SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Quarter Ended September 30, 1996
Commission File Number: 1-9916
Freeport-McMoRan Copper & Gold Inc.
Incorporated in Delaware 74-2480931
(IRS Employer Identification No.)
1615 Poydras Street, New Orleans, Louisiana 70112
Registrant's telephone number, including area code: (504)582-4000
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such
shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90
days. Yes X No
---
On September 30, 1996, there were issued and outstanding 75,338,577
shares of the registrant's Class A Common Stock, par value $0.10 per
share, and 117,909,228 shares of its Class B Common Stock, par value
$0.10 per share.
<PAGE> 1
FREEPORT-McMoRan COPPER & GOLD INC.
TABLE OF CONTENTS
Page
Part I. Financial Information
Financial Statements:
Condensed Balance Sheets 3
Statements of Income 4
Statements of Cash Flow 5
Notes to Financial Statements 6
Remarks 6
Report of Independent Public Accountants 7
Management's Discussion and Analysis of Financial Condition
and Results of Operations 8
Part II. Other Information 14
Signature 15
Exhibit Index E-1
<PAGE> 2
FREEPORT-McMoRan COPPER & GOLD INC.
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements.
<TABLE>
FREEPORT-McMoRan COPPER & GOLD INC.
CONDENSED BALANCE SHEETS (Unaudited)
<CAPTION>
September 30, December 31,
1996 1995
---------- ----------
(In Thousands)
<S> <C> <C>
ASSETS
Current assets:
Cash and short-term investments $ 49,031 $ 26,883
Accounts receivable 235,734 256,121
Inventories 408,609 354,728
Prepaid expenses and other 19,588 15,542
---------- ----------
Total current assets 712,962 653,274
Property, plant and equipment, net 2,965,406 2,845,625
Other assets 104,042 82,847
---------- ----------
Total assets $3,782,410 $3,581,746
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued liabilities $ 314,461 $ 351,485
Current portion of long-term debt and
short-term borrowings 107,916 86,943
Accrued income taxes 64,777 88,357
---------- ----------
Total current liabilities 487,154 526,785
Long-term debt, less current portion 1,493,390 1,080,289
Accrued postretirement benefits and
other liabilities 157,337 186,342
Unearned income 67,162 -
Deferred income taxes 335,271 305,490
Minority interests 97,169 101,159
Mandatory redeemable preferred stock 500,007 500,007
Stockholders' equity 644,920 881,674
---------- ----------
Total liabilities and stockholders'
equity $3,782,410 $3,581,746
========== ==========
</TABLE>
The accompanying notes are an integral part of these financial
statements.
<PAGE> 3
<TABLE>
FREEPORT-McMoRan COPPER & GOLD INC.
STATEMENTS OF INCOME (Unaudited)
<CAPTION>
Three Months Nine Months
Ended September 30, Ended September 30,
------------------------ ------------------------
1996 1995 1996 1995
---------- ---------- ---------- ----------
(In Thousands, Except Per Share Amounts)
<S> <C> <C> <C> <C>
Revenues $ 474,664 $ 469,812 $1,287,404 $1,300,087
Cost of sales:
Production and delivery 230,646 216,392 674,374 663,752
Depreciation and
amortization 45,228 33,888 123,804 83,996
---------- ---------- ---------- ----------
Total cost of sales 275,874 250,280 798,178 747,748
Exploration expenses - (5,722) - 13,888
General and administrative
expenses 28,468 53,659 101,734 113,587
---------- ---------- ---------- ----------
Total costs and
expenses 304,342 298,217 899,912 875,223
---------- ---------- ---------- ----------
Operating income 170,322 171,595 387,492 424,864
Interest expense, net (28,566) (18,836) (81,641) (31,287)
Other income (expense),
net (1,894) (2,761) 1,978 (4,399)
---------- ---------- ---------- ----------
Income before income taxes
and minority interests 139,862 149,998 307,829 389,178
Provision for income
taxes (65,297) (63,041) (140,651) (164,964)
Minority interests in net
income of consolidated
subsidiaries (14,926) (12,809) (28,732) (38,486)
---------- ---------- ---------- ----------
Net income 59,639 74,148 138,446 185,728
Preferred dividends (13,513) (13,615) (40,825) (40,577)
---------- ---------- ---------- ----------
Net income applicable to
common stock $ 46,126 $ 60,533 $ 97,621 $ 145,151
========== ========== ========== ==========
Net income per primary
and fully diluted share
of common stock $.24 $.30 $.50 $.71
========== ========== ========== ==========
Average common shares
outstanding 195,611 204,058 197,050 205,056
========== ========== ========== ==========
Dividends paid per
common share $.225 $.15 $.675 $.45
========== ========== ========== ==========
</TABLE>
The accompanying notes are an integral part of these financial
statements.
<PAGE> 4
<TABLE>
FREEPORT-McMoRan COPPER & GOLD INC.
STATEMENTS OF CASH FLOW (Unaudited)
<CAPTION>
Nine Months Ended
September 30,
----------------------------
1996 1995
---------- ----------
(In Thousands)
<S> <C> <C>
Cash flow from operating activities:
Net income $ 138,446 $ 185,728
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization 123,804 83,996
Deferred income taxes 29,781 36,514
Recognition of unearned income (30,011) (36,207)
Deferral of unearned income 97,173 -
Minority interests' share of net income 28,732 38,486
Other (18,490) 22,378
(Increase) decrease in working capital:
Accounts receivable 9,329 18,383
Inventories (35,826) (74,178)
Prepaid expenses and other (2,485) (9,327)
Accounts payable and accrued
liabilities 9,643 (70,370)
Accrued income taxes (25,143) 54,020
---------- ----------
Decrease in working capital (44,482) (81,472)
---------- ----------
Net cash provided by operating activities 324,953 249,423
---------- ----------
Cash flow from investing activities:
Capital expenditures:
PT-FI (235,675) (361,378)
Atlantic Copper (49,014) (124,756)
Investment in Freeport Copper Company - (25,000)
Investment in Gresik smelter and other (28,740) (2,168)
---------- ----------
Net cash used in investing activities (313,429) (513,302)
---------- ----------
Cash flow from financing activities:
Proceeds from debt 581,816 470,367
Repayment of debt (149,849) (205,017)
Net proceeds from infrastructure financing - 228,899
Purchase of FCX common shares (220,997) (84,717)
Cash dividends paid:
Common stock (132,284) (92,163)
Preferred stock (38,147) (37,876)
Minority interests (32,722) (27,228)
Other 2,807 838
---------- ----------
Net cash provided by financing activities 10,624 253,103
---------- ----------
Net increase (decrease) in cash and
short-term investments 22,148 (10,776)
Cash and short-term investments at
beginning of year 26,883 44,252
---------- ----------
Cash and short-term investments at
end of period $ 49,031 $ 33,476
========== ==========
</TABLE>
The accompanying notes are an integral part of these financial
statements.
<PAGE> 5
FREEPORT-McMoRan COPPER & GOLD INC.
NOTES TO FINANCIAL STATEMENTS
1. JOINT VENTURES
In October 1996, Freeport-McMoRan Copper & Gold Inc. (FCX) and The
RTZ-CRA Group (RTZ-CRA) signed definitive documentation for
exploration and expansion joint venture arrangements. See Note 2 to
the 1995 FCX Annual Report to stockholders for a discussion of these
arrangements. As a result, RTZ-CRA paid FCX and P.T. Freeport
Indonesia Company (PT-FI), FCX's Indonesian mining subsidiary, $184
million for exploration and expansion capital expenditures under the
joint venture arrangements. The funds were used to reduce FCX and PT-
FI bank debt.
With the completion of definitive documentation, RTZ-CRA has (1)
fully funded its $100 million exploration commitment, (2) reimbursed
PT-FI for expansion capital expenditures previously incurred, (3)
begun funding future expansion costs pursuant to the agreement, and
(4) become a 40 percent joint venture partner in PT-FI's current
expansion project above its existing operations and, if RTZ-CRA elects
to participate, in FCX's future development projects in Indonesia.
