Obligations Several and Not Joint.............13
3.3 Not a Partnership.............................13
3.4 No Authority to Act for other Participants....13
3.5 No Joint Receipt of Income....................14
3.6 Area of Mutual Interest.......................14
3.7 Other Business Opportunities..................15
3.8 Waiver of Right to Partition..................15
3.9 Employees.....................................15
3.10 Title.........................................15
CLAUSE 4 REPRESENTATIONS AND WARRANTIES......................16
4.1 Capacity......................................16
4.2 PT-FI Representations and Warranties..........16
4.3 Disclosures...................................18
CLAUSE 5 EXPLORATION CONTRIBUTIONS BY PARTICIPANTS...........18
5.1 Exploration Contribution by P.T.-RTZ..........18
5.2 Additional Cash Contributions.................18
CLAUSE 6 INTERESTS OF PARTICIPANTS...........................19
6.1 Participating Interests.......................19
6.2 Changes in Participating Interests............19
6.3 Default in Making Contributions...............20
6.4 Continuing Liabilities upon Adjustment of the
Participating Interests.......................24
<PAGE>
CLAUSE 7 COVENANTS AND RIGHTS................................25
7.1 Mutual Covenants..............................25
7.2 PT-FI Covenants...............................25
7.3 P.T.-RTZ Covenant.............................27
7.4 Power of Attorney.............................27
7.5 Retained PT-FI Rights.........................28
CLAUSE 8 COMMITTEES..........................................29
8.1 Exploration Committee.........................29
8.2 Operating Committee...........................30
8.3 Other Committees..............................30
8.4 Quorum........................................31
8.5 Decisions.....................................31
8.6 Meetings......................................31
8.7 Action without Meeting........................32
8.8 Close-down....................................32
CLAUSE 9 OPERATOR............................................33
9.1 Appointment...................................33
9.2 Powers and Duties of Operator.................33
9.3 No Fee........................................37
9.4 Standard of Care..............................37
9.5 Resignation; Deemed Offer to Resign...........37
9.6 Transactions with Affiliates..................39
CLAUSE 10 FEASIBILITY STUDY INTO EXPANSION....................39
CLAUSE 11 GREENFIELD PROJECTS AND LATER EXPANSION PROJECTS....41
CLAUSE 12 SOLE RISK...........................................42
CLAUSE 13 PROGRAMMES AND BUDGETS..............................44
CLAUSE 14 TAXATION IN INDONESIA...............................44
CLAUSE 15 TRANSFER OF PARTICIPATING INTERESTS.................45
15.1 General.......................................45
15.2 Limitations on Free Transferability...........45
15.3 First Offer Right.............................46
15.4 Exceptions to First Offer Right...............46
CLAUSE 16 GENERAL PROVISIONS....................................47
16.1 Notices.......................................47
16.2 Waiver........................................47
16.3 Modification..................................47
16.4 Force Majeure.................................48
<PAGE>
16.5 Governing Law.................................49
16.6 Penalties.....................................50
16.7 Rule Against Perpetuities.....................50
16.8 Further Assurances............................50
16.9 Confidentiality and Public Statements.........51
16.10 Entire Agreement; Successors and Assigns......52
16.11 Severability..................................52
16.12 Indonesian Law Waiver.........................52
16.13 Tax Covenant..................................52
Schedule 1 Privatisation Agreements............................54
Schedule 2 Deed of Assignment of Interest in COW...............57
Schedule 3 Exceptions to Representations and Warranties........60
Annex A Product Schedule....................................62
Annex B Financial and Accounting Procedures.................63
<PAGE>
- - 1 -
THIS AGREEMENT is made 1995
BETWEEN:
(1) P.T. FREEPORT INDONESIA COMPANY, a limited liability company
organised under the laws of the Republic of Indonesia and
domesticated in the State of Delaware, U.S.A. ("PT-FI") and
(2) [P.T.-RTZ], a limited liability company organised under the
laws of the Republic of Indonesia ("P.T.-RTZ")
WHEREAS
(A) By a Contract of Work dated 30 December 1991 made between
The Government of the Republic of Indonesia (the
"Government") and PT-FI, the Government appointed PT-FI as
the sole contractor for the Government with respect to the
Contract Area, as defined in the Contract of Work, with the
sole rights to explore, mine, process, store, transport,
market, sell, and dispose of Products, as defined below, in
the Contract Area (defined as aforesaid)
(B) PT-FI desires P.T.-RTZ and P.T.-RTZ desires to participate
in operations under the COW (as defined below) on the terms
and conditions hereinafter appearing
IT IS HEREBY AGREED as follows:
1. DEFINITIONS
1.1 In this Agreement (including the Schedules and Annexes
hereto), unless the context otherwise requires, the
following terms shall have the following meanings:
1.1.1 "Affiliate" or "Affiliates" means any
person, company, partnership, joint
venture, or other form of enterprise which
directly or indirectly controls, or is
controlled by or is under common control
with, a Participant. The term "control"
as used herein means possession, directly
or indirectly, of the power to direct or
cause direction of management and policies
through ownership of voting securities,
contract, voting trust or otherwise;
1.1.2 "Agreement" means this Participation
Agreement, including all amendments and
modifications thereof, and all schedules
and annexes hereto, which are incorporated
herein by this reference;
<PAGE>
- - 2 -
1.1.3 "Annual Budget Meeting" means the meeting
defined in Clause 8.6;
1.1.4 "Approved Expansion Project" means any
project of Expansion in Contract Area
Block A which has been approved by the
boards of directors of PT-FI, FCX and
P.T.-RTZ or is otherwise an Approved
Expansion Project in accordance with
Clause 10.3;
1.1.5 "Approved Programme and Budget" means a
Programme and Budget which has been
approved by the boards of directors of PT-
FI and P.T.-RTZ upon the recommendation of
the relevant Exploration Committee or the
Operating Committee, as appropriate, as
provided in Clause 8.5 and paragraph 10.1
of the Financial and Accounting
Procedures;
1.1.6 "Area of Mutual Interest" has the meaning
assigned to that expression in Clause 3.6;
1.1.7 "Assignment" means the assignment referred
to in Clause 2.3;
1.1.8 "board of directors" of PT-FI or P.T.-RTZ
shall mean the respective board of
directors and/or board of commissioners
(if any) of such entity, whichever is the
appropriate body (whether pursuant to its
constitutional documents or law) for the
decision or action in question;
1.1.9 "Budget" means a detailed estimate of all
costs to be incurred by the Participants
with respect to a Programme and an
estimated schedule of cash calls to be
made therefor;
1.1.10 "Budgetary Period" means the
budgetary period established in a
Programme and Budget;
1.1.11 "Chargeable Operations" has the
meaning assigned to that expression in the
Financial and Accounting Procedures;
1.1.12 "Close-down" means a decision by the
boards of directors of PT-FI, FCX and
P.T.-RTZ, upon the recommendation of the
Operating Committee, to cease all Mining
and Processing in the Contract Area;
<PAGE>
- - 3 -
1.1.13 "Committee" means whichever
committee during the applicable time (be
that the Exploration Committee in respect
of either Contract Area Block A or
Contract Area Block B or the Operating
Committee or a committee established
pursuant to Clause 8.3) is responsible for
the subject matter under this Agreement as
provided in Clause 8;
1.1.14 "Confidential Information" means the
confidential information referred to in
Clause 16.9;
1.1.15 "Contract Area" means the area
defined as such under the COW;
1.1.16 "Contract Area Block" means, as
appropriate or as the context requires,
either Contract Area Block A or Contract
Area Block B;
1.1.17 "Contract Area Block A" has the
meaning assigned to that expression in the
COW;
1.1.18 "Contract Area Block B" has the
meaning assigned to that expression in the
COW;
1.1.19 "Cover Payment" means the payment
described in Clause 6.3.2;
1.1.20 "COW" means the Contract of Work
referred to in Recital (A) of this
Agreement and includes any other contract
of work, whenever granted, for the conduct
of Exploration, Development or Mining in
all or any part of the Contract Area;
1.1.21 "Cut-off Date" means the last day of
the final Year covered in the Product
Schedule, as the same may be extended
pursuant to Clause 16.4.2;
1.1.22 "Defaulting Participant" means the
Participant referred to in Clause 6.3;
1.1.23 "Development" has the meaning
assigned to that expression in the
Financial and Accounting Procedures;
1.1.24 "Dispose" means, in relation to any
relevant property, to sell, transfer,
assign, declare oneself a trustee of or
part with the
<PAGE>
- - 4 -
use or benefit of or otherwise deal with the relevant property (or
any interest therein);
1.1.25 "dollar" or "$" means a dollar being
the lawful currency of the United States
of America;
1.1.26 "Effective Date" means the date of
this Agreement;
1.1.27 "Encumbrance" means any mortgage,
pledge, lien, charge, power of attorney,
assignment for the purpose of providing
security, hypothecation, security interest
or trust arrangement for the purpose of
providing security and any other security
agreement or arrangement;
1.1.28 "Enterprise Operations" means all
operations within the Contract Area under
the COW by or on behalf of PT-FI or by or
on behalf of PT-FI and P.T.-RTZ, including
the Mining of the 10-K Reserves and Joint
Operations, but excluding Sole Risk
Ventures;
1.1.29 "Expansion" means a Development
which is designed to increase the
productive capacity of existing facilities
(whether comprising PT-FI Available Assets
or Joint Account Assets and whether
Mining, milling and delivery facilities
and related infrastructure) for the
obtaining of Products from the aggregate
resources in Contract Area Block A (being
both the 10-K Reserves and reserves other
than the 10-K Reserves) at an aggregate
rate in excess of the then existing
production capacity of such facility;
1.1.30 "Exploration" has the meaning
assigned to that expression in the
Financial and Accounting Procedures;
1.1.31 "Exploration Committee" means a
committee established under Clause 8.1;
1.1.32 "Exploration Costs" has the meaning
assigned to that expression in the
Financial and Accounting Procedures;
1.1.33 "Exploration Obligation" has the
meaning assigned to that expression in the
Implementation Agreement;
1.1.34 "FCX" means Freeport-McMoRan Copper
& Gold Inc., a Delaware corporation;
<PAGE>
- - 5 -
1.1.35 "Feasibility Study" means a report
showing the economic viability of a
proposed Development project, which may
relate to Expansion, and shall include (i)
reasonable assessment of the size and
quality of the minable reserves of
Minerals, (ii) reasonable assessments of
the amenability of the Minerals to
metallurgical treatment, (iii) reasonable
description of the work, equipment,
supplies and permitting, if any, required
to bring the prospective deposit of
Minerals into commercial production and
the estimated costs thereof, (iv)
conclusions regarding the economic
viability of bringing the prospective
deposit of Minerals into commercial
production, (v) an analysis of the impact
which such project will have on the
existing Enterprise Operations and Sole
Risk Programmes and (vi) such other
information as may be appropriate to allow
banking and other financial institutions
familiar with the mining business to make
a firm decision whether or not to advance
funds sufficient to finance the Expansion
in whole or in part;
1.1.36 "Financial and Accounting
Procedures" means the document so
entitled, in the form attached to this
Agreement as Annex B;
1.1.37 "Government" means the Government of
the Republic of Indonesia;
1.1.38 "Greenfield Project" means a
Development project which does not rely to
any significant extent on PT-FI Available
Assets, the 10-K Reserves or the Joint
Account Assets constituting part of any
prior approved project;
1.1.39 "Implementation Agreement" means the
agreement so designated between FCX and
RTZ dated as of 2 May 1995;
1.1.40 "Incremental Expansion Cashflow" has
the meaning assigned to that expression in
the Financial and Accounting Procedures;
1.1.41 "Incremental Expansion Revenues" has
the meaning assigned to that expression in
the Financial and Accounting Procedures;
1.1.42 "Incremental Production" has the
meaning assigned to that expression in the
Financial and Accounting Procedures;
<PAGE>
- - 6 -
1.1.43 "Joint Account Assets" means all
Products (in whatever form) derived from
Joint Operations prior to their being sold
and all other real and personal property,
tangible and intangible, held by or for
the benefit of the Participants for the
purposes of Joint Operations, but
excluding the PT-FI Assets and the P.T.-
RTZ Assets;
1.1.44 "Joint Operations" means the conduct
of the following activities:
(i) Approved Expansion Projects;
(ii) Exploration in the Contract Area;
(iii) Development and Mining in Contract
Area Block B and, after the
Cut-off Date, if there has,
before such Date, been a first
Approved Expansion Project,
also in Contract Area Block A
and
(iv) any other activities in or in
relation to the Contract Area which
the Participants agree to conduct
under the terms of this Agreement,
including Joint Operations
Greenfield Projects,
but excluding Sole Risk Ventures;
1.1.45 "Liabilities" or "Liability" means
any and all claims, demands,
investigations, judgements, losses,
liabilities, costs and expenses, including
reasonable attorneys' fees;
1.1.46 "LIBOR" means a rate of interest
which is equal to three month U.S dollar
Libor as published in the London Financial
Times;
1.1.47 "Memorandum Equity Account" means an
account established for each Participant
pursuant to paragraph 2 of the Financial
and Accounting Procedures;
1.1.48 "Minerals" has the meaning assigned
to that expression in the COW;
1.1.49 "Mining" means the mining,
extracting, producing, handling, milling
or other processing of Minerals and the
marketing and selling of Products
therefrom;
<PAGE>
- - 7 -
1.1.50 "Non-defaulting Participant" means a
Participant which is not the Defaulting
Participant as described in Clause 6.3;
1.1.51 "Operating Committee" means the
committee established under Clause 8.2;
1.1.52 "Operator" means the person or
entity appointed under Clause 9.1 or any
successor Operator;
1.1.53 "Participation" means the business
arrangement of the Participants under this
Agreement;
1.1.54 "Participant(s)" means any person(s)
or entity(ies) that from time to time have
Participating Interests;
1.1.55 "Participating Interest" means, at
any time, with respect to Contract Area
Block A or Contract Area Block B, the
percentage interest then applicable to
each Participant with respect to such
Contract Area Block determined in
accordance with this Agreement (including
the Financial and Accounting Procedures),
provided that, if such expression is used
with reference to assets, it shall refer
to an interest in the Joint Account Assets
and Joint Operations;
1.1.56 "Privatisation Agreements" means the
agreements listed in Schedule 1 to this
Agreement;
1.1.57 "Processing" has the meaning
assigned to that expression in the COW;
1.1.58 "Product Schedule" means the Product
Schedule annexed hereto as Annex A,
setting out the planned production of
Products for each Year from 1995 to 2021
as the same may be amended pursuant to
Clause 16.4.2;
1.1.59 "Products" has the meaning assigned
to that expression in the COW;
1.1.60 "Programme" means a description in
reasonable detail of Joint Operations or
Sole Risk Ventures, as appropriate, to be
conducted for a Year or any longer period,
which is prepared and approved in
accordance with paragraph 10.1 of the
Financial and Accounting Procedures;
<PAGE>
- - 8 -
1.1.61 "Proposing Participant" means the
Participant referred to in Clause 10.1;
1.1.62 "PT-FI Assets" means together
(i) the PT-FI Available Assets
(ii) the right, title and interest of PT-
FI in and under the COW and all
authorisations issued pursuant to
the COW and
(iii) all other real and personal assets,
tangible and intangible, of
PT-FI, including without
limitation, cash, accounts
receivable, inventories and
capital stock and indebtedness
of other corporations,
including its interests in the
Gresik smelter and any assets
in respect of Sole Risk
Ventures of PT-FI, but
excluding all Joint Account
Assets or interests therein;
1.1.63 "PT-FI Available Assets" means
together
(i) all real and personal property,
tangible and intangible, held by PT-
FI from time to time which are used
or intended to be used for
Exploration, Development or Mining
in the Contract Area, including,
without limitation, mills and
infrastructure
(ii) the right, title and interest of PT-
FI in and to the Privatisation
Agreements and
(iii) except for the purpose of the
Financial and Accounting
Procedures, capital
replacements hereafter of
physical property subject to
Privatisation Agreements or
constituting PT-FI Available
Assets, but excluding those
items specified in paragraph
(iii) of the definition of
"PT-FI Assets"
and excluding all Joint Account Assets,
assets relating to Sole RiskVentures or
interests therein;
1.1.64 "P.T.-RTZ Assets" means together
<PAGE>
- - 9 -
(i) the interest of P.T.-RTZ in and
under the COW pursuant to the
Assignment
(ii) any assets in respect of Sole Risk
Ventures of P.T.-RTZ and
(iii) all other real and personal assets,
tangible and intangible, of
P.T.-RTZ, but excluding all
Joint Account Assets or
interests therein;
1.1.65 "RTZ" means The RTZ Corporation PLC,
an English company;
1.1.66 "RTZ Loan" has the meaning assigned
to the expression "Loan" in the RTZ Loan
Agreement;
1.1.67 "RTZ Loan Agreement" means the
facility agreement [of even date herewith]
between PT-FI and [RTZ UK company] whereby
[RTZ UK company] agrees to make available
to PT-FI a facility of up to $450,000,000
to fund one or more Approved Expansion
Projects;
1.1.68 "Sales Revenues" has the meaning
assigned to that expression in the
Financial and Accounting Procedures;
1.1.69 "Sharing Commencement Date" has the
meaning assigned to that expression in the
Financial and Accounting Procedures;
1.1.70 "Sole Risk Programme" has the
meaning assigned to it in Clause 10.3;
1.1.71 "Sole Risk Venture" means any
activity carried out by a Participant in
the Contract Area on its own account
pursuant to Clauses 10 and 12;
1.1.72 "Specified Area" means the area
referred to as such in Clause 10.1;
1.1.73 "subsidiary" has the meaning
assigned to it in the Implementation
Agreement;
1.1.74 "Taxes" means all present and future
income and other taxes, levies, imposts,
duties, charges, deductions and
withholdings
<PAGE>
- - 10 -
whatsoever together with interest thereon and penalties with
respect thereto;
1.1.75 "10-K Reserves" means the proved and
probable ore reserves as at 31 December
1994 in Contract Area Block A being
1,125.6 million tonnes at an average grade
of 1.30% copper, 1.42 grams of gold per
tonne and 4.06 grams of silver per tonne;
1.1.76 "Trust Agreement" means [Insert here
description of Trust Agreement after it
has been negotiated and agreed. It will be
the Trust Agreement scheduled to the RTZ
Loan Agreement and which provides the
various matters described in Exhibit A to
the Implementation Agreement.];
1.1.77 "Year" means a calendar year
commencing on 1 January.
1.2 Interpretation
In this Agreement
1.2.1 References to any document or agreement,
including the COW, includes such document
or agreement as amended, novated,
substituted, varied, supplemented or
replaced from time to time.
1.2.2 References to any Act of Parliament, code,
decree, regulation or ordinance or to any
provision thereof include any modification
or re-enactment thereof or any provision
substituted therefor and all statutory or
other instruments issued thereunder.
1.2.3 References to a party to this Agreement or any
other document or agreement include such
party's successors or permitted assigns.
1.3 Headings Headings to Clauses, sub-clauses, Schedules
or Annexes are for convenience only and shall not
affect the interpretation of this Agreement.
2. PURPOSES AND TERM
2.1 General PT-FI and P.T.-RTZ hereby agree that all of
their rights and obligations as between themselves
relating to Joint Operations, Sole Risk Ventures and
other operations within the Contract Area shall be
subject to and governed by this Agreement.
<PAGE>
- - 11 -
2.2 Purposes This Agreement is entered into for the
following purposes and for no others, and shall serve
as the exclusive means by which the Participants, or
either of them, accomplish such purposes:
2.2.1 to conduct Exploration within the Contract
Area, including the evaluation of
Development or Mining opportunities within
the Contract Area;
2.2.2 to engage in Development and Mining within
the Contract Area if so decided in the
manner provided in this Agreement;
2.2.3 to engage in the Disposal of Products
derived from Joint Operations;
2.2.4 to allocate costs of and revenues derived
from Joint Operations;
2.2.5 to regulate as between the parties the
conduct of Joint Operations and Sole Risk
Ventures in the Contract Area;
2.2.6 to regulate as between the parties to the
extent provided herein the conduct by PT-
FI of its activities in the Contract Area,
other than in respect of Joint Operations,
using the PT-FI Available Assets and PT-
FI's right, title and interest in and
under the COW and all authorisations
issued pursuant to the COW;
2.2.7 to regulate the procedures for making a
Close-down decision and for implementing
that decision; and
2.2.8 to perform any other operation or activity
necessary, appropriate or incidental to
any of the foregoing.
2.3 Assignment of COW Simultaneously with signature of
this Agreement, PT-FI and P.T.-RTZ shall execute an
assignment of interests in the COW in the form set out
in Schedule 2 to this Agreement or in such other form
as P.T.-RTZ may reasonably require provided that such
interests shall be reassigned by P.T.-RTZ to PT-FI in
the circumstances provided for in Clause 6(2) of the
Implementation Agreement.
2.4 Term The term of this Agreement shall commence on the
Effective Date and shall continue until the occurrence
of any of the following events:
<PAGE>
- - 12 -
2.4.1 the termination of the COW and the termination
of all rights of the Participants to
conduct Exploration, Development and
Mining in the Contract Area and completion
of a final accounting between the
Participants as provided in Clause 2.5.2;
or
2.4.2 the agreement by the Participants permanently to
cease Joint Operations and terminate this
Agreement and completion of a final
accounting between the Participants as
provided in Clause 2.5.2; or
2.4.3 the reduction of the Participating Interest of
one of the Participants in both Contract
Area Block A and Contract Area Block B to
zero (including a reduction pursuant to
the operation of the proviso to Clause
2.3); or
2.4.4 the Disposal of all Joint Account Assets and the
completion of a final accounting between
the Participants as provided in Clause
2.5.2; or
2.4.5 the bankruptcy, dissolution or withdrawal of any
Participant, unless all of the remaining
Participants agree to continue this
Agreement, and completion of a final
accounting between the Participants as
provided in Clause 2.5.2.
2.5 Termination Upon expiry of the term of this
Agreement:
2.5.1 all unpaid Liabilities properly incurred arising
out of Joint Operations during the term of
this Agreement shall be paid by the
Participants as provided in this Agreement
2.5.2 the Operator shall take all action necessary to
wind up the activities of the
Participation, and all costs and expenses
incurred in connection with the
termination of the Participation shall be
expenses chargeable to the Participants.
Where the term of this Agreement expires
pursuant to Clauses 2.4.1, 2.4.2, 2.4.4 or
2.4.5, the Joint Account Assets shall be
paid, applied, or distributed in
satisfaction of all Liabilities of the
Participation arising out of Joint
Operations to third parties. Thereafter,
all other Joint Account Assets shall be
sold and the proceeds, together with any
remaining cash, shall be distributed to
the Participants in proportion to their
Participating Interests in Contract Area
Block A or, as appropriate, Contract Area
Block B at the time of such distribution,
subject as provided in Clause 6.1 or the
Financial and Accounting Procedures, after
first satisfying out of a Participant's
share any Liabilities owed by that
Participant to the other
<PAGE>
- - 13 -
2.5.3 the Participants shall enter into such other
agreements and arrangements as may be
necessary or appropriate in the
circumstances to regulate the conduct of
any Sole Risk Ventures in the Contract
Area which are to continue after expiry of
the term of this Agreement.
3. RELATIONSHIP OF THE PARTICIPANTS
3.1 Contribution of Use of Assets
3.1.1 PT-FI agrees to make available in accordance
with the terms of this Agreement the PT-FI
Available Assets for the purposes of
Enterprise Operations without charge to
the Participants except as otherwise
provided in this Agreement.
3.1.2 PT-FI and P.T.-RTZ agree that their respective
rights under the COW will be made
available to the Participants without
charge for the purposes of Joint
Operations.
3.2 Obligations Several and Not Joint The liability of
the Participants shall be several and not joint nor
joint and several. Each Participant shall be liable
to the other only for its obligations as set out in
this Agreement.
3.3 Not a Partnership Nothing contained in this Agreement
shall be deemed to constitute either Participant the
partner of the other, nor, except as otherwise herein
expressly provided, to constitute either Participant
the agent or legal representative of the other or to
create any fiduciary relationship between them.
3.4 No Authority to Act for other Participants No
Participant shall have any authority to act for or to
assume any obligation or responsibility on behalf of
the other Participant, except as otherwise expressly
provided herein. Each Participant shall indemnify,
defend and hold harmless the other Participant and its
Affiliates (including, without limitation, direct and
indirect parent companies), and its or their
respective directors, commissioners, officers,
shareholders, employees, agents and attorneys, from
and against any Liabilities which may be imposed upon,
asserted against or incurred by any of them and which
arise out of or result from any act of or any
assumption of Liability by the indemnifying
Participant, or any of its directors, commissioners,
officers, shareholders, employees, agents, attorneys
and Affiliates, done or undertaken, or apparently done
or undertaken, on behalf of the other Participant,
except pursuant to the authority expressly granted
herein or as otherwise agreed in writing between the
Participants.
<PAGE>
- - 14 -
3.5 No Joint Receipt of Income The Participants
acknowledge that it is not their intention to receive
income jointly as a result of the Participation.
3.6 Area of Mutual Interest
3.6.1 General Any exploration permit, contract of
work, mineral lease, right or interest,
including an equity interest or option to
acquire an equity interest in an entity
owning any of the foregoing, including
rights and interests which do not directly
involve Mining but which may be useful in
connection with the Joint Operations
(collectively, "Mining Rights") acquired
during the term of this Agreement by or on
behalf of a Participant or an Affiliate
(other than, in the case of P.T.-RTZ, and
for so long as CRA Limited is not a
subsidiary of RTZ, CRA Limited and its
subsidiaries) of a Participant (the
"Acquirer") which is situated in the
province of Irian Jaya, Indonesia (the
"Area of Mutual Interest") shall be
subject to the terms and provisions of
this Clause 3.6, except Mining Rights
acquired pursuant to an Approved Programme
and Budget or Sole Risk Ventures.
3.6.2 Notice Within 30 days after acquisition of
Mining Rights or the right to acquire any
Mining Rights wholly or partially within
the Area of Mutual Interest, the
Participant being the Affiliate of the
Acquirer ("Acquirer's Participant") shall
notify the other Participant of such
acquisition. The Acquirer's Participant's
notice shall describe in detail the
acquisition, the Mining Rights covered
thereby and the cost thereof and the
Acquirer's Participant shall procure that
there is made available for inspection by
the other Participant any and all such
information concerning the Mining Rights.
3.6.3 Option Exercised Within 30 days after receiving
the Acquirer's Participant's notice, the
other Participant shall elect, by notice
to the Acquiring Participant, that an
Affiliate of such other Participant shall:
(a) accept an interest in the Mining Rights
equal to the other Participant's
Participating Interest at the date of this
Agreement; or
(b) not to acquire an interest in the Mining
Rights.
If a Participant entitled to make an election
under this Clause 3.6.3 fails to give notice
within the time allotted, such failure shall be
deemed an election by such Participant not to
accept an interest in
<PAGE>
- - 15 -
the Mining Rights and the Mining Rights shall not be subject to
the same terms, mutatis mutandis, as this
Agreement. If a Participant entitled to make an
election under this Clause 3.6.3 makes a timely
election to accept an interest in the Mining
Rights, the Acquirer's Participant shall procure
that the Acquirer shall, subject to all
necessary Governmental consents, convey to an
Affiliate of the other Participant nominated by
the other Participant, by appropriate
instrument, an undivided interest in the Mining
Rights equal to such Participant's Participating
Interest at the date of this Agreement. If such
Participant has elected that an Affiliate shall
accept an interest in Mining Rights pursuant to
this Clause 3.6.3, the Mining Rights shall be
held on the same terms as this Agreement,
mutatis mutandis to those with respect to
Contract Area Block B, unless the Participants
agree otherwise. The Participant which is not
the Acquirer's Participant shall procure that
its Affiliate acquiring the interest in the
Mining Rights shall promptly pay to the Acquirer
its proportionate share of the latter's actual
out-of-pocket acquisition costs.
3.7 Other Business Opportunities Except as expressly
provided in Clause 3.6, each Participant shall have
the right independently to engage in and receive full
benefits from business activities outside the Contract
Area, whether or not in competition with the
Enterprise Operations, without consulting the other.
Except as expressly provided in Clause 3.6, no
Participant shall have any obligation to the other
under this Agreement with respect to any opportunity
to acquire any property outside the Contract Area at
any time, or within the Contract Area after the
termination of this Agreement. Except as otherwise
agreed by the Participants, whether in this Agreement
or subsequently, neither Participant shall conduct any
activity inside the Contract Area other than
Enterprise Operations, Sole Risk Ventures and
activities which do not adversely affect the carrying
out of the Enterprise Operations and any Sole Risk
Ventures, without the prior written approval of the
other.
3.8 Waiver of Right to Partition The Participants hereby
waive and release all rights of partition, or of sale
in lieu thereof, or other division of Joint Account
Assets, including any rights provided by law.
3.9 Employees Employees of one Participant are not and
shall not be employees of the other Participant or of
the Participation.
3.10 Title All Joint Account Assets acquired by the
Operator for Joint Operations may be held in the name
of PT-FI but, subject to any mandatory provisions of
applicable law, the beneficial interest therein shall
be for the
<PAGE>
- - 16 -
benefit of PT-FI and P.T.-RTZ severally in proportion to their
respective Participating Interests. Subject to any
mandatory provisions of applicable law, each of the
Participants agrees to execute appropriate documents
to reflect any changes in Participating Interests
which may occur hereunder from time to time and to
execute, and register with the appropriate
Governmental authorities, the necessary document(s) to
effect the transfer of any property as contemplated by
this Agreement.
4. REPRESENTATIONS AND WARRANTIES
4.1 Capacity Each of the parties represents, warrants and
undertakes to the other(s) as follows:
4.1.1 it is a company duly incorporated and in good
standing in its place of incorporation and
that it is qualified to do business and is
in good standing in those jurisdictions
where necessary in order to carry out the
purposes of this Agreement;
4.1.2 it has the capacity to enter into and perform
its obligations under this Agreement and,
in the case of PT-FI, the Assignment and
all transactions contemplated herein or
(as appropriate) therein and that all
corporate and, except as mentioned in
Schedule 3 to this Agreement, other
actions required to authorise it to enter
into and perform its obligations under
this Agreement and, in the case of PT-FI,
the Assignment have been properly and duly
taken;
4.1.3 this Agreement constitutes, and, in the case of
PT-FI, the Assignment will constitute its
legal, valid and binding obligation, save
as enforcement may be limited by
bankruptcy, reorganisation, insolvency,
moratorium or other laws affecting the
enforcement of creditors' rights generally
and subject to any limitations acts and to
general equitable principles;
4.1.4 the execution, delivery and performance by it or
any other party to this Agreement of this
Agreement and, in the case of PT-FI, the
Assignment and the transactions
implemented hereunder or (as appropriate)
thereunder do not and will not contravene,
conflict with or constitute a default
under (a) any law or regulation or any
official or judicial order, judgment,
injunction or decree applicable to it or
(b) its constitutional documents or (c)
any agreement or document to which it is a
party or which is binding upon it or any
of its assets.