2. CREDIT FACILITIES
In July 1996, the FCX and PT-FI credit facilities were amended to
increase the availability under the FCX/PT-FI facility by $250 million
to a combined total of $1 billion, lower the interest rates and
release the collateral securing FCX's borrowing and FCX's guaranty.
Consequently, PT-FI retains its $550 million facility ($250 million
of additional borrowings available at October 21, 1996) and FCX and
PT-FI now have a separate $450 million facility ($243 million of
additional borrowings available at October 21, 1996). All other
significant terms of the facilities were unaffected.
3. INTEREST COSTS
Interest expense excludes capitalized interest of $6.9 million and
$10.2 million in the third quarters of 1996 and 1995, respectively,
and $22.1 million and $39.2 million in the first nine months of 1996
and 1995, respectively.
4. RATIO OF EARNINGS TO FIXED CHARGES
The ratio of earnings to fixed charges for the first nine months of
1996 and 1995 was 3.7 to 1 and 5.8 to 1, respectively. For this
calculation, earnings consist of income from continuing operations
before income taxes, minority interests and fixed charges. Fixed
charges include interest and that portion of rent deemed
representative of interest.
5. RECLASSIFICATIONS
Certain prior year amounts have been reclassified to conform to the
1996 presentation.
----------------------
Remarks
The information furnished herein should be read in conjunction with
FCX's financial statements contained in its 1995 Annual Report to
stockholders and incorporated by reference in its Annual Report on
Form 10-K.
The information furnished herein reflects all adjustments which are,
in the opinion of management, necessary for a fair statement of the
results for the periods. All such adjustments are, in the opinion of
management, of a normal recurring nature.
<PAGE> 6
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To The Board of Directors and Stockholders of
Freeport-McMoRan Copper & Gold Inc.:
We have reviewed the accompanying condensed balance sheet of
Freeport-McMoRan Copper & Gold Inc. (a Delaware corporation) as of
September 30, 1996, the related statements of income for the three and
nine-month periods ended September 30, 1996 and 1995 and the related
statements of cash flows for the nine-month periods ended September
30, 1996 and 1995. These financial statements are the responsibility
of the Company's management.
We conducted our reviews in accordance with standards established
by the American Institute of Certified Public Accountants. A review
of interim financial information consists principally of applying
analytical procedures to the financial data and making inquiries of
persons responsible for financial and accounting matters. It is
substantially less in scope than an audit in accordance with generally
accepted auditing standards, the objective of which is the expression
of an opinion regarding the financial statements taken as a whole.
Accordingly, we do not express such an opinion.
Based on our reviews, we are not aware of any material
modifications that should be made to the financial statements referred
to above for them to be in conformity with generally accepted
accounting principles.
We have previously audited, in accordance with generally accepted
auditing standards, the balance sheet of Freeport-McMoRan Copper &
Gold Inc. as of December 31, 1995, and the related statements of
income, shareholders' equity and cash flows for the year then ended
(not presented herein), and in our report dated January 23, 1996, we
expressed an unqualified opinion on those financial statements. In
our opinion, the information set forth in the accompanying condensed
balance sheet as of December 31, 1995, is fairly stated, in all
material respects, in relation to the balance sheet from which it has
been derived.
ARTHUR ANDERSEN LLP
New Orleans, Louisiana
October 22, 1996
<PAGE> 7
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations.
OVERVIEW
Freeport-McMoRan Copper & Gold Inc. (FCX) operates through its
majority-owned subsidiaries P.T. Freeport Indonesia Company (PT-FI)
and P.T. IRJA Eastern Minerals Corporation (Eastern Mining) and
through Atlantic Copper Holding, S.A. (Atlantic), a wholly owned
subsidiary. PT-FI's operations involve mineral exploration and
development, mining and milling of ore containing copper, gold and
silver in Irian Jaya, Indonesia and the marketing of concentrates
containing these metals worldwide. PT-FI also has a 25 percent
interest in a joint venture to construct and operate a copper smelter
and refinery in Indonesia. Eastern Mining conducts mineral exploration
activities in Irian Jaya. Atlantic, formerly Rio Tinto Minera, S.A.,
is engaged in the smelting and refining of copper concentrates in
Spain.
Summary comparative results for the third-quarter and nine-month
periods follow (in millions, except per share amounts):
Third Quarter Nine Months
------------------------ ------------------------
1996 1995 1996 1995
---------- ---------- ---------- ----------
Revenues $ 474.7 $ 469.8 $ 1,287.4 $ 1,300.1
Operating income 170.3 171.6a,b 387.5c 424.9b,d
Net income applicable
to common stock 46.1 60.5a,b 97.6c 145.2b,d
Net income per
common share 0.24 0.30a,b 0.50c 0.71b,d
Operating income (loss) by subsidiary:
PT-FI $ 175.1 $ 183.9 $ 393.2 $ 460.2
Atlantic 2.4 (5.6) 2.7 (14.6)
Eastern Mining - 2.2 - (3.9)
Intercompany
eliminations
and other e (7.2) (8.9) (8.4) (16.8)
---------- ---------- ---------- ----------
$ 170.3 $ 171.6 $ 387.5 $ 424.9
========== ========== ========== ==========
a. Includes a $6.0 million credit ($4.3 million to net income or
$0.02 per share) for exploration costs incurred in the second quarter
of 1995 and paid by The RTZ-CRA Group (RTZ-CRA).
b. Includes a $21.4 million noncash charge ($11.6 million to net
income or $0.06 per share) for costs of stock appreciation rights
caused by the increase in FCX's common stock price during the third
quarter of 1995.
c. Includes charges totaling $17.4 million ($8.0 million to net
income or $0.04 per share) consisting of $12.7 million for costs of
stock appreciation rights caused by the increase in FCX's common stock
price during the period, $3.0 million for costs related to a civil
disturbance (discussed below) and $1.7 million ($1.2 million to
production cost and $0.5 million to general and administrative
expenses) for an early retirement program.
d. Includes a $12.5 million charge ($6.8 million to net income or
$0.03 per share) for a materials and supplies inventory reserve
adjustment in connection with the completion of PT-FI's 118,000 metric
tons of ore per day (MTPD) expansion program.
e. Profit on PT-FI sales to Atlantic is not reflected in FCX's
consolidated results until completion of the smelting and refining
process. The increased level of PT-FI concentrate sales to Atlantic
resulting from the expanded smelter capacity causes fluctuations in
FCX's consolidated quarterly earnings because of the timing of the
shipments and prices.
FCX's revenues are derived primarily from the sale of copper
concentrates, which contain significant amounts of gold and also
silver by PT-FI, and the sale of copper anodes, cathodes and wire rod
by Atlantic. FCX's 1996 revenues reflect higher PT-FI sales volumes,
higher Atlantic revenues and significantly lower PT-FI copper
realizations compared with the 1995 periods. Cost of sales for 1996
was affected by higher sales volumes and depreciation, while the nine-
month 1995 period includes a materials and supplies inventory reserve
adjustment. Exploration expenses reflect the May 1995 agreement with
RTZ-CRA under which RTZ-CRA agreed to pay for certain exploration
costs in areas covered by the PT-FI and Eastern Mining Contracts of
Work (COWs). General and administrative expenses in the 1996 periods
were considerably lower than the comparable 1995 periods because of
the third-quarter 1995 expense for stock appreciation rights. Net
income applicable to common stock for the 1996 periods was also
reduced by higher interest expense. For the nine-month 1996 period,
the provision for income taxes and minority interests in net income
were lower primarily because of lower net income at PT-FI.
<PAGE> 8
RESULTS OF OPERATIONS
PT-FI Financial Results. PT-FI's revenues for the third-quarter and
nine-month period of 1996 were below the comparable 1995 periods.
Higher sales volumes were offset by a decline in copper realizations
from $1.24 per pound in the 1995 quarter to $0.97 per pound in the
1996 quarter, and higher treatment charges of $0.22 per pound in the
1996 quarter compared to $0.19 per pound in the 1995 quarter.
Treatment charges increased because of higher rates negotiated with
customers based on market conditions. Despite higher sales volumes,
royalties were lower because of lower copper prices.
PT-FI's revenues include net additions totaling $21.9 million
for the 1996 quarter and $21.8 million for the 1996 nine-month period,
compared with net reductions totaling $23.7 million for the 1995
quarter and $55.4 million for the 1995 nine-month period, recognized
under PT-FI's copper price protection program. Third-quarter 1996
revenues include upward adjustments of $1.7 million on open copper
sales from June 30, 1996, while nine-month 1996 revenues include
$8.1 million of net downward adjustments on open copper sales. A
reconciliation of PT-FI revenues between the periods follows (in
millions):
Third Quarter Nine Months
------------ -----------
Revenues -1995 $ 382.6 $ 1,016.5
Increases (decreases):
Sales volumes:
Copper 33.7 133.1
Gold 30.3 105.1
Price realizations:
Copper (77.9) (232.3)
Gold 6.8 12.6
Prior period adjustments 2.9 (4.7)
Treatment charges, royalties and other (2.4) (39.1)
---------- ----------
Revenues -1996 $ 376.0 $ 991.2
========== ==========
A March 1996 civil disturbance, in which Irianese tribes people
engaged in acts of vandalism to PT-FI property, resulted in an
approximate three-day closure of the mine and mill as a precautionary
measure. Full production was promptly restored after the Government of
Indonesia (GOI) increased its military presence in the area.
Concentrate shipments to customers were not interrupted. There have
been no further disruptions since the March 1996 event. PT-FI and the
GOI have launched a comprehensive economic and social development plan
for the area around PT-FI's operations in a series of open meetings
with the local indigenous leaders. The plan, which represents the
culmination of many months of effort including extensive interviews
with local indigenous people, had actually been completed several days
prior to the civil disturbance. PT-FI has dedicated one percent of
its revenues over the next ten years to fund the plan which will
include establishing a job skill and vocational training center and
the continued enhancement of direct benefits to those tribes whose
original tribal lands have been impacted by PT-FI's operations. FCX
believes that its historical commitment to the area, improved dialogue
with the indigenous population, coordinated development activities
with the GOI and the local people and increased military presence
should serve to avoid future disruptions of mine and mill operations.
<PAGE> 9
PT-FI Operating Results.
Third Quarter Nine Months
------------------------ ----------------------
1996 1995 1996 1995
---------- ---------- ---------- --------
Ore milled (MTPD) 127,500 122,200 127,100 106,900
Copper grade (%) 1.37 1.32 1.31 1.31
Gold grade (grams per
metric ton) 1.52 1.28 1.45 1.32
Recovery rate (%)
Copper 83.3 86.8 83.5 85.1
Gold 77.1 78.1 75.7 74.7
Copper (000s of recoverable pounds)
Production 284,700 274,300 812,200 694,400
Sales 285,300 258,200 779,500 673,800
Average realized price a $.97 $1.24 $.96 $1.26
Gold (recoverable ounces)
Production 427,000 348,500 1,181,100 893,800
Sales 418,000 338,700 1,155,100 879,200
Average realized price $398.60 $382.27 $391.55 $380.67
Gross profit per pound of copper (cents):
Average realized price a 96.9 124.3 96.1 125.9
----- ----- ----- -----
Production costs:
Site production and
delivery 49.4 48.7 52.6b 55.0c
Gold and silver credits (59.2) (51.4) (58.6) (50.7)
Treatment charges 21.8 19.3 22.2 19.5
Royalty on metals 1.5 4.4 3.0 4.3
----- ------- ----- -------
Cash production costs 13.5 21.0 19.2 28.1
Depreciation and amortization 13.0 11.0 13.0 10.2
---- ------ ---- ------
Total production costs 26.5 32.0 32.2 38.3
---- ------ ---- ------
Revenue adjustments d (1.0) (3.8) (2.4) (1.9)
----- ------- ----- -------
Gross profit per pound
of copper 69.4 88.5 61.5 85.7
==== ====== ==== ======
a. Amounts were $0.88 for the 1996 quarter, $1.32 for the 1995
quarter, $0.92 for the 1996 nine-month period and $1.33 for the 1995
nine-month period before hedging adjustments.
b. Includes $4.2 million (0.5 cents per pound) for costs related to
the civil disturbance and an early retirement program.
c. Excludes the $12.5 million (1.9 cents per pound) materials and
supplies inventory reserve adjustment discussed earlier .
d. Reflects adjustments for prior period concentrate sales and
amortization of the copper price protection program cost.
Average mill throughput in the third quarter of 1996 was 4
percent higher than the 1995 third quarter. Cash production costs per
pound of copper for the third-quarter and nine-month periods of 1996
were considerably lower than the comparable 1995 periods. Higher gold
sales and realizations and higher gold and silver credits have
resulted in lower unit cash production costs. The higher treatment
charges reflect market conditions. Treatment charge rates for a
significant portion of PT-FI's 1997 projected sales will be negotiated
in the fourth quarter of 1996 based on current market conditions. As
a result of a tight smelter market, treatment charges are expected to
increase. Higher treatment charges, which negatively affect PT-FI,
benefit Atlantic. With completion of Atlantic's expansion, the effect
of an equivalent change in treatment charges on PT-FI and Atlantic
would now largely offset in FCX's consolidated financial results,
after taking into account income tax and minority interests. PT-FI's
copper royalty rate varies from 1.5 percent, at a copper price of
$0.90 or less, to 3.5 percent, at a copper price over $1.10, on copper
net revenue (after freight costs, other selling costs and treatment
charges); the gold and silver royalty rate is 1.0 percent.
PT-FI's 1996 depreciation rate of 13.0 cents per pound of copper
reflects depreciation for the expanded operations and the first phase
of an enhanced infrastructure program (EIP). The EIP is designed to
provide the infrastructure needed for PT-FI's current and anticipated
expanded future operations, to enhance the living conditions of PT-
FI's employees, and to develop and promote the growth of local and
third party activities and enterprises in Irian Jaya. The third-
quarter 1995 rate of 11.0 cents per pound did not include the EIP
costs.
<PAGE> 10
PT-FI Outlook and Price Protection Program. PT-FI has commitments
from various parties, including Atlantic, to purchase virtually all of
its expected fourth-quarter 1996 production and 1997 production at
market prices. Sales for 1996 are estimated to total approximately
1.1 billion pounds of copper and 1.65 million ounces of gold. Strong
fourth-quarter 1996 estimated copper and gold sales reflect the
expectation of mining ore with higher than mine-life average grades.
The significant decline in copper prices during 1996 increased
the value of PT-FI's put option contracts which PT-FI had purchased
under its price protection program to provide a floor price of $0.90
per pound for essentially all copper sales through the second quarter
of 1997. During the third quarter, PT-FI sold all of its put option
contracts covering approximately 1.2 billion pounds of copper for
$97.2 million cash. As a result, PT-FI will report future copper
revenues through June 30, 1997 at a higher price than realized under
its copper concentrate sales contracts, but PT-FI no longer has a
floor price on any of its copper sales. Through September 30, 1996,
PT-FI recognized $30.0 million of additional copper revenues from the
sale of its put option contracts. PT-FI will recognize additional
copper revenues from the sale of put option contracts in the following
amounts: $21.1 million in the fourth quarter of 1996, $23.0 million in
the first quarter of 1997 and $23.1 million in the second quarter of
1997.
PT-FI's concentrate sales agreements, with regard to copper,
provide for provisional billings at the time of shipment with final
settlement generally based on the average London Metals Exchange price
for a specified future month. Copper revenues on provisionally priced
"open" pounds are adjusted monthly based on then current prices. At
September 30, 1996, copper sales totaling 316.5 million pounds, which
were recorded at an average price of $0.88 per pound, remained to be
finally priced. Approximately 80 percent of these "open" pounds are
expected to be finally priced during the fourth quarter of 1996 with
the remaining pounds to be priced during the first quarter of 1997.