4.2 PT-FI Representations and Warranties Subject to the
matters stated in Schedule 3 and in addition to the
representations, warranties and
<PAGE>
- - 17 -
undertakings contained in Clause 4.1, PT-FI represents, warrants
and undertakes to P.T.-RTZ as follows:
4.2.1 the shareholders in PT-FI are FCX, as to 81.28%,
the Government as to 9.36% and PT
Indocopper Investama Corporation as to
9.36%;
4.2.2 it has all authorisations, consents and licences
necessary to conduct its activities in the
Contract Area as presently conducted;
4.2.3 it is up to date on all payments, filings, or
other requirements in respect of the COW
and there are no existing or threatened
actions, suits, claims or proceedings in
relation thereto, and PT-FI has not
received any notice of violation or claim
alleging any violation of any law, rule,
regulation, or permit, including without
limitation any environmental law, rule,
regulation or permit, in connection with
the COW except any thereof where such
violation or claim would not, individually
or in the aggregate, have a material
adverse effect on the rights of PT-FI and
P.T.-RTZ under the COW;
4.2.4 it has delivered to or made available to P.T.-
RTZ or its Affiliates all geological data
and other similar information in PT-FI's
possession or control derived from its
activities in the Contract Area which any
person interested in acquiring a
Participating Interest in the Contract
Area would reasonably be expected to wish
to see and all other information or copies
thereof reasonably requested by them
concerning the COW, its operations in the
Contract Area and the disposal of
Products, including, but not limited to,
true and correct copies of all contracts
relating to the COW and the Contract Area
of which PT-FI has knowledge;
4.2.5 all activities by PT-FI under the COW up to the
date of this Agreement have in all
material respects been in accordance with
the requirements of the Government and
Indonesian law and there has been no
breach by PT-FI of any of the provisions
of the COW or of any other agreement
binding upon it the breach of which might
have a material adverse effect on the
ability of PT-FI to carry out the
Enterprise Operations;
4.2.6 there has been no material breach by the
Government of any of the provisions of the
COW and PT-FI has not received any
indication from the Government that the
Government is seeking to re-negotiate any
of the terms of the COW;
<PAGE>
- - 18 -
4.2.7 to the best of PT-FI's knowledge, there has been
no material breach by any third party of
any material contract with PT-FI in
relation to PT-FI's activities under the
COW or the sale of Products;
4.2.8 there are no material litigation, arbitration or
administrative proceedings or claims
currently in progress or, so far as PT-FI
is aware, pending or threatened against
PT-FI or any of its assets under the COW
or any material contract to which PT-FI is
a party in relation to PT-FI's activities
under the COW or the sale of Products;
4.2.9 PT-FI is not a party to any agreement or under
any other obligation under or pursuant to
which it has created or given or permitted
to subsist or is obliged or bound to
create or give or permit to subsist in
favour of any third party any Encumbrance
over P.T.-RTZ's share of the Joint Account
Assets or over any revenues allocated to
P.T.-RTZ (or to which P.T.-RTZ is
entitled) under this Agreement;
4.2.10 P.T.-RTZ's interest in the COW pursuant to
the Assignment is not subject to any
Encumbrance created or given by PT-FI in
favour of any third party.
4.3 Disclosures Each of the parties represents and
warrants to the other(s) that it is unaware of any
facts or circumstances which have not been disclosed
in this Agreement and which should have been disclosed
to the other party in order to prevent the
representations and warranties given by it in this
Clause 4 from being materially misleading.
5. EXPLORATION CONTRIBUTIONS BY PARTICIPANTS
5.1 Exploration Contribution by P.T.-RTZ P.T.-RTZ shall
pay, in accordance with paragraph 10.3 of the
Financial and Accounting Procedures, all Exploration
Costs approved by an Exploration Committee after the
Effective Date until the Exploration Obligation has
been satisfied, including the expenditure of not less
than $40,000,000 in respect of Contract Area Block A.
5.2 Additional Cash Contributions After the Exploration
Obligation has been satisfied, the Participants shall
contribute funds for Approved Exploration Programmes
and Budgets in proportion to their respective
Participating Interests, subject to their rights to
conduct Sole Risk Ventures.
<PAGE>
- - 19 -
6. INTERESTS OF PARTICIPANTS
6.1 Participating Interests
6.1.1 At the date of this Agreement, except as
otherwise provided in this Agreement
(including the Financial and Accounting
Procedures), the Participating Interests
of the Participants in Contract Area Block
A and in Contract Area Block B are:
PT-FI sixty per cent (60%)
P.T.-RTZ forty per cent (40%).
The Participating Interests of the Participants
shall not be changed except as provided in this
Agreement (including the Financial and
Accounting Procedures) and each Participant's
Participating Interest in Contract Area Block A
may, as provided in this Agreement and the
Financial and Accounting Procedures, be
different from its Participating Interest in
Contract Area Block B.
6.1.2 There shall be allocated to the Participants the
revenues and shares thereof calculated in
accordance with the Financial and
Accounting Procedures.
6.1.3 All costs and liabilities incurred in or
attributable to Chargeable
Operations in the Contract
Area shall be allocated to and
borne by the Participants in
accordance with the Financial
and Accounting Procedures.
6.1.4 Participating Interests shall be calculated to
three decimal places and rounded to two
(e.g. 1.519% rounded to 1.52%). Decimals
of .005 and less shall be rounded down.
6.2 Changes in Participating Interests A Participant's
Participating Interest may be changed as follows:-
6.2.1 in the event of default by a Participant in
making its agreed upon contribution to an
Approved Programme and Budget, followed by
an election by the other Participant to
invoke Clause 6.3.2.3; or
6.2.2 transfer by a Participant of less than all its
Participating Interest in accordance with
Clause 15; or
6.2.3 acquisition of less than all of the
Participating Interest of the other
Participant, however arising.
<PAGE>
- - 20 -
In the event of a change in a Participant's
Participating Interest with respect to either Contract
Area Block A or Contract Area Block B, there will,
subject to obtaining any necessary Governmental
approval, be a corresponding and proportionate change
in the Participant's interest in the COW with respect
to Contract Area Block A (subject to PT-FI's rights
with respect to the 10-K Reserves and PT-FI Assets) or
the COW with respect to Contract Area Block B, as the
case may be.
6.3 Default in Making Contributions
If a Participant defaults in its obligation to pay a
contribution or cash call properly payable or made
under this Agreement (including the Financial and
Accounting Procedures), (such Participant being a
"Defaulting Participant"),
6.3.1 All rights of the Defaulting Participant to
receive its proportionate share of the
Incremental Expansion Cashflow of Approved
Expansion Projects, or the revenues from
Contract Area Block B, Joint Operations
Greenfield Projects in Contract Area Block
A or, as the case may be, in any Year
after the Cut-off Date, the revenues from
Joint Operations, shall be suspended until
such time as the default has been remedied
and until such time, such proportionate
share shall go to the Non-Defaulting
Participant(s), who shall apply such share
of the relevant revenues or (as the case
may be) Incremental Expansion Cashflow
first, to make any contribution or meet
any cash calls not made or met by the
Defaulting Participant or made or met on
its behalf, and second, to pay the
indebtedness and unpaid and accrued
interest thereon then owing by the
Defaulting Participant to such Non-
Defaulting Participant pursuant to Clause
6.3.2. The right of a Defaulting
Participant to receive its proportionate
share of the relevant revenues or (as the
case may be) the Incremental Expansion
Cashflow shall be reinstated at the first
time when such Participant is not in
default in its obligation to make a
contribution or meet a cash call and all
indebtedness and interest thereon arising
out of the making by the Non-Defaulting
Participant of Cover Payments has been
paid in full.
6.3.2.1 The other Participant, by notice to
the Defaulting Participant, may at
any time, but shall not be obliged
to, elect to make such contribution
or meet such cash call on behalf of
the Defaulting Participant (a "Cover
Payment"). If more than one Cover
Payment is made by the other
Participant in relation to the same
Contract Area Block, such Cover
Payments shall be
<PAGE>
- - 21 -
aggregated and the rights and remedies described herein pertaining
to an individual Cover Payment shall
be read to apply to the aggregated
Cover Payments.
6.3.2.2 Each Cover Payment shall constitute
indebtedness due from the Defaulting
Participant to the Non-Defaulting
Participant, which indebtedness,
together with interest (calculated
from the date of the Cover Payment
at the rate specified in paragraph
10.3.3 of the Financial and
Accounting Procedures) shall be
payable upon demand.
6.3.2.3 If a Cover Payment shall have been
made, upon the giving of not less
than 5 days' prior notice to the
Defaulting Participant, whether or
not payment thereof has been
demanded under Clause 6.3.2.2, the
Non-Defaulting Participant may, but
shall not be obliged to, elect to
effect an adjustment of the
Defaulting Participant's
Participating Interest in the
relevant Contract Area Block
pursuant to this Clause 6.3.2.3;
provided, however, that if within
such 5 day period the Defaulting
Participant shall evidence to the
reasonable satisfaction of the Non-
Defaulting Participant that it will
have the funds to, and will, within
10 days of the expiry of such 5 day
period, pay all indebtedness owing
by the Defaulting Participant to the
Non-Defaulting Participant, then
such adjustment of Participating
Interest may not be effected until
the end of such additional 10 day
period. Upon such election, or, if
applicable, at the end of such
additional 10 day period, an amount
equal to 125% times the Cover
Payment shall be deducted from the
Defaulting Participant's relevant
Memorandum Equity Account for the
relevant Contract Area Block and
added to the relevant Memorandum
Equity Account for that Contract
Area Block of the Non-Defaulting
Participant and the Participating
Interests of the Participants shall
be recalculated based on the
relevant adjusted Memorandum Equity
Accounts.
6.3.2.4 Notwithstanding anything to the
contrary contained in this
Agreement, failure by PT-FI to make
a
<PAGE>
- - 22 -
contribution or respond to a cash call shall not constitute a
default hereunder if such failure
occurs prior to the time an
aggregate sum of $750,000,000 has
been spent on one or more Approved
Expansion Projects and is wholly
attributable to the failure by PT-FI
to receive advances under the RTZ
Loan Agreement.
6.3.3 If as a consequence of the adjustment of a
Defaulting Participant's relevant
Memorandum Equity Account under Clause
6.3.2.3 its recalculated Participating
Interest in Contract Area Block A or, as
the case may be, Contract Area Block B is
less than 10% (such adjustment being a
"Forced Sale Adjustment"), then
6.3.3.1 the Defaulting Participant shall be
deemed to have elected to withdraw
from participation in Joint
Operations in Contract Area Block A
or, as the case may be, Contract
Area Block B
6.3.3.2 the Defaulting Participant shall
sell to the Non-Defaulting
Participant and the Non-Defaulting
Participant shall buy all of the
Defaulting Participant's
Participating Interest in Contract
Area Block A or, as the case may be,
Contract Area Block B for a price
equal to the proportion of the Fair
Market Value of the Joint Account
Assets attributable to Contract Area
Block A or, as the case may be,
Contract Area Block B as at the date
on which its Participating Interest
first reduces below 10% which is
proportionate to the Defaulting
Participant's recalculated
Participating Interest therein
6.3.3.3 completion of the sale and purchase
under Clause 6.3.3.2 shall take
place within 90 days after
establishment of the Fair Market
Value. The Defaulting Participant
shall be liable for all costs and
expenses of the sale and purchase
(other than the purchase price) and
shall indemnify the Non-Defaulting
Participant against all adverse tax
consequences of the sale and
purchase
6.3.3.4 for the purposes of Clause 6.3.3.2,
the Fair Market Value of the Joint
Account Assets attributable to
Contract Area Block A or, as the
case may be,
<PAGE>
- - 23 -
Contract Area Block B means the amount determined by the
Participants. Should the
Participants be unable within 30
days after a Forced Sale Adjustment
to agree as to the Fair Market Value
of the Defaulting Participant's
Participating Interest to be sold
pursuant to Clause 6.3.3.2, the
Participants shall, within 10 days
after the expiration of such 30 day
period, attempt to select one
reasonably acceptable,
internationally recognised
independent investment bank to
determine the Fair Market Value of
the Defaulting Participant's
Participating Interest, which
determination shall be binding on
all Participants. Should the
Participants be unable to agree upon
a mutually acceptable investment
bank within such 10 day period, each
of the Participants shall have 10
additional days to select one
internationally recognised
investment bank to determine the
Fair Market Value of the Defaulting
Participant's Participating
Interest. Each such investment bank
or, in default of selection by
either Participant, the sole
investment bank so selected shall,
within 30 days of being requested to
do so, determine the Fair Market
Value of the Defaulting
Participant's Participating Interest
provided however that, where two
such investment banks are so
selected, the Fair Market Value of
such interest shall be the average
of their respective determinations
if and only if the lower of the two
determinations is at least 90% of
the higher of the two
determinations. If it is not, then
such two investment banks shall
select a third internationally
recognised investment bank to
determine the Fair Market Value of
the Defaulting Participant's
Participating Interest, and the Fair
Market Value of such interest (i)
shall be such third determination if
such third determination is a figure
between the two previous
determinations; (ii) shall be the
lower of the two previous
determinations if the third
determination is lower than both the
two previous determinations; and
(iii) shall be the higher of the two
previous determinations if the third
determination is higher than both
the two previous determinations.
The Participants shall each pay 50%
of the costs of the services and
expenses of the investment bank(s)
<PAGE>
- - 24 -
6.3.3.5 upon completion of the sale and
purchase under Clause 6.3.3.2 the
Defaulting Participant shall cease
to conduct any activities in
Contract Area Block A or, as the
case may be, Contract Area Block B
(other than then existing Sole Risk
Ventures and other than, in the case
of PT-FI, PT-FI's rights with
respect to the 10-K Reserves and any
retained rights referred to in
Clause 7.5) and shall surrender to
the Non-Defaulting Participant the
right to conduct all such activities
6.3.3.6 each of the Participants appoints
the other its attorney, such
appointment becoming effective upon
its becoming a Defaulting
Participant, with power in its name
or otherwise to do all such things
and sign or execute all such deeds
or documents as may be necessary or
desirable to complete any of the
transactions referred to in this
Clause 6.3.3, and (without
limitation) for that purpose to
appear in the name of the Defaulting
Participant before any notary or
other Government official in
Indonesia.
6.4 Continuing Liabilities Upon Adjustment of the
Participating Interests Any reduction of a
Participant's Participating Interest under this Clause
6 shall not relieve such Participant of its share of
any Liability, whether it accrues before or after such
reduction, arising out of Joint Operations in Contract
Area Block A or, as the case may be, Contract Area
Block B conducted after the Effective Date and prior
to such reduction. For purposes of this Clause 6,
such Participant's share of such Liability shall,
subject to Clause 6.1 and the Financial and Accounting
Procedures, be equal to its Participating Interest in
the relevant Contract Area Block at the time such
Liability was incurred. The increased Participating
Interest accruing to a Participant as a result of the
reduction of the other Participant's Participating
Interest shall be free from Encumbrances arising by,
through or under such other Participant, except those
to which both Participants have given their written
consent or are otherwise subject (including, without
limitation, royalties payable under the COW). Each
Participant's Participating Interest shall be shown in
the books of the Operator.
<PAGE>
- - 25 -
7. COVENANTS AND RIGHTS
7.1 Mutual Covenants Each of the Participants covenants
and agrees with the other that:
7.1.1 it will give prompt notice to the other
Participant of any notice of default,
lawsuit, proceeding, action or damage of
which it becomes aware and which might
affect the Joint Account Assets, the
Contract Area or the COW
7.1.2 it will only conduct operations within or
relating to the Contract Area in
accordance with the provisions of the COW
and this Agreement and, without prejudice
to the foregoing, not at any time do or
cause or permit to be done any act or
omission which results or might result in
a breach of the provisions of the COW,
this Agreement or any other agreement
binding upon it a breach of which might
have a material adverse effect on Joint
Operations.
7.2 PT-FI Covenants PT-FI covenants and agrees with P.T.-
RTZ that it will:
7.2.1 At all times comply with and perform all its
obligations under the Privatisation
Agreements and exercise its rights under
the Privatisation Agreements in
consultation with P.T.-RTZ and in a manner
which does not adversely affect the
carrying out of the Joint Operations and
will not enter into any other agreements
in the nature of Privatisation Agreements
(other than as listed in Schedule 1)
except in consultation with P.T.-RTZ;
7.2.2 Prepare its annual financial statements in
accordance with accounting principles
generally accepted in the U.S.A. except as
otherwise stated therein and based on
accounting policies consistently applied
in all respects except as otherwise stated
therein and at the time of the issue
thereof send to P.T.-RTZ copies of the
same;
7.2.3 As and when required by P.T.-RTZ furnish to
P.T.-RTZ promptly such financial or other
information, data or maps relating to the
Contract Area and the Enterprise
Operations therein and thereon as P.T.-RTZ
may from time to time require;
7.2.4 Furnish to P.T.-RTZ a copy of each material
return and report (and each other return
and report requested specifically by P.T.-
RTZ)
- -26-
<PAGE>
submitted to the Government under the COW and,
with respect to major returns and reports (as
determined from time to time by the
Participants), do so within a reasonable time
before the latest day for such submission to
permit time for review by P.T.-RTZ provided that
tax returns shall not be included in this sub-
Clause 7.2.4;
7.2.5 Not, without the prior written consent of P.T.-
RTZ, create or permit to exist any
Encumbrance on or Dispose, except in the
ordinary course of business, of the whole
or any part of the PT-FI Available Assets
or its right, title and interest in and
under the COW or any authorisations issued
pursuant to the COW or the Joint Account
Assets, other than, with respect to
Dispositions, sales otherwise permitted by
this Agreement and, with respect to
Encumbrances, (i) the security in favour
of [RTZ-UK Lender] referred to in the RTZ
Loan Agreement, (ii) Encumbrances in
favour of the existing bank lenders to PT-
FI or the lenders under any replacement or
refinancing thereof, (iii) Encumbrances in
favour of lenders on PT-FI Available
Assets or on PT-FI's share of the Joint
Account Assets or, with P.T.-RTZ's
consent, on all of the Joint Account
Assets, (iv) Encumbrances on replacements
of assets under Privatisation Agreements
and (v) Encumbrances on replacements of
PT-FI Available Assets, provided that the
lenders holding Encumbrances referred to
in (ii) and (iii) above shall have
executed documents recognising P.T.-RTZ's
rights to the same extent as have PT-FI's
existing bank lenders in connection with
this Agreement;
7.2.6 Do and cause to be done all things necessary to
preserve and keep in full force and effect
its rights and authorisations with respect
to the COW and the Contract Area, at all
times comply with and cause to be complied
with all applicable laws, the violation of
which would be materially adverse to the
Enterprise Operations and obtain and
maintain in full force and effect all
authorisations, approvals, consents,
licences and exemptions with respect to
the COW and the Contract Area, in each
case where the failure to obtain or
maintain which would be materially adverse
to Enterprise Operations, promptly effect
all filings, registrations and
notarisations and promptly comply with all
other requirements in any such case which
may at any time be required with respect
to or under this Agreement, the COW and
Enterprise Operations, and the continued
due performance of its obligations
hereunder or thereunder or the validity or
enforceability of this Agreement and the
COW, and P.T.-RTZ shall provide to PT-FI
all such information in relation to P.T.-
RTZ's participation in Joint Operations as
PT-FI may reasonably
<PAGE>
- - 27 -
require and which is not otherwise available to PT-FI in order to
enable PT-FI to fulfill its obligations
under this Clause 7.2.6;
7.2.7 Notify P.T.-RTZ immediately upon becoming aware
of the actual or threatened revocation or
variation of any such authorisation as is
referred to in Clause 7.2.6;
7.2.8 Without the prior written consent of P.T.-RTZ,
not agree to any waiver or amendment of
the terms of the COW which would have a
material adverse effect on P.T.-RTZ's
Participating Interest;
7.2.9 Not take any action, including actions using the
PT-FI Available Assets, which would
prejudice either the institution,
completion or operation of any first
Approved Expansion Project as described in
Clause 10.5 and any projects of Expansion
thereafter or any activity of PT-FI
authorised hereunder;
7.2.10 Make available the PT-FI Available Assets
and its right, title and interest in and
under the COW and all authorisations
issued pursuant to the COW for their use
in Joint Operations on a first priority
basis with respect to any PT-FI Available
Assets which are not, at the time, being
employed with respect to activities
permitted by Clause 7.5, and on a shared
basis that reflects equitably the needs of
the parties with respect to other PT-FI
Available Assets;
7.2.11 Without prejudice to any other provisions
of this Agreement, not take any action or
permit any action to be taken which will
affect materially and adversely P.T.-RTZ's
Participating Interest but PT-FI shall not
be deemed to be in breach of this Clause
merely because it exercises any right
contained in Clauses 6.3 and 15 of this
Agreement.
7.3 P.T.-RTZ Covenant P.T.-RTZ covenants and agrees with
PT-FI that, without the prior written consent of PT-
FI, it will not create or permit to exist any
Encumbrance on or Dispose, except in the ordinary
course of business, of the whole or any part of the
interests assigned in the Assignment or the Joint
Account Assets, or violate any applicable law if the
effect thereof would be materially adverse to the
Enterprise Operations provided that P.T.-RTZ may
create Encumbrances in favour of project lenders on
P.T.-RTZ's share of the Joint Account Assets or, with
PT-FI's consent, on all of the Joint Account Assets.
7.4 Power of Attorney Each of the Participants hereby
appoints the other Participant its attorney in its
name or otherwise to do all such things and
<PAGE>
- - 28 -
sign or execute all such deeds or documents as may be necessary or
desirable to cure any and each default by that
Participant under the COW or, in the case of P.T.-RTZ,
its assigned interest in the COW and (without
limitation) to appear in the name of the appointor
before any notary or other Government official in
Indonesia.
7.5 Retained PT-FI Rights
7.5.1 Existing Operations
7.5.1.1 Subject to Clause 7.5.1.2, PT-FI
shall have the right, without the
need to obtain the consent of P.T.-
RTZ, to continue to carry on Mining
activities with the use of the PT-FI
Available Assets, including
activities which, through
optimisation or fine tuning of its
operations and facilities, may
result in treatment of ore at a rate
in excess of 118,000 tonnes per day
and shall have the right to use and
make changes to the PT-FI Available
Assets so long as such activities do
not prejudice the undertaking of the
first Approved Expansion Project at
the current millsite, as described
in Clause 10.5.
7.5.1.2 PT-FI will not undertake any
Expansion project (as opposed to
optimisation or fine tuning) in
Contract Area Block A other than as
part of Joint Operations or take any
other action which will prejudice
the undertaking of the first
Approved Expansion Project at the
current millsite, provided that if
no project for Expansion which meets
the criteria specified in, or agreed
pursuant to, Clause 10.5 has
been proposed by P.T.-RTZ to the
Operating Committee before the tenth
anniversary of the Effective Date,
(i) the foregoing limitation on PT-
FI's ability to enter into an
Expansion project other than as part
of Joint Operations shall no longer
be applicable, (ii) PT-FI shall be
entitled to enter into such a
project either as a Sole Risk
Venture or, if it elects at its
option to offer P.T.-RTZ a right of
participation and P.T.-RTZ accepts
such offer, as part of Joint
Operations, in which latter event,
[RTZ UK Lender] shall remain obliged
to make available the loan funds
contemplated by the RTZ Loan
Agreement, and (iii) except as set
out in the immediately preceding
item
<PAGE>
- - 29 -
(ii), P.T.-RTZ will not have a right to participate in any
revenues from nor will it be obliged
to contribute to any costs in
respect of Contract Area Block A,
even after the Cut-off Date, except
with respect to Joint Operations
Greenfield Projects and Sole Risk
Ventures in Contract Area Block A in
which P.T.-RTZ has participated.
7.5.1.3 PT-FI shall be entitled to retain
100% of all revenues, including
Sales Revenues, received by PT-FI
from Contract Area Block A prior to
the Sharing Commencement Date,
except for any revenues from Joint
Operations Greenfield Projects and
Sole Risk Ventures in which P.T.-RTZ
shall have participated.
7.5.2 Privatisation Agreements Without prejudice and
subject to the covenants on the part of
PT-FI contained in Clause 7.2, PT-FI shall
have the right, without the need to obtain
the consent of P.T.-RTZ, to conduct
activities in accordance with the
Privatisation Agreements existing on the
Effective Date or described in Schedule 1
provided that the consent of P.T.-RTZ
shall be obtained prior to any material
change in the terms thereof which results
in an increase in the burdens of PT-FI
thereunder, other than as described in
Schedule 1. The Participants will
discuss the possibility of future
agreements in the nature of Privatisation
Agreements on the basis of the financial
requirements of the Participants. If PT-
FI wishes to sell and lease back further
of the PT-FI Available Assets (as part of
such future agreements or otherwise) or to
sell any part thereof reasonably deemed by
it to be surplus to its requirements in
relation to Enterprise Operations, it
shall be permitted to do so provided such
action does not affect materially and
adversely the institution, completion or
operation of any Approved Expansion
Projects or the availability of the use of
such assets, if required, for Joint
Operations.
8. COMMITTEES
8.1 Exploration Committees The Participants will, not
later than thirty days after the Effective Date,
establish both an Exploration Committee for Contract
Area Block A and an Exploration Committee for Contract
Area Block B, in each case to determine overall
policies, objectives, procedures, methods and actions
for incurring the Exploration Costs. Until the
Exploration Obligation has been satisfied, each
Participant may appoint two members to each of the
Exploration Committees. Once the
- -30-
<PAGE>
Exploration Obligation has been satisfied, PT-FI may appoint an
additional member to each of the Exploration
Committees. Each Participant may appoint one or more
alternates to act in the absence of a regular member.
Any alternate so acting shall be deemed a member.
Appointments shall be made or changed by written
notice to the other Participant.
8.2 Operating Committee PT-FI shall establish an
Operating Committee to, among other things:
(i) receive reports on all operations within the
Contract Area, including Joint Operations,
(ii) design for presentation to the boards of
directors of PT-FI and P.T.-RTZ appropriate
actions respecting the Joint Operations,
(iii) develop plans and make recommendations to the
board of directors of PT-FI,
(iv) monitor execution of plans approved by the board
of directors of PT-FI, and
(v) subject to the control of the board of directors
of PT-FI, be involved generally in directing
day-to-day operations of the business of PT-FI,
but will not determine policies, objectives,
procedures, methods and actions for incurring
Exploration Costs, which will continue to be
determined by the relevant Exploration Committee.
The Operating Committee will have three members,
comprising the Chief Operating Officer of PT-FI as
Chairman, the General Manager (Mining Operations) of
PT-FI and one member appointed by P.T.-RTZ. Each of
PT-FI and P.T.-RTZ may appoint one or more alternates
to act in the absence of the regular member appointed
by it. Any alternate so acting shall be deemed a
member. Appointments shall be made or changed by
written notice to the other Committee members.
8.3 Other Committees A special Tax Committee will be
established to administer the provisions of Clause
16.13 of this Agreement. Other committees may be
established as required on which PT-FI shall be
entitled to have majority representation provided
that, on any committee established in respect of a
Sole Risk Programme undertaken by P.T.-RTZ, P.T.-RTZ
shall be entitled to have majority representation and
that PT-FI and P.T.-RTZ shall be entitled to have
equal representation on the special Tax Committee.
- -31-
<PAGE>
8.4 Quorum At any Committee meetings, a quorum will exist
if a representative of each Participant is present at
the meeting. If at the time a meeting is convened, a
quorum is not present, the meeting may, upon notice to
the parties entitled to be represented at the meeting,
be adjourned to a date no sooner than twenty nor later
than thirty days following such originally scheduled
meeting. Those members who attend the rescheduled
meeting shall be deemed to constitute a quorum and may
adopt any resolutions or take any other action not
inconsistent with the provisions of this Agreement.
8.5 Decisions Each party entitled to be represented,
acting through its appointed members, shall have a
vote on a Committee. Each member of a Committee shall
have one vote. With respect to the approval of an
Approved Expansion Project or of Programmes and
Budgets, the function of the Operating Committee will
be to recommend the same for the approval of the
boards of directors of, in the case of an Approved
Expansion Project, PT-FI, FCX and P.T.-RTZ and, in the
case of Programmes and Budgets, PT-FI and P.T.-RTZ.
No project for Expansion shall be an Approved
Expansion Project unless and until it has been
approved by the boards of directors of PT-FI, FCX and
P.T.-RTZ (and each project of Expansion shall be an
Approved Expansion Project if and when it has been so
approved) or is otherwise an Approved Expansion
Project in accordance with Clause 10.3 and no
Programme and Budget shall be an Approved Programme
and Budget unless and until it has been approved by
the boards of directors of PT-FI and P.T.-RTZ.
Subject to the foregoing, all decisions of each
Committee shall be taken by simple majority vote of
members present in person or by proxy except that all
decisions relating to Approved Expansion Projects,
including a decision regarding a material departure
from the scope or cost of any Approved Expansion
Project, shall, subject to Clause 10.3, require the
approval of representatives of both Participants.
8.6 Meetings The Operator shall call the first meetings
of the Exploration Committees within thirty days of
the formation thereof. The purpose of such first
meetings shall be to propose and agree the first
Programme and Budget for the remainder of that Year
provided that until such a first Programme and Budget
has been agreed, Exploration activities will be
conducted in accordance with the Exploration programme
for 1995 in existence at the date of the
Implementation Agreement or, if this Agreement is
executed after 31 December 1995, the then existing
Exploration programme of PT-FI which does not cover a
period in excess of 12 months. Thereafter the
Exploration Committees and the Operating
- -32-
<PAGE>
Committee shall hold at least four meetings per Year, one of which
shall be in December to propose the relevant Programme
and Budget for the subsequent calendar year (the
"Annual Budget Meeting"). The Operator shall give
thirty days' notice to the Participants of each
meeting. Additionally, any Participant or the
Operator may call a special meeting upon fifteen days'
notice to the other Participant(s) and to the Operator
if the Operator is not calling the meeting. In case
of emergency, reasonable notice of a special meeting
shall suffice. All meetings shall be held in a
mutually agreed place, failing which in New Orleans.
Each notice of a meeting shall include an itemised
agenda prepared by the Operator in the case of a
regular meeting, or by the Participant calling the
meeting in the case of a special meeting, but any
matters may be considered with the consent of the
Participants. The Operator shall prepare minutes of
all meetings and shall distribute copies of such
minutes to the Participants within thirty days after
the meeting. The minutes, when signed by all
Participants (and no signature shall be unreasonably
withheld or delayed), shall be the official record of
the decisions made by a Committee and shall be binding
on the Participants and on the Operator. Each of the
Participants shall bear its own costs of attendance at
meetings of Committees. The Operator shall be
entitled to be present at all meetings of a Committee
unless such Committee otherwise resolves but the
Operator shall not be counted in the quorum or be
entitled to vote in its capacity as Operator.
8.7 Action Without Meeting In lieu of meetings, a
Committee may hold telephone conferences, so long as
all decisions are immediately confirmed in writing and
signed by all the parties entitled to be represented
at meetings of that Committee, and a member appointed
by each party entitled to be represented at meetings
of that Committee has a reasonable opportunity to be
included in any such conference.
8.8 Close-down
8.8.1 If either Participant shall determine
that, in its best judgment, Close-down
shall occur within 11 years thereafter, it
shall notify the other Participant and the
Operator. Within 30 days after receipt of
notice of such determination, the other
Participant shall notify the first
Participant whether or not it agrees with
such determination. If there is a
disagreement as to such determination, the
Participants shall seek to achieve a
mutually agreed expected date of Close-
down (an "Anticipated Close-down Date").
In the absence of such an agreement, the
dispute shall be referred to the firm of
independent mining consultants which has
most recently
- -33-
<PAGE>
reviewed and confirmed the reserves in the Contract Area for Form
10-K reporting purposes, whose
determination as to the Anticipated Close-
down Date shall be binding on both
Participants.
8.8.2 Within 90 days after a final determination
of the Anticipated Close-down Date, the
Operator shall deliver to the Participants
its best estimate of the anticipated
Close-down Costs. In December of the Year
in which such determination of the
Anticipated Close-down Date shall have
been finally determined, and in December
of each of the nine subsequent Years, each
Participant shall secure the payment of
10% of the Close-down Costs payable by
such Participant (in accordance with the
Financial and Accounting Procedures), by
such methods as shall be determined by
agreement of the Participants or, in the
absence of agreement, by (i) the purchase
of bonds with an investment rating of A
(or the then equivalent rating) or better
and (ii) the delivery of such bonds to the
Trustee under the Trust Agreement or such
other trustee as shall be agreed by the
Participants. The proceeds of such bonds
or other form of security shall be made
available, as required, to pay such Close-
down Costs.