Exploration Activities. In September 1996, FCX announced that
drilling activities at the Kucing Liar prospect within the "Golden
Triangle" at PT-FI's Ertsberg-Grasberg District have moved from the
exploration phase to the delineation phase. Results to date confirm
the continuity of extensive skarn-type copper/gold mineralization
between drill holes. Underground drill sites are 50 to 135 meters
apart allowing multiple holes, known as fans, to be drilled from each
site across a portion of the 1.5 kilometer long Kucing Liar
mineraliized zone which, based on current information, could represent
a 250 million metric ton geologic resource at an average grade of
greater than two percent copper equivalent. This high grade
underground mineralization, in close proximity to the mill, could have
a significant positive impact on the grade of the ore feed to and the
economics of PT-FI's "fourth concentrator mill expansion." Geological
mapping, sampling, geophysical surveying and drilling continued at the
Wabu prospect as well as other targets within PT-FI's Block B area.
Geologic work including drilling and geophysical surveying continued
at Etna Bay in Block I and Block II. Reconnaissance mapping and
sampling is scheduled to take place in Block III during the fourth
quarter. No assurance can be given that any of these new areas
contain commercially exploitable mineral deposits.
Atlantic Results.
Third Quarter Nine Months
------------------------ ---------------------
1996 1995 1996 1995
---------- ---------- ---------- ---------
Revenues (in millions) $200.1 $121.2 $569.1 $372.6
Concentrate treated
(metric tons) 220,900 117,100 586,400 291,400
Anode production
(000s of pounds) 152,400 76,700 397,000 199,800
Cathode production
(000s of pounds) 121,700 70,800 343,400 201,300
Atlantic completed the expansion of its smelter from 150,000 to
270,000 metric tons of metal per year, reaching its full production
capacity in June 1996. Atlantic reported higher revenues and cost of
sales in the 1996 periods than the comparable 1995 periods because of
increases in production from its newly expanded facilities.
Additionally, shutdowns in the 1995 third quarter caused by a strike
at an adjacent plant and for approximately half of the 1995 second
quarter to tie-in expansion equipment and to perform maintenance
turnarounds impacted 1995 results. Atlantic's third-quarter 1996
operating income totaled $2.4 million compared to a $5.6 million
operating loss in the 1995 period. Atlantic is benefiting from higher
volumes plus higher treatment and refining rates, $0.23 per pound in
the third quarter of 1996 compared with $0.22 per pound in the third
quarter of 1995.
<PAGE> 11
A portion of Atlantic's operating costs are paid with Spanish
pesetas and certain assets and liabilities are denominated in Spanish
pesetas. On an annual basis, a one peseta change in the U.S. dollar
and Spanish peseta exchange rate results in an approximate $2 million
change in FCX's annual net income before any hedging effects. Third-
quarter and nine-month 1996 other income includes currency
translation gains on Atlantic's net peseta liability position totaling
$0.6 million and $8.2 million, respectively. Atlantic implemented a
currency hedging program to reduce its operating cost exposure to
changes in the U.S. dollar and Spanish peseta exchange rate. The
program involves foreign currency contracts which provide hedges for
approximately 80 percent of Atlantic's net peseta operating cost
exposure through December 1997.
Other Financial Results. FCX reported a $5.7 million credit for
exploration costs in the third-quarter of 1995 after reversing costs
charged to expense in May and June 1995 that were reimbursed by RTZ-
CRA. The FCX/RTZ-CRA joint venture incurred $9.8 million of
exploration costs in the third quarter of 1996 as it aggressively
explores its COW areas. These costs are not reflected as an expense
in FCX's income statement because RTZ-CRA has funded $100 million for
exploration costs beginning May 1995. Exploration costs in excess of
RTZ-CRA's $100 million commitment, will be shared 60 percent by FCX
and 40 percent by RTZ-CRA. Through September 1996, the joint venture
had incurred $59.4 million of exploration costs covered by the RTZ-CRA
funding.
FCX's general and administrative expenses were $28.5 million for
the third quarter of 1996 compared with $53.7 million in the 1995
period when FCX recorded a $21.4 million charge for costs of stock
appreciation rights. Nine-month 1996 general and administrative
expenses include charges of $12.7 million for costs of stock
appreciation rights caused by the increase in FCX's common stock
price.
FCX's total interest cost (before capitalization) rose to $103.8
million for the nine-month 1996 period from $70.5 million in the 1995
period because of an increase in debt levels associated with the
expansions and the FCX share purchase program. Because of the
significant expansion projects at PT-FI and Atlantic, approximately 55
percent of interest costs were capitalized during the first nine-
months of 1995. Only 21 percent of 1996 interest costs were
capitalized because of completion of the expansions.
FCX's effective tax rate was 46 percent for the first nine months of
1996 and 42 percent for the first nine months of 1995. PT-FI's COW
provides a 35 percent income tax rate and a 15 percent withholding on
dividends paid to FCX by PT-FI and on interest for debt incurred after
the signing of the COW. The 15 percent withholding is expected to
decline to 10 percent beginning in 1997 because of a new United
States/Indonesia tax treaty. No income tax benefit is recorded for
the losses at Atlantic, which is subject to taxation in Spain, because
it has not generated taxable income in recent years.
CAPITAL RESOURCES AND LIQUIDITY
FCX's primary sources of cash inflows are operating cash flows and
borrowings while its primary cash outflows include capital
expenditures, dividends and stock purchases. Net cash provided by
operating activities was $325.0 million for the first nine months of
1996, compared with $249.4 million for the 1995 period. Cash flow used
in investing activities reflects a decrease in PT-FI capital
expenditures associated with the completion of the 118,000 MTPD
expansion in 1995. Atlantic expenditures reflect completion of the
smelter expansion. Cash flow provided by financing activities totaled
$10.6 million in 1996 compared with $253.1 million in 1995. Stock
purchases and dividends increased in 1996.
Operating Activities. Lower copper realizations offset the benefits
of higher sales volumes and resulted in lower net income in the 1996
period. The increase in depreciation and amortization primarily
reflects the higher rate for the completed PT-FI expansion and first
phase of the EIP. FCX recorded $97.2 million of unearned income for
the proceeds realized on the sale of copper put option contracts in
1996 and recognized $30.0 million as income through September 30,
1996. Lower accounts receivable reflect the decline in copper
realizations partially offset by $80.7 million recorded for
exploration costs incurred since May 1995 and expansion costs which
RTZ-CRA reimbursed in October 1996. Inventories have increased
primarily because of materials purchased for the "fourth concentrator
mill expansion." The decrease in accrued income taxes reflects the
March 1996 payment on PT-FI's 1995 income tax liability and a smaller
tax liability in 1996.
<PAGE> 12
Investing Activities. FCX's capital expenditures have declined from
$486.1 million in 1995 to $284.7 million in the 1996 period because
of the completion of PT-FI's 118,000 MTPD expansion during the second
quarter of 1995, the completion of Atlantic's smelter expansion during
1996 and the completion of the first phase of PT-FI's EIP during 1996.
FCX's cash expenditures for capital in 1996 include approximately $60
million for costs incurred in 1995.
PT-FI's fourth-quarter 1996 capital expenditures (other than for the
"fourth concentrator mill expansion" discussed below), representing
primarily mine and mill sustaining capital, will be funded by
operating cash flow, FCX's and PT-FI's bank credit facilities ($493
million available at October 21, 1996) and other financing sources. As
previously announced, FCX and RTZ-CRA have established the economic
justification for a further expansion of PT-FI's facilities, subject
to certain approvals. Engineering activities have begun on the
expansion of PT-FI's Indonesian operations which are currently
producing at a throughput rate of approximately 125,000 MTPD. The
optimum rate following this "fourth concentrator mill expansion" is
expected to be at least 190,000 to 200,000 MTPD and completion is
expected in the second half of 1998. Costs for this expansion to
achieve optimum throughput rates are expected to approximate $960
million, including approximately $300 million to construct a coal-
fired power plant and related facilities. The new power plant
facilities will not only provide the required power for the expanded
operations but also improve the profitability of existing operations
which currently use power generated by higher cost diesel fueled
facilities. Pursuant to the joint venture arrangements, RTZ-CRA has
agreed to provide up to $750 million for the expansion.