8.8.3 In the case of a Sole Risk Venture, the
Participant undertaking the Sole Risk
Venture shall provide for the anticipated
Close-down Costs as provided in Clauses
8.8.1 and 8.8.2, unless an alternate
method of funding Close-down Costs has
been approved by the non-Participating
Participant(s).
9. OPERATOR
9.1 Appointment Except as provided in Clauses 9.5 and
12.2, PT-FI shall be the Operator for all operations
under the COW or this Agreement. The Operator shall
report to the Committees.
9.2 Powers and Duties of Operator Subject to the
provisions of this Agreement, the Operator shall, in
addition to those powers and duties contained
elsewhere in this Agreement, have the following powers
and duties which shall be discharged in accordance
with each Programme and Budget:
9.2.1 The Operator shall manage, direct and
control Enterprise Operations.
- -34-
<PAGE>
9.2.2 The Operator shall prepare and present to
each member of the appropriate Committee
proposed Programmes and Budgets in
accordance with paragraph 10.1 of the
Financial and Accounting Procedures.
9.2.3 The Operator shall make cash calls as
provided in paragraph 10.3 of the
Financial and Accounting Procedures and on
receipt of amounts from the Participants
pursuant to paragraph 10.3 of the
Financial and Accounting Procedures shall
make all expenditures necessary to carry
out Approved Programmes and Budgets and
shall promptly advise the relevant
Committee if it lacks sufficient funds to
carry out its responsibilities under this
Agreement.
9.2.4 The Operator shall make distributions of
cashflow as provided in this Agreement
(including the Financial and Accounting
Procedures) and should the Operator
default in making any such distributions
and the default continues for 30 days
after (i) (in the absence of any dispute
or, in the event of a dispute, as regards
the undisputed amount) notice from any
Participant of non-payment or (ii) (in the
event of a dispute, as to the disputed
amount) final determination of such amount
as provided in the Financial and
Accounting Procedures, any Participant
shall have the right to declare an
Allocation Event (as defined in the Trust
Agreement).
9.2.5 The Operator shall implement Approved
Expansion Projects and other Expansions.
9.2.6 The Operator shall sell on behalf of the
Participants the Products derived from
Joint Operations on terms which shall be
discussed with the Participants. In
carrying out its obligations pursuant to
Clause 9.2.6, the Operator shall conduct
such hedging and other price protection
activities as are authorised by each
Participant. However, the costs and
benefits of such price protection
activities shall be specifically allocated
to and borne solely by the authorising
Participant.
9.2.7 The Operator shall:
(a) purchase or otherwise acquire all
material, supplies, equipment,
water, utility and transportation
services required for operations,
such purchases and
- -35-
<PAGE>
acquisitions to be made on such terms as the Operator shall
prudently approve, taking into
account all of the circumstances,
including the existence of prior
agreements and arrangements;
(b) obtain such customary warranties and
guarantees as are available in
connection with such purchases and
acquisitions, taking into account
all of the circumstances; and
(c) keep the Joint Account Assets free
and clear of all Encumbrances,
except for those existing at the
time of, or created concurrent with,
the acquisition of such Joint
Account Assets and those which are
otherwise permitted by this
Agreement, including Clause 7.2.5,
or with the consent of the
Participants.
9.2.8 The Operator shall: (a) make or arrange
for all payments required by the COW,
leases, claims, grants, permits, licences,
concessions, contracts and other
agreements related to the Joint Account
Assets; (b) pay all Taxes, assessments and
like charges on Enterprise Operations and
Joint Account Assets except Taxes
determined or measured by a Participant's
net income subject to the provisions of
Clause 14 and (c) do all other acts
reasonably necessary to maintain the Joint
Account Assets and the COW.
9.2.9 The Operator shall: (a) apply for all
necessary permits, licences and approvals;
(b) comply with applicable laws and
regulations; (c) notify promptly the
relevant Committee of any allegations of
substantial violation thereof; and (d)
prepare and file all reports or notices
required for Joint Operations. The
Operator shall not be in breach of this
provision if a violation has occurred in
spite of the Operator's good faith efforts
to comply, and the Operator has in a
timely manner cured or disposed of such
violation.
9.2.10 The Operator shall prosecute and defend,
but shall not initiate without consulting
the Participants any litigation or
administrative proceedings arising out of
Joint Operations. The Participants shall
have the right to participate, at their
own expense, in such litigation or
administrative proceedings.
- -36-
<PAGE>
9.2.11 The Operator shall maintain for the
account of the Participants with respect
to the Joint Operations such basic
insurance as it shall reasonably deem to
be necessary for prudent operation
(details of which it shall supply to each
Participant) and, to the extent
practicable, shall also make available, at
the individual Participant's cost, such
additional insurance, including business
interruption insurance, as the individual
Participants shall desire. The premium
for such basic insurance will be a charge
to the Participation and for such
additional insurance to the Participant(s)
requesting the same. No other insurance
shall be provided for the benefit of the
Participants. However, after consultation
with the other Participant, any
Participant may procure and maintain at
its cost and expense such other insurance
as it shall determine and such other
insurance shall be solely for the benefit
of the Participant procuring the same and
the premium therefor shall not be a charge
to the Participation. Further, such
insured Participant shall indemnify the
other Participants not named as insured in
such additional insurance policy against
any claim of the insurer by subrogation or
otherwise.
9.2.12 Except where the Participants are
expressly permitted to Dispose of Joint
Account Assets by the terms of this
Agreement, the Operator may not Dispose of
Joint Account Assets, whether by sale,
assignment, abandonment or other transfer,
except in the ordinary course of business.
9.2.13 The Operator shall have the right (subject
to Clause 9.6) to carry out its
responsibilities hereunder through agents,
Affiliates or independent contractors.
9.2.14 The Operator shall keep and maintain all
accounting and financial records in
accordance with the Financial and
Accounting Procedures.
9.2.15 The persons employed in the Joint
Operations will not be employees of the
Participation.
9.2.1 At all reasonable times, the Operator shall
provide the relevant Committee or the
representative of any Participant, upon
request, access to, and the right to
inspect and copy all information acquired
in Joint Operations, including, but not
limited to, maps, drill logs, core tests,
reports, surveys, assays, analyses,
production reports, operations, technical,
accounting and financial records. In
addition, the Operator shall allow each
Participant, at its sole risk and expense,
and subject to reasonable safety
regulations, to inspect the
- -37-
<PAGE>
Joint Account Assets and observe Enterprise Operations at all
reasonable times, so long as the
inspecting Participant does not
unreasonably interfere with Enterprise
Operations.
9.2.17 The Operator shall undertake all other
activities reasonably necessary to fulfill
the foregoing.
The Operator shall not be in default of its duties
under this Clause 9.2 if its inability to perform
results from the failure of either Participant to
perform acts or to contribute amounts required of it
by this Agreement, but this shall not relieve any
Participant which is the Operator of any liability in
its capacity as a Participant.
9.3 No Fee Except as otherwise agreed or provided for in
the Financial and Accounting Procedures, the Operator
shall not be entitled to any fee or other compensation
for acting as Operator.
9.4 Standard of Care The Operator shall conduct all
Enterprise Operations (including the marketing of
Products) in a good, workmanlike and efficient manner,
in accordance with sound mining and other applicable
industry standards and practices, and in accordance
with applicable laws, the terms and provisions of the
COW and any leases, licences, permits, contracts and
other agreements pertaining to the Joint Account
Assets. Without prejudice to the generality of the
foregoing, the Operator shall maintain in good working
order all material assets taken as a whole from time
to time used in Enterprise Operations or Sole Risk
Ventures. The Operator shall not be liable to any
Participant for any act or omission in its capacity as
Participant (insofar as such act or omission relates
to conduct of operations in the Contract Area) or as
Operator resulting in damage or loss except to the
extent caused by or attributable to its wilful
misconduct or gross negligence.
9.5 Resignation; Deemed Offer to Resign The Operator may
resign upon 90 days' prior notice. In addition, the
Operator shall be deemed to have resigned forthwith
upon an Event of Resignation, as defined below and, as
provided in the Intercreditor Agreement, P.T.-RTZ
shall, if at the time of such Event of Resignation,
P.T.-RTZ is an indirect or direct subsidiary of RTZ,
automatically become substitute Operator with respect
to the COW. Similarly, if the Operator shall resign
upon 90 days' prior notice, P.T.-RTZ will become
Operator with respect to the COW if P.T.-RTZ shall at
the time be a direct or indirect subsidiary of RTZ.
For the purposes of this Agreement, an Event of
Resignation shall mean one of the following
occurrences:
- -38-
<PAGE>
9.5.1 an Event of Default shall have occurred under
[ N.B. Insert here details of PT-FI's bank agreement(s)] which
gives the banks a right to cause PT-FI to
resign as Operator and the banks have
elected to exercise such right; or
9.5.2 the Government has given PT-FI a notice of
default under Article 20 of the COW and
PT-FI has not within 30 days (unless the
default relates to failure to make
payments pursuant to Article 12 or 13 of
the COW, in which event 20 days) after
receipt thereof either corrected such
default or obtained the withdrawal or stay
of such notice, unless the question has
been submitted to arbitration, in which
event it shall be an Event of Resignation
if PT-FI has not corrected such default
within 10 days after affirmation of such
default by arbitration; or
9.5.3 FCX and its Affiliates shall cease to own at
least such number of shares of the capital
stock of PT-FI as shall permit FCX and its
Affiliates to elect a majority of the
board of directors and of the board of
commissioners of PT-FI; or
9.5.4 any person shall, except with the consent of
RTZ, acquire such number of shares of the
capital stock of FCX as shall permit such
person to elect a majority of the board of
directors of FCX; or
9.5.5 a general meeting of shareholders of the
Operator resolves that the Operator be
liquidated or the Operator suffers the
appointment of a receiver, liquidator,
administrator, assignee, custodian,
trustee, sequestrator or similar official
for a substantial part of its assets in a
proceeding brought against or initiated by
it, and such appointment is neither made
ineffective nor discharged within ninety
days after the making thereof or such
appointment is consented to, requested by
or acquiesced in by it; or
9.5.6 the Operator commences a voluntary case under
any applicable bankruptcy, insolvency or
similar law now or hereafter in effect; or
consents to the entry of an order of
relief in an involuntary case under any
such law or to the appointment of or
taking possession by a receiver,
liquidator, administrator, assignee,
custodian, trustee, sequestrator or other
similar official of any substantial part
of its assets; or makes a general
assignment for the benefit of creditors;
or
9.5.7 entry is made against the Operator of a
judgment, decree or order for relief by a
court of competent jurisdiction in an
involuntary case commenced against the
Operator under any applicable bankruptcy,
- -39-
<PAGE>
insolvency or other similar law of any jurisdiction now or
hereafter in effect.
[Events to be reviewed when Intercreditor Agreement
finalised]
9.6 Transactions With Affiliates If the Operator engages
an Affiliate of either Participant to provide services
hereunder or to perform any of the obligations of the
Operator, it shall do so on terms no more favourable
to the Affiliate than would be the case with an
unrelated person in an arm's length transaction
provided that arrangements with Affiliates consistent
with the Management Services Agreement presently in
existence between Freeport-McMoRan Inc. and PT-FI or
between FCX and PT-FI, and substitute arrangements no
more onerous to PT-FI, shall not constitute a
violation of the foregoing.
10. FEASIBILITY STUDY INTO EXPANSION
10.1 At such time (whether before or after the Effective
Date) as a Participant is of the good faith and
reasonable opinion that an economically viable project
of Expansion or Development may be possible in any
area of the Contract Area (the "Specified Area") (the
"Expansion Project"), such Participant (the "Proposing
Participant") may propose that a Feasibility Study be
prepared to assess the economic viability of such
Expansion Project. Such proposal (the "Proposal")
shall be made to the Operating Committee and shall
detail the information upon which the Proposing
Participant has based its opinion. The Specified Area
shall be defined in terms of a three-dimensional
physical description.
Within 30 days following the Operating Committee's
receipt of the Proposal, the Operating Committee shall
vote whether to authorise the Operator to conduct a
Feasibility Study relating to such Proposal, except
that, if the Proposal relates to an Expansion Project
which satisfies the criteria specified in, or agreed
pursuant to, Clause 10.5 and would be the first
Approved Expansion Project, such approval shall be
deemed to have been given. If the Operating Committee
approves the Proposal, the Operator shall conduct a
Feasibility Study relating thereto. If the Operating
Committee does not approve the Proposal, the Proposing
Participant may, at its sole risk and expense, proceed
with the project as described in the Proposal as a
Sole Risk Programme, to which the provisions of this
Agreement relating to Sole Risk Programmes and Sole
Risk Ventures shall apply.
10.2 Upon completion of any such Feasibility Study as is
referred to in Clause 10.1 (including any initiated
before the Effective Date and completed after
- -40-
<PAGE>
the Effective Date), the Operator will deliver a copy of the
results thereof to the Operating Committee and to the
boards of directors of FCX, PT-FI and P.T.-RTZ
respectively. Within 90 days following receipt of
such results or, if the Expansion Project does not
involve project financing on a joint basis and is not
to be financed through the proceeds of the RTZ Loan
Agreement, then within such additional reasonable
period of time, not exceeding six months, as shall be
necessary for either Participant to receive assurance
of necessary bank financing, the boards of directors
of FCX and PT-FI, on one hand, and of P.T.-RTZ, on the
other, shall either
10.2.1 approve, and authorise the commencement of
construction of, the Expansion Project in
accordance with its terms;
10.2.2 agree in principle that the Expansion
Project be carried out as Joint Operations
but disagree as to scope or related
Budget; or
10.2.3 decline to approve the Expansion Project.
10.3 Notwithstanding any other provision of this Agreement
to the contrary, for a period of ten years from the
date hereof, P.T.-RTZ shall have the sole right (i) to
propose as the subject of a Feasibility Study an
Expansion Project which satisfies the criteria
specified in, or agreed pursuant to, Clause 10.5 and
which would be the first Approved Expansion Project
and (ii) to determine that the Expansion Project which
is the subject of such Feasibility Study shall be the
first Approved Expansion Project, for which purpose
the approval of the board of directors of PT-FI shall
be deemed to have been given. Accordingly, whether or
not the board of directors of PT-FI or the board of
directors of FCX approve such Expansion Project, such
Expansion Project shall, provided it is approved by
the board of directors of P.T.-RTZ, be an Approved
Expansion Project for all purposes of this Agreement.
10.4 Except in relation to the Expansion Project falling
within Clause 10.3 as to which the provisions of
Clause 10.3 shall apply, if the boards of directors of
FCX, PT-FI and P.T.-RTZ do not agree on the scope and
Budget of an Expansion Project as mentioned in Clause
10.2.2, the matter shall be left open for an
additional period of 30 days to allow for further
discussion. If the boards of directors shall decline
to approve the Expansion Project within such 30 day
period, the board of directors of the Proposing
Participant may, within a further period of 30 days
thereafter by notice to the other Participant and the
Operator elect, subject, in the case of PT-FI, to the
limitation specified in Clause 7.5.12, to carry out
such Expansion Project as a sole risk venture (a "Sole
Risk Programme") and, unless the other Participant,
within a further period of 30 days after receipt of
the
- -41-
<PAGE>
Proposing Participant's notice of election, elects by written
notice to the Proposing Participant and the Operator
to join in such Sole Risk Programme (in which case the
Expansion Project shall become part of Joint
Operations), the Proposing Participant shall have the
right to carry out the Expansion Project as a Sole
Risk Venture provided that it commences work within
one year after the date of its written election to
carry out such Expansion Project as a Sole Risk
Venture, and provided further that, in the case of any
Sole Risk Programme carried out by P.T.-RTZ, unless
P.T.-RTZ has obtained the prior written consent of PT-
FI, the Sole Risk Programme is not based to any
significant degree on the accelerated mining of the
10-K Reserves.
10.5 No project shall be capable of being the first
Approved Expansion Project unless it is a project for
Expansion which is (a) based on the aggregate of (i)
the 10-K Reserves and (ii) New Reserves of not less
than 400,000,000 tonnes containing an average of 0.5%
copper and 0.5 grammes/tonne of gold (or the economic
equivalent thereof), unless FCX and P.T.-RTZ shall
agree that a smaller reserve would suffice and (b)
designed to result in the treatment of ore mined from
the aggregate resources in Contract Area Block A
(being both the 10-K Reserves and the above-mentioned
New Reserves) at an aggregate rate in excess of
118,000 tonnes per day. In this Clause 10.5, "New
Reserves" means proved and probable ore reserves
situated in Contract Area Block A which are additional
to the 10-K Reserves.
11. GREENFIELD PROJECTS AND LATER EXPANSION PROJECTS
11.1 The Participants will plan together, in accordance
with the procedures set out in Clause 10, the
Development of any new Greenfield Project in Contract
Area Block A or Contract Area Block B, and any project
of Expansion which is to be funded wholly without the
use of the proceeds of the RTZ Loan and the related
direct investment by P.T.-RTZ. The procedures
outlined in Clause 10 and the Financial and Accounting
Procedures will be applicable.
11.2 If any project referred to in Clause 11.1 is to be
developed as part of Joint Operations, the financing
of such project, insofar as it is not to be funded by
way of the RTZ Loan and the related direct investment
by P.T.-RTZ, will be either on a joint basis, in which
event the financing costs will be part of the
Operating Costs for purposes of the Financial and
Accounting Procedures, or on an individual basis, in
which event each Participant will be solely liable for
its financing costs but will be entitled to determine
the form which such financing will take, including, if
such Participant so desires, sale and leaseback
transactions so long as such transactions relate
- -42-
<PAGE>
solely to such Participant's interest in the Joint Account Assets
and do not prejudice or unduly interfere with the
carrying on of Enterprise Operations or previously
established Sole Risk Ventures. The costs and
benefits of any such project carried on as part of
Joint Operations will, subject to the above provisions
of this Clause 11.2 and Clause 6.1 and the Financial
and Accounting Procedures, be borne by the
Participants in proportion to their respective
Participating Interests in Contract Area Block A or
Contract Area Block B, as the case may be.
11.3 If, pursuant to the procedures set out in Clause 10,
any project referred to in Clause 11.1 is not to be
developed as part of Joint Operations, either
Participant may treat the project as a Sole Risk
Venture under the provisions of Clauses 10 and 12.
12. SOLE RISK
12.1 If a Proposing Participant shall proceed with a Sole
Risk Programme and unless otherwise agreed by the
Participants, for so long as the Sole Risk Programme
continues or the Proposing Participant continues to
conduct operations on its own account in the Specified
Area:
12.1.1 the Specified Area shall not be
eligible for Joint Operations and the
Proposing Participant shall have the
exclusive right to carry out the Sole Risk
Programme and any subsequent work
programmes as it may think fit in the
Specified Area at its sole risk and cost
and the other Participant shall, to the
extent necessary and so far as it is able
and without prejudice to the existing
Enterprise Operations, provide full rights
of ingress, egress and regress to, from
and over the Specified Area and the
remainder of the Contract Area so that the
Proposing Participant may exercise such
right. Without prejudice to the
generality of the foregoing, to the extent
that the Sole Risk Venture requires the
use of PT-FI Available Assets and PT-FI
support services, and the use of these
assets and support services does not
prejudice then or later the conduct of
Enterprise Operations, PT-FI will make
available and charge to the Sole Risk
Venture the direct and allocable costs of
providing such assets and services;
12.1.2 the Participant which is not the
Proposing Participant shall cease to have
any rights to the production of Minerals
or proceeds therefrom from operations in
the Specified Area provided that the
rights of the Proposing Participant will
relate solely to the obtaining of
exclusive rights to the proved
- -43-
<PAGE>
and probable reserves in the three-dimensional physical area of
the Specified Area, as described in the
Feasibility Study with respect to the
project in question, to the extent such
reserves constitute the basis for the
project, as presented to the Participants
pursuant to Clause 10, but will not
thereby obtain rights with respect to any
other reserves. Any further Expansion
within the Specified Area, but not
constituting part of the Sole Risk
Programme, will be subject to the
procedure provided in Clause 11 for
approval of Programmes, but with
protections afforded to the holder of the
Sole Risk Programme which are comparable
to those afforded PT-FI with respect to
the 10-K Reserves and the related PT-FI
Available Assets.
12.2 All Sole Risk Programmes shall be conducted by the
Operator appointed under this Agreement, unless it
declines to act as operator with respect thereto, in
which event the operator with respect thereto shall be
the person designated as operator by the Participant
for whose account the Sole Risk Venture is being
conducted, subject to the reasonable approval of PT-
FI. The Operator or other operator shall have, with
respect to the Sole Risk Venture, the same powers,
rights and obligations as are applicable to the
Operator's activities with respect to Enterprise
Operations. In the event of any conflict between the
conduct of Enterprise Operations and a Sole Risk
Programme, the Operator shall give priority to
Enterprise Operations.
12.3 Should the Operator conduct a Sole Risk Programme on
behalf of a Participant which is not also the
Operator, the charges provided for in the Financial
and Accounting Procedures with respect to such Sole
Risk Programme shall be payable or repayable to the
Operator upon demand. The Operator shall be
authorised to establish such procedures as are
reasonably necessary to obtain such payments from
revenues otherwise payable to such Participant or to
issue cash calls with respect thereto to such
Participant.
12.4 Should the board of directors of any Participant
determine, in any Year, not to participate in the
proposed Exploration Programme for such Year as
recommended by the Exploration Committee, or if no
Programme is recommended by the Committee, the board
of directors of either Participant may elect, upon 30
days' notice after having submitted a proposed
Exploration Programme to the other Participant, to
carry out such Programme as a Sole Risk Venture,
unless within such period the other Participant elects
to join in such Programme. If no such election by the
other Participant is made,
- -44-
<PAGE>
(a) if the proposed Programme is in Contract Area
Block B, the declining Participant shall not be
entitled to participate in that or any
subsequent Exploration Programmes or in any
subsequent Development Projects in Contract Area
Block B other than any Development Projects
already begun or pursuant to Exploration
Programmes and subsequent Development Projects
based on Feasibility Studies which have
theretofore been approved [NB This will also
apply in relation to the Eastern Minerals Area]
(b) if the proposed Programme is in Contract Area
Block A, the absence of any such election by the
other Participant shall not affect that other
Participant's rights to participate in any
subsequent Exploration Programmes or in any
subsequent Development Projects except that if
the Participant which carries out the Programme
as a Sole Risk Programme subsequently puts
forward a proposal for Development based on such
Sole Risk Programme, the other Participant shall
not, in reaching a decision whether or not to
participate in such Development Project, be
entitled to see or use any data relating to such
Exploration Sole Risk Programme.
13. PROGRAMMES AND BUDGETS
Joint Operations shall be conducted, expenses shall be
incurred and Joint Account Assets shall be acquired pursuant
only to Approved Programmes and Budgets. The Financial and
Accounting Procedures contains, among other things,
provisions concerning the preparation, review and approval
of Programmes and Budgets.
14. TAXATION IN INDONESIA
It is the intention of the Participants that each of the
Participants should be liable for Indonesian Taxes on income
separately according to its participation in Joint
Operations and any of its Sole Risk Ventures (and with
respect to PT-FI, its interest in the 10-K Reserves and the
other Enterprise Operations). Each Participant shall be
directly responsible for and shall directly pay all such
Taxes applicable to such Participant in Indonesia.
Each Participant shall individually and timely file its own
Indonesian Tax returns with the relevant authorities and
independently file pertinent claims and recover Tax credits
to the extent permitted by applicable law. Each Participant
shall provide to the other promptly all such information
reasonably requested by the other to enable such other to
comply with its obligations under this Clause 14.
Failure by a Participant to make any payment of Indonesian
Income Tax which is due and payable by the Participant and
which would result in a default under the
- -45-
<PAGE>
COW shall entitle the Operator after 3 business days' notice to
the Participant to make the required payment on behalf of
the Participant and withhold such amount from sums otherwise
due to such Participant under this Agreement.
15. TRANSFER OF PARTICIPATING INTERESTS
15.1 General Subject to the provisions of this Clause 15,
a Participant shall have the right to transfer, grant,
assign, and otherwise commit or dispose (all such
rights to be referred to as "transfer" in this Clause
15) to any third party all or any part of its
Participating Interest.
15.2 Limitations on Free Transferability The transfer
right of a Participant in Clause 15.1 shall be subject
to the following terms and conditions:-
15.2.1 no transferee of all or part of its
Participating Interest shall have the
rights of a Participant unless and until
the transferring Participant has provided
to the other Participants notice of the
transfer, and the transferee, as of the
effective date of the transfer, has
committed in writing to be bound by this
Agreement to the same extent and nature as
the transferring Participant;
15.2.2 no transfer permitted by this Clause 15
shall relieve the transferring Participant
of its share of any Liability, whether
accruing before or after such transfer,
which arises out of Joint Operations
conducted after the Effective Date and
prior to such transfer;
15.2.3 the transferring Participant and the
transferee shall indemnify the other
Participant against all adverse tax
consequences of the transfer;
15.2.4 no transfer shall be made of less than a
10% Participating Interest (unless it is
the balance of the transferor's
Participating Interest) and no such
transfer shall result in the transferring
Participant retaining less than a 10%
Participating Interest provided that a
Participant will be entitled, in
connection with the financing of a Sole
Risk Programme or an Approved Programme
and Budget, subject to the other sub-
clauses of this Clause 15.2, to transfer a
partial interest of less than a 10%
Participating Interest, or a partial
interest that relates only to a specific
geographic area, so long as such transfer
and such financing do not materially and
adversely affect any Joint Operations;
15.2.5 no transfer shall be made to a person
which is bankrupt, insolvent, liable to be
wound up, which is not of good financial
standing or
- -46-
<PAGE>
which is otherwise objectionable on reasonable grounds from the
viewpoint of the interests of the
Participation;
15.2.6 such transfer shall be subject to a first
offer right in favour of the other
Participant as provided in Clause 15.3;
15.2.7 such transfer shall in no case affect the
rights of the non-transferring Participant
under the COW;
15.2.8 such transfer shall include the right to
receive revenues from Enterprise
Operations to the extent enjoyed by the
transferor, but shall not include the
right to participate in any Committees
described in Clause 8 of this Agreement or
in Clause 2 of the Implementation
Agreement or to be an Operator as
described in Clause 10 of this Agreement,
unless the non-transferring Participants
consent to the transfer of the right in
question, which consent may be withheld
for any reason; and
15.2.9 such transfer shall be subject to prior
Government approval.
In addition, until the RTZ Loan has been repaid in
full, no transferee of the whole or any part of PT-
FI's Participating Interest in Contract Area Block A
shall have the rights of a Participant unless and
until it has committed in writing to be bound by the
repayment provisions of the RTZ Loan Agreement to the
extent of the Participating Interest transferred.
15.3 First Offer Right Except as otherwise provided in
Clause 15.4, if a Participant desires to transfer all
or any part of its Participating Interest, including
an interest therein that relates only to a specific
geographic area, it shall first offer to sell such
part to the other Participant on terms to be agreed.
The Participants shall thereupon use all reasonable
endeavours to agree the terms of the sale. If despite
using all such reasonable endeavours, the Participants
fail to agree on the terms of the sale within a period
of 60 days after the date of the offer referred to in
this Clause 15.3, the Participant desiring to sell
shall have the right for the period of 180 days
following the expiry of such 60 day period to sell
such part of its Participating Interest to a third
party. If the Participant desiring to sell shall fail
to consummate such a sale to any third party within
180 days after such Participant shall become entitled
hereunder to sell to such third party, no sale or
transfer may thereafter be made by such Participant
without again complying with the provisions of this
Clause 15.3.
15.4 Exceptions to First Offer Right Clause 15.3 shall not
apply to the following transfers:-
- -47-
<PAGE>
15.4.1 transfer by a Participant of all or any
part of its interest in this Agreement or
any Participating Interest to an
Affiliate;
15.4.2 corporate merger, consolidation,
amalgamation or reorganisation of a
Participant for the purposes of a
financial reconstruction;
15.4.3 transfers among Participants which are
expressly required or permitted by the
provisions of this Agreement.
16. GENERAL PROVISIONS
16.1 Notices All notices, payments and other required
communications hereunder ("Notice") between the
parties shall be in writing and shall be addressed,
respectively, as follows: All Notices shall be given
(a) by personal delivery to each of the other parties,
or (b) by electronic communication, with a
confirmation sent by registered or certified mail,
return receipt requested. All Notices shall be
effective and shall be deemed delivered (i) if by
personal delivery on the date of delivery and (ii) if
by electronic communication on the date of receipt of
the electronic communication. A party may change its
address from time to time by Notice to the other
parties.
If to PT-FI: [_________________________________
__________________________________
__________________________________
__________________________________
Attention:
_________________________________]
If to P.T.-RTZ: [_________________________________
__________________________________
__________________________________
__________________________________
Attention: The Company Secretary
_________________________________]
16.2 Waiver The failure of a party to insist on the strict
performance of any provision of this Agreement or to
exercise any right, power or remedy upon a breach
hereof shall not constitute a waiver of any provision
of this Agreement or limit the party's right
thereafter to enforce any provision or exercise any
right.
16.3 Modification No modification or amendment of this
Agreement shall be valid unless made in writing and
duly signed by all the parties. If, in the
- -48-
<PAGE>
event of experience gained through the operation of this
Agreement, the parties agree that application of any
of its provisions results in a material inequity to
(a) party(ies), then the parties agree that they will
meet to discuss possible changes in such provision(s)
proposed by one or more parties as a means of
obviating such inequity.
16.4 Force Majeure
16.4.1 The obligations of a Participant, other
than the payment of money provided
hereunder, shall be suspended and any
period of time mentioned in this Agreement
shall be extended to the extent and for
the period that performance or the ability
of one or both of the Participants to
exercise rights or carry out obligations
or otherwise act as permitted by or in
accordance with this Agreement is
prevented by any cause, whether
foreseeable or unforeseeable, beyond its
reasonable control, including, without
limitation, labour disputes (however
arising and whether or not employee
demands are reasonable or within the power
of the Participant to grant); acts of God;
laws, regulations, orders, proclamations,
instructions or requests of any government
or governmental entity; judgments or
orders of any court; inability to obtain
on reasonably acceptable terms any public
or private exploration or exploitation,
right, licence, permit or concession;
curtailment or suspension of activities to
remedy or avoid an actual or alleged,
present or prospective violation of
federal, state or local environmental
standards; acts of war or conditions
arising out of or attributable to war,
whether declared or undeclared; riot,
civil strife, insurrection or rebellion;
fire, explosion, earthquake, storm, flood,
sink holes, drought or other adverse
weather condition; delay or failure by
suppliers or transporters of materials,
parts supplies, services or equipment or
by contractors or sub-contractors'
shortage of, or inability to obtain,
labour, transportation, materials,
machinery, equipment, supplies, utilities,
or services; accidents; breakdown of
equipment, machinery or facilities; or any
other cause, whether similar or dissimilar
to the foregoing. The affected
Participant shall promptly give notice to
the other Participant of the suspension of
performance, stating therein the nature of
the suspension, the reasons therefor and
the expected duration thereof. The
affected Participant shall resume
performance as soon as reasonably
possible. During the period of
suspension, the obligations of the
Participants to advance funds pursuant to
paragraph 10.3 of the Financial and
Accounting Procedures shall be reduced to
levels consistent with the Joint
Operations which are capable of being
carried on in the circumstances.
- -49-
<PAGE>
16.4.2 Should any of the causes referred to in
Clause 16.4.1 result in the actual
production of Products from Enterprise
Operations (other than Greenfield
Projects) in Contract Area Block A in any
Year (the "Actual Production") falling
short of the planned production of such
Products for the Year as shown in the then
current programme and budget (which, in
the case of Joint Operations, shall be the
Approved Programme and Budget) for that
Year (the "Planned Production") , the
Product Schedule shall be amended as
follows:
(i) The scheduled production of Products for
the Year in question as shown in the
Product Schedule shall be reduced in
accordance with the following formula:
A
D = - x C
B
where D is the revised scheduled production for the Year in
question, A is the Actual Production, B is
the Planned Production and C is the
scheduled production of Products for that
Year as shown in the Product Schedule
prior to the occurrence of the cause and
the production which is D shall be
substituted in the Product Schedule as the
scheduled production of Products for the
Year in question.