Construction began in July 1996 on PT-FI's 25 percent-owned, 200,000
metric tons of metal per year copper smelter/refinery complex in
Gresik, Indonesia. The estimated aggregate project cost, before
working capital requirements, is approximately $600 million. The
project will be financed with a $300 million non-recourse term loan
and a $110 million working capital facility from a group of commercial
banks. The remaining funding will be made pro-rata by PT-FI (25
percent) and Mitsubishi Materials Corporation (75 percent). PT-FI
expects its 1996 cash investment in the smelter to total approximately
$39 million, including approximately $11 million in the fourth quarter
of 1996. Construction is expected to be completed by mid-1998 with
full production capacity reached during the second half of 1998. Upon
completion of the Gresik smelter and the PT-FI "fourth concentrator
mill expansion," FCX anticipates that approximately 50 percent of PT-
FI's annual concentrate production will be sold to Atlantic and the
Gresik smelter at market prices.
Atlantic received $29.5 million of grants from the Spanish government
in the first nine months of 1996 for a total of $45.3 million through
September 30, 1996. Atlantic expects to receive additional grants
totaling more than $8 million in 1997. These grants are recorded as a
reduction of capital expenditures and are contingent on Atlantic
satisfying certain conditions.
Financing Activities. Net proceeds from debt totaled $432.0 million
in the first nine months of 1996 while the 1995 period included $265.4
million of net proceeds from debt and $228.9 million of proceeds from
infrastructure financing. In 1995, FCX announced an open market share
purchase program for up to a total of 20 million shares of its Class A
and Class B common shares representing approximately 10 percent of its
shares outstanding. During the first nine months of 1996, FCX acquired
7.6 million of its shares for $221.0 million (an average of $29.25 per
share). From inception of this program through September 30, 1996,
FCX has purchased a total of 11.9 million shares for $328.3 million
(an average of $27.64 per share). The timing of purchases is
dependent upon many factors, including the price of common shares, the
Company's business and financial position, and general economic and
market conditions. During the nine-month 1995 period, FCX acquired 3.9
million of its shares for $84.7 million (an average of $21.48 per
share). The increase in cash dividends paid on common stock results
from the fourth-quarter 1995 increase in the regular quarterly
dividend from $0.15 to $0.225 per share.
Political Risk Insurance. In September 1996, FCX notified the
Overseas Private Investment Corporation (OPIC) and certain other
issuers that it has elected to terminate all of its political risk
insurance. FCX's termination of the insurance policies, which were
acquired in 1990 and 1991, was a business decision made after a review
of the relative costs and benefits of the insurance to FCX and its
stockholders. Based on that review, FCX concluded that the potential
benefits of such insurance, which provided a relatively small amount
of coverage in relation to the value of FCX's Indonesian assets, no
longer justify the cost in view of the maturity of FCX's mining
project in Indonesia, the GOI's support of the project, and the GOI's
record of economic stability and growth over the last thirty years.
----------------------
The results of operations reported and summarized above are not
necessarily indicative of future operating results.
<PAGE> 13
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.
(a) The exhibits to this report are listed in the Exhibit Index
appearing on Page E-1 hereof.
(b) During the quarter for which this report is filed, the
registrant filed three Current Reports on Form 8-K, dated September
18, 1996, September 11, 1996 and August 16, 1996, reporting
information under Item 5.
<PAGE> 14
SIGNATURE
Pursuant to the requirements of the Securities and Exchange Act
of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned hereunto duly authorized.
FREEPORT-McMoRan COPPER & GOLD INC.
By: /s/ Michael A. Weaver
-------------------------------
Michael A. Weaver
Controller-Financial Reporting
(authorized signatory and
Principal Accounting Officer)
Date: November 7, 1996
<PAGE> 15
EXHIBIT INDEX
Sequentially
Numbered
Number Description Page
- -------- ----------- -----------
4.1 Amendment dated as of July 15, 1996 to the Credit Agreement
dated as of June 30, 1995 among Freeport-McMoRan Copper &
Gold Inc. ("FCX"), P.T. Freeport Indonesia Company ("PT-
FI"), the several financial institutions party thereto,
Chemical Bank and The Chase Manhattan Bank (National
Association) ("Chase") , as agents, and First Trust of New
York, National Association ("First Trust"), as trustee and
security agent.
4.2 Amendment dated as of July 15, 1996 to the Credit Agreement
dated as of October 27, 1989, among FCX, PT-FI, the several
financial institutions party thereto, Chemical Bank and
Chase, as agents, and First Trust, as trustee and security
agent.
11.1 Computation of Net Income per Common and Common Equivalent
Share
27.1 Financial Data Schedule
<PAGE> E-1
EXHIBIT 4.1
CONFORMED COPY
AMENDMENT dated as of July 15, 1996
(this "Amendment"), to the Credit Agreement
dated as of June 30, 1995 (as amended and in
effect prior to the Effective Date (as
defined below), the "Credit Agreement"),
among P.T. FREEPORT INDONESIA COMPANY, a
limited liability company organized under the
laws of the Republic of Indonesia and also
domesticated in Delaware ("FI"), FREEPORT-
McMoRan COPPER & GOLD INC., a Delaware
corporation ("FCX"), the undersigned
financial institutions (collectively, the
"Banks"), FIRST TRUST OF NEW YORK, NATIONAL
ASSOCIATION, a national banking association,
as trustee under the FI Trust Agreement (in
such capacity, the "FI Trustee") and as
security agent for the Banks (in such
capacity, the "Security Agent") under the FI
Security Documents (as defined in the Credit
Agreement), CHEMICAL BANK, a New York banking
corporation ("Chemical"), as administrative
agent for the Banks (in such capacity, the
"Administrative Agent") and as collateral
agent for the Banks and certain other lenders
(in such capacity, the "FCX Collateral
Agent") under the FCX Pledge Agreements (as
defined in the Credit Agreement), and THE
CHASE MANHATTAN BANK (NATIONAL ASSOCIATION),
a national banking association ("Chase"), as
documentary agent for the Banks (in such
capacity, the "Documentary Agent"; the
Administrative Agent, the Security Agent, the
FCX Collateral Agent and the Documentary
Agent being collectively referred to herein
as the "Agents"). Capitalized terms used
herein and not defined herein shall have the
meanings given such terms in the Credit
Agreement.
Pursuant to the terms of the Credit Agreement, the
FI Obligations are guaranteed by FCX. The guarantee is
secured by the FCX Pledge Agreements. FCX and FI have
requested that the Banks agree to amend the Credit Agreement
in various respects and release the pledge under the FCX
Pledge Agreements and, in connection therewith, terminate
and discharge the FCX Pledge Agreements and, subject to the
consent of all applicable secured parties thereunder, the
FCX Intercreditor Agreement; the Banks have advised FCX and
FI that they are willing to do so, on the terms and subject
to the conditions hereinafter set forth. The parties hereto
accordingly wish to enter into this Amendment to, among
other things, (i) reflect the release of the pledge of the
2
Collateral (as defined in the FCX Pledge Agreements),
(ii) terminate and discharge the FCX Pledge Agreements and
the FCX Intercreditor Agreement, (iii) reduce the Commitment
Fees and the Applicable Margin in respect of LIBO Rate
Loans, (iv) increase the Total Commitment and restructure
all outstanding loans and Commitments under the Credit
Agreement and (v) effect the other amendments to the Credit
Agreement hereinafter set forth.
Accordingly, FI, FCX, the FI Trustee, the Banks
and the Agents agree as follows:
SECTION 1. Amendments to the Credit Agreement.
Effective as of the Effective Date, the Credit Agreement is
hereby amended as follows:
(a) The first recital to the Credit Agreement is
hereby amended by changing the reference therein from
"$200,000,000" to "$450,000,000".
(b) Section 1.1 of the Credit Agreement is hereby
amended by adding the following defined terms in the
appropriate alphabetical order:
(i) "Additional Infrastructure Assets" means non-
mining assets, other than Block B Assets, transferred,
sold, pledged, encumbered or otherwise disposed of by
FI, in each case in accordance with the terms of this
Agreement, in connection with the Additional
Infrastructure Projects.
(ii) "Additional Infrastructure Basket" has the
meaning assigned to such term in paragraph (y) of
Section 5.2(c).