(ii) The shortfall in production being C - D
(as defined in (i) above) shall be added
to the final Year of production as shown
by the Product Schedule prior to the
occurrence of the cause or causes. If, in
the final Year, the scheduled production
as so revised would exceed the production
which would result from a daily rate of
118,000 tonnes per day, the excess shall
be carried forward to the subsequent Year
(and the Cut-off Date shall be extended
accordingly) and appropriate adjustments
made to the production of recovered metal
for that Year.
16.5 Governing Law
16.5.1 This Agreement shall be governed by and
construed in accordance with the laws of
the State of New York.
16.5.2 Each of the parties irrevocably agrees
that any suit, action or proceedings
(together in this Clause 16.5 referred to
as "Proceedings") arising out of or in
connection with this Agreement shall be
brought in any United States Federal or
New York State court sitting in the
borough of Manhattan, City of New York
and, except for the purposes of or
Proceedings regarding enforcement, which
may take place in any relevant
jurisdiction, submits to the exclusive
jurisdiction of the courts in such
borough.
- -50-
<PAGE>
16.5.3 Each of the parties irrevocably waives any
objection which it may have now or
hereafter to the laying of venue of any
Proceedings in any such court as is
referred to in this Clause 16.5 and any
claim that any such Proceedings have been
brought in an inconvenient forum. Each of
the parties hereby to the fullest extent
permitted by law waives any right it may
have to have any Proceedings take the form
of a trial by jury.
16.5.4 Each of the parties hereby irrevocably
designates, appoints and empowers, in the
case of the United States Federal Courts
in New York and the New York State courts,
CT Corporation System, having offices at
the date hereof at 1633 Broadway, New
York, N.Y. 10019, U.S.A. to receive, for
and on behalf of itself, service of
process in such jurisdictions in any legal
action or proceedings with respect to this
Agreement or any judgment in connection
herewith and agrees that failure by such
process agent to give notice of such
service of process to it shall not impair
or affect the validity of such service or
of any judgment based thereon.
16.6 Penalties It is agreed between the parties that,
while the percentage and rate set out in Clause
6.3.2.3 and paragraph 10.3.3 of the Financial and
Accounting Procedures are considered fair and
reasonable and a genuine pre-estimate of the loss to
the non-Defaulting Participants, if it should be found
that either of such percentage and rate be
unenforceable as going beyond what is fair and
reasonable or a genuine pre-estimate in the
circumstances and if by substituting a different
percentage or rate for the percentage or rate set out
in Clause 6.3.2.3 or paragraph 10.3.3 of the Financial
and Accounting Procedures it would be enforceable,
then there shall be substituted such next high
percentage or rate as shall render Clause 6.3.2.3 or
paragraph 10.3.3 of the Financial and Accounting
Procedures valid and enforceable.
16.7 Rule Against Perpetuities Any right or option to
acquire any interest in real or personal property
under this Agreement must be exercised, if at all, so
as to vest such interest in the acquirer within
twenty-one years less one day after the death of the
last known descendent of Queen Victoria alive on the
Effective Date.
16.8 Further Assurances Each of the Participants agrees
that it shall take from time to time such actions and
sign or execute such additional instruments as may be
reasonably necessary or convenient to implement and
carry out the intent and purpose of this Agreement.
- -51-
<PAGE>
16.9 Confidentiality and Public Statements Except as
otherwise provided in this Clause 16.9, the terms and
conditions of this Agreement, and all data, reports,
records and other information of any kind whatsoever
developed or acquired by any Participant in connection
with this Participation, shall be treated by the
Participants as confidential (hereinafter called
"Confidential Information"), and no Participant shall
reveal or otherwise disclose such Confidential
Information to third parties without the prior written
consent of the other Participant(s). The foregoing
restrictions shall not apply to the disclosure of
Confidential Information pursuant to the terms of the
COW or the request of the Government, the laws, rules
and regulations administered by the Securities &
Exchange Commission or the rules of any stock or
securities exchange on which the shares or stock of
either of the Participants or any of its Affiliates
may from time to time be listed or to any Affiliate
(other than CRA Limited and any of its subsidiaries
unless and until CRA Limited becomes a subsidiary of
RTZ), to any public or private financing agency or
institution, to any contractors or subcontractors
which the Participants may engage and to employees and
consultants of the Participants or to any third party
to which a Participant contemplates the transfer,
sale, assignment, encumbrance or other disposition of
all or part of its Participating Interest pursuant to
Clause 16; provided that in any such case only such
Confidential Information as such third party shall
have a legitimate business need to know shall be
disclosed, and the person or company to whom
disclosure is made shall first undertake in writing to
protect the confidential nature of such information at
least to the same extent as the parties are obligated
under this Clause 16.9. In addition, (a) the
foregoing restrictions shall not apply to Confidential
Information which otherwise comes into the public
domain and (b) notwithstanding anything to the
contrary in this Clause 16.9, each Participant is
permitted to use and disclose data arising from the
Participation in its annual audited financial
statements and notes thereto.
In the event that a Participant is required to
disclose Confidential Information to any government
and appropriate agencies and departments thereof, to
the extent required by law or in response to a
legitimate request for such Confidential Information,
the Participant so required shall immediately and
prior to any disclosure notify the other Participants
hereto of such requirement and the terms thereof prior
to such submission.
The provisions of this Clause 16.9 shall apply during
the term of this Agreement and shall continue to apply
to any Participant which forfeits, surrenders,
assigns, transfers or otherwise disposes of its
Participating Interest for one year following the date
of such occurrence.
- -52-
<PAGE>
Except as may be required by applicable law or any
listing agreement with any national securities
exchange or the rules of any stock exchange on which
the shares or stock of either of the Participants or
any of its Affiliates may from time to time be listed,
no party to this Agreement shall issue any press
release or make any public announcement or public
disclosure with regard to the Participation or its
financial performance or condition, including
Confidential and non-Confidential Information, unless
either (i) a draft of the proposed press release has
been provided to the other party hereto at least
twenty-four hours prior to its proposed release in
order to permit such party to comment thereon or (ii)
such press release or other public statement contains
factual information (or discussion or analysis of or
comment based upon such factual information)
previously provided to such party by the other party
provided that neither will present projections or
forward-looking information that is attributed to the
other party or any of its Affiliates without the prior
written consent of the other party.
16.10 Entire Agreement; Successors and Assigns This
Agreement, together with the Implementation
Agreement and the other documents referred to
therein, contains the entire understanding of
the parties and supersedes all prior agreements
and understandings between the parties relating
to the subject matter hereof. This Agreement
shall be binding upon and inure to the benefit
of the respective successors and permitted
assigns of the parties.
16.11 Severability If part of this Agreement is rendered
illegal, invalid or unenforceable under
applicable law, the remaining clauses of this
Agreement shall continue in force.
16.12 Indonesian Law Waiver Each of the Participants waives
those provisions of Article 1266 of the Civil
Code of the Republic of Indonesia (if and to the
extent that, notwithstanding Clause 16.5, that
Article is applicable to this Agreement) which
would otherwise require the order of a court as
a precondition to termination of this Agreement.
16.13 Tax Covenant
In recognition of the fact that the Participants and
the transactions contemplated by this Agreement may be
affected adversely over the life of the Chargeable
Operations, by the interaction of the laws relating to
Taxes under multiple taxing jurisdictions, the
Participants agree that they will cooperate with a
view to minimizing the adverse tax impact of the
various jurisdictions on the Participants to the
extent such can be accomplished without material
adverse affect on the conduct of the Chargeable
Operations and the other Participant. The
Participants will consult and
- -53-
<PAGE>
work together to ensure that neither party takes any action which
prejudices the Tax position of the other. The
Participants hereby agree that each will endeavour to
make such adjustments in the way in which Chargeable
Operations are conducted, or in the terms of this
Agreement, or in their other relationships, as may be
reasonably requested by the other Participant to avoid
or minimize any adverse tax impact on such Participant
while taking into account any adverse tax or
operational impact on Chargeable Operations and on the
other Participant.
IN WITNESS WHEREOF the authorised representatives of the parties
hereto have signed this Agreement as of the date first above
written.
- -54-
<PAGE>
SCHEDULE 1
Privatisation Agreements
1. Joint Venture Agreement dated as of March 11, 1993 between
P.T. ALatieF Nusakarya Corporation ("ANC") and PT-FI (the
"ALatief J.V. Agreement").
The ALatief J.V. Agreement provides for the sale and
purchase of US$270 million of infrastructure assets
consisting primarily of warehouses, a hotel, housing (single
and multi-family and dormitories), and food service,
medical, retail and recreational facilities by the end of
1995.
Master Services Agreement, dated December 15, 1993 between
Alatief Freeport Infrastructure Corporation ("AFIC") and PT-
FI regarding the operation and management of certain non-
mining infrastructure assets for the benefit of PT-FI, as
amended April 15, 1994 and April 19, 1994.
Master Services Agreement, dated August 11, 1994, between
AFIC and PT-FI regarding the operation and management of
certain non-mining infrastructure assets for the benefit of
PT-FI.
Master Services Agreement, dated August 11, 1994 between
Alatief Freeport Hotel Corporation ("AFHC") and PT-FI
regarding the provision of hotel management services for the
Sheraton Inn at Timika.
Management Contract, dated October 28, 1993 between PT-FI
and Indo-Pacific Sheraton Limited regarding the management
of the Sheraton Inn at Timika which was assigned by Indo-
Pacific Sheraton Limited to Sheraton Overseas Management
Corporation on October 28, 1993. By Assignment, dated
August 11, 1994 PT-FI assigned its rights and obligations
under such Contract and other hotel privatisation agreements
to AFHC.
As of April 1995, transactions involving the sale of
approximately US$198 million of infrastructure assets have
been closed with P.T. ALatief Freeport Infrastructure
Company ("AFIC") purchasing approximately US$156 million and
P.T. ALatief Freeport Hotel Company ("AFHC") purchasing
US$42 million. AFIC and AFHC are each owned 2/3rds by ANC
and 1/3rd by PT-FI.
ANC and PT-FI are currently discussing amending the ALatief
J.V. Agreement to add additional infrastructure assets,
thereby increasing the total amount of the infrastructure
sales provided for in the ALatief J.V. Agreement to
approximately US$350-450 million, and to restructure
financing for the transaction on more favourable terms.
- -55-
<PAGE>
2. Asset Purchase Agreement dated as of December 26, 1994
between P.T. Puncakjaya Power ("PTPJP") and PT-FI (the
"Asset Purchase Agreement").
The Asset Purchase Agreement provides for the sale and
purchase of US$215 million of infrastructure assets
consisting primarily of electric power generation and
transmission facilities by the end of 1995.
Power Sales Agreement, dated as of December 27, 1994 between
P.T. Puncakjaya Power ("Seller") and P.T. Freeport Indonesia
Company ("Buyer") providing for Seller to make available,
sell and deliver to Buyer and to certain designees of Buyer,
and for Buyer to purchase from Seller, certain electric
capacity and electricity.
Operation, Maintenance and Management Agreement, dated and
effective as of January 30, 1995, between P.T. Puncakjaya
Power ("Owner") and P.T. Nusantara Power Services
("Operator") providing for Operator to furnish certain
services to Owner on a cost reimburable basis for the
operation, maintenance and management of the Mill Site
Facility, the Timika Facility, the New Town Facility, the
Milepost 38/39 Facility and the Port Site Facility.
As of April 1995, transactions involving the sale of US$100
million of infrastructure assets had been closed.
3. Purchase and Sale Agreement dated as of March 22, 1995
between ANC, P&O Singapore Pte. Ltd., P.T. ALatief P&O Port
Development Company and PT-FI (the "Purchase and Sale"
Agreement").
Master Services Agreement, dated March 22, 1995 between P.T.
Alatief P & O Port Development Company ("PTAPPDC") and PT-FI
regarding the operation and management of the port, marine
and logistics assets by PTAPPDC for the benefit of PT-FI.
The Purchase and Sale Agreement provides for the purchase
and sale of US$100 million of infrastructure assets
consisting primarily of tugboats, motorised barges, wharfs
and warehouses, cranes and other cargo handling equipment,
concentrate drying equipment, heavy trucks and maintenance
facilities. This transaction was closed on March 22, 1995.
4. Joint Venture Agreement dated as of March 18, 1994 among
P.T. Airfast Indonesia, P.T. Giga Haksa and PT-FI (the
"Aviation J.V. Agreement").
The Aviation J.V. Agreement provides for the sale and
purchase of approximately US$48 million of infrastructure
assets consisting primarily of aircraft and helicopters,
spare parts and aviation support facilities by the end of
1995.
- -56-
<PAGE>
The transaction is expected to close in 1995.
5. PT-FI is currently negotiating with an Indonesian company
concerning the sale and purchase of infrastructure assets
constituting essentially all of PT-FI's potable water
treatment and distribution facilities and sewerage treatment
and collection facilities. PT-FI expects to enter into
agreements resulting in the closing of a sale of such assets
in 1995 or 1996.
6. PT-FI is currently negotiating with an Indonesian company
concerning the sale and purchase of infrastructure assets
constituting essentially all of PT-FI's solid waste
treatment, storage and disposal facilities. PT-FI expects
to enter into agreements resulting in the closing of a sale
of such assets in 1995 or 1996.
7. PT-FI is currently negotiating with certain Indonesian
companies concerning the sale and purchase of infrastructure
assets constituting a steel fabrication shop and industrial
gases plant. PT-FI expects to enter into agreements
resulting in the closing of a sale of such assets in 1995 or
1996.
8. PT-FI has filed, and expects to shortly receive approval for
the formation of a service company tentatively named Mining
Services Company International ("MSCI"). It is expected
that in 1995 or 1996 MSCI will enter into agreements for the
provision of certain mining related services to PT-FI, PT-
IRJA, other related companies, and potentially third
parties. It is not anticipated that any significant amount
of assets will be transferred to the MSCI, although PT-FI
personnel may be transferred to MSCI.
- -57-
<PAGE>
SCHEDULE 2
Deed of Assignment of Interest in COW
ASSIGNMENT OF INTEREST
THIS AGREEMENT is made the day of 1995
between PT Freeport Indonesia Company, a corporation organised and
existing under the laws of Indonesia (hereinafter referred to as
the "Assignor") and PT-RTZ, a corporation organised and existing
under the laws of Indonesia (hereinafter referred to as the
"Assignee").
WHEREAS, the Assignor has a 100% undivided ownership interest in
and to the Contract of Work made 30 December 1991 between the
Minister of Mines and Energy of the Republic of Indonesia, acting
for and on behalf of the Government of the Republic of Indonesia,
and the Assignor (hereinafter referred to as the "Contract of
Work");
AND WHEREAS, under the terms of the Contract of Work the Assignor
is now conducting certain development, mining and processing
activities in the Contract Area Block A (as defined in the
Contract of Work) and is implementing a plan for expansion of the
capacity of its facilities for treatment of ore mined from
Contract Area Block A to a design rate of 118,000 metric tonnes
per day (hereinafter, together with all assets and rights reserved
to PT-FI pursuant to the terms of the Participation Agreement,
referred to as the "Existing Project");
AND WHEREAS under the terms of a Participation Agreement made
[ ] between the Assignor and the Assignee
(hereinafter called the "Participation Agreement") the Assignee is
entitled at this time to an assignment of a 40% undivided
ownership interest in and to the Contract of Work subject to the
rights and obligations of the parties in relation to the Existing
Project, as set out in the Participation Agreement.
NOW, THEREFORE THIS AGREEMENT WITNESSES that, in consideration of
the mutual covenants and agreements herein contained and subject
to the terms and conditions hereinafter set out, the Parties
hereto agree as follows:
1. The Assignor does hereby assign, set over, transfer and
convey unto the Assignee a 40% undivided ownership interest
in and to the Contract of Work and all benefit and advantage
derived or to be derived therefrom (subject to the rights
and obligations of the parties in relation to the Existing
Project as set out in the Participation Agreement)
(hereinafter called the "Assigned Interest") to have and to
hold the same unto the Assignee on the terms, conditions and
obligations contained in the Contract of Work insofar as
they relate to the Assigned Interest.
- -58-
<PAGE>
This Assignment is subject to all terms and conditions of the
Participation Agreement.
2. The Assignee hereby accepts the assignment of the Assigned
Interest and covenants and agrees that it shall, at all
times hereafter be bound by, observe and perform all of the
provisions of the Contract of Work to be observed and
performed by the Assignor, insofar as they relate to the
Assigned Interest, to the same extent as if the Assignee had
been a party thereto in the place and stead of the Assignor
in respect of the Assigned Interest.
3. PTFIC shall remain responsible to the Government of the
Republic of Indonesia for the conduct of all operations
under the Contract of Work and for all communications with
the Government of the Republic of Indonesia under the
Contract of Work on behalf of itself and PT-RTZ.
4. The undivided ownership interest in and to the Contract of
Work as at the Effective Date after giving effect to the
assignment of the Assigned Interest and subject to the
rights and obligations of the parties in relation to the
Existing Project as set out in the Participation Agreement
shall be as follows:
(i) PT Freeport Indonesia Company 60%
(ii) PT-RTZ 40%
5. Each of the Assignor and the Assignee covenants and agrees
with the other of them that at the request [and cost] of the
other it will execute such further assurances and do all
such further acts as may reasonably required for the purpose
of vesting the Assigned Interest in the Assignee.
6. The address of the Assignee for notices shall be:
[ ]
7. This Assignment shall enure to the benefit of and be binding
on the Parties hereto and their respective successors and
assigns.
IN WITNESS WHEREOF the Parties have executed this Assignment on
the date first stated above.
PT FREEPORT INDONESIA COMPANY
By: ...........................................................
Title: President Director/Attorney-in-fact
- -59-
<PAGE>
PT-RTZ
By: ...........................................................
Title: President Director/Attorney-in-fact
- -60-
<PAGE>
SCHEDULE 3
Exceptions to Representations and Warranties
A. PT-FI
4.1.2
None.
4.2.9 and 4.2.10
1. Assignment of the Contract of Work pursuant to the
Trust Agreement dated as of May 15, 1970, as amended
and restated, between PT-FI and First Trust, National
Association (successor to Morgan Guaranty Trust
Company of New York).
2. Assignment to Privatisation counterparties specified
in Schedule 1 of rights to use, occupy and construct
facilities on certain parcels of land on which
infrastructure assets are situated which have been
sold by PT-FI to such entities, and rights to pass
over other land as reasonably necessary to gain
ingress and egress to such parcels.
B. P.T.-RTZ
- -61-
<PAGE>
P.T. FREEPORT INDONESIA COMPANY
By : _____________________________________
Its : _____________________________________
[P.T.-RTZ]
By : _____________________________________
Its : _____________________________________
- -62-
<PAGE>
ANNEX A
Product Schedule
Recovered Metal in Concentrate
Year Cu (mil. lbs) Au (000 oz.) Ag (000 oz.)
1995 1,029 1,318 2,872
1996 1,085 1,379 2,828
1997 1,140 1,791 2,969
1998 1,033 1,365 3,275
1999 1,165 1,503 3,822
2000 1,069 1,262 4,103
2001 1,132 1,397 3,943
2002 1,090 1,375 3,795
2003 1,082 1,610 4,045
2004 1,052 1,657 3,703
2005 1,082 1,695 3,730
2006 1,099 1,653 3,934
2007 1,099 1,631 4,045
2008 1,110 1,614 4,158
2009 1,107 1,589 4,203
2010 1,099 1,567 4,296
2011 1,049 1,269 4,138
2012 1,035 1,283 4,010
2013 1,066 1,471 4,268
2014 1,066 1,461 4,277
2015 1,057 1,493 4,156
2016 1,044 1,529 3,768
2017 1,008 1,589 3,359
2018 1,008 1,589 3,359
2019 1,024 1,589 3,396
2020 1,027 1,593 3,405
2021 219 344 716
TOTAL 28,076 39,616 98,573
- -63-
<PAGE>
ANNEX B
Financial and Accounting Procedures
1. Accounting Definitions
Terms which are not defined in this Annex shall have the
meaning ascribed to them in the Agreement of which this
Annex B is a part.
1.1 Definitions Applicable to Contract Area Block A and
Contract Area Block B
A. "AFE" means an authorisation for expenditures in
relation to a capital expenditure project.
B. "Capital Costs" means all expenditures incurred
in connection with or allocable to a capital
project including fully loaded labour,
materials, equipment and contractors' costs,
engineering, procurement, including freight
costs and handling, construction and management
costs, allocated owners' cost, infrastructure
and logistic support, support costs, Taxes other
than those imposed on net income of the
Participants, general and administrative costs,
land acquisition and preparation costs (if any),
legal and regulatory costs, pre-stripping and
pre-production costs, initial fill, spares and
consumables, capitalised finance costs, and any
associated working capital, but excluding
depreciation, non-cash charges, interest (other
than capitalised finance costs), payments in the
nature of principal and interest under
Privatisation Agreements, and accounting
provisions and reserves.
Capital Costs shall not include any Exploration
Costs.
C. "Chargeable Operations" means operations,
including support activities, related to Mining
and Processing of Minerals and marketing and
delivery of Products produced from the Contract
Area and excluding (i) any operations or
activities of PT-FI not related to or associated
with the Contract Area and (ii) any operations
or activities of parties subject to the
Privatisation Agreements to the extent that they
are operations or activities of third parties
unconnected with Enterprise Operations.
D. "Close-down Costs" means all costs incurred in
or allocable to Close-down, including without
limitation, rehabilitation of the
- -64-
<PAGE>
environment, the removal of buildings, equipment, infrastructure
and other tangible property, costs incurred in
terminating equipment, supply, service and
employment contracts, and costs incurred in
terminating and surrendering the COW. Close-
down Costs shall include all such costs incurred
within the period ten Years prior to the
Anticipated Close-down Date and prior to such
date all such costs shall be treated as
Operating Costs.
E. "Development" means all preparation for the
removal and recovery of Products, including the
construction or installation of a mine or heap
leach facilities, ore and waste handling
facilities, mining equipment, or any other
improvement to be used for Mining, handling,
transportation or milling of Minerals or other
processing or marketing of Products, including
infrastructure and logistic support facilities
associated therewith. It is acknowledged that
certain expenditures may involve activities that
relate to both Exploration and Development. In
such cases, the primary purpose of the activity
related to such expenditure shall govern its
classification as Exploration or Development.
F. "Eastern Minerals COW" means the contract of
work dated 15 August 1994 made between the
Government and P.T. IRJA Eastern Minerals
Corporation with respect to the Contract Area as
therein defined.
G. "Exploration" means all activities, excluding
Development and Mining, directed towards
ascertaining or appraising the existence,
location, quantity, quality or commercial value
of deposits of Minerals (other than the 10-K
Reserves) and the feasibility of Development or
Mining in relation to those deposits. It is
acknowledged that certain expenditures may
involve activities that relate to both
Exploration and Development. In such cases, the
primary purpose of the activity related to such
expenditure shall govern its classification as
Exploration or Development.
H. "Exploration Costs" means all labour, supplies,
equipment, contract costs and other costs
directly attributable or allocable to
Exploration including fully loaded labour,
logistical support costs, facility and other
miscellaneous costs required to support these
activities.
I. "Operating Costs" means the aggregate of:
(a) expenditure, adjusted for changes in
inventory, that is either directly
incurred or allocable to Chargeable
Operations,
- -65-
<PAGE>
including but not limited to production, maintenance and repair
costs, logistical support and freight and
handling costs, infrastructure and support
facility costs (including similar
expenditures under Privatisation
Agreements), Taxes (other than those
imposed on net income of the
Participants), and general and
administrative costs of the kind
identified in PT-FI's annual financial
statements for the period ended 31
December 1994 under the heading "General
and Administrative Costs", but excluding
depreciation, non-cash charges, interest,
payments in the nature of principal and
interest under Privatisation Agreements,
and accounting provisions and reserves;
(b) Replacement Capital Costs in carrying out
Chargeable Operations (including such
expenditures under Privatisation
Agreements); and
(c) the cash element of specific accounting
provisions incurred in the normal course
of business in conducting Chargeable
Operations .
Exploration Costs, Taxes on net income of the
Participants, and financing costs in connection
with any financing arrangement entered into
separately by a Participant (including without
limitation, payments in the nature of principal
and interest under Privatisation Agreements
undertaken separately) shall not be treated as
Operating Costs incurred in carrying out
Chargeable Operations. Financing costs
(including without limitation, payments in the
nature of principal and interest under
Privatisation Agreements) in connection with any
financing arrangement entered into jointly by
the Participants shall be included in Operating
Costs.
J. "Replacement Capital Costs" means Capital Costs
incurred other than for Expansion, a Greenfield
Project or a Sole Risk Venture.
K. "Sales Revenues" means the value of Products
sold based on actual prices realised (or which
would have been realised but for any hedging and
other price protection activities), net of
smelting and refining charges, royalties and
other selling expenses.
- -66-
<PAGE>
1.2 Definitions Applicable to Approved Expansion Projects
Only
A. "Expansion Share of Costs" in any Year means
that proportion of the Operating Costs in
respect of Contract Area Block A in that Year
which is represented by a fraction the numerator
of which is the Incremental Expansion Revenues
for that Year and the denominator of which is
Total Sales Revenues from Contract Area Block A
in that Year, and in any Year where Incremental
Expansion Revenues is nil or deemed to be nil,
"Expansion Share of Costs" shall be nil or be
deemed to be nil.
Operating Costs and Sales Revenues from
Greenfield Projects and Sole Risk Ventures shall
be excluded from this calculation.
B. "Incremental Expansion Cashflow" in any Year
means Incremental Expansion Revenues in that
Year less Expansion Share of Costs in that Year.
C. "Incremental Expansion Revenues" in any Year
means the Sales Revenues in respect of
Incremental Production sold in that Year or part
thereof in which sales of Incremental Production
occurred, with sales from inventory deemed to be
sold on a first-in, first-out basis, and any
negative value of "Incremental Expansion
Revenues" in any Year shall be deemed to be nil
with respect to such period but shall be carried
forward to the next Year in which there are
Incremental Expansion Revenues.
D. "Incremental Production" in any Year means the
excess of:
(i) the actual production in that Year of
Products from Contract Area Block A,
including actual production resulting from
Approved Expansion Projects, but excluding
actual production resulting from
Greenfield Projects and Sole Risk
Ventures; over
(ii) the scheduled production of Products for
such Year as shown in the Product Schedule
(as such schedule may be adjusted pursuant
to Clause 16.4.2 of the Agreement).
Production of Products from Contract Area Block
A at any time prior to the Sharing Commencement
Date shall not be treated as Incremental
Production.
- -67-
<PAGE>
E. "Sharing Commencement Date" means the date
following the commissioning of the first
Approved Expansion Project on which the first
Sales Revenues from such project are accrued.
F. "Total Sales Revenues" in any Year means the
weighted average Sales Revenues of all Products
produced from Contract Area Block A (excluding
Greenfield Projects and Sole Risk Ventures) sold
in that Year.
2. Memorandum Equity Accounts
A separate Memorandum Equity Account will be established by
the Operator for each Participant for each of Contract Area
Block A and Contract Area Block B. Each such Memorandum
Equity Account shall be credited with such Participant's
contribution to Capital Costs (other than Replacement
Capital Costs and Capital Costs for Sole Risk Ventures)
attributable to such Contract Area Block. The Memorandum
Equity Account of each Participant shall be credited with
such Participant's contributions to Capital Costs,
regardless of how such contributions were financed by a
Participant (including funding to PT-FI under the RTZ Loan),
but such Memorandum Equity Accounts shall not be credited
for contributions to Capital Costs financed jointly by the
Participants through project financing which encumbers the
interests of both Participants. Specifically:
(A) Approved Expansion Projects up to $750,000,000. The
first $750,000,000 of Capital Costs incurred pursuant
to AFE's for Approved Expansion Projects shall be
credited 60% to PT-FI's Memorandum Equity Account and
40% to P.T.-RTZ'S Memorandum Equity Account, with
funding for PT-FI's proportionate share of such
Capital Costs being provided pursuant to the RTZ Loan.
(B) Approved Expansion Projects in Excess of $750,000,000.
All Capital Costs incurred pursuant to AFE's for
Approved Expansion Projects in excess of $750,000,000
shall be credited to the Memorandum Equity Account of
each Participant in proportion to its contribution to
such Capital Costs.
- -68-
<PAGE>
3. Exploration Activities
3.1 General Separate accounts will be maintained for
Exploration Costs incurred in respect of Contract Area
Block A and Contract Area Block B and in respect of
the Contract Area as defined in the Eastern Minerals
COW ("Eastern Area").
3.2 Joint Operations Exploration Costs P.T.-RTZ will pay
all Exploration Costs approved by the relevant
Exploration Committee for Exploration in Contract Area
Block A and Contract Area Block B until the
Exploration Obligation has been satisfied, including
the expenditure of not less than $40,000,000 in
respect of Contract Area Block A. Thereafter, the
Participants will pay all Exploration Costs in
proportion to their respective Participating Interests
in Contract Area Block A and Contract Area Block B.
3.3 Exploration Costs for Sole Risk Ventures All
Exploration Costs for a Sole Risk Venture in
Exploration shall be paid by the Participant
undertaking such Sole Risk Venture.
3.4 Statements of Exploration Costs Monthly statements of
Joint Operations Exploration Costs and Sole Risk
Venture Exploration Costs will be prepared by the
Operator and submitted to the Exploration Committee or
the Participant undertaking the Sole Risk Venture, as
appropriate, so that actual Exploration Costs may be
monitored.
3.5 Payment for Exploration Costs Exploration Costs will
be included in the monthly cash calls made pursuant to
paragraph 10.3 of this Annex.
4. Feasibility Studies
4.1 General Separate accounts will be maintained for each
Feasibility Study and will be reported by the Operator
to the relevant Exploration Committee or Operating
Committee, or to the Participant undertaking a Sole
Risk Venture, as appropriate.
4.2 Joint Operations Feasibility Studies Prior to the
date any AFE is approved as a result of a Feasibility
Study, the costs of the Feasibility Study shall be
Exploration Costs. In the event that an AFE is
approved as a result of the Feasibility Study, then
from and after the date that such AFE is approved, any
additional Feasibility Study costs shall be Capital
Costs of the project rather than Exploration Costs.
- -69-
<PAGE>
4.3 Sole Risk Feasibility Studies All costs of a
Feasibility Study of a Sole Risk Venture shall be paid
by the Participant undertaking the Feasibility Study
as a Sole Risk Venture. There shall however be no
reimbursement to the non-participating Participant of
previously incurred costs.
4.4 Statements of Feasibility Study Costs Monthly
statements of the costs of each Joint Operations
Feasibility Study and Sole Risk Venture Feasibility
Study will be prepared by the Operator and submitted
to the relevant Exploration Committee or Operating
Committee or the Participant undertaking the Sole Risk
Venture, as appropriate, so that actual costs of
Feasibility Study may be monitored.
4.5 Payment of Feasibility Study Costs The costs of each
Feasibility Study will be included as Exploration
Costs or, as appropriate, Capital Costs, in the
monthly cash calls made pursuant to paragraph 10.3 of
this Annex.
5. Joint Operations in Contract Area Block A
5.1 Pre-Expansion Period "Pre-Expansion Period" means the
period commencing on the Effective Date and continuing
until the date that the first Approved Expansion
Project in Contract Area Block A has been approved by
the boards of directors of FCX, PT-FI, and P.T.-RTZ
or, pursuant to Clause 10.3, approved by the board of
directors of P.T.-RTZ.
During the Pre-Expansion Period, all revenues from and
all Capital Costs and Operating Costs in respect of
Contract Area Block A are attributable 100% to PT-FI
except for revenues, Capital Costs and Operating Costs
in respect of Joint Operations Greenfield Projects (as
to which paragraphs 5.4 and 6 of this Annex shall
apply) and Sole Risk Ventures undertaken by P.T.-RTZ,
if any (as to which, subject to any express provision
to the contrary in this Annex or the Agreement, P.T.-
RTZ shall be entitled to all revenues attributable).
5.2 Development Period
5.2.1 "Development Period" means the period commencing
with the date that the first Approved
Expansion Project in Contract Area Block A
has been approved by the boards of
directors of FCX, PT-FI and P.T.-RTZ or,
pursuant to Clause 10.3, approved by the
board of directors of P.T.-RTZ and
continuing until the Sharing Commencement
Date.
During the Development Period, all revenues from
Contract Area Block A are attributable 100% to
PT-FI except for revenues in
- -70-
<PAGE>
respect of Joint Operations Greenfield Projects (as to which
paragraphs 5.4 and 6 of this Annex shall apply)
and Sole Risk Ventures undertaken by P.T.-RTZ,
if any (as to which, subject to any express
provision to the contrary in this Annex or the
Agreement, P.T.-RTZ shall be entitled to all
revenues attributable).
During the Development Period, all Capital Costs
and all Operating Costs in respect of Contract
Area Block A are attributable 100% to PT-FI
except for:
(i) all Capital Costs attributable to Approved
Expansion Projects, as to which the
provisions of 5.2.2 of this Annex shall
apply
(ii) all Capital Costs and Operating Costs
attributable to or in respect of Joint
Operations Greenfield Projects as to which
the provisions of paragraphs 5.4 and 6 of
this Annex shall apply
(iii) all costs of Sole Risk Ventures undertaken
by P.T.-RTZ, all of which shall,
subject to any express provision to
the contrary in this Annex or the
Agreement, belong to and be borne by
P.T.-RTZ.
5.2.2 Approved Expansion Projects
5.2.2.1 General For each Approved Expansion
Project, an AFE will be prepared
detailing budgeted expenditures of
Capital Costs anticipated to be
incurred. Separate accounts will be
maintained for each AFE.
5.2.2.2 Allocation of Approved Expansion
Project Development Costs
(a) Approved Expansion Projects up
to $750,000,000 Until such
time as aggregate Capital
Costs for Approved Expansion
Projects reach $750,000,000,
these Capital Costs will be
allocated to and be borne by
the Participants in proportion
to their respective
Participating Interests in
Contract Area Block A and PT-
FI's share will be funded
through the RTZ Loan.
- -71-
<PAGE>
(b) Approved Expansion Projects in
Excess of $750,000,000
Capital Costs for Approved
Expansion Projects after
aggregate Capital Costs for
Approved Expansion Projects
exceed $750,000,000 will be
allocated to and be borne by
the Participants in proportion
to their respective
Participating Interests in
Contract Area Block A.
5.2.3 Statements of Approved Expansion Project
Development Costs Monthly statements of
Approved Expansion Project Development
costs will be prepared by the Operator and
submitted to the Operating Committee so
that actual Development costs may be
monitored.
5.2.4 Payment for Development Costs Payment for
Development Costs will be included in the
monthly cash calls made pursuant to
paragraph 10.3 of this Annex.
5.3 Production Period
5.3.1 "Production Period" means the period commencing
on the Sharing Commencement Date for the
first Approved Expansion Project and
continuing thereafter for so long as Joint
Operations are producing Products from
Contract Area Block A.
During the Production Period, the revenues from
Contract Area Block A shall be allocated between
the Participants as follows:
(a) until and including the Cut-off Date P.T.-
RTZ shall be entitled to such share as is
proportionate to its Participating
Interest in Contract Area Block A of all
Incremental Expansion Revenues and of
revenues related to Joint Operations
Greenfield Projects as provided in
paragraphs 5.4 and 6 of this Annex
(b) after the Cut-off Date, P.T.-RTZ shall be
entitled to such share as is proportionate
to its Participating Interest in Contract
Area Block A of all revenues derived from
Joint Operations in Contract Area Block A
(c) P.T.-RTZ shall be entitled to all revenues
attributable to Sole Risk Ventures
undertaken by P.T.-RTZ
- -72-
<PAGE>
(d) PT-FI shall be entitled, as between the
Participants, to all revenues from
Contract Area Block A other than those
allocated to P.T.-RTZ pursuant to sub-
paragraphs (a), (b) and (c) above.
During the Production Period, the costs of or
attributable to Contract Area Block A shall be
allocated to and borne by the Participants as
between themselves as follows:
(i) until and including the Cut-off Date,
P.T.-RTZ shall be obliged to contribute
such share of the following costs as is
proportionate to its Participating
Interest in Contract Area Block A and of
no other costs of or attributable to
Contract Area Block A:
(A) Expansion Share of Costs
(B) Capital Costs of Approved Expansion
Projects only
(C) Joint Operations Greenfield Projects
(ii) after the Cut-off Date, P.T.-RTZ shall be
obliged to contribute such share of
Operating Costs and of Capital Costs of
Joint Operations in Contract Area Block A
other than Sole Risk Ventures as is
proportionate to its Participating
Interest in Contract Area Block A
(iii) the costs of or attributable to each Sole
Risk Venture in Contract Area Block
A undertaken by P.T.-RTZ shall be
allocated to and borne by P.T.-RTZ
(iv) all costs of or attributable to operations
in Contract Area Block A other than those
allocated to and borne by P.T.-RTZ
pursuant to sub-paragraphs (i), (ii) or
(iii) above shall, as between the
Participants, be allocated to and borne by
PT-FI.
5.3.2 General Each month during the Production Period
prior to the Cut-off Date, Incremental
Expansion Cashflow shall be computed by
the Operator and distributed to the
Participants in proportion to their
Participating Interests in Contract Area
Block A; provided however, PT-FI shall
assign to [RTZ UK Lender] all of its
interest in such distributions of
Incremental Expansion Cashflow pursuant to
the RTZ Loan Agreement until such RTZ Loan
has been repaid (including, for the
avoidance of doubt, all interest under the
RTZ
- -73-
<PAGE>
Loan Agreement). Each month during the Production Period from and
after the Cut-off Date, all revenues and
costs in respect of Joint Operations in
Contract Area Block A shall be considered
in determining the amount to be
distributed to the Participants in
proportion to their Participating
Interests in Contract Area Block A.
(a) Incremental Expansion Revenue Each month
during the Production Period, Incremental
Expansion Revenue will be computed by the
Operator and included in the computation
of Incremental Expansion Cashflow for such
month.
(b) Expansion Share of Costs Each month
during the Production Period, Expansion
Share of Costs will be computed by the
Operator and included in the computation
of Incremental Expansion Cashflow for such
month.
(c) Incremental Expansion Cashflow Each month
during the Production Period, Incremental
Expansion Cashflow will be computed by the
Operator and distributed to the
Participants or, in the case of PT-FI, its
assignee for the time being, in the
proportions attributable to each not later
than the 20th business day after the end
of the month. The amount distributed will
be based on the best estimate of
Incremental Expansion Revenue less
Expansion Share of Costs for such month.
(d) Statements of Incremental Expansion
Cashflow Monthly statements will be
prepared by the Operator showing details
of the Incremental Expansion Cashflow
computation. A copy of the statements
will be distributed to the Participants
not later than the 20th business day after
the end of the month.
(e) Adjustment Any adjustment that is
determined to be required at any time
shall be included in the next monthly
statement.
(f) Annual Adjustment Not later than 45
business days after the end of each Year
during the Production Period, a statement
of the previous Year's Incremental
Expansion Cashflow shall be prepared by
the Operator and distributed. If the
annual settlement statement indicates an
overpayment of Incremental Expansion
Cashflow, each Participant shall pay the
Operator its share of such overpayment
within 30
- -74-
<PAGE>
business days. If the annual settlement statement indicates an
underpayment of Incremental Expansion
Cashflow, the Operator shall pay to each
Participant its share of such underpayment
within 30 business days.
5.4 Joint Operations Greenfield Projects in Contract Area
Block A Joint Operations Greenfield Projects in
Contract Area Block A will be accounted for in a
manner comparable to that provided in paragraph 6 of
this Annex in respect of Joint Operations in Contract
Area Block B. All costs, including allocable costs,
of and revenue related to Greenfield Projects in
Contract Area Block A will be excluded from costs of
and revenues derived from other operations in Contract
Area Block A.
6. Joint Operations in Contract Area Block B
6.1 Development Phase "Development Phase" means the
period commencing with the date on which the first
Joint Operations Greenfield Project in Contract Area
Block B has been approved by the boards of directors
of PT-FI and P.T.-RTZ and continuing until the date
following commissioning of such project on which the
first Sales Revenues from such project are accrued.
6.1.1 General For each Joint Operations Development
project, an AFE will be prepared by the
Operator detailing budgeted expenditures
of Capital Costs anticipated to be
incurred. Separate accounts will be
maintained for each AFE.
6.1.2 Allocation of Joint Operations Development Costs
All Capital Costs incurred in Joint
Operations in Contract Area Block B will
be allocated to and borne by the
Participants in proportion to their
respective Participating Interests in
Contract Area Block B and included in
monthly cash calls made pursuant to
paragraph 10.3 of this Annex.
6.1.3 Statements of Development Costs Monthly
statements will be prepared by the
Operator showing details of Joint
Operations Development costs. These
statements will be submitted to the
Operating Committee not later than the
20th business day after the end of the
month so that actual Joint Operations
Development costs may be monitored.
6.1.4 Payment for Development Costs Payment for
Development costs will be included in the
monthly cash calls made pursuant to
paragraph 10.3 of this Annex.
- -75-
<PAGE>
6.2 Production Phase "Production Phase" means the period
commencing on the date following commissioning of the
first Joint Operations Greenfield Project on which the
first Sales Revenues from such project are accrued and
continuing for so long as Joint Operations are
producing Products from Contract Area Block B.
6.2.1 General During the Production Phase, all
revenues and costs in respect of Joint
Operations in Contract Area Block B shall
be allocated to and be borne by the
Participants in proportion to their
Participating Interests in Contract Area
Block B. All revenues and costs in
respect of Joint Operations in Contract
Area Block B shall be considered in
determining the amount to be distributed
to the Participants in proportion to their
respective Participating Interests in
Contract Area Block B.
(a) Revenue Each month during the Production
Phase, the revenues that result from Joint
Operations in Contract Area Block B will
be computed by the Operator and included
in the computation of cashflow from Joint
Operations in Contract Area Block B for
such month.
(b) Operating Costs Each month during the
Production Phase, the Operating Costs that
result from Joint Operations in Contract
Area Block B will be computed by the
Operator and included in the computation
of cashflow from Joint Operations in
Contract Area Block B for such month.
(c) Cashflow Each month during the Production
Phase, the cashflow will be computed by
the Operator by subtracting Operating
Costs that result from Joint Operations in
Contract Area Block B from revenues that
result from Joint Operations in Contract
Area Block B and the net amount of this
calculation will be distributed to the
Participants in the proportions to which
they are entitled not later than the 20th
business day after the end of the month.
The amount distributed will be based on
the best estimate of revenues and
Operating Costs from Contract Area Block B
for such month.
(d) Statements of Cashflow Monthly statements
will be prepared by the Operator showing
details of the cashflow computation and
delivered to the Participants not later
than the 20th business day after the end
of the month.
- -76-
<PAGE>
(e) Adjustment Any adjustment that is
determined to be required at any time
shall be included in the next monthly
statement.
7. Accounting for Sole Risk Ventures
7.1 Conduct of Operations Upon the establishment of a
Sole Risk Venture, the Operator, as determined
pursuant to the Agreement, or some other entity
selected as operator of the Sole Risk Venture in
accordance with the Agreement (also in this Annex
referred to as the Operator), will be responsible for
the conduct of the operations of such venture,
including its accounting requirements, and will be
paid a reasonable fee for such services.
7.2 Determination of Costs and Revenues Separate accounts
will be maintained for each Sole Risk Venture. All
costs, including allocable costs, of and revenue
related to Sole Risk Ventures will be excluded from
the costs of and revenues derived from Enterprise
Operations.
7.3 Use of PT-FI Available Assets To the extent that the
Sole Risk Venture requires the use of PT-FI Available
Assets and PT-FI support services, and the use of
these assets and support services does not prejudice
then or later the conduct of Enterprise Operations,
PT-FI will make available and charge to the Sole Risk
Venture the direct and allocable costs of providing
such assets and services.
7.4 Sole Risk Venture Revenues and Costs All revenues and
costs derived from any Sole Risk Venture will be
directly attributed by the Operator to the Participant
undertaking the Sole Risk Venture. The net amount of
revenues less costs will be included in the monthly
cash call made pursuant to paragraph 10.3 of this
Annex for settlement (in the case of a negative
amount) or distribution (in the case of a positive
amount) to the Participant undertaking the Sole Risk
Venture as appropriate.
7.5 Sole Risk Venture Reports The Operator will summarise
each month all costs, including charges associated
with the use of PT-FI Available Assets and support
services, and revenues derived from the Sole Risk
Venture during that month and deliver this report to
the Participant undertaking the Sole Risk Venture not
later than the 20th business day after the end of the
month.
7.6 Programmes and Budgets Programme and Budgets for Sole
Risk Ventures shall be approved and administered in a
manner comparable to that provided in paragraph 10.1
of this Annex.
- -77-
<PAGE>
7.7 Co-operation Each Participant shall provide in a
timely manner to the Operator all information that is
within such Participant's knowledge, possession or
control which the Operator may require in order to
perform its accounting responsibilities for Sole Risk
Ventures.
If the Operator is not PT-FI, the Operator shall
provide in a timely manner to PT-FI all information
that is within such Operator's knowledge, possession
or control which PT-FI may require in connection with
fulfilling its obligations under the COW.
8. Accounting for Hedging Activities
The revenues allocated to the Participants shall be adjusted
to reflect the effect of any hedging and other price
protection activities authorised by the Participants
pursuant to Clause 9.2.5 of the Agreement.
Prior to entering into any hedging or other price protection
activities authorised in writing by any Participant, the
Participant authorising such activities shall make
appropriate arrangements, satisfactory to the Operator,
whereby the Operator is protected from and assured that it
will never be required to use its own funds in connection
with the placing or maintaining of any such hedging or other
price protection activities.
9. Accounting Records, Inspection of Books
9.1 Required Records & Accounts
(A) The Operator shall keep comprehensive and
accurate records and accounts of all Exploration
Costs, Operating Costs, costs in respect of
Feasibility Studies, and costs in respect of
Development which are capable of separate
identification, with respect to:
(i) Approved Expansion Projects,
(ii) Joint Operations with respect to Contract
Area Block A,
(iii) Joint Operations Greenfield Projects with
respect to Contract Area Block A,
(iv) Joint Operations with respect to Contract
Area Block B,
(v) Sole Risk Ventures,
- -78-
<PAGE>
(vi) Chargeable Operations and any other
operations within the Contract Area any
part of the costs of which are borne by
each Participant.
The costs of support and infrastructure
facilities and activities shall be allocated to
the activities for which they are utilised. The
costs of support and infrastructure facilities
and activities which are located in one Contract
Area Block, but utilised in support of
activities in one or more Contract Area Block,
shall be allocated to the activities in the
Contract Area Blocks in accordance with actual
utilisation.
(B) The records and accounts in respect of
activities in Contract Area Block A shall be
capable of identifying Incremental Expansion
Revenue and other revenues, those attributable
to Joint Operations other than Approved
Expansion Projects and those attributable to all
other activities in Contract Area Block A, and
costs attributable to the activities, sub-
divided as above.
The records and accounts in respect of
activities in Contract Area Block B shall show
separately the costs and revenues of each
project.
Activity attributable to Sole Risk Ventures by
either Participant within the Contract Area
shall likewise be separately identifiable within
the records and accounts.
The records and accounts in respect of
Greenfield Projects in Contract Area Block A,
activities in Contract Area Block B and Sole
Risk Ventures will separately identify direct
costs of these projects from costs otherwise
allocated thereto.
(C) All records and accounts referred to above shall
be prepared and maintained in accordance with
generally accepted accounting principles in the
United States.
Accordingly, revenues recognised and costs
incurred shall include, in the normal course of
business, accruals to appropriately reflect the
operations of the business conducted during a
given month or year.
All accounting terms used in this Annex will,
except to the extent otherwise expressly
provided for, be determined in accordance with
generally accepted accounting principles in the
United States.
- -79-
<PAGE>
(D) Subject to compliance with the express
provisions of this Annex, the Operator's basic
accounting systems and accounting practices,
policies and procedures will apply.
(E) All such records and accounts shall be retained
for a period of 10 years or as required for
compliance with tax or other regulatory
requirements or as otherwise agreed to by the
Participants.
9.2 Audits
(A) The Operator shall order an annual examination
of the accounting and financial records kept by
it in respect of activities in the Contract Area
for each Year.
(B) The audits shall be conducted by a firm of
accountants of international standing selected
by the Operator and approved by the Operating
Committee and such accountants shall provide
certification that the records and accounts have
been properly maintained in accordance with the
provisions of this Agreement and that the
revenues and costs have been properly calculated
and allocated to the Participants in accordance
with the provisions of this Annex and the
Agreement.
9.3 Right of Participants to Inspect Records
Without prejudice to any other provision of this Annex
or the Agreement, representatives of each Participant
(including for this purpose its accountants or another
appointed firm of accountants) shall be entitled upon
reasonable prior notice at all reasonable times during
normal working hours to inspect and obtain copies of
all documents, records and accounts under the control
of the Operator relating to Enterprise Operations or
the Participation provided always that the frequency
and duration of inspections shall be without undue
hindrance to the proper conduct of Enterprise
Operations or the activities of the Operator. Without
prejudice to the above, but subject to the proviso,
the Operator shall also give to the Participants and
their accountants during normal working hours such
access to the Operator's books and records and such
explanation of the same as the Participants or their
accountants may reasonably require in order to verify
the revenues from Sole Risk Ventures undertaken by
such Participants, Contract Area Block B, Incremental
Expansion Cashflow, Joint Operations Greenfield
Projects in Contract Area Block A and, after the Cut-
off Date, revenues from Joint Operations in the
Contract Area and costs attributable to the same.
- -80-
<PAGE>
9.4 Right of Participants to Conduct Audit
(A) Without prejudice to any other provision of this
Annex or the Agreement, representatives of each
Participant (including for this purpose its
accountants or another appointed firm of
accountants) will be entitled, upon reasonable
notice and at its own cost, to conduct an audit
of the accounting and financial records of
operations to which these Financial and
Accounting Procedures apply for any Year,
provided, however, that any such audit shall be
conducted within eighteen months after the end
of the Year to which the audit pertains and any
claim for an adjustment must be made within
thirty-six months after the end of the Year to
which such adjustment pertains.
(B) Should such audit reveal an alleged error in the
statement of revenues and costs or in the
calculation of the revenues and costs allocated
to each Participant, notice of the alleged error
shall be given promptly to each Participant and
the Participants shall thereupon use all
reasonable endeavours to reconcile any
differences.
(C) Should the Participants be unable to reconcile
the differences to their mutual satisfaction
within a period of 60 days following the notice
referred to above, the dispute shall be referred
to an independent firm of accountants of
international standing appointed by agreement
between the Participants or in default of such
agreement within a period of 30 days following
the expiry of the period of 60 days referred to
above, by the President for the time being of
the American Institute of Certified Public
Accountants on the application of either of the
Participants.
(D) Such independent firm of accountants shall act
as an expert and not as an arbitrator and it
shall be directed to find for one Participant or
the other. Its costs shall be borne by the
Participant losing the issue in question and its
determination shall be final and binding upon
the Participants and the Operator.
(E) If it is agreed between the Participants or
determined by the expert that an error has been
made to the calculation of the revenues and
costs from operations to which these Financial
and Accounting Procedures apply, such payments
or reimbursements as shall be appropriate to
correct such error shall be made by the
Participants and the Operator shall make any and
all necessary entries and
- -81-
<PAGE>
corrections to the relevant Memorandum Equity Accounts of each
Participant.
9.5 Fair clause
The Participants agree that if any of the methods for
determining charges and credits applicable to
operations under the Agreement set out above prove to
be unfair or inequitable to either party, the
Participants will in good faith endeavour to agree on
changes deemed necessary.
10. Other Financial and Accounting Matters
10.1 Programmes and Budgets
10.1.1 Joint Operations Pursuant to Programmes
and Budgets Joint Operations shall be
conducted, expenses shall be incurred and
Joint Account Assets shall be acquired
only pursuant to Approved Programmes and
Budgets.
10.1.2 Preparation of Programmes and Budgets The
Operator shall, not less than one month
prior to the Annual Budget Meeting (which
shall be held annually in December as
provided in Clause 8.6 of the Agreement),
prepare and submit to the relevant
Committee for recommendation to the boards
of directors of the Participants for the
next ensuing Budgetary Period separate
proposed Programmes and Budgets for
Exploration and for Development and
Mining. Any Programme which includes the
undertaking of an Approved Expansion
Project (or the relevant part of it) shall
be based upon the programme for
implementation thereof contained in the
Feasibility Study relating thereto.
Each Programme and/or Budget, as proposed and
approved, shall contain, as appropriate, a
breakdown on a quarterly basis of the following:
(a) a reasonably detailed description of the
Joint Operations to be undertaken with
respect to each of Contract Area Block A
and Contract Area Block B;
(b) an itemised estimate of the Capital Costs
and Operating Costs to be incurred,
distinguishing between Replacement Capital
Costs and new Capital Costs and between
Exploration and Development and Mining and
between Contract Area Block A and Contract
Area Block B;
- -82-
<PAGE>
(c) itemised schedules of estimated production
of Products;
(d) itemised estimates of revenues;
(e) estimates of the amounts and timing of
expected cash requirements from the
Participants; and
(f) such other items as the Operator may deem
necessary or desirable or as either
Participant may reasonably require.
10.1.3 Review and Approval of Proposed Programmes
and Budgets
(a) At the Annual Budget Meeting, the relevant
Exploration Committee or Operating
Committee shall review the Operator's
proposed Programme and Budget and either
submit it unchanged to the boards of
directors of PT-FI and P.T.-RTZ for their
approval or instruct the Operator to make
specified revisions and submit the revised
proposal to such boards for their
approval.
(b) Revisions, modifications and amendments to
Programmes and Budgets may be initiated by
the Operator, the relevant Exploration or
Operating Committee or the board of
directors of PT-FI or P.T.-RTZ, provided
that no material revision, modification or
amendment shall be made without the
approval of both such boards of directors.
(c) Any Programme and Budget, or any revision
modification and amendment thereto, shall
be deemed to be approved by any board of
directors which does not, within thirty
days after receipt, disapprove the same
and notify the other board of directors
and relevant Exploration or Operating
Committee of its disapproval (including
explanation thereof in reasonable detail).
(d) Except as otherwise specified in the
Agreement or this Annex, unbudgeted AFEs,
and budgeted AFEs in excess of amounts
fixed from time to time by the relevant
Exploration or Operating Committee, shall
be submitted by the Operator and subject
to the approval by such Committee,
provided that any AFE which is in excess
of amounts fixed from time to time by the
boards of directors of PT-FI and P.T.-RTZ
or which requires unbudgeted expenditure
in excess of 5% of any Programme and
Budget (whether individually or as part
- -83-
<PAGE>
of a group of related expenditures) shall also be subject to the
approval of such boards of directors in
the manner set out in paragraph 10.1.3(c).
(e) Except as provided in Clause 10.3 of the
Agreement, should the board of directors
of PT-FI or P.T.-RTZ disapprove any
Programme and Budget or any revision,
modification or amendment thereto, both
boards of directors and the relevant
Exploration Committee or Operation
Committee shall endeavour in good faith to
resolve the difference(s) and reach mutual
agreement on the applicable Programme and
Budget as soon as possible.
10.1.4 Budget Overruns; Programme Changes The
Operator shall immediately notify the
relevant Committee of any material
departure from an Approved Programme and
Budget. As soon as practicable following
the Operator becoming aware that the costs
to be incurred under an Approved Budget
are likely to be exceeded by more than
10%, then unless such excess is directly
caused by an emergency or unexpected
expenditure made pursuant to paragraph
10.2 of this Annex or otherwise authorised
by the Participants, the Operator shall
prepare a revised Programme and Budget for
that Year and submit it as soon as
practicable to the relevant Committee for
review, and if needed, for recommendation
for approval by the boards of directors of
the Participants.
10.2 Emergency or Unexpected Expenditures In case of
emergency, the Operator may take such action it deems
necessary to protect life, limb or property, to
protect the Enterprise Operations or Sole Risk
Ventures or to comply with law or government
regulation. Likewise, the Operator may make
expenditures for unexpected events which are beyond
its reasonable control and which do not result from a
breach by it of its standard of care. In the case of
either an emergency or unexpected expenditures, the
Operator shall promptly notify the Participants of the
emergency or unexpected expenditure, and the Operator
shall be reimbursed therefor by the Participants as
provided in Clause 6.1 of the Agreement and this
Annex.
- -84-
<PAGE>
10.3 Cash Calls
10.3.1 On the basis of the Approved Programme and
Budget or revision thereof, the Operator
shall submit to each Participant prior to
the fifth business day of each calendar
month, a billing for estimated cash
requirements for the next following
calendar month, taking into consideration
any cash the Operator has on hand from
Joint Operations and any timing
differences of actual expenditures from
the Approved Programme and Budget, and
identifying the separate contribution
obligations of each Participant in
accordance with the provisions of this
Annex and the Agreement and any
reimbursement obligations under Clause 12
of the Agreement relating to Sole Risk
Ventures.
10.3.2 Prior to the first business day of the
month for which the funds are requested,
each Participant shall pay to the Operator
by wire transfer to the bank account
designated by the Operator, its share of
the estimated amount as is shown in the
billing unless the share of the amount
shown therein is manifestly incorrect.
10.3.3 Time is of the essence of payment of each
billing. A Participant that fails to meet
cash calls in the amount and at the times
specified in this paragraph 10.3 shall be
in default, and the amount of the
defaulted cash call shall bear interest
from the date due at an annual rate equal
to 5% above LIBOR as published in the
London Financial Times on the business day
immediately prior to the date of default.
10.3.4 All funds in excess of immediate cash
requirements shall be invested in
interest-bearing accounts, for the benefit
of the Participants provided that all
funds representing the Exploration
Obligation shall be so invested solely for
the benefit of P.T.-RTZ.
10.3.5 Should the Operator be required to pay
large sums of money on behalf of the
Participants which were unforeseen at the
time of providing the monthly cash call,
the Operator may make written request for
special advances which shall be payable
not later than the fifth business day
after receipt of such notice.
- -85-
<PAGE>
10.4 Close-down Costs
10.4.1 Close-down Costs directly attributable to
a Sole Risk Venture shall be allocated to
and borne by the Participant undertaking
the Sole Risk Venture.
10.4.2 Notwithstanding any other provision to the
contrary in this Annex or the Agreement
but subject to paragraph 10.4.1 above,
each Participant agrees to pay and shall
be liable to pay in respect of Close-down,
that proportion of Close-down Costs which
the value of Products sold by or for such
Participant over the life of the COW bears
to the value of all Products sold by or
for the Participants over the life of the
COW.
Final salvage shall be credited to the
Participants in the same proportion as Close-
down Costs are allocated to them.
10.4.3 For purposes of paragraph 10.4.2(b),
"value" is determined by reference to the
actual realised price of Products sold (or
which would have been realised but for any
price protection activities), adjusted for
inflation, net of smelting and refining
charges, royalties, and other selling
expenses.
Dated 1995
P.T. FREEPORT INDONESIA COMPANY
and
[RTZ UK COMPANY]
Credit Facility of up to $450,000,000
<PAGE
CONTENTS
Clause Page No.