(iii) "Additional Infrastructure Documents" means
the agreements and other documents (whether now
existing or hereafter entered into) governing the
Additional Infrastructure Transactions.
(iv) "Additional Infrastructure Projects" means
future infrastructure projects of FI involving
Additional Infrastructure Assets that are not otherwise
included in the definitions of New Infrastructure
Projects or Block B Projects.
(v) "Additional Infrastructure Transactions"
means the transactions in connection with the
3
implementation, financing and operation of the
Additional Infrastructure Projects, as contemplated by
Additional Infrastructure Documents.
(vi) "Block A Operations and Assets" means the
existing and future mining, concentration, processing,
transportation, delivery and related operations (and
assets used in connection therewith) in respect of FI
Product obtained or provided from Contract Area Block A
(as defined in the Contract of Work).
(vii) "Block B Assets" means assets now owned or
hereafter acquired and utilized in connection with the
development and exploitation of Contract Area Block B
(as defined in the Contract of Work), including with
respect to mining, concentrating, processing,
transportation, delivery and related operations (and
assets used in connection therewith) in respect of FI
Product obtained or provided from Contract Area Block
B, but such term shall not in any event include Block A
Operations and Assets.
(viii) "Block B Conditions" means, with respect to
Block B Debt or Block B Projects including, but not
limited to, transfers or dispositions of Block B Assets
or Liens on Block B Assets relating thereto, the
following conditions:
(X) any such Block B Debt is Non-Recourse
Debt to FI, FCX and the Restricted Subsidiaries
except as to the Block B Assets (and income
relating thereto) and except as otherwise
permitted by Section 5.2(g)(xii); and
(Y) any Block B Project relating to any such
Block B Assets or Block B Debt shall not (1) make
use of any assets that constitute ore that were
originally extracted from or located in Contract
Area Block A or (2) unless Banks holding 51% of
the Commitments otherwise consent in writing, make
any other use of the Block A Operations and
Assets; provided however that such Bank consent
shall not be required with respect to any such use
of Block A Operations and Assets relating solely
to (i) shipping, (ii) storage or warehouse
facilities that are not used for storage of FI
Product, (iii) emergency-related uses, (iv) the
administration or management of Contract Area
4
Block A or (v) infrastructure projects involving
Contract Area Block A, which use, either in cases
requiring the consent of Banks holding 51% of the
Commitments or in cases involving clauses (i)
through (v) above, has been approved in writing by
the Administrative Agent as not, in the sole
discretion of the Administrative Agent, impairing
or adversely affecting the FI Collateral and
Rights relating to the Block A Operations and
Assets (and in cases requiring the consent of
Banks holding 51% of the Commitments or in cases
involving clauses (i) through (v) above, the
Administrative Agent shall have received an
opinion of counsel to FI reasonably satisfactory
to the Administrative Agent to such effect and as
to the non-recourse nature of the Block B Debt);
provided further, that (x) temporary, de minimis
usage of Block A Operations and Assets that would
not in any way adversely affect the development,
exploitation or operations relating to Block A
Operations and Assets or the FI Collateral and
Rights and (y) usage of Block A Operations and
Assets that FI has reasonably determined to be
surplus (i.e., not required for the scheduled
production of year-end 1994 10-K ore reserves
referred to on Schedule VII) shall be permitted
without the approval of the Administrative Agent
or the Banks. Notwithstanding the foregoing, it
is understood that any usage by FCX, FI and any
Restricted Subsidiary of non-mining assets in
connection with any Block B Project shall be
permissible without the consent of the
Administrative Agent or the Banks so long as such
usage would not in any way adversely affect the
scheduled production of year-end 1994 10-K ore
reserves or the FI Collateral and Rights and so
long as FCX, FI or such Restricted Subsidiary has
determined that such usage is in its best
interest.
(ix) "Block B Debt" means Debt incurred for the
purpose of developing or exploiting Contract Area
Block B or acquiring or financing Block B Assets.
(x) "Block B Project" means any project or
transaction, including but not limited to any joint
venture, investment, sale, transfer or leasing of
5
assets, sale leaseback transaction or financing, which
involves the development or exploitation of Contract
Area Block B or the acquisition, financing or
disposition of Block B Assets, and shall include all
contracts and agreements relating to any such project
or transaction.
(xi) "July 1996 CDF Amendment" shall mean the
amendment dated as of July 15, 1996 to this Agreement.
(xii) "July 1996 FI Amendment" shall mean the
amendment dated as of July 15, 1996 to the FI Credit
Agreement.
(xiii) "New Infrastructure Assets" means non-mining
assets transferred, sold, pledged, encumbered or
otherwise disposed of by FI, in each case in accordance
with the terms of this Agreement, in connection with
the New Infrastructure Projects.
(xiv) "New Infrastructure Documents" means the
agreements and other documents (whether now existing or
hereinafter entered into) governing the New
Infrastructure Transactions.
(xv) "New Infrastructure Projects" means the
infrastructure projects of FI involving New
Infrastructure Assets relating to waste water
facilities, the limestone joint venture, the coal power
plant, the cattle joint venture and the G-III aircraft,
each as generally described on Schedule III to the July
1996 CDF Amendment.
(xvi) "New Infrastructure Transactions" means the
transactions in connection with the implementation,
financing and operation of the New Infrastructure
Projects, as contemplated by New Infrastructure
Documents.
(xvii) "1995 Form 10-K" has the meaning assigned
to such term in Section 4.1(e).
(xviii) "Non-Recourse Debt" means, with respect to
any Person and its assets, Debt the obligees of which
will not have, directly or indirectly, recourse
(including by way of any Guarantee or other
undertaking, agreement or instrument that would
constitute Debt) for repayment of the principal,
premium (if any), and interest on such Debt or any
6
fees, indemnities, expense reimbursements or other
amounts of whatever nature accrued or payable in
connection with such Debt against any assets of such
Person other than pursuant to any pledge of specified
assets of such Person.
(c) Section 1.1 of the Credit Agreement is hereby
further amended by substituting the following modified
defined terms for the equivalent defined terms that
presently appear in such Section:
(i) "Loan Documents" means the Amendment
Agreement, the Corporate Group Facilities, the
Corporate Group Notes, the FI Intercreditor Agreement,
the FI Security Documents and all other agreements,
certificates and instruments now or hereafter entered
into in connection with any of the foregoing, in each
case as amended and modified from time to time.
(ii) "Net Proceeds Transactions" means any sales,
transfers, distributions or other dispositions
(including by merger or consolidation) of assets or
properties (including any capital or other equity
interests) owned by FI or its Restricted Subsidiaries,
but excluding (a) the ALatieF Transaction, the PFT
Transaction, the P&O Transaction, the Airfast
Transaction, the New Infrastructure Transactions and
the Additional Infrastructure Transactions, (b) sale
and leaseback transactions permitted by
Section 5.2(g)(vi), (c) dispositions of obsolete or
worn-out property or real estate not used or useful in
its or their business, (d) permitted transfers of
assets from FCX or FI to a Restricted Subsidiary or
from a Restricted Subsidiary to FCX or FI or another
Restricted Subsidiary, (e) sales or other dispositions
of Nonrestricted Subsidiaries or interests therein,
(f) sales or other dispositions by Nonrestricted
Subsidiaries of their assets, (g) direct sales of
equity by FI or a Restricted Subsidiary of FI,
(h) sales of accounts receivable, (i) transfers of
assets pursuant to permitted sale and leaseback
transactions, (j) the granting of the RTZ Interests to
PT-RTZ as contemplated by the Participation Agreement
and (k) sales or other dispositions of Block B Assets
in transactions satisfying the Block B Conditions.
(iii) "Specified Documents" mean the Airfast
Documents, the ALatieF-FI Documents, the Caterpillar
Documents, the PFT Documents, the P&O Documents, the
7
New Infrastructure Documents and the Additional
Infrastructure Documents.