1. Interpretation.............................................1
2. Amount.....................................................6
3. Purpose....................................................6
4. Conditions Precedent.......................................7
5. Availability of Advances...................................8
6. Lender Return..............................................9
7. Repayment of Loan.........................................12
8. Undertakings..............................................13
9. Illegality................................................14
10. Payments..................................................15
11. Default...................................................17
12. Expenses..................................................19
13. Assignment.................... ...........................19
14. Notices...................................................19
15. Governing Law.............................................20
16. Miscellaneous.............................................20
Schedule 1 Address for Notices.................................21
Schedule 2 Form of Advance Request.............................22
Schedule 3 Trust Agreement.....................................24
<PAGE>
THIS AGREEMENT is made 1995
BETWEEN
(1) P.T. FREEPORT INDONESIA COMPANY of [address] ("PT-FI") and
(2) [RTZ UK Company] of 6 St. James's Square, London SW1Y 4LD,
England (the "RTZ Lender")
WHEREAS
(A) By a Contract of Work dated 30 December 1991 made between
The Government of the Republic of Indonesia (the
"Government") and PT-FI, the Government appointed PT-FI as
the sole contractor for the Government with respect to the
Contract Area, as defined in the Contract of Work, with the
sole rights to explore, mine, process, store, transport,
market, sell and dispose of Products (as defined in the
Contract of Work) in the Contract Area (defined as
aforesaid)
(B) By a participation agreement of even date herewith between
PT-FI and [P.T.-RTZ], PT-FI and P.T.-RTZ agreed, inter alia,
to participate in operations under the COW (as defined
below)
(C) RTZ Lender and P.T.-RTZ are both subsidiaries of The RTZ
Corporation PLC
(D) RTZ Lender has agreed to make available to PT-FI a loan
facility of up to but not exceeding a maximum aggregate
principal amount to be advanced of $450,000,000, repayment
of which is to be discharged solely out of PT-FI's share of
Incremental Expansion Cashflow (as defined below)
IT IS AGREED as follows
INTERPRETATION
1. (1) In this Agreement
(a) "Additional Amounts" means such additional
amounts as may be required, after the deduction
or withholding of Applicable Taxes (including
Applicable Taxes with respect to any Additional
Amounts), to enable RTZ Lender to receive from
PT-FI and retain an amount equal to the full
amount stated to be payable to RTZ Lender under
Clause 6 of this Agreement, subject to the limit
on the rate of Applicable Taxes as a result of
the proviso to the definition of "Applicable
Taxes"
(b) "Advance" means the principal amount of each
borrowing by PT-FI under this Agreement
<PAGE>
2
(c) "Advance Date" means, in relation to each
Advance, the date specified as such in the
relative Advance Request or, on and after the
making thereof, the date on which it was made
(d) "Advance Request" means a request, substantially
in the form of Schedule 2 to this Agreement,
made by PT-FI to RTZ Lender in accordance with
Clause 5 for an Advance to be made by RTZ Lender
to PT-FI under this Agreement
(e) "Applicable Taxes" means all present and future
Taxes (whether or not collectable by deduction
or withholding) imposed in the Republic of
Indonesia, the United States of America or any
jurisdiction through or out of which such
payment is made or any political subdivision or
taxing authority thereof on any payment (other
than of principal) by PT-FI to RTZ Lender under
this Agreement (other than Taxes imposed,
assessed, levied or collected on or with respect
to the net income of RTZ Lender), provided that
such Applicable Taxes will, with respect to each
taxing jurisdiction, be at a rate which does not
exceed the rate of withholding on interest
giving effect, in each case, to any applicable
Tax treaty, with RTZ Lender qualified thereunder
as a United Kingdom person and "Applicable Tax"
shall be construed accordingly
(f) "Approved Expansion Project" has the meaning
assigned to it in the Participation Agreement
(g) "Approved Programme and Budget" has the meaning
assigned to it in the Participation Agreement
(h) "Available Commitment" means at any time
$450,000,000 less the aggregate amount of the
Advances which have theretofore been made
(i) "Bank Credit Agreement[s]" means [the credit
agreement(s) pursuant to which the banks that
are parties to the Intercreditor Agreement have
made available to PT-FI from time to time loans
secured by, among other things, PT-FI's interest
in the COW]
(j) "Banks" means the banks that are parties to the
Intercreditor Agreement
(k) "Business Day" means a day on which banks and
foreign exchange markets are open for business
in London and New York City
(l) "Commitment" means the obligation of RTZ Lender
under and subject to the terms of this Agreement
to make available to PT-FI
<PAGE>
3
Advances of an aggregate principal amount not exceeding the
Available Commitment
(m) "Contract Area Block A" has the meaning assigned
to it in the Participation Agreement
(n) "COW" means the Contract of Work referred to in
Recital (A)
(o) "Default" means any Event of Default and any
event which, with the giving of any notice
and/or the expiry of time and/or the fulfilment
of any other condition stated in Clause 11(1)
below would be or become an Event of Default
(p) "Dispose" has the meaning assigned to that
expression in the Participation Agreement
(q) "Encumbrance" means any mortgage, deed of trust
or other trust arrangement for the purpose of
providing security, deed to secure debt or any
other security agreement or arrangement, pledge,
hypothecation, assignment for the purpose of
providing security, security interest,
encumbrance, lien or charge of any kind, whether
voluntarily incurred or arising by operation of
law, by statute, contract or otherwise,
affecting any property, including any power of
attorney or agreement to grant any of the
foregoing, any conditional sale or other title
retention agreement, any lease in the nature of
a security interest and/or the filing of or
agreement to give any financing statement (other
than a precautionary financing statement with
respect to a lease that is not in the nature of
a security interest) under the UCC or comparable
law of any jurisdiction with respect to any
property
(r) "Enterprise Operations" has the meaning assigned
to it in the Participation Agreement
(s) "Event of Default" means any of the events
specified in Clause 11(1) below
(t) "Expansion" has the meaning assigned to it in
the Participation Agreement
(u) "Facility" means the credit facility granted to
PT-FI by RTZ Lender in this Agreement
(v) "Feasibility Study" has the meaning assigned to
it in the Participation Agreement
<PAGE>
4
(w) "Government" has the meaning assigned to it in
Recital (A)
(x) "Governmental Authority" means the Government
(including the President and any Minister), any
Indonesian state, provincial, local or foreign
court or governmental agency, authority,
instrumentality or regulatory body
(y) "Incremental Expansion Cashflow" has the meaning
assigned to it in the Participation Agreement
(z) "Incremental Expansion Revenues" has the meaning
assigned to it in the Participation Agreement
(aa) "Intercreditor Agreement" means the agreement
dated as of [ ] 1995 made between,
among other parties, the Banks under the Bank
Credit Agreement[s] and RTZ Lender, under which
a trustee has been appointed as trustee and
security agent (i) for the Banks pursuant to the
[Banks' Security Documents] (as defined in the
Intercreditor Agreement) and (ii) RTZ Lender,
pursuant to which the parties to the agreement
have agreed to regulate their respective rights
and interests inter se
(bb) "Lender Lien" means the Encumbrance on PT-FI's
Participating Interest in Incremental Expansion
Cashflow granted by PT-FI to RTZ Lender in the
Security Documents
(cc) "Lender's UK Group" means the group of companies
comprising The RTZ Corporation PLC and its
United Kingdom subsidiaries, where subsidiary
has the meaning assigned to it in Section 736 of
the Companies Act 1985 of Great Britain
(dd) "Loan" means together the Relevant Approved
Expansion Project Loans
(ee) "Month" means a calendar month
(ff) "Operator" has the meaning assigned to it in the
Participation Agreement
(gg) "Participating Interest" has the meaning
assigned to it in the Participation Agreement
(hh) "Participation Agreement" means the
participation agreement referred to in Recital
(B)
<PAGE>
5
(ii) "Prescribed Rate" has the meaning assigned to
such expression in Clause 6(3)(a) below
(jj) "Programme" and "Budget" each has the meaning
assigned to it in the Participation Agreement
(kk) "Reference Banks" means together Morgan Guaranty
Trust Company of New York, Barclays Bank PLC,
Deutsche Bank AG, ABN-AMRO Bank N.V. and
Chemical Bank and any bank mutually selected by
RTZ Lender and PT-FI pursuant to Clause 6(3)(d)
below to replace any of such banks and
"Reference Bank" means each and any of them
(ll) "Relevant Costs" means costs, expenses and
expenditures to be incurred as comprised in and
pursuant to one or more Approved Programmes and
Budgets and Applicable Taxes and Additional
Amounts payable from Advances as provided in
this Agreement
(mm) "Relevant Approved Expansion Project" means an
Approved Expansion Project in or towards the
financing of which proceeds of Advances made
under this Agreement are or will be applied
(nn) "Relevant Approved Expansion Project Loan" means
the aggregate outstanding principal amount of
all Advances made to PT-FI under this Agreement
in respect of the Relevant Approved Expansion
Project together with all interest and
commitment fees added thereto as provided in
Clause 6(4) below
(oo) "Security Documents" means together the Trust
Agreement and the security documents referred to
in the Trust Agreement
(pp) "Taxes" includes all present and future income
and other taxes, levies, imposts, assessments,
duties, charges, deductions and withholdings
whatsoever together with interest thereon and
penalties with respect thereto and "Tax" and
"Taxation" shall be construed accordingly
(qq) "Transaction Documents" means together the
Implementation Agreement, the Participation
Agreement, the Intercreditor Agreement, the
Security Documents and this Agreement
(rr) "Trust Agreement" means [the trust agreement
between, among others, PT-FI and the Trustee in
the form or substantially in the form set out in
Schedule 3 to this Agreement]
<PAGE>
6
(ss) "Trustee" means First Trust, National
Association, successor to Morgan Guaranty Trust
Company of New York under the Trust Agreement
and any successor under the Trust Agreement
(tt) "UCC" means the Uniform Commercial Code as in
effect from time to time in the State of New
York or, as appropriate, the Uniform Commercial
Code (or equivalent) as in effect from time to
time in any other relevant jurisdiction
(uu) "U.S.A." means the United States of America, any
state or territory thereof and the District of
Columbia
(vv) "Year" means a calendar year commencing 1
January
(ww) "dollars" and "$" means the lawful currency for
the time being of the U.S.A.
(2) In this Agreement,
(a) the contents page hereof and the headings in
this Agreement are for convenience only and
shall be ignored in construing this Agreement
(b) references to a "person" shall include an
individual, company, corporation, firm,
partnership, joint venture, association, trust
or agency of a state (in each case, whether or
not having a separate legal personality)
(c) references to any document or agreement,
including, without limitation, the COW, shall
include such document or agreement as amended, novated,
substituted, varied, supplemented or replaced
from time to time
(d) references to a party to this Agreement or to a
Reference Bank or any other person mentioned in
this Agreement shall include such party's or
person's successors or permitted assigns
(e) references to this Agreement shall include all
schedules and annexes hereto.
AMOUNT
2. Subject to the terms of this Agreement, RTZ Lender grants to
PT-FI a dollar loan facility whereby RTZ Lender, when requested by
PT-FI pursuant to an Advance Request and subject as aforesaid,
will make to PT-FI Advances denominated in dollars of an aggregate
amount not to exceed $450,000,000.
PURPOSE
3. The proceeds of each Advance shall be applied only in or
towards financing payment of Relevant Costs of one or more
Approved Expansion Projects (and PT-FI
<PAGE>
7
undertakes so to apply each such Advance) and no Advance shall be
drawn by PT-FI unless the proceeds of such Advance are or will be
so applied within thirty days after the Advance Date.
CONDITIONS PRECEDENT
4. (1) The obligations of RTZ Lender to make the first
Advance to PT-FI under this Agreement are subject to the condition
that RTZ Lender shall first have received all of the following in
form and substance satisfactory to it:
(a) a copy of a resolution of the board of directors
of PT-FI approving the transactions and matters
to be implemented under the Transaction
Documents to which it is to be party and
authorising a specified person or persons to
execute and deliver on its behalf the
Transaction Documents to which it is to be
party, and to execute and deliver and/or
despatch all notices, certificates and other
documents to be executed and delivered and/or
despatched in connection with any of the
Transaction Documents, such copies to be
accompanied by a certificate of PT-FI signed by
any authorised officer on behalf of the board of
directors confirming that the utilisation by PT-
FI of up to $450,000,000 of the Facility would
not cause any borrowing limit contained in the
Articles of PT-FI or in any other agreement or
instrument to which PT-FI is a party to be
exceeded
(b) a copy of the signatures of those persons
authorised to execute and deliver on behalf of
PT-FI the Transaction Documents to which it is
to be party and of those persons authorised to
execute and deliver and/or despatch on behalf of
PT-FI all notices, certificates and other
documents in connection therewith
(c) a copy of each of the Security Documents duly
executed by PT-FI together with evidence that
the Encumbrance in favour of RTZ Lender created
by such documents has been perfected and all
taxes, stamp duties and fees payable in respect
thereof have been duly paid;
(d) a legal opinion of Ali Budiardjo, Negroho &
Reksodiputro, Indonesian legal advisers to PT-
FI, addressed to RTZ Lender in form and
substance reasonably satisfactory to RTZ Lender
(e) a legal opinion of Davis Polk & Wardwell, US
Counsel to PT-FI, addressed to RTZ Lender in
form and substance reasonably satisfactory to
RTZ Lender
(f) a copy of the Participation Agreement duly
executed by each of the parties to it
(g) a copy of the Intercreditor Agreement duly
executed by each of the other parties to it and
such other evidence that such agreement is in
full force and effect as RTZ Lender may
reasonably require.
<PAGE>
8
(2) The obligations of RTZ Lender in respect of the making
of each Advance under this Agreement are subject to the further
conditions precedent that both at the time of the relative Advance
Request and at the Advance Date:
(a) no Event of Default under Clauses 11(1)(a),
(e), (i), (j) or (k) shall have occurred and be
continuing or would result from or be in
existence immediately after the making of such
Advance which has not been waived by RTZ Lender
(b) no Event of Default, act of war, insurrection,
rebellion, earthquake or other event of like
impact has occurred as a result of which RTZ
Lender has determined that, in its reasonable
judgment, it is unlikely that the Relevant
Approved Expansion Project will proceed to
completion, in which event RTZ Lender will
nevertheless make Advances (not to exceed the
Available Commitment) to cover cash calls
required to pay obligations in respect of the
Relevant Approved Expansion Project outstanding
at the time of the call which the Participants
are legally obliged to pay or which are agreed
between the Participants to be necessary to pay
the costs of suspending or terminating such
Relevant Approved Expansion Project.
(3) If any event shall occur as a result of which RTZ
Lender (whether before or after Incremental Expansion Cashflow
starts being generated) shall cease to have access to 100% of PT-
FI's share of Incremental Expansion Cashflow, if any, (including
the failure to have the benefit of the Intercreditor Agreement and
the Trust Agreement, or comparable protection), RTZ Lender's
obligation to make Advances shall be suspended until such time as
RTZ Lender shall again have access to such share of Incremental
Expansion Cashflow, it being understood that RTZ Lender and PT-FI
shall use their respective best efforts to cure the event giving
rise to such cessation of access to such share of Incremental
Expansion Cashflow.
AVAILABILITY OF ADVANCES
5. (1) Subject to the terms of this Agreement, PT-FI may
require that an Advance be made to it under this Agreement by
delivering to RTZ Lender prior to 10am (London time) on the fifth
Business Day before the proposed Advance Date, a duly completed
Advance Request.
(2) Each Advance Request shall specify:
(a) the amount of the proposed Advance, which shall
not be in such an amount as to exceed the
Available Commitment
(b) (unless previously notified to RTZ Lender in
writing and not revoked in accordance with this
Agreement) the details of the bank and account
to which the proceeds of the proposed Advance
are to be made available
<PAGE>
9
(c) the Relevant Approved Expansion Project,
together with, in the case of the first Advance
Request in respect of a Relevant Approved
Expansion Project, PT-FI's best estimate, taken
from the Feasibility Study for the Relevant
Approved Expansion Project, of
(i) the aggregate of the projected Relevant
Costs of the Relevant Approved Expansion
Project
(ii) the period over which the projected
Relevant Costs of the Relevant Approved
Expansion Project will be incurred and
(iii) an assumed repayment schedule based upon
the application of 100% of PT-FI's
share of Incremental Expansion
Cashflow, such schedule to be
derived from the related Feasibility
Study
(d) reasonable details of the Relevant Costs of the
Relevant Approved Expansion Project in question
and that such sums fall due and that such
proceeds will be so applied within thirty days
after the proposed Advance Date.
(3) Subject to the terms of this Agreement, each Advance
Request shall be irrevocable. Each Advance Request shall be based
on a cash call (pursuant to paragraph 10.3 of the Accounting
Procedures constituting part of the Participation Agreement) with
respect to an Approved Expansion Project.
LENDER RETURN
6. (1) There shall be determined separately for each Relevant
Approved Expansion Project the rate of interest applicable to
Advances made to finance payment of Relevant Costs of that
Relevant Approved Expansion Project.
(2) The rate of interest applicable to a Relevant Approved
Expansion Project Loan shall be the rate per annum determined by
RTZ Lender in accordance with Clause 6(3) below to be the
Prescribed Rate for that Relevant Approved Expansion Project.
(3) (a) Not later than the third Business Day before the
proposed Advance Date for the first Advance
under this Agreement in respect of each Relevant
Approved Expansion Project, RTZ Lender shall
select, at its absolute discretion, three of the
Reference Banks and ask each of the three
Reference Banks selected to provide RTZ Lender
with a quote of (1) the rate of interest at
which such Reference Bank would be prepared to
make available to a subsidiary of The RTZ
Corporation PLC a loan facility on the following
basis:
(i) the loan would be in an amount equal to
the estimate given by PT-FI pursuant to
Clause 5(2)(c)(i) in relation to the
Relevant Approved Expansion Project
<PAGE>
10
(ii) the loan would be capable of being drawn
over the period estimated by PT-FI
pursuant to Clause 5(2)(c)(ii) in relation
to the Relevant Approved Expansion Project
(iii) the loan would have an assumed repayment
schedule based upon the application
of 100% of PT-FI's share of
Incremental Expansion Cashflow, such
schedule to be derived from the
related Feasibility Study
(iv) the rate of interest should be a floating
rate, based on a margin over LIBOR, LIBOR
being the rate quoted by the Reference
Bank in the ordinary course of business in
the London Interbank Eurodollar Market at
or about 11.00am (London time) on the day
the Reference Bank supplies to RTZ Lender
its rate for the offering of dollar
deposits for a period of up to six months
(v) the loan would be unconditionally
guaranteed, as to principal and interest,
by The RTZ Corporation PLC
and (2) the rate of any commitment fee.
The Prescribed Rate for the Relevant Approved
Expansion Project Loan shall be the arithmetic
mean (rounded up, if necessary, to the nearest
fourth decimal place) of the respective rates
quoted to RTZ Lender, provided that if any of
the Reference Banks shall be unable or otherwise
fails to supply a rate by 1.00pm (London time)
on the date falling ten Business Days after the
date of RTZ Lender's request, RTZ Lender shall
select another Reference Bank or Banks to
provide a quote on the basis set out above and
provided further that if, by 1.00pm (London
Time) on the date falling two Business Days
before the end of the Month in which the first
addition to the Relevant Approved Expansion
Project Loan is to be made pursuant to Clause
6(4) below, RTZ Lender shall not have received a
rate from each of three of the Reference Banks,
the Prescribed Rate shall be determined by RTZ
Lender on the basis of the quotations of each of
the Reference Banks which have supplied a rate.
The rate of any commitment fee applicable to the
Relevant Approved Expansion Project Loan shall
be the arithmetic mean (rounded up, if
necessary, to the nearest fourth decimal place)
of the respective rates or fees (as appropriate)
quoted by the Reference Banks whose quotes of
the rates of interest are used by RTZ Lender in
determining the Prescribed Rate applicable to
the Relevant Approved Expansion Project Loan.
(b) RTZ Lender shall determine in accordance with
Clause 6(3)(a) above and notify to PT-FI not
later than the Business Day before the end of
the Month in which the first addition to the
Relevant
<PAGE>
11
Approved Expansion Project Loan is to be made pursuant to Clause
6(4) below the Prescribed Rate and commitment
fee applicable to the Relevant Approved
Expansion Project Loan.
(c) Each Relevant Approved Expansion Project Loan
(including, for the avoidance of doubt, interest
and commitment fee, previously or to be added
pursuant to Clause 6(4) below) shall accrue
interest at the Prescribed Rate applicable to
that Relevant Approved Expansion Project Loan.
(d) Should any of the Reference Banks cease to carry
on business as a bank, the parties shall
mutually select another bank with a credit
rating reasonably equivalent to that enjoyed at
the date of this Agreement by the Reference Bank
in question to replace such Reference Bank.
(4) There shall be added to and become part of each
Relevant Approved Expansion Project Loan on the last Business Day
of each Month the following amounts to the extent not paid:
(a) interest accrued thereon calculated in
accordance with Clauses 6(3)(a) above and
6(5)(a) below and
(b) an amount equivalent to a commitment fee in
respect thereof calculated in accordance with
Clauses 6(3)(b) above and 6(5)(b) below.
(5) RTZ Lender shall, in respect of each Relevant Approved
Expansion Project Loan, calculate (on a basis of a 360 day year,
comprising 12 months of 30 days each) the interest and commitment
fee (if any) to be added to the Relevant Approved Expansion
Project Loan on the last Business Day of each Month by multiplying
(a) in the case of the interest to be added, the
Relevant Approved Expansion Project Loan as at
the end of the Month in question (immediately
prior to the addition on the last Business Day
of that Month of any amounts pursuant to Clause
6(4)(a)) by the Prescribed Rate applicable to
the Relevant Approved Expansion Project Loan,
expressed as a monthly rate, where such monthly
rate shall be the interest factor which, when
compounded for 12 months, equals the Prescribed
Rate applicable to the Relevant Approved
Expansion Project Loan
(b) in the case of the commitment fee to be added,
the difference between the estimate given by PT-
FI pursuant to Clause 5(2)(c)(i) in relation to
the Relevant Approved Expansion Project and the
Relevant Approved Expansion Project Loan as at
the end of the Month in question (immediately
prior to the addition on the last Business Day
of that Month of any amounts pursuant to Clause
<PAGE>
12
6(4)(b)) by the rate of commitment fee applicable to the Relevant
Approved Expansion Project Loan, expressed as a
monthly rate, where such monthly rate shall be
the factor which, when compounded for 12 months,
equals the rate of the commitment fee applicable
to the Relevant Approved Expansion Project Loan.
RTZ Lender shall, not later than the fifth Business Day after the
end of each Month, send to PT-FI a statement showing the aggregate
amount of the Relevant Approved Expansion Project Loan outstanding
at the end of the previous Month (prior to the addition of the
sums mentioned next) together with the interest and commitment fee
applicable during and added to the Relevant Approved Expansion
Project Loan at the end of the Month and shall give to PT-FI such
explanation regarding the calculation of the interest and
commitment fee added as PT-FI may reasonably require.
(6) Each determination by Lender of the Prescribed Rate
and the rate of commitment fee applicable to a Relevant Approved
Expansion Project Loan and the amounts of interest accrued on the
Relevant Approved Expansion Project Loan and commitment fee
applicable thereto shall, in the absence of manifest error, be
conclusive.
REPAYMENT OF LOAN
7. (1) Except as otherwise provided in this Agreement,
beginning on the Sharing Commencement Date (as defined in the
Participation Agreement), PT-FI will pay to (or, in the case of
payments in respect of Applicable Taxes and Additional Amounts, on
behalf of) RTZ Lender 100% of PT-FI's share (determined in
accordance with the Participation Agreement) of the Incremental
Expansion Cashflow until the Loan is repaid in full. PT-FI shall
not be required to repay the Loan or pay any other obligation
under this Agreement from any of its assets other than that
constituting 100% of PT-FI's share of Incremental Expansion
Cashflow provided that in any event the Loan shall mature and be
repayable in full on the earlier of the date which is 25 years
after the date of the first Advance under this Agreement and the
date which is 15 years after the date of the last Advance under
this Agreement and provided further that, on such earlier date,
PT-FI may, in lieu of repaying the Loan, at its option assign to
RTZ Lender all of PT-FI's rights to Incremental Expansion Cashflow
in full and final satisfaction of all PT-FI's obligations
hereunder and in no circumstances shall PT-FI require or have the
right to require RTZ Lender to reassign the same to PT-FI.
(2) With effect from the Sharing Commencement Date
(defined as above), PT-FI shall, not later than the twentieth
Business Day after the end of each Month, pay to (or, in the case
of payments of Applicable Taxes and Additional Amounts, on behalf
of) RTZ Lender in dollars the whole of such share of the
Incremental Expansion Cashflow for the immediately preceding Month
distributed to PT-FI by the Operator in accordance with the terms
of the Participation Agreement. Each such payment shall be
accompanied by a statement containing details of the Incremental
Expansion Cashflow computation.
<PAGE>
13
(3) Not later than 45 Business Days after the end of each
Year after the date of commissioning of the first Approved
Expansion Project, PT-FI shall send to RTZ Lender a statement
showing for the previous Year (or part thereof) the Incremental
Expansion Cashflow, such statement to contain sufficient data to
enable RTZ Lender to verify the calculation thereof. If the
annual statement indicates an overpayment of Incremental Expansion
Cashflow, RTZ Lender shall pay to PT-FI a sum equal to the excess
within 30 Business Days. If the annual statement indicates an
underpayment of Incremental Expansion Cashflow, PT-FI shall pay to
RTZ Lender a sum equal to the shortfall within 30 Business Days.
(4) Each payment under this Clause 7 shall be applied to
Relevant Approved Expansion Project Loans in the following order
of priority:
(i) first, to any Applicable Taxes or Additional
Amounts then payable;
(ii) secondly, to any amounts of commitment fee or
interest then payable, rateably;
(iii) thirdly, to the principal amount of the Relevant
Approved Expansion Loans in the order in
which the first Advance thereunder is made
so that no payment shall be applied to the
principal amount of any Relevant Approved
Expansion Project Loan other than the
first until the principal amount of the
first has been repaid in full and so on.
UNDERTAKINGS
8. (1) PT-FI undertakes with RTZ Lender that, from the date
of this Agreement until all its liabilities under this Agreement
have been discharged:
(a) PT-FI will notify RTZ Lender of any Default
promptly upon PT-FI becoming aware of the same
and of any remedial action being taken
(b) PT-FI will not take any action or fail to take
any action, including actions or failures to act
under the COW, the Participation Agreement or
any of the Transaction Documents, if the effect
of any such action or failure to act would have
a material adverse effect on the ability of PT-
FI to carry out Enterprise Operations or affect
materially and adversely the access of RTZ
Lender to 100% of PT-FI's share of Incremental
Expansion Cashflow or to affect materially and
adversely the rights of RTZ Lender under the
Transaction Documents
(c) PT-FI will give prompt notice to RTZ Lender of
any notice of default, lawsuit, proceeding,
action or damage of which it becomes aware which
might materially and adversely affect the
ability of PT-FI to carry out Enterprise
Operations or the access of RTZ Lender to 100%
of PT-FI's share of Incremental Expansion
Cashflow or might materially and adversely
affect the rights of RTZ Lender under the
Transaction Documents
<PAGE>
14
(d) PT-FI shall at all times maintain in full force
and effect for the benefit of RTZ Lender a first
priority lien with respect to 100% of PT-FI's
share of Incremental Expansion Cashflow, free
and clear of all Encumbrances except for a
subordinated lien in favour of the Banks parties
to the Intercreditor Agreement to the extent
provided for in the Intercreditor Agreement
(e) PT-FI shall not Dispose of any part of its share
of Incremental Expansion Revenues without the
prior written consent of RTZ Lender and in the
event of any such Disposal, PT-FI shall procure
that the transferee commits in writing to RTZ
Lender to be bound by the repayment provisions
of this Agreement to the extent of the
Participating Interest or such other interest
transferred
(f) PT-FI shall at its own expense execute any and
all further deeds, documents, agreements and
instruments, and take all such further actions
as may be required under applicable law or which
RTZ Lender may reasonably request in order to
perfect the transactions contemplated by this
Agreement and the Trust Agreement, subject to
the Intercreditor Agreement and in order to
grant, preserve, protect and perfect the
validity and first priority of the Lender Lien
with respect to 100% of PT-FI's share of
Incremental Expansion Cashflow.
(2) RTZ Lender shall record in RTZ Lender's internal
records separately for each Relevant Approved Expansion Project
Loan the date and amount of each Advance from RTZ Lender to PT-FI,
the amount of interest and other sums added to the Relevant
Approved Expansion Project Loan on the last Business Day of each
Month and the date each such amount is added, and the date and
amount of each payment by PT-FI to RTZ Lender under this Agreement
with respect to the Relevant Approved Expansion Project Loan
provided that the failure of RTZ Lender to make or any error in
any such entries shall not affect the obligations of PT-FI under
this Agreement.
ILLEGALITY
9. If any change in or the introduction of any law, regulation,
treaty or (whether or not having the force of law) official
directive or rule of any governmental, fiscal, monetary or
regulatory (including any self regulatory) authority, organisation
or agency of or in the United Kingdom, Indonesia or the U.S.A., or
any change in the interpretation, administration or application
thereof by the relevant courts or other authority, organisation or
agency in any such jurisdiction or compliance by RTZ Lender
therewith, shall make it unlawful or contrary to any such
regulation, treaty, official directive or rule for RTZ Lender to
make available or fund or maintain or to give effect to its
obligations as contemplated hereby, RTZ Lender may, by notice
thereof to PT-FI, declare that, to the extent that they are so
unlawful or contrary to such regulation, treaty, official
directive or rule, RTZ Lender's obligations to PT-FI hereunder
shall be suspended forthwith whereupon such obligations and RTZ
Lender's Commitment shall be so suspended until such time as such
condition is no longer operative. If and to the extent that the
continued
<PAGE>
15
lending thereof by RTZ Lender would cause RTZ Lender to be in
breach of such law, regulation, treaty, official directive or
rule, PT-FI will co-operate with RTZ Lender with a view to
enabling RTZ Lender to transfer the Loan, its rights under the
Trust Agreement and its obligations under this Agreement to
another subsidiary of The RTZ Corporation PLC incorporated in a
jurisdiction where there is no such illegality provided that if no
such subsidiary acceptable to both PT-FI and The RTZ Corporation
PLC is identified within a period of twelve months, RTZ Lender's
obligations to PT-FI hereunder shall be terminated.
PAYMENTS
10. (1) All payments to be made by PT-FI to RTZ Lender under
this Agreement shall be made in dollars in same day funds to such
account at such bank or office in New York City as RTZ Lender
shall designate by notice to PT-FI given not less than five
Business Days prior to the date of such payment.
(2) All payments to be made by RTZ Lender to PT-FI under
this Agreement shall be made in dollars in same day funds to such
account at such bank or office as PT-FI may designate by notice to
RTZ Lender given not less than five Business Days prior to the
date of such payment or as PT-FI shall designate in the relevant
Advance Request.
(3) (a) PT-FI shall pay to or on behalf of RTZ Lender
from the sources specified below (the "Specified
Sources") an amount equal to all Applicable
Taxes with respect to amounts payable under this
Agreement, together with any Additional Amounts,
in accordance with Clause 10(3)(c). Payments
from Specified Sources shall mean:
(i) in the period before any Incremental
Expansion Cashflow is generated, out of
Advances (not to exceed the Available
Commitment) and should any proposed
Advance in respect of such payments
otherwise cause the Available Commitment
to be exceeded, PT-FI may, at its option,
either suspend claiming a deduction for
interest on the Loan (but interest will
nevertheless continue to accrue in the
manner provided in this Agreement) or
request an advance from RTZ Lender for the
excess which shall be granted on the same
terms as those applicable to Advances
under this Agreement but at a rate of
interest reflecting a loan to PT-FI and
not to The RTZ Corporation PLC
(ii) in the period after Incremental Expansion
Cashflow begins to be generated, subject to
Clause 10(3)(c), first, from Incremental
Expansion Cashflow available at the time of
payment and secondly, to the extent that there
is insufficient to meet any payment, from
Advances (not be exceed the Available
Commitment) and should any proposed Advance
<PAGE>
16
in respect of such payments otherwise cause the Available
Commitment to be exceeded, PT-FI may. at
its option, either suspend claiming a
deduction for interest on the Loan (but
interest will nevertheless continue to
accrue in the manner provided in this
Agreement) or request an advance from RTZ
Lender for the excess which shall be
granted on the same terms as those
applicable to Advances under this
Agreement but at a rate of interest
reflecting a loan to PT-FI and not to The
RTZ Corporation PLC.
(b) PT-FI shall from the Specified Sources indemnify
RTZ Lender against and reimburse RTZ Lender upon
demand for any Applicable Taxes or Additional
Amounts paid by RTZ Lender and any loss,
liability, claim or expenses (including
interest, penalties, fines, surcharges and legal
fees) which RTZ Lender may incur at any time
arising out of or in connection with any failure
of PT-FI to make any payments of Applicable
Taxes or Additional Amounts.
(c) PT-FI shall pay or account to the relevant
taxation or other authorities from the Specified
Sources within the period permitted by
applicable law the full amount of any Applicable
Tax or Additional Amounts payable hereunder and
within thirty days after each payment by PT-FI
hereunder of any such Applicable Tax or
Additional Amounts, PT-FI shall deliver to RTZ
Lender evidence (including receipts where
obtained within that period) that such
Applicable Tax or Additional Amounts have been
duly remitted to the appropriate authority. If
any such receipts are obtained after the expiry
of such thirty day period, PT-FI shall furnish
copies thereof promptly to RTZ Lender.
PT-FI shall promptly pay to RTZ Lender from the
Specified Sources the full amount of any
Applicable Taxes and Additional Amounts in
respect thereof upon receipt of notice from RTZ
Lender of the imposition and amount of such
Applicable Tax and Additional Amounts when such
Applicable Tax and Additional Amounts are
imposed on any payment in the hands of RTZ
Lender.
(d) If, following the imposition of any Applicable
Tax or Additional Amount, under this Clause
10(3), RTZ Lender determines in its absolute
discretion that it has obtained a refund of Tax
payable by it or obtained or used a credit or
any other relief against Tax on its profits or
income (any of the foregoing being a "Tax
Credit") which RTZ Lender in its absolute
discretion is able to quantify and identify as
attributable to Applicable Tax or the Additional
Amounts paid by PT-FI, then, if RTZ Lender can
do so without any adverse consequences for
itself or any other company in RTZ Lender's
<PAGE>
17
Group, RTZ Lender shall treat as a payment made pursuant to Clause
7 such proportion of that Tax Credit as RTZ
Lender in its absolute discretion may determine
will leave RTZ Lender and each other company in
RTZ Lender's Group (after that reimbursement) in
no better or worse position in respect of their
worldwide Tax liabilities than they would have
been in if no payment by PT-FI of Applicable
Taxes or Additional Amounts had been required.
RTZ Lender shall have absolute discretion as to
whether to claim any Tax Credit (and, if it does
claim, the extent, order and manner in which it
does so) and whether any amount is due from it
under this Clause 10(3)(d) (and, if so, what
amount and when). RTZ Lender shall not be
obliged to disclose any information regarding
its Tax affairs and computations or those of any
other company in RTZ Lender's Group.
(e) RTZ Lender warrants to PT-FI that RTZ Lender is
fully eligible for the benefits of the
"Interest" provision of the double taxation
treaty between the United Kingdom and the United
States of America and of the double taxation
treaty between the United Kingdom and The
Republic of Indonesia.
Each of PT-FI and RTZ Lender shall provide to
the other promptly and file with any relevant
taxation or other authority all information,
documents, certificates and returns reasonably
required by the other or necessary in order to
enable RTZ Lender and PT-FI to claim the
benefits of any relevant double taxation treaty
in respect of the lower rate of withholding tax
on payments other than principal.
DEFAULT
11. (1) Each of the events set out below is an Event of
Default (whether or not caused by any reason whatsoever outside
the control of PT-FI or any other person):
(a) if default is made in the payment of any sum due
under this Agreement on the due date and
otherwise in accordance with the provisions of
this Agreement and such failure shall continue
for 30 days after notice by RTZ Lender; or
(b) if PT-FI for any reason fails duly and promptly
to perform or observe any of its material
obligations under this Agreement or any of the
other Transaction Documents to which it is party
and such failure shall continue for 30 days
after notice by RTZ Lender; or
(c) if any authorisation, approval or consent
necessary for PT-FI to enter into or perform
this Agreement or any of the other Transaction
Documents to which it is party or to ensure that
this Agreement or any of the other Transaction
Documents is legal, valid and enforceable is
revoked or terminated or expires and is not
renewed;
<PAGE>
18
or
(d) if for any reason the Intercreditor Agreement or
any of the Security Documents shall cease to be
valid, legally binding and enforceable; or
(e) if the maturity of the indebtedness under the
Bank Credit Agreement[s] has been accelerated as
a result of an Event of Default as defined in
and under the Bank Credit Agreement[s]; or
(f) if PT-FI shall abandon or postpone indefinitely
or resolve to abandon or postpone indefinitely
Enterprise Operations in or relating to Contract
Area Block A or shall no longer be entitled to
carry on Enterprise Operations in or relating to
Contract Area Block A, whether because of its
default under or termination of the COW or for
any reason whatsoever; or
(g) if the COW shall be terminated or otherwise fail
to be in full force and effect or shall be
amended without the consent of RTZ Lender in any
manner which materially and adversely affects
the rights and benefits granted to RTZ Lender
under the Transaction Documents or the Minister
of Mines and Energy of Indonesia (or any
successor entity) or the Government shall take
any action in contravention of the COW or
otherwise which materially and adversely affects
PT-FI's ability to perform its obligations under
the Transaction Documents to which it is a party
or the rights and benefits granted to RTZ Lender
under any of the Transaction Documents; or
(h) any Governmental Authority shall condemn, seize,
nationalise, consume the management of or
appropriate any material part of PT-FI's
Property, assets or revenues (with or without
payment of compensation); or
(i) if a general meeting of shareholders of PT-FI
resolves that PT-FI be liquidated or PT-FI
suffers the appointment of a receiver,
liquidator, administrator, assignee, custodian,
trustee, sequestrator or similar official for a
substantial part of its assets in a proceeding
brought against or initiated by it, and such
appointment is neither made ineffective nor
discharged within ninety days after the making
thereof or such appointment is consented to,
requested by or acquiesced in by it; or
(j) if PT-FI commences a voluntary case under any
applicable bankruptcy, insolvency or similar law
now or hereafter in effect; or consents to the
entry of an order of relief in an involuntary
case under any such law or to the appointment of
or taking possession by a receiver, liquidator,
administrator, assignee, custodian, trustee,
sequestrator or other similar official of any
substantial part of its assets; or makes a
general assignment for the benefit of creditors;
or
(k) if entry is made against PT-FI of a judgement,
decree or order for relief by a court of
competent jurisdiction in an involuntary case
commenced against PT-FI under any applicable
bankruptcy,
<PAGE>
19
insolvency or other similar law of any jurisdiction now or
hereafter in effect.
(2) In the case of any such event as is mentioned in
Clause 11(1), and at any time thereafter if any such event shall
then be continuing, RTZ Lender may, by written notice to PT-FI,
(a) declare that an Allocation Event (as defined in the Trust
Agreement) shall have occurred under the Trust Agreement and/or
(b) exercise or cause the Trustee to exercise any or all of the
remedies available to RTZ Lender or the Trustee under the Security
Documents or the Intercreditor Agreement, including, without
limitation, any action required to enforce RTZ Lender's rights
with respect to 100% of PT-FI's share of Incremental Expansion
Cashflow.
EXPENSES
12. Each of PT-FI and RTZ Lender shall bear its own costs and
expenses incurred in the preparation and negotiation of this
Agreement and the other Transaction Documents. Any and all
documentary taxes, assessments, notarial or other fees or charges
levied by any Governmental Authority by reason of the execution
and delivery of or in connection with the performance of this
Agreement or any of the other Transaction Documents shall be borne
equally between PT-FI and RTZ Lender.
ASSIGNMENT
13. This Agreement shall inure to the benefit of and be binding
upon the parties hereto and their respective successors, but is
not assignable without the written consent of the other party
hereto provided that RTZ Lender may assign without such consent of
PT-FI to a member of RTZ Lender's UK Group without the written
consent of the other party hereto. Nothing in this Agreement,
express or implied, is intended to confer upon any other person
any rights or remedies under or by reason of this Agreement. Any
transfer by PT-FI of its Participating Interest in accordance with
the Participation Agreement, to the extent such assignment relates
to its interests in Incremental Expansion Cashflow, shall be
subject to the terms and provisions of the Transaction Documents.
No such assignment or transfer shall be effective until there is
executed and delivered to RTZ Lender an instrument or instruments
in form and substance satisfactory to RTZ Lender evidencing the
agreement of the transferee to assume all of the liabilities and
to perform all of the obligations and duties under this Agreement
and the other Transaction Documents to which PT-FI is party. No
such assignment or transfer shall relieve PT-FI of its obligations
under this Agreement.
NOTICES
14. (1) Except as otherwise stated herein, all notices,
demands or other communications hereunder to any party hereto
shall be made in writing and shall be deemed to be duly given or
made when delivered to such party addressed to it at its address
specified in the relevant part of Schedule 1 to this Agreement, or
at such other address as such party may hereafter specify for such
purpose to the others by notice.
<PAGE>
20
(2) A notice or other communication received on a non-
working day or after 5.00pm on a working day in the place of
receipt shall be deemed to be served on the next following working
day in such place.
GOVERNING LAW
15. (1) This Agreement shall be governed and construed in
accordance with the laws of the State of New York.
(2) Each of the parties irrevocably agrees that any suit,
action or proceedings (together in this Clause 15 referred to as
"Proceedings") arising out of or in connection with this
Agreement, except for Proceedings regarding enforcement which may
be brought in any jurisdiction, shall be brought in the courts of
the Borough of Manhattan in the State of New York and submits to
the exclusive jurisdiction of each such court.
(3) Each of the parties irrevocably waives any objection
which it may have now or hereafter to the laying of venue of any
Proceedings in any such court as is referred to in this Clause 15
and any claim that any such Proceedings have been brought in an
inconvenient forum. Each of the parties hereby to the fullest
extent permitted by law waives any right it may have to have any
Proceedings take the form of a trial by jury.
(4) Nothing contained in this Clause 15 shall limit the
rights of any party to take proceedings against any other party in
any other court of competent jurisdiction, nor shall the taking of
Proceedings in one or more jurisdictions preclude the taking of
Proceedings in any other jurisdiction, whether concurrently or
not.
MISCELLANEOUS
16. If any provision of this Agreement or the Security Documents
is prohibited or unenforceable in any jurisdiction such
prohibition or unenforceability shall not invalidate the remaining
provisions of this Agreement or the Security Documents or affect
the validity or enforceability of such provision in any other
jurisdiction.
IN WITNESS whereof the parties have caused this Agreement to be
signed on the date first above written.
<PAGE>
21
SCHEDULE 1
Address for Notices to PT-FI
P.T. Freeport Indonesia Company
Plaza 89, 5th Floor
Jl.H.R. Rasuna Said Kav.X-7 No.6
Jakarta 12940 Indonesia
Telephone: 62 21 850 4555
Telex: 44415 FIIJKTIA
Fax: 62 21 850 6736
Attention: President-Director
with a copy to: P.T. Freeport Indonesia Company
1615 Poydras Street
New Orleans, LA 70112
Telephone: 504 582 4000
Telex: 6275993
Fax: 504 585 3513
Attention: General Counsel
Address for Notices to RTZ Lender
6 St. James's Square
London SW1Y 4LD
Telephone: 0171 930 2399
Telex: 24639 RTZLDN G
Fax: 0171 930 3249
Attention:The Secretary
with a copy to: The Treasurer
The RTZ Corporation PLC
6 St. James's Square
London SW1Y 4LD
Fax: 0171 930 3249
<PAGE>
22
SCHEDULE 2
Form of Advance Request
To: [name and address of RTZ Lender]
Attention:
[Date]
REQUEST
Agreement dated [ ] 199[ ]
Dear Sirs
We refer to the Facility constituted by an agreement (the
"Agreement") dated [ ] 199[ ] made between
this Company as Borrower and [ ] as RTZ Lender.
Terms defined in the Agreement have the same meanings herein.
We hereby give you notice pursuant to Clause 5 of the Agreement
that we require an Advance to be made to us under the Agreement as
follows:
(a) Drawdown Date:
(b) Amount:
We set out below the Approved Expansion Project in or towards the
financing of which the proceeds of the Advance will be applied:
[ ]
[In the first Advance Request in respect of a Relevant Approved
Expansion Project only:
[Our best estimate, taken from the feasibility study for the
Approved Expansion Project referred to above approved pursuant to
Clauses 10 and 11 of the Participation Agreement, of
(i) the aggregate of the projected Relevant Costs of the
Approved Expansion Project is $
(ii) the period over which the projected Relevant Costs of the
Approved Expansion Project will be incurred is years
(iii) we attach an assumed repayment schedule based on the
application of 100% of our Incremental Expansion
Cashflow based on the related Feasibility Study of the
Approved Expansion Project.]
We set out below details of the Relevant Costs in or towards the
financing of which the proceeds of the Advance will be applied and
confirm that such proceeds will be applied within thirty days
after the proposed Advance Date:
<PAGE>
23
[ ]
We confirm that no Event of Default has occurred and is continuing
or would occur as a result of the making of the proposed Advance
which has not been waived.
Yours faithfully
<PAGE>
24
SCHEDULE 3
Trust Agreement
<PAGE>
25
P.T. FREEPORT INDONESIA COMPANY
By:
Name:
Title:
[RTZ Company]
By:
Name:
Title:
Exhibit A
DESCRIPTION OF TRUST ARRANGEMENT
1. Trust Estate. To give effect to the arrangements
contemplated by the credit facilities, the Participation
Agreement and the RTZ Loan Agreement and to preserve and
protect the respective rights of the parties thereunder, an
independent third party trustee (First Trust is the existing
trustee) will hold in trust (i) the COW, (ii) all
concentrate sales contracts, (iii) all receipts from sales
of concentrate (to be directed to trust accounts) and (iv)
the power of attorney (surat kuasa) and all Indonesian
security agreements.
2. Sales Receipts. All receipts from sales of concentrate from
operations in Block A (other than Sole Risk Projects) will
be directed to a single trust payments account. Sales
receipts from Block B and Sole Risk Projects will be
directed respectively to separate trust payments accounts.
Prior to any allocation event, such cash receipts will be
swept daily to a general PT-FI account, and PT-FI will pay
its various obligations, including operating expenses, debt
service and payments to be made to PT-RTZ.
3. Trust Payments Accounts. If an allocation event occurs,
cash received in the trust payments accounts at any time
thereafter will not be swept into the general PT-FI account
but, instead, will be retained by the Trustee and applied by
the Trustee strictly in accordance with the Financial and
Accounting Procedures annexed to the Participation
Agreement, the RTZ Loan Agreement, Bank Credit Agreements
and the Intercreditor Agreement.
4. Security Arrangements and Remedies. The lenders will be
able to institute an "allocation" event, triggering the
allocation set forth above, upon an event of default under
the credit facilities. RTZ will be able to institute an
allocation event upon the occurrence of certain specified
events pursuant to the RTZ Loan Agreement or the
Participation Agreement. With respect to the credit
facilities, dedication of 100% of base production cashflow
to the credit facilities (a "blockage" event) will require a
separate notice (which may be given concurrently with an
allocation notice) by the lenders upon an event of default.
It is anticipated that PT-FI will pledge to the lenders its
right to receive 60% of Incremental Expansion Cashflow after
the RTZ Loan has been paid.
5. Operatorship. The lenders agree that, if they have the
right to replace PT-FI as operator, they will (subject to
certain conditions to be agreed upon related to RTZ's
ability to perform and to RTZ's agreement to operate
consistently with the terms of the credit facilities)
appoint PT-RTZ or an Affiliate of PT-RTZ reasonably
acceptable to the Banks to so act providing PT-RTZ or its
Affiliate, as the case may be, agrees that it will so act.
<PAGE>
The lenders agree that, should PT-FI resign, or be deemed to
have resigned, pursuant to the Participation Agreement, they
will thereupon consent to PT-RTZ or an Affiliate of PT-RTZ
reasonably acceptable to the Banks to so act (subject only
to the aforementioned conditions).
6. Power of Attorney. A new power of attorney (surat kuasa)
will be granted to the trustee by PT-FI (in substitution of
the present power held by the lenders) granting the trustee
the right in certain specified circumstances (each a
"replacement event") to perform and exercise in the name of
PT-FI the rights and duties of PT-FI under the COW and
generally to conduct the activities of PT-FI in the Contract
Area as fully and effectually as if conducted by PT-FI
itself. The specified circumstances shall include, without
limitation, events of defaults under the credit facilities
and PT-FI's resignation, or deemed resignation, under the
Participation Agreement. The power of attorney will be
written in terms which will expressly permit PT-RTZ to be
substituted for the trustee (subject only to the
aforementioned conditions) and to act under the power as
fully and effectually as could the trustee.
The trustee shall, upon request of PT-RTZ, exercise its
rights under the power of attorney, including the
substitution of PT-RTZ (subject to such conditions),
promptly on its being satisfied that a replacement event has
occurred.
7. Duration. The trust arrangement will continue to operate
after repayment of the credit facilities (and any
replacements or substitutes thereof) until the termination
of the Participation Agreement, and, if an allocation event
occurs during such period, cash received in the trust
payment accounts at any time thereafter will be applied
solely in accordance with the Financial and Accounting
Procedures annexed to the Participation Agreement and, if
still outstanding, the RTZ Loan Agreement. The costs of the
trustee shall be allocated to the relevant Trust Payments
Account and shall be met by PT-FI and PT-RTZ in proportion
to their Participating Interests in the activities which are
subject to such Trust Payments Account.
8. A similar trust arrangement will be established for the PT-
IRJA Contract of Work area and the activities undertaken
therein.
Freeport-McMoRan Inc. Exhibit B
Freeport-McMoRan Inc. R. Foster Duncan
1615 Poydras Street Treasurer
New Orleans, LA 70112 Telephone: 504-582-4628
P.O. Box 61119 Fax: 504-582-4511
New Orleans, LA 70161
April 27, 1995
Re: Restructuring of Freeport-McMoRan Inc.
Thank you for agreeing to underwrite our new credit
facilities.
Enclosed for your review is a description of (1) the
spin-off of Freeport-McMoRan Copper & Gold Inc. ("FCX") and (2)
the plans of FTX and FCX to enter into a strategic alliance with
The RTZ Corporation PLC ("RTZ") and RTZ America Inc. (the "RTZ
Transaction"), as to both of which we have informed you previously
and details of which are set out in the Exhibit hereto.
In order for us to proceed with our discussions with
RTZ toward execution of definitive documentation, we are
requesting that you indicate your agreement in principle to the
RTZ Transaction, subject to your further satisfaction with the
final terms of the definitive documentation. As you are aware,
under the proposed FCX/FI credit facility, the security interest
granted to the lenders will include cash flows from PT-FI's
Contract of Work, Block A. As described in more detail in the
attachment, the RTZ Transaction will include the sharing of
certain incremental cash flows from future expansion projects
related to Block A. Cash flows from the current base production
in Block A of 118,000 tonnes per day, in effect produced from the
amount of PT-FI's year-end 1994 10-K ore reserve base, will remain
reserved to PT-FI (and, consequently, to its lenders) and RTZ's
interest will be only in any incremental cash flow derived from
production in excess of such current base production due to any
expansion projects RTZ has funded on a joint venture basis or a
sole risk basis. Please refer to the attachment for further
detail regarding the RTZ Transaction.
<PAGE>
In reliance upon your agreement in principle, the
parties intend to enter into a stock purchase agreement governing
the purchase of FCX stock and related transactions and, at the
same time, a master agreement attaching forms of definitive
documentation regarding the joint venture, which definitive
documentation will be subject to your satisfaction as provided
below.
If you agree in principle to the RTZ Transaction as
outlined above and in the attachment, subject to your satisfaction
with the final terms of the definitive documentation regarding
such transaction prior to your entering into our new credit
facilities, please countersign this letter and return it via
facsimile (504-582-4511) to R. Foster Duncan, Treasurer of
Freeport-McMoRan Inc., no later than Friday, May 5, 1995. We
understand such agreement in principle to include specifically
your agreement that, subject to your satisfaction with the final
terms of the RTZ Transaction and the definitive terms of the
documentation regarding such transaction, (1) you will cooperate
and negotiate in good faith with RTZ regarding intercreditor and
revenue sharing arrangements to give effect to the foregoing, (2)
you will consent to the joint venture arrangements and the loan
described in the attachment, (3) you will consent to the lien on
the expansion cash flows (those attributable to expansion projects
funded on a joint venture basis or on a sole risk basis by RTZ)
and that such cash flows can be assigned and pledged to RTZ, (4)
you will consent to the lien on (X) the 40% undivided interest to
be acquired by RTZ in the COW insofar as it relates to expansion
projects funded on a joint venture basis or on a sole risk basis
by RTZ in Block A (it being understood that expansion projects
exclude PT-FI's current milling and mining operations in Block A,
i.e., the current base production in Block A of 118,000 tonnes per
day, in effect produced from PT-FI's year-end 1994 10-K ore
reserve base), (Y) the 40% undivided interest to be acquired by
RTZ in the COW insofar as it relates to Block B and agree such
interests may be assigned to RTZ and (Z) RTZ's 40% interest in all
Products obtained or other property produced by or acquired by the
joint venture expansion projects in Block A or joint venture
expansion projects in Block B, (5) PTFI may (subject to certain
exceptions to be agreed upon related to RTZ's ability to perform
and to RTZ's agreement to operate consistently with the terms of
the credit facilities) be replaced with RTZ or an affiliate of RTZ
reasonably acceptable to the Banks as operator of the joint
venture as described in the attachment and (6) FCX may guaranty
PTFI's obligations under the participation agreement which governs
the terms of the joint venture. Please return the original
executed signature pages to Mr. Woolery via overnight courier c/o
Cravath, Swaine &
2
<PAGE>
Moore, Worldwide Plaza, 825 Eighth Avenue, New York, New York
10019-7475 (telephone: 212-474-1000).
Very truly yours,
FREEPORT-MCMORAN INC.
By: /s/ R. Foster Duncan
Name: R. Foster Duncan
Title: Treasurer
FREEPORT-MCMORAN COOPER & GOLD INC.
By: /s/ R. Foster Duncan
Name: R. Foster Duncan
Title: Treasurer
P.T. FREEPORT INDONESIA COMPANY
By: /s/ R. Foster Duncan
Name: R. Foster Duncan
Title: Treasurer
Agreed and accepted on this _____ day of April, 1995:
The Chase Manhattan Bank, N.A.
Name of Bank
By: /s/ Nicholas J. Chirzkos
Name: Nicholas J. Chirzkos
Title: Vice President
3
<PAGE>
Moore, Worldwide Plaza, 825 Eighth Avenue, New York,
New York 10019-7475 (telephone: 212-474-1000).
Very truly yours,
FREEPORT-MCMORAN INC.
By:________________________________________
Name:
Title:
FREEPORT-MCMORAN COOPER & GOLD INC.
By:________________________________________
Name:
Title:
P.T. FREEPORT INDONESIA COMPANY
By:________________________________________
Name:
Title:
Agreed and accepted on this 27th day of April, 1995:
Chemical Bank
Name of Bank
By: /s/ Theodore L. Parker
Name: Theodore L. Parker
Title: Vice President
3
<PAGE>
Chemical Bank
270 Park Avenue
New York, NY 10017-2070
April 27, 1995
Freeport-McMoRan Inc.
Freeport-McMoRan Resource Partners,
Limited Partnership
Freeport-McMoRan Copper & Gold Inc.
P.T. Freeport Indonesia Company
1615 Poydras Street
New Orleans, Louisiana 70112
Attention of: Mr. R. Foster Duncan
Senior Secured Revolving Credit Facilities
Consent Letter
Ladies and Gentlemen:
Reference is made to: (i) the Amended and Restated
Credit Agreement (the "FTX-FRP Credit Agreement") dated as of June
1, 1993 among Freeport-McMoRan Inc. ("FTX"), Freeport McMoRan
Resource Partners, Limited Partnership ("FRP"), the Banks party
thereto and Chemical Bank (as Agent for the Banks), (ii) the
Credit Agreement dated as of October 27, 1989, as amended and
restated as of June 1, 1993 and as further amended (the "FI Credit
Agreement"), among P.T. Freeport Indonesia Company ("FI"), FTX,
Freeport-McMoRan Copper & Gold Inc. ("FCX"), the Banks party
thereto, First National Bank, National Association (as successor
to Morgan Guaranty Trust Company of New York as trustee for the
Banks under the FI Trust Agreement) and Chemical Bank (as Agent
for the Banks), (iii) the Credit Agreement dated as of June 11,
1992, as amended (the "FMPO Credit Agreement"), among FM
Properties Operating Co. ("FMPO"), FTX, the Banks party thereto
and Chemical Bank as Agent and Collateral Agent for the Banks (the
FTX-FRP Credit Agreement, the FI Credit Agreement and the FMPO
Credit Agreement being collectively referred to herein as the
"Credit Agreements") and (iv) the consents attached hereto (the
"Consents") delivered to the Banks party to the respective Credit
Agreements in connection with the proposed transaction between
FTX, FCX, The RTZ Corporation PLC ("RTZ") and RTZ America Inc.
described therein. Terms used but not defined herein have the
meaning assigned to such terms in the FTX-FRP Credit Agreement.
In the event that (A) (i) any Bank shall not provide
its consent under the FTX-FRP Credit Agreement, the FI Credit
Agreement or the FMPO Credit Agreement, as the case may be,
pursuant to the Consents attached hereto and (ii) the consent of
such Bank is necessary to obtain approval of the Consent Letter by
the requisite number of Banks under the FRP-FTX Credit Agreement,
the FI Credit Agreement or the FMPO Credit Agreement, as the case
may be; or (B) if Chemical Bank has approved the definitive
documentation and (i) any Bank shall not provide the necessary
consents, waivers and/or agreements, as the case may be, under any
of the FTX-FRP Credit Agreement, the FI Credit Agreement or the
FMPO Credit Agreement, as the case may be, in respect of the
definitive documentation (and the transactions contemplated
thereby) relating to the transactions described herein and in the
attachments hereto, and (ii) the consent of such Bank is necessary
to obtain the approval of such definitive documentation under the
FTX-FRP Credit Agreement, the FI Credit Agreement or the FMPO
Credit Agreement, as the case may be, then, in each case, Chemical
agrees to (I) make a binding offer to purchase at par such Bank's
rights and obligations under such Credit Agreement and to use its
best efforts to consummate such purchase in accordance with
Section 10.3 of the FTX-FRP Credit Agreement, Section 10.3 of the
FI Credit Agreement or Section 9.3 of the FMPO Credit Agreement,
as the case may be, and to provide such consents, waivers and
agreements, as the case may be, and/or (II) refinance the Credit
Agreements on the same terms (except as modified to reflect and to
permit the transactions described herein and in the attachments
hereto, as contemplated by the approved definitive documentation)
with banks which provide such consents, waivers and agreements, as
the case may be; provided that, Chemical's obligations hereunder
shall be subject to the condition that, after giving effect to the
waivers and consents in the Consents with respect to each of the
respective Credit Agreements, there shall not have occurred and be
continuing any Default or Event of Default under any such Credit
Agreements.
By execution and delivery of this letter agreement,
Chemical, in its capacity as a Bank, indicates its agreement in
principle to the transactions described herein and in the
attachments, subject to Chemical's satisfaction with the final
terms of the definitive documentation regarding such transactions.
Such agreement in principle includes specifically Chemical's
agreement that, subject to its satisfaction with the final terms
of the definitive documentation regarding such transactions, (1)
Chemical consents to the joint venture arrangements and the loan
described in the attachments, (2) Chemical will consent to release
the lien on the expansion cash flows (those attributable to
expansion projects funded on a joint venture basis or on a sole
risk basis by RTZ) and that such cash flows can be assigned and
pledged to RTZ, (3) Chemical will consent to release the lien on
(X) the 40% undivided interest to be acquired by RTZ in the COW
insofar as it relates to expansion projects funded on a joint
venture basis or on a sole risk basis by RTZ in Block A (it being
understood that expansion projects exclude PT-FI's current milling
and mining operations in Block A, i.e., the current base
production in Block A of 118,000 tonnes per day, in effect
produced from PT-FI's year-end 1994 10-K ore reserve base), (Y)
the 40% undivided interest to be acquired by RTZ in the COW
insofar as it relates to Block B and agree such interests may be
assigned to RTZ and (Z) RTZ's 40% interest in all Products
obtained or other property produced by or acquired by the joint
venture expansion projects in Block A or joint venture expansion
projects in Block B, (4) Chemical agrees that PT-FI may (subject
to certain exceptions to be agreed upon related to RTZ's ability
to perform and to RTZ's agreement to operate consistently with the
terms of the credit facilities) be replaced with RTZ or an
affiliate of RTZ as operator reasonably acceptable to Chemical of
the joint venture as described herein and in the attachments, (5)
Chemical agrees that FCX may guaranty PT-FI's obligations under
the participation agreement which governs the terms of the joint
venture, and (6) Chemical agrees to enter into mutually
satisfactory agreements with RTZ so that the respective revenue
priorities and lien rights are respected. Such agreement in
principle also includes specifically Chemical's agreement, subject
to such satisfaction, that the proposed terms of the new senior
secured revolving credit facilities which will amend or replace
the Credit Agreements will be changed to reflect and permit the
transactions described herein and in the attachments hereto, as
contemplated by the approved definitive documentation.
This letter agreement may be executed in multiple
counterparts, each of which shall constitute an original, but all
of which when taken together shall constitute but one instrument.
This letter agreement shall be governed by and construed in
accordance with the laws of the State of New York.
If the foregoing correctly sets forth our
understanding, please indicate your acceptance hereof by signing
in the appropriate space below and returning to each of us
one of the enclosed duplicate originals hereof, whereupon this
letter shall become a binding agreement between us.
Very truly yours,
CHEMICAL BANK,
By: /s/ Theodore L. Parker
Name: Theodore L. Parker
Title: Vice President
CHEMICAL SECURITIES INC.,
By: /s/ W. Durand Eppler
Name: W. Durand Eppler
Title: Managing Director
Accepted and agreed to
as of the date first written
above:
FREEPORT-MCMORAN INC.
By: /s/ R. Foster Duncan
Name: R. Foster Duncan
Title: Treasurer
FREEPORT-MCMORAN RESOURCE PARTNERS
LIMITED PARTNESHIP,
By: FREEPORT-MCMORAN INC.,
its Administrative Managing
General Partner,
By: /s/ R. Foster Duncan
Name: R. Foster Duncan
Title: Treasurer
FREEPORT-MCMORAN COPPER & GOLD INC.,
By: /s/ R. Foster Duncan
Name: R. Foster Duncan
Title: Treasurer
P.T. FREEPORT INDONESIA COMPANY,
By: /s/ R. Foster Duncan
Name: R. Foster Duncan
Title: Treasurer
FM PROPERTIES OPERATING CO.,
By: Freeport-McMoRan Inc.,
its Managing General Partner,
By: /s/ R. Foster Duncan
Name: R. Foster Duncan
Title: Treasurer
Chemical Bank The Chawe Manhattan Bank
270 Park Avenue (Natioanl Association)
New York, NY 10017-2070 One Chase Manhattan Plaza
New York, NY 10081
April 27, 1995
Freeport-McMoRan Inc.
Freeport-McMoRan Resource Partners,
Limited Partnership
Freeport-McMoRan Copper & Gold Inc.
P.T. Freeport Indonesia Company
1615 Poydras Street
New Orleans, Louisiana 70112
Attention of: Mr. R. Foster Duncan
Senior Secured Revolving Credit Facilities
Amended Commitment Letter
Ladies and Gentlemen:
Reference is made to the Commitment Letter, dated as of January 25,
1995 (including attachments thereto, the "Commitment Letter"), among
Freeport-McMoRan Inc. ("FTX"), Freeport-McMoRan Resource Partners,
Limited Partnership ("FRP"), Freeport-McMoRan Copper and Gold Inc.
("FCX"), P.T. Freeport Indonesia Company ("FI"), Chemical Bank
("Chemical"), Chemical Securities Inc. ("CSI"), The Chase Manhattan
Bank (National Association) ("Chase") and Chase Securities, Inc.
("Chase Securities"). Capitalized terms used but not defined herein
have the meaning assigned to such terms in the Commitment Letter.
You have advised Chemical, CSI, Chase and Chase
Securities that, in addition to the Restructuring transactions
described in the Commitment Letter, FTX and FCX plan to enter into a
strategic alliance with the RTZ Corporation PLC ("RTZ") and RTZ
American Inc. as described in the letter attached as Exhibit A
hereto (the "RTZ" Transaction"). Based on FTZ's and FCX's plan to
enter into the RTZ Transaction, each of Chemical and Chase is
pleased to confirm to you its reinstatement of its several
commitment to provide one half of the $750,000,000 principal amount
of the FI Senior Secured Credit Facility and one half of the
$400,000,000 principal amount of the FRP Senior Secured Credit
Facility, each substantially on the terms and conditions set forth
<PAGE>
in this letter agreement, the Commitment Letter and the respective
Term Sheets attached as Exhibits A-1, A-2 and B to the Commitment
Letter.
In accordance with the provisions of the Commitment
Letter, Chemical continues to reserve the right, prior to the
execution of definitive documentation (the "Closing"), to syndicate
all or a portion of such commitments to one or more financial
institutions reasonable acceptable to you which will become parties
to the definitive credit documentation (together with Chemical and
Chase, the "Lenders"). In addition, Chemical's and Chase's
commitments hereunder are subject to (i) the negotiation, execution
and delivery prior to [June 30,] 1995, of definitive documentation
with respect to the Credit Facility satisfactory in form and
substance to Chemical, Chase and counsel for the Agents and (ii) the
conditions included in the Commitment Letter.
This letter constitutes an amendment to the Commitment
Letter, which except as amended hereby, shall remain in full force
and effect in accordance with its terms. After your acceptance
hereof, all references to the Commitment Letter in the Fee Letters,
the Term Sheets or other documentation relating to the Credit
Facility shall be Deemed to refer to the Commitment Letter as
amended hereby.
If the foregoing correctly sets forth our understanding,
please indicate your acceptance hereof by signing in the appropriate
space below and returning to each of us one of the enclosed
duplicate originals hereof, whereupon this letter shall become a
binding agreement between us.