(iv) "Specified Obligations" mean the Airfast
Obligations, the ALatieF-FI Obligations, the
Caterpillar Obligations, the PFT Obligations, the P&O
Obligations and all obligations of FCX, FI or any
Restricted Subsidiary (including, without limitation,
as appropriate, in respect of take-or-pay contracts and
Capitalized Lease Obligations) relating to the New
Infrastructure Projects and the Additional
Infrastructure Projects.
(v) "Specified Transactions" mean the Airfast
Transaction, the ALatieF-FI Transaction, the
Caterpillar Transaction, the PFT Transaction, the P&O
Transaction, the New Infrastructure Transactions and
the Additional Infrastructure Transactions.
(d) Section 1.1 of the Credit Agreement is hereby
further amended by deleting the following defined terms that
presently appear in such Section:
(i) "1994 Form 10-K";
(ii) "Waste Water";
(iii) "Waste Water Assets";
(iv) "Waste Water Documents";
(v) "Waste Water Obligations"; and
(vi) "Waste Water Transaction".
(e) Section 1.1 of the Credit Agreement is hereby
further amended by:
(i) amending the definition of "Applicable Margin"
by substituting a revised Schedule I to the Credit
Agreement that shall read in its entirety as set forth
on Schedule I to this Amendment; and
(ii) amending the definition of "Nonrestricted
Subsidiaries" by adding the following words immediately
after the words "FCX may (x)" in the last sentence of
such definition:
"at any time other than when a Default or an
8
Event of Default has occurred and is continuing or
would exist after giving effect to such
declaration,".
(f) Section 4.1(b) of the Credit Agreement is hereby
amended by deleting from clause (ii) (C) the words "the FCX
Pledge Agreements and".
(g) Section 4.1(c) of the Credit Agreement is hereby
amended to read in its entirety as follows:
"(c) Governmental Approvals. (i) Except for
those consents, approvals and registrations of, or
actions by, any Governmental Authority
(individually, a "Requisite Approval" and
collectively, the "Requisite Approvals") which
have been obtained and are in full force and
effect, no Requisite Approval is or will be
required in connection with (A) the execution and
delivery by either Borrower of this Agreement or
any other Loan Document to which it is, or is to
be, a party, (B) the performance by either
Borrower of this Agreement or any other Loan
Document to which it is, or is to be, a party
(other than performance related to borrowings
hereunder or thereunder by FI) or (C) the
borrowings hereunder by FCX.
(ii) Except for Requisite Approvals which
will have been obtained by FI and be in full force
and effect on the FI Funding Date, no Requisite
Approval or other action by, any Governmental
Authority is or will be required in connection
with the borrowings hereunder by FI.
(iii) Other than routine authorizations,
permissions or consents which are of a minor
nature and which are customarily granted in due
course after application or the denial of which
would not materially adversely affect the
business, financial condition or operations of
either Borrower, such Person has all franchises,
licenses, certificates, authorizations, approvals
or consents from all national, state and local
governmental and regulatory authorities required
to carry on its business as now conducted and as
proposed to be conducted.".
9
(h) Section 4.1(e) of the Credit Agreement is hereby
amended by:
(i) deleting each reference therein to
"December 31, 1993 and 1994" and substituting in lieu
thereof a reference to "December 31, 1994 and 1995";
(ii) deleting each reference therein to
"December 31, 1994" and substituting in lieu thereof a
reference to "December 31, 1995";
(iii) deleting the parenthetical "(the '1994 Form
10-K')" and substituting in lieu thereof the
parenthetical "(the '1995 Form 10-K')"; and
(iv) deleting each reference therein to "March 31,
1995" and substituting in lieu thereof a reference to
"March 31, 1996".
(i) Section 4.1(f) of the Credit Agreement is hereby
amended by:
(i) deleting the reference therein to "1994 Form
10-K" and substituting in lieu thereof a reference to
"1995 Form 10-K,"; and
(ii) deleting the words immediately following such
reference to the "1995 Form 10-K" through and including
the words "delivered to the Banks," in such Section.
(j) Section 4.1(g) of the Credit Agreement is hereby
amended by:
(i) adding the following phrase at the beginning
of the second sentence:
"Other than routine authorizations, permissions or
consents which are of a minor nature and which are
customarily granted in due course after application or
the denial of which would not materially adversely
affect the business, financial condition or operations
of FI,";
(ii) adding the words "in the case of FCX, FI and
their Restricted Subsidiaries," immediately after the
word "reserves)," in the first sentence thereof; and
(iii) adding the word "Restricted" immediately
after the words "or the respective" in the first
10
sentence thereof.
(k) Section 4.1(m) of the Credit Agreement is hereby
amended by adding the words "and, in the case of FI and its
Restricted Subsidiaries, Liens permitted by
Section 5.2(d)(vi)" immediately after the words
"Section 4.1(o)" contained in the parenthetical in the
second sentence thereof.
(l) Section 4.1(o) of the Credit Agreement is hereby
amended by deleting the second sentence thereof in its
entirety.
(m) Section 5.1(f) of the Credit Agreement is hereby
amended by deleting the word "Subsidiaries" in the second
line thereof and substituting in lieu thereof the words
"ERISA Affiliates".
(n) Section 5.l(h) of the Credit Agreement is hereby
amended by:
(i) deleting paragraph (ii) thereof in its
entirety;
(ii) deleting the symbol "(i)" relating to the
first paragraph thereof and ending such paragraph
immediately following the words "Section 8.1(j)"; and
(iii) adding the words "to Liens expressly
permitted by Section 5.2(d) and" immediately following
the words "subject only".
(o) Section 5.1(k) of the Credit Agreement is hereby
amended by:
(i) adding the words "for the first time" in
clause (ii) thereof immediately prior to the words "be
a Major Concentrate Sales Agreement";
(ii) adding the words "(together with the original
Concentrate Sales Agreement that is the subject of such
amendment, waiver or supplement)" in clause (ii)
thereof immediately prior to the phrase ", in each
case"; and
(iii) adding immediately following the word
"thereof" at the end of clause (ii) thereof a new
clause (iii) that reads in its entirety as follows:
11
", and (iii) promptly notify the
Administrative Agent and the FI Trustee of any
material default under a Major Concentrate Sales
Agreement of which it has knowledge.".
(p) Section 5.1(l) of the Credit Agreement is hereby
amended to read as follows:
"(l) Protection of Contract Rights. FI will not
terminate, suspend, amend or grant waivers of any
provisions of any of the Assigned Agreements without
the prior written consent of the Required Banks;
provided, however, that FI may amend or waive
provisions in any Concentrate Sales Agreement or, in
the ordinary course of business and so long as no
Default or Event of Default shall have occurred and be
continuing hereunder, terminate any Concentrate Sales
Agreement, so long as such amendment, waiver or
termination will not materially adversely affect the
business, financial condition or operations of FI or
any rights of the FI Trustee or the Banks. Upon the
request of the Administrative Agent or the FI Trustee,
FI will promptly provide the Administrative Agent or
the FI Trustee, as the case may be, with access to FI's
books, records and offices for the purpose of
permitting the Administrative Agent or the FI Trustee
to inspect and review any amendments, waivers or
supplements to, or terminations of, any Concentrate
Sales Agreement and make copies thereof. If a Default
or Event of Default shall have occurred and be
continuing, upon the request of the Administrative
Agent or the FI Trustee, FI will provide the
Administrative Agent or the FI Trustee, as the case may
be, with copies of any such amendments, waivers,
supplements or terminations. FI shall take all steps
necessary or advisable to protect its rights (and the
rights of the FI Trustee) under the Assigned
Agreements.".
(q) Section 5.1(n) of the Credit Agreement is hereby
amended by deleting the phrases "the FCX Pledge Agreements
and" and "and the FCX Pledge Agreements" from the first
sentence thereof.