Very truly yours,
CHEMICAL BANK,
by Theodore L. Parker
Name: Theodore L. Parker
Title: Vice President
- -2-
<PAGE>
CHEMICAL SECURITIES INC,
by/s/ W. Durand Eppler
Name: W. Durand Eppler
Title: Managing Director
CHASE SECURITIES, INC.
by/s/ Andrew C. Mahder
Name: Andrew C. Mahder
Title: Vice President
THE CHASE MANHATTAN BANK
(NATIONAL ASSOCIATION),
by/s/ Nicholas J. Chirzkos
Name: Nicholas J. Chirzkos
Title: Vice President
Accepted and agreed to
as of the date first written
above:
FREEPORT-McMoRan INC.,
by
/s/ R. Foster Duncan
Name: R. Foster Duncan
Title: Treasurer
FREEPORT-McMoRan RESOURCE PARTNERS,
LIMITED PARTNERSHIP,
by FREEPORT-McMoRan INC.,
its Administrative Managing
General Partner,
by/s/ R. Foster Duncan
Name: R. Foster Duncan
Title: Treasurer
FREEPORT-McMoRan COPPER & GOLD INC.,
by
/s/ R. Foster Duncan
Name: R. Foster Duncan
Title: Treasurer
- -3-
<PAGE>
P.T. FREEPORT INDONESIA COMPANY,
by/s/ R. Foster Duncan
Name: R. Foster Duncan
Title: Treasurer
- -4-
<PAGE>
Description of Freeport Restructuring
A. Spin-Off of Freeport-McMoRan Cooper & Gold Inc.
On May 3, 1994, Freeport-McMoRan Inc. ("FTX") announced
plans to spin-off its subsidiary, Freeport-McMoRan Copper & Gold
Inc. ("FCX"), pursuant to an essentially tax-free distribution to
its common stockholders, on a pro rata basis, of all of the shares
of the Class B Common Stock of FCX which it owns at the time of such
distribution (the "Distribution").
Because of the tremendous growth of FCX's common equity
market value since its organization in 1987, FTX and FCX believe
that the Distribution is necessary in order for FCX to continue its
growth and development of business opportunities without conflicting
with the financial needs and priorities of FTX.
A series of steps will be taken prior to the
Distribution. First, both FTX and FCX will recapitalize or
refinance certain of their existing indebtedness. Accordingly, FTX
plans to call for redemption or otherwise cause to be converted or
discharged all of its outstanding convertible debt. The ability to
do so is dependent to a large extent on its arrangements with RTZ.
These arrangements and FTX's recapitalization are described in more
detail below.
Likewise, as you are aware, FCX is in the process of
refinancing its existing indebtedness. FCX and P.T. Freeport
Indonesia Company ("PT-FI"), a subsidiary of FCX, will enter into
two senior secured revolving credit facilities with Chemical Bank,
as Administrative Agent, and The Chase Manhattan Bank (National
Association), as Documentary Agent, including an amendment to the
existing $550 million facility under which PT-FI will be the
borrower and a new $200 million facility under which either FCX or
PT-FI may borrow. In addition, a separate facility for FTX and
Freeport-McMoRan Resource Partners, Limited Partnership ("FRP"),
will replace the existing $800 million FTX/FRP credit arrangements,
the availability of which is now reduced by PT-FI's borrowings under
its existing $550,000,000 facility.
In addition, prior to the Distribution, FCX will effect
a recapitalization by merging a newly created, wholly owned Delaware
subsidiary of FCX with and into FCX (the "Merger"). The Merger will
result in a number of changes to FCX'S capital structure. These
changes include altering the voting rights of FCX so that the
shareholders of its Class B Common Stock elect 80% of the FCX
directors and shareholders of its Class A Common Stock and preferred
stock together elect 20% of the FCX directors. Such changes in
voting power are required in order to permit the Distribution to be
tax-free for federal income tax purposes. Consummation of the
<PAGE>
Merger has been approved by the shareholders of FCX's Class A Common
Stock and Class B Common Stock, who also approved the establishment
of new stock option, stock-based award and cash bonus plans for its
directors, officers and employees and the amendment of its
Certificate of Incorporation to reduce FCX's vulnerability to
unsolicited takeover proposals.
After the completion of the FTX refinancing and the
consummation of the Merger, FTX will spin off FCX in the
Distribution. FTX currently owns all of the shares of Class B
Common Stock of FCX. Pursuant to the Distribution, FTX will
distribute all of the shares of FCX Class B Common Stock which it
owns at such time pro rata to its common stockholders.
In connection with the Distribution, FCX will repay in
full its intercompany indebtedness to FTX. Certain obligations
previously incurred by FTX, including liabilities with respect to
space and equipment leases and employee benefits relating to
employees transferred to FCX, will be transferred to FCX. In
addition, up to $90 million of FTX's existing guarantee of FM
Properties Operating Co.'s indebtedness will be assumed b FCX.
Following the Distribution, FTX will retain its
interests in the sulphur and agricultural minerals business It will
remain engaged in the business of mining and selling sulphur through
its interest in FRP, a Delaware limited partnership, and in the
business of mining, developing, producing and marketing phosphate
fertilizers through its interest in and through FRP's interest in a
joint venture partnership IMC-Agrico Company.
B. RTZ Transactions and -FTX Recapitilization
1. On March 7, 1995, FTX signed letters of intent
with The RTZ Corporation PLC ("RTZ") and RTZ America Inc. ("RTZ
America") whereby RTZ subsidiaries may acquire up to approximately
19% of the outstanding common equity of FCX and up to approximately
12% of the outstanding common equity of FTX. In addition, FCX and
subsidiaries of FCX will enter into joint ventures with RTZ and
subsidiaries of RTZ pursuant to which RTZ's subsidiaries will fund
up to $850 million of exploration and development projects on lands
controlled by FCX's Indonesian subsidiaries and RTZ will acquire 25%
of FCX's Spanish smelter operations and mineral exploration program.
2. Pursuant to its arrangements with RTZ, FTX will
sell approximately 21.5 million shares of the Class A Common Stock
of FCX (which is approximately 10.4% of the outstanding common
equity of FCX) to RTZ for $450 million. RTZ has an option to
- -2-
<PAGE>
purchase from FTX an additional 3.5 million shares of Class A Common
Stock for $75 million. FTX will use the proceeds from the sale of
these shares of FCX Class A Common Stock to call for redemption in
accordance with their terms its Zero Coupon Convertible Subordinated
Debentures (the "ABC Debentures"), to repay certain of its long-term
debt and, to the extent that there are any proceeds remaining, for
other corporate purposes.
3. FTX will also call for redemption its 6.55%
Convertible Subordinated Notes (the "6.55% Notes"). In connection
with the redemption of the 6.55% Notes, RTZ America, if requested by
FTX, will make an all-cash tender offer for all of the 6.55% Notes
and will convert any 6.55% Notes it acquires in the tender offer
into the Common Stock of FTX. As a result of the tender offer or
otherwise, it is expected that most of the 6.55% Notes will be
converted into FTX Common Stock rather than being redeemed. If FTX
purchases any of the 6.55% Notes in redemption, however, RTZ, if
requested, will purchase additional FCX Class A Common Stock from
FTX.
4. In order to effect such sales of FCX Class A
Common Stock, FTX will convert a sufficient amount of shares of the
FCX Class B Common Stock it owns into shares of FCX Class A Common
Stock.
5. In addition, FTX has completed an offer of shares
of its Common Stock in exchange for its $4.375 Convertible
Exchangeable Preferred Stock, at a ratio of 2.85 shares of Common
Stock for each share of such Preferred Stock.
6. If RTZ America acquires and converts all of the
6.55% Notes and RTZ exercises the option to acquire the additional
3.5 million shares of the FCX Class A Common Stock, RTZ and RTZ
America will own, in the aggregate after giving effect to the spin-
off, up to approximately 19% of the outstanding common equity of FCX
and, if the shares obtained on conversion of the 6.55% Notes are
retained through the Distribution, approximately 12% of the common
equity of FTX anticipated to be outstanding (after completion of
FTX's restructuring).
7. In addition to RTZ America's acquisition of FTX
and FCX stock, RTZ and FCX have agreed to establish joint ventures
to explore and develop the Contracts of Work ("COWs") held by PT-FI
and by P.T. Irja Eastern Minerals Corporation ("PT-IRJA"), an
Indonesian limited liability company in which FCX's wholly owned
subsidiary, Eastern Mining Company, Inc., a Delaware corporation,
owns an 80% interest. Under the joint venture arrangements,
subsidiaries of RTZ will acquire a 40% undivided interest, in (i)
the COW held by PT-IRJA (the "PT-IRJA Area"); (ii) in the COW held
by PT-FL insofar as it relates to Contract Area Block B (as defined
in PT-FI's COW); and (iii) in the COW held by PT-FI insofar as it
relates to expansion projects funded on a joint venture basis
- -3-
<PAGE>
or on a sole risk basis by RTZ in Contract Area Block A (as defined
in PT-FI's COW) (it being understood that expansion projects exclude
PT-FI's current mining and milling operations in Block A, i.e., the
current base production in Block A of 118,000 tonnes per day, in
effect produced from PT-FI's year-end 1994 10-K ore reserve base).
8. All Products (as defined in PT-FI's COW) obtained
or other property produced by or acquired by the joint venture
expansion projects in BLOCK A or joint venture projects in Block B
will be held in the name of PT-FI as operator of such joint venture
but shall be and remain the property of PT-FI and RTZ severally in
proportion to their interests in the joint venture. In addition,
PT-FI will make its 60% interest in PT-FI's COW insofar as it
relates to expansion projects funded on a joint venture basis or on
a sole risk basis by RTZ in Block A (it being understood that
expansion projects exclude PT-FI's current mining and milling
operations in Block A, i.e., the current base production in Block A
of 118,000 tonnes per day, in effect produced from PT-FI's year-end
1994 10-K ore reserve base) available to the joint venture. FCX
will guarantee PT-FI's obligations under the participation agreement
which governs the terms of the joint venture.
9. Under the joint venture arrangements, subsidiaries
of RTZ will pay for all further exploration approved by an
Exploration Committee established by FCX and RTZ until RTZ has paid
an aggregate of $100 million. Thereafter, the parties will pay
additional exploration costs ratably in proportion to their
participating interests in such projects (on a 60%/40% basis except
for sole risk ventures). The parties will pay the costs to develop
additional projects in Block A (after RTZ has funded its $750
million as outlined below), and of all projects in Block B and in
the PT-IRJA Area, ratably in accordance with their participating
interests in such projects.
10. In addition, RTZ will provide 100% of certain
specified costs (up to $750 million), including mining development,
equipment and working capital, of future expansion projects of PT-
FI's current milling operations in Block A, subject generally to
proving up of 400 million tonnes of reserves incremental to the 1994
year-end 10-K reserves. RTZ's contribution of $750 million for such
Block A expansion projects is being structured as a $450 million
loan to PT-FI, with recourse only to PT-FI's cash flows attributable
to such Block A expansion projects, and as a direct investment by
RTZ of $300 million. In return, PT-FI will grant to RTZ a first
priority lien upon PT-FI's 60% interest in incremental cash flow
resulting from the expansion of operations under PT-FI's COW and RTZ
will receive 100% of incremental cash flow attributable to PT-FI's
60% undivided interest in such expansion projects until it has
received in respect of the loan an amount equal to the funds it has
provided through the loan plus interest on the loan based on RTZ's
cost of borrowing, after which RTZ will continue to receive 40% and
PT-FI will receive 60% of incremental cash flow for the remaining
life of such expansion projects. A condition to the making of the
- -4-
<PAGE>
$450,000,000 loan by RTZ will be the release by the Banks, subject
to satisfactory intercreditor arrangements, of any lien that they
may now have or hereafter acquire with respect to (i) RTZ's 40%
interest in all Products obtained or other property produced by or
acquired by the joint venture expansion projects in Block A or joint
venture projects in Block B and in incremental cash flow resulting
from the expansion of operations under PT-FI's COW, and (ii) RTZ's
undivided 40% interest (subject to the following sentence) in PT-
FI's right, title and interest in, to and under PT-FI's COW insofar
as it relates to expansion projects funded on a joint venture basis
or on a sole risk basis by RTZ in Block A (it being understood that
expansion projects exclude PT-FI's current mining and milling
operations in Block A, i.e., the current base production in Block A
of 118,000 tonnes per day, in effect produced from PT-FI's year-end-
1994 10-K ore reserve base) and in the COW insofar as it relates to
Block B. No payments to RTZ in respect of the loan or the
investment will be made until the expansion projects have begun to
generate such incremental cash flows.
11. In addition, FCX/PT-FI will (subject to certain
exceptions to be agreed upon related to RTZ's ability to perform and
to RTZ's agreement to operate consistently with the terms of the
credit facilities) be replaced as operator of the joint venture by
RTZ or an affiliate of RTZ reasonably acceptable to the Banks if the
Banks have the right to remove FCX/PT-FI as operator and decide to
exercise such right. In addition, in certain other circumstances to
be agreed, such as the bankruptcy of FCX, the bankruptcy of PT-FI,
the loss of control of PT-FI by FCX, or certain other circumstances
to be agreed upon, RTZ may have the right to become the operator.
12. PT-FL shall continue to receive 100% of all cash
flow from its current Block A operations until its year-end 1994 10-
K ore reserves have been mined out in 2021.
13. In addition, a subsidiary of RTZ will purchase a
25% interest in FCX's Huelva, Spain copper smelter and RTZ will also
acquire a 25% interest in FCX's Spanish mineral exploration program.
14. In addition, the outstanding guarantees of FTX
relating to the debt of FM Properties Operating Co. ("FMPO"), a
partnership principally owned by FM Properties Inc. ("FMPI"), will
be refinanced in conjunction with a currently planned refinancing of
FMPO's indebtedness. If such refinancing has not occurred at the
time of the Distribution, however, FTX will retain primary
responsibility with respect to $45 million of the indebtedness and
FCX will unconditionally guarantee the remaining $90 million,
pending a refinancing or subsequent sale of properties by FMPO.
15. The foregoing will require that PT-FI's bank
lenders, (1) consent to the joint venture arrangements and the loan
described above, (2) release the lien on the expansion cash flows
(those attributable to expansion projects funded on a joint venture
- -5-
<PAGE>
basis or on a sole risk basis by RTZ) and that such cash flows can
be assigned and pledged to RTZ, (3) release the lien on (X) the 40%
undivided interest to be acquired by RTZ in the COW insofar as it
relates to expansion projects funded on a joint venture basis or on
a sole risk basis by RTZ in Block A (it being understood that
expansion projects exclude PT-FI's current mining and milling
operations in Block A, i.e., the current base production in Block A
of 118,000 tonnes per day, in effect produced from PT-FI's year-end
1994 10-K ore reserve base), (Y) the 40% undivided interest to be
acquired by RTZ in the COW insofar as it relates to Block B and
agree such interests may be assigned to RTZ and (Z) RTZ's 40%
interest in all Products obtained or other property produced by or
acquired by the joint venture expansion projects in Block A or joint
venture projects in Block B, (4) agree that PT-FI may (subject to
certain exceptions to be agreed upon related to RTZ's ability to
perform and to RTZ's agreement to operate consistently with the
terms of the credit facilities) be replaced with RTZ or an affiliate
of RTZ reasonably acceptable to the Banks as operator of the joint
venture as described above, (5) agree that FCX may guaranty PT-FI's
obligations under the participation agreement which governs the
terms of the joint venture and (6) enter into mutually satisfactory
agreements with RTZ so that the respective revenue priorities and
lien rights are respected.
16. In order to give effect to the foregoing, trust
arrangements of the type described in Exhibit A hereto will be
implemented.
- -6-
<PAGE>
DESCRIPTION OF TRUST ARRANGEMENT
Trust Estate. To give effect to the arrangements contemplated by
the credit facilities, the participation agreement and the
production payment loan and to preserve and protect the respective
rights of the parties thereunder, an independent third party trustee
(First Trust is the existing trustee) would hold in trust (i) the
COW, (ii) all concentrate sales contracts, (iii) all receipts from
sales of concentrate (to be directed to trust accounts) and (iv) the
surat kuasa and all Indonesian security agreements.
Sales Receipts. All receipts from sales of concentrate from PTFI's
existing operations and approved expansion projects would be
directed to a single "trust payments account". (Sales receipts from
sole risk and greenfield projects would be directed to separate
trust accounts.) It is anticipated that, prior to any allocation
event, such cash receipts would be swept daily to a general PTFI
account, and that PTFI would pay its various obligations, including
operating expenses, debt service and payments to be made to PTRTZ.
Trust Payments Account. If an allocation event has occurred, cash
received in the trust payments account will be charged with
operating costs, as defined in and in accordance with the accounting
procedures (which will contemplate monthly estimated calculations
with an annual true-up). The remainder would be split between base
production cash flow and expansion cash flow (it being understood
that expansion cash flows exclude PT-FI's current mining and milling
operations in Block A, i.e., the current base production in Block A
of 118,000 tonnes per day, in effect produced from PT-FI's year-end
1994 10-K ore reserve base).
Expansion cash flow would be allocated 60% for the account of PTFI
and 40% for the account of PTRTZ. PTRTZ's share would be payable to
it. For so long as the production payment loan is outstanding,
PTFI's 60% share will be 100% dedicated to repayment of such loan;
thereafter PTFI's share would be paid to it.
Subject to the occurrence of a blockage event, base production cash
flow would be paid to PTFI, which would be responsible for payment
of PTFI corporate credit and infrastructure debt service.
Security Arrangements and Remedies. The lenders would be able to
institute an "allocation" event, triggering the allocation set forth
above, upon an event of default under the credit facilities. RTZ
would be able to institute an allocation event upon the occurrence
of certain specified events to be agreed with respect to the
production payment loan or the participation agreement. In such an
event, the payment of operating expenses and dedication to PTRTZ
would be implemented by the trustee; with respect to the credit
<PAGE>
facilities, dedication of 100% of base production cash flow to the
credit facilities (a "blockage" event) would require a separate
notice (which may be given concurrently with an allocation notice)
by the lenders upon an event of default.
It is anticipated that PTFI would pledge to the lenders its right to
receive 60% of expansion cash flow after the production payment loan
has been paid.
The lenders agree that if they have the right to replace PTFI as
operator they will (subject to certain exceptions to be agreed upon
related to RTZ's ability to perform and to RTZ's agreement to
operate consistently with the terms of the credit facilities)
appoint RTZ or an affiliate of RTZ reasonably acceptable to the
Banks to so act, and RTZ agrees that it will so act.
<PAGE>
Freeport-McMoRan Inc. R. Foster Duncan
1615 Poydras Street Treasurer
New Orleans, LA 70112 Telephone: 504-582-4628
P.O. Box 61119 Fax: 504-582-4511
New Orleans, LA 70161
April 27, 1995
Re: Restructuring of Freeport-McMoRan Inc.
Enclosed for your review is a description of (1) the
spin-off of Freeport-McMoRan Copper & Gold Inc. ("FCX") and (2)
the plans of FTX and FCX to enter into a strategic alliance with
The RTZ Corporation PLC ("RTZ") and RTZ America Inc. (the "RTZ
Transaction"), as to both of which we have informed you previously
and details of which are set out in the Exhibit hereto.
In order for us to proceed with our discussions with
RTZ toward execution of definitive documentation, we are
requesting that you indicate your agreement in principle to the
RTZ Transaction, subject to your further approval of the final
terms of the definitive documentation. As you are aware, under
the original FTX/FCX/FI credit facility, the security interest
granted to the lenders includes cash flows from PT-FI's Contract
of Work, Block A. As described in more detail in the attachment,
the RTZ Transaction will include the sharing of certain
incremental cash flows from future expansion projects related to
Block A. Cash flows from the current base production in Block A
of 118,000 tonnes per day, in effect produced from the amount of
PT-FI's year-end 10-K ore reserve base, will remain reserved to
PT-FI (and, consequently, to its lenders) and RTZ's interest will
be only in any incremental cash flow derived from production in
excess of such current base production due to any expansion
projects RTZ has funded on a joint venture basis or on a sole risk
basis. Please refer to the attachment for further detail
regarding the RTZ Transaction.
In reliance upon your agreement in principle, the
parties intend to enter into a stock purchase agreement governing
the purchase of FCX stock and related transactions and, at the
same time, a master agreement attaching forms of definitive
documentation regarding the joint venture, which definitive
documentation will be subject to your satisfaction as provided
below.
If you agree in principle to the RTZ Transaction as
outlined above and in the attachment, subject to your further
<PAGE>
approval of the final terms of the definitive documentation
regarding such transaction, please countersign this letter and
return it via facsimile (504-582-4511) to R. Foster Duncan,
Treasurer of Freeport-McMoRan Inc., with a copy via facsimile to
James Woolery of Cravath, Swaine & Moore, counsel for the Agent
(212-474-3700), no later than Friday, May 5, 1995. We understand
such agreement in principle to include specifically your agreement
that, subject to your satisfaction with the final terms of the RTZ
Transaction and the definitive terms of the documentation
regarding such transaction, (1) you will cooperate and negotiate
in good faith with RTZ regarding intercreditor and revenue sharing
arrangements to give effect to the foregoing, (2) you will consent
to the joint venture arrangements and the loan described in the
attachment, (3) you will consent to release the lien on the
expansion cash flows (those attributable to expansion projects
funded on a joint venture basis or on a sole risk basis by RTZ)
and that such cash flows can be assigned and pledged to RTZ, (4)
you will consent to release the lien on (X) the 40% undivided
interest to be acquired by RTZ in the COW insofar as it relates to
expansion projects funded on a joint venture basis or on a sole
risk basis by RTZ in Block A (it being understood that expansion
projects exclude PT-FI's current milling and mining operations in
Block A, i.e., the current base production in Block A of 118,000
tonnes per day, in effect produced from PT-FI's year-end 1994 10-K
ore reserve base), (Y) the 40% undivided interest to be acquired
by RTZ in the COW insofar as it relates to Block B and agree such
interests may be assigned to RTZ and (Z) RTZ's 40% interest in all
Products obtained or other property produced by or acquired by the
joint venture expansion projects in Block A or joint venture
expansion projects in Block B, (5) PTFI may (subject to certain
exceptions to be agreed upon related to RTZ's ability to perform
and to RTZ's agreement to operate consistently with the terms of
the credit facilities) be replaced with RTZ or an affiliate of RTZ
reasonably acceptable to the Banks as operator of the joint
venture as described in the attachment and (6) FCX may guaranty
PTFI's obligations under the participation agreement which governs
- -2-
<PAGE>
the terms of the joint venture. Please return the original
executed signature pages to Mr. Woolery via overnight courier c/o
Cravath, Swaine & Moore, Worldwide Plaza, 825 Eighth Avenue, New
York, New York 10019-7475 (telephone: 212-474-1000).
Very truly yours
R. Foster Duncan
Agreed and accepted on this __ day of April, 1995:
Name of Bank
By
Name:
Title:
- -3-
<PAGE>
Freeport-McMoRan Inc. R. Foster Duncan
1615 Poydras Street Treasurer
New Orleans, LA 70112 Telephone: 504-582-4628
P.O. Box 61119 Fax: 504-582-4511
New Orleans, LA 70161
April 27, 1995
To: The Banks Referred to Below
Re: Freeport-McMoRan Inc. Recapitalization
Reference is made to: (i) the Amended and Restated Credit
Agreement (the "FTX-FRP Credit
Agreement") dated as of June 1, 1993 among Freeport-McMoRan Inc.
("FTX"), Freeport-McMoRan Resource
Partners, Limited Partnership ("FRP"), the Banks party thereto and
Chemical Bank (as Agent for the Banks),
(ii) the Credit Agreement dated as of October 27, 1989, as amended
and restated as of June 1, 1993 and as
further amended (the "FI Credit Agreement"), among P.T. Freeport
Indonesia Company ("FI"), FTX,
Freeport-McMoRan Copper & Gold Inc. ("FCX"), the Banks party
thereto First National Bank, National
Association (as successor to Morgan Guaranty Trust Company of New
York, as trustee for the Banks under the
FI Trust Agreement) and Chemical Bank (as Agent for the Banks),
and (iii) to the Credit Agreement dated as
of June 11, 1992, as amended (the "FMPO Credit Agreement"), among
FM Properties Operating Co. ("FMPO"), FTX,
the Banks party thereto and Chemical Bank as Agent and Collateral
Agent for the Banks (the FTX-FRP Credit
Agreement, the FI Credit Agreement and the FMPO Credit Agreement
being collectively referred to herein as
the "Credit Agreements"). Terms used but not defined herein have
the meaning assigned to such terms in the
FTX-FRP Credit Agreement.
As you are aware, FTX plans to recapitalize its indebtedness prior
to its spinoff of FCX. The
recently announced transactions with RTZ enable FTX to proceed
with this recapitalization. Under the most
likely scenario, FTX intends to sell to RTZ shares of FCX
currently held by FTX representing a 12.2%
ownership interest in FCX. The total proceeds from a sale of a
12.2% ownership interest would be
approximately $525 million (approximately $490 million after tax).
Actual sales to RTZ will vary depending
on the outcome of subsequent events described below. All such
sales to RTZ will result in reductions to the
FTX Borrowing Base pursuant to the formula in Section 2.5 of the
FTX-FRP Credit Agreement.
On March 24, 1995, FTX commenced its recapitalization program by
offering holders of the $4.375 Convertible
Exchangeable
<PAGE>
Preferred Stock (the "Preferred Stock") the option to exchange
each share of Preferred Stock into 2.85
shares of FTX common stock. Net proceeds from the sale of FCX
shares to RTZ will be used by FTX to call the
Zero Coupon Convertible Subordinated Debentures due 2006 ("ABC's")
for approximately $282 million in cash.
FTX will also call the 6.55% Convertible Subordinated Notes due
January 15, 2001 (the "6.55%'s") and the
holders will have the option of receiving cash or converting their
securities into shares of FTX common
stock. FTX may decide to change the terms of the conversion of
the 6.55%'s.
While FTX management is confident the 6.55% holders will elect to
convert, some portion of the
6.55% holders may elect not to convert to FTX shares and cash will
therefore be required to satisfy the call
price for these securities. However, even in the event that there
are no 6.55% conversions to equity, FTX
can raise up to approximately $653 million in aggregate (net of
taxes) through its arrangement with RTZ from
the sale of FCX shares, and would have cash outflows of
approximately $644 million ($282 million for the
ABC's plus $352 million for the 6.55%'s in the event that no 6.55%
holders convert). While the FTX revolver
may be needed on an interim basis, no net uses of the FTX revolver
would therefore be required in order to
complete the recapitalization. We have attached for your
convenience a pro forma Borrowing Base
availability calculation which details this scenario.
In order to consummate the actions described above, it is
necessary for FTX to obtain the
following consents and waivers under the Credit Agreements:
1. A consent by the Required Borrowing Base Banks not to
exercise their right under Section 2.2(III) of
the FTX-FRP Credit Agreement to redetermine the Borrowing Base
Factors if FTX's direct or indirect aggregate
ownership of FI decreases below 50% on a fully diluted basis as a
result of the sale by FTX of shares of FCX
to RTZ on the terms described above (in no event to decrease below
43%);
2. To the extent necessary to permit the payment of cash on the
ABC's and 6.55%'s in the aggregate
amounts and on the terms described above, a waiver by the Banks of
compliance by FTX with the terms of
Section 5.2(i) of both the FTX-FRP Credit Agreement and the FI
Credit Agreement prohibiting payment on the
ABC's and 6.55%'s 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;
3. A consent by the Banks under Section 5.2(n)(i) of the FTX-
FRP Credit Agreement and Section 5.2(n) of
the FI Credit Agreement to any change in the conversion terms for
stock issuances and timing provisions of
the 6.55%'s; and
- -4-
<PAGE>
4. The waivers and conditions outlined above are conditioned
upon the execution of and the Agent's
satisfaction with the terms of the Stock Purchase Agreement to be
executed in connection with the
transactions with RTZ referred to above.
Execution of this letter agreement shall constitute agreement and
acceptance of the waivers and
consents described in paragraphs 1, 2 and 3 above with respect to
the terms outlined above by each Bank
under each of the Credit Agreements to which it is a party.
Following receipt by the Agent of executed counterparts of this
letter agreement which, when
taken together, bear the signatures of FTX, FRP, FMPO, FI, the
Agent and the Required Banks (as defined
under each of the respective Credit Agreements), this letter
agreement shall become effective upon the
satisfaction of the conditions outlined in paragraph 4 above.
This letter agreement may be executed in
multiple counterparts, each of which shall constitute an original,
but all of which when taken together
shall constitute but one instrument.
Except as expressly set forth herein, this letter agreement shall
not by implication or
otherwise limit, impair, constitute a waiver of or otherwise
affect the rights and remedies of the Banks and
the Agent under the respective Credit Agreements, nor alter,
modify, amend or in any way affect any of the
terms, conditions, obligations, covenants or agreements contained
in the respective Credit Agreements, all
of which are ratified and affirmed in all respects and shall
continue in full force and effect. This letter
agreement shall apply and be effective only with respect to the
provisions of the respective Credit
Agreements specifically referred to herein. Except as expressly
set forth herein, the respective Credit
Agreements shall continue in full force and effect in accordance
with the provisions thereof. This letter
agreement shall be governed by and construed in accordance with
the laws of the State of New York.
FTX shall pay all out-of-pocket expenses incurred by the Agent in
connection with the
preparation of this letter agreement, including, but not limited
to, the reasonable fees and disbursements
of Cravath, Swaine & Moore, counsel for the Agent.
- -4-
<PAGE>
If the foregoing correctly sets forth our understanding, please
indicate your acceptance hereof
by signing in the appropriate space below and returning to the
Agent one of the enclosed duplicate originals
hereof, whereupon this letter agreement shall become a binding
agreement between us.
Very truly yours,
Freeport-McMoRan Inc.,
by
R. Foster Duncan
Treasurer
Freeport-McMoRan Resource Partners, Limited Partnership
by Freeport-McMoRan Inc.
its Administrative Managing General Partner,
R. Foster Duncan
Treasurer
P.T. Freeport Indonesia Company
by
R. Foster Duncan
Treasurer
- -4-
<PAGE>
FM Properties Operating Co.,
by Freeport-McMoRan Inc.
its Managing General Partner,
R. Foster Duncan
Treasurer
Agreed and accepted on
this ___ day of April, 1995:
Name of Bank
by
Name:
Title:
- -4-
<PAGE>
Proforma Borrowing Base Availability
Assumes No Conversion of 6.55% Notes
Assumptions
A Initial sale of 21.5 million shares of FCX
common stock to RTZ for $450 million ($430
million net of tax); subsequent sale 14.4
million shares to RTZ for $301 million
($223 million net of tax).
B Repayments of ABC's in the amount of
$281 million and 6.55% in the amount of
$352 million.
These events have the following effects on
the FTX Bank Debt and Borrowing Base:
FTX Bank Debt
Actual Balance - March 31, 1995 $281,500
Less Net Proceeds of RTZ Sales (652,603)
Plus: Retirement of ABC's 281,487
Plus: Retirement of 6.55%'s 352,416
Proforma Balance - March 31, 1995 262,800
FTX Borrowing Base Reduction (as required under Section 2.5
of the FTX Credit Agreement)
Actual Balance - March 31, 1995 1,800,000
Less: Net Proceeds
$150MM X 50% (75,000)
$150MM X 75% (112,500)
$353MM X 100% (352,003)
Proforma Balance - March 31, 1995 1,259,697
<PAGE>
Availability
Figures In $Millions 3/31/95 3/31/95
(Actual) (Proforma)
FTX Borrowing Base $1,600.0 $1,259.9
Plus MS Factors:
FRP (.486) 166.7 166.7
PTFI (.409 to .570) 157.9 220.1
Total adjusted base $2,124.6 $1,646.7
Less: (262.8)
FTX:
Bank Debt ($281.5) ($262.8)
Subordinated
Debt/Other (598.2) 0.0
FM Properties
Guarantee/Debt (138.3) (138.3)
(net)
FRP
Bank Debt (179.0) (179.0)
Public Debt (150.0) (150.0)
IMC-Agrico/Other (14.1) (14.1)
FCX/PTFI:
Bank Debt (35.0) (35.0)
Privatization - Debt/Leases (351.3) (351.3)
Caterpillar/Other (88.3) (88.3)
Total Borrowing Base Debt ($1,813.0) $1,198.7)
Credit Availability
Availability Under Borrowing Base $311.0 $448.1
Availability Under Bank Facility $304.5 $323.2
<PAGE>