(r) Section 5.2(a) of the Credit Agreement is hereby
amended to read in its entirety as follows:
12
"(a) Conflicting Agreements. FCX, FI and the
Restricted Subsidiaries shall not enter into any
agreement with any Person containing any provision
which would (i) be violated or breached by the
performance of their obligations under any Loan
Document or under any instrument or document
delivered or to be delivered by them hereunder or
thereunder or in connection herewith or therewith,
(ii) prohibit or restrict FI and the other
Restricted Subsidiaries in the payment of
dividends or other distributions or (iii) except
as provided in this clause (iii) and in the second
sentence of this paragraph 5.2(a), prohibit or
restrict the ability of FCX, FI and the other
Restricted Subsidiaries to create Liens on any of
their assets (other than as provided in Sections
7.2.5 and 7.3 of the Participation Agreement and
other than on assets which are subject to Liens
permitted pursuant to paragraphs (i) (with respect
to such required margin deposits only), (ii),
(iii), (iv), (vi), (vii), (ix), (x), (xi) and
(xii) of Section 5.2(d) and extensions and
renewals and replacements thereof to the extent
permitted pursuant to Section 5.2(d)(xiii)).
Notwithstanding the limitations set forth in the
immediately preceding sentence, FCX, FI and any
other Restricted Subsidiary and any special
purpose issuing Restricted Subsidiary of FCX may,
in connection with the placement or issuance of
additional Debt (and any refinancings or
replacements of or exchanges for such additional
Debt), enter into agreements containing a covenant
prohibiting or restricting its ability to grant or
create a Lien on any of its assets unless the
holders of such Debt share equally and ratably in
such Lien, provided that (x) such covenant does
not apply to any Lien which is in effect, or which
may be granted, pursuant to any Loan Document
existing on the date of original placement or
issuance of such additional Debt, (y) the
placement or issuance of such additional Debt does
not contravene any other provision of any Loan
Document including, without limitation, Section
5.2(b) of this Agreement and (z) the terms of such
covenant are approved by the Agents.".
(s) Section 5.2(c) of the Credit Agreement is hereby
amended by:
13
(i) deleting from clause (B)(v) thereof the words
"a Borrower", and substituting in lieu thereof a
reference to "FI";
(ii) deleting the words "any Restricted Subsidiary"
in clause (B)(v) and substituting in lieu thereof the
words "any of its Restricted Subsidiaries";
(iii) adding a new paragraph (v) immediately prior
to paragraph (w) that reads in its entirety as follows:
"(v) FCX, FI and the Restricted Subsidiaries
may transfer and dispose of Block B Assets in
transactions satisfying the Block B Conditions;";
(iv) amending paragraph (y) to read as follows:
"(y) FI and the Restricted Subsidiaries may
engage in sale and leaseback transactions
(including sale and leaseback transactions which
initially take the form of a purchase money
transaction in that title to the equipment passes
through FI or a Restricted Subsidiary prior to
being held by the lessor in the sale and leaseback
transaction) for assets with a cumulative
aggregate fair market value not in excess of
$50,000,000 and FI may consummate (1) the transfer
of the remaining PFT Assets and ALatieF-FI Assets
as required by the PFT Documents and the
ALatieF-FI Documents, respectively, (2) the
transfer or disposition in respect of Contract
Area Block B referred to in Section 8.1(j) subject
to the conditions precedent thereto set forth in
Section 8.1(j), (3) the transfer or disposition of
New Infrastructure Assets solely in connection
with the New Infrastructure Projects; provided
that, immediately after giving effect to any such
transfer or disposition, the cumulative aggregate
value (based on the higher of fair market or book
value at the time of transfer or encumbrance) of
all New Infrastructure Assets so transferred or
disposed of, or which are pledged or otherwise
encumbered in connection with New Infrastructure
Projects, does not exceed $375,000,000 and (4) the
transfer or disposition of Additional
Infrastructure Assets solely in connection with
14
Additional Infrastructure Projects; provided that
any such transfer or disposition pursuant to this
clause (y)(4) shall be permitted only to the
extent that, immediately after giving effect to
such transfer or disposition, the cumulative
aggregate fair market value (determined for any
asset at the time of its transfer or encumbrance)
of all Additional Infrastructure Assets which are
transferred or disposed of pursuant to this
clause (y)(4), or which are pledged or otherwise
encumbered in connection with Additional
Infrastructure Projects, does not exceed an amount
equal to 10% of FCX's total consolidated assets
reflected in its most recent audited consolidated
balance sheet that has been delivered to the Banks
pursuant to Section 5.1(a)(1) or, if such audited
consolidated balance sheet has not yet been
delivered to the Banks, in a certificate of a
Financial Officer of FCX to the Administrative
Agent certifying as to FCX's audited total
consolidated assets (the "Additional
Infrastructure Basket"); provided that, if upon
receipt of the audited financial statements
delivered pursuant to Section 5.1(a)(1), FI shall
have transferred or disposed of Additional
Infrastructure Assets in excess of 10% of FCX's
total consolidated assets as reflected in such
audited financial statements, then within 30 days
of the delivery of such audited financial
statements to the Banks, FI shall arrange for
certain assets to be transferred back to it or for
pledges of certain assets to be released in order
that the condition set forth in the first
provision of this clause (y)(4) shall be
satisfied; and"; and
(v) amending paragraph (z) by deleting the words
"and by Section 5.2(r)" wherever they appear and the
words "pledged pursuant to the FCX Pledge Agreements".
15
(t) Section 5.2(d) of the Credit Agreement is hereby
amended by:
(i) deleting from paragraph (v) thereof the words
"Liens in favor of the Collateral Agent (for the equal
and ratable benefit of the Lenders (as defined in the
FCX Intercreditor Agreement) and the holders of the
B.V. Notes as provided in the FCX Pledge Agreements,
and";
(ii) amending paragraph (vi) thereof by adding the
following words at the end of such paragraph:
"and Liens on equity or debt investments in Third
Parties owned by FI or a Restricted Subsidiary
(which Lien in any case is limited to such pledged
equity or debt investment) which secure Debt of
Third Parties or other Third Party obligations (or
Guarantees thereof); provided that such pledged
investments were initially acquired in accordance
with Section 5.2(l);";
(iii) amending paragraph (vii) thereof by:
(A) inserting the words "(other than
Additional Infrastructure Transactions and New
Infrastructure Transactions)" immediately after
the reference to "Specified Transactions" in
paragraph (vii) clause (x); and
(B) amending paragraph (vii) clause (z) to
read in its entirety as follows:
"to the extent permitted by
Section 5.2(g)(vi) pursuant to other sale and
leaseback transactions entered into after the
Closing Date.";
(iv) deleting the word "and" at the end of
paragraph (ix), redesignating paragraph (x) as
paragraph (xiii) and adding new paragraphs (x), (xi)
and (xii) to read as follows:
"(x) Liens on New Infrastructure Assets
(which Lien in any such case is limited to such
New Infrastructure Assets) pursuant to Capitalized
Lease Obligations arising under New Infrastructure
Transactions or securing Debt which is Non-
16
Recourse Debt of FI or a Restricted Subsidiary
except as to such New Infrastructure Assets,
provided that, the cumulative aggregate value
(based on the higher of fair market or book value
at the time of encumbrance or transfer) of all New
Infrastructure Assets which are subject to such
Liens or which have been transferred or disposed
of pursuant to Section 5.2(c)(y)(3) does not
exceed $375,000,000;
(xi) Liens on Additional Infrastructure
Assets (which Lien in any such case is limited to
such Additional Infrastructure Assets) pursuant to
Capitalized Lease Obligations arising under
Additional Infrastructure Transactions or securing
Debt which is Non-Recourse Debt of FI or a
Restricted Subsidiary except as to such Additional
Infrastructure Assets, provided that, immediately
after any such Lien is granted or incurred, the
cumulative aggregate fair market value (determined
for any asset at the time of its encumbrance or
transfer) of all Additional Infrastructure Assets
which are subject to such Liens or which have been
transferred or disposed of pursuant to
Section 5.2(c)(y)(4) does not exceed the
Additional Infrastructure Basket;
(xii) Liens on Block B Assets securing Block B
Debt provided that such Liens and Block B Debt
satisfy the Block B Conditions;"; and
(v) in redesignated paragraph (xiii) deleting the
reference to "and (ix)" and inserting in place
thereof ", (ix), (x), (xi) and (xii)" and adding,
immediately prior to the period at the end of such
paragraph the following:
"and provided further, however, that any such
extension, renewal or replacement Lien relating to
paragraph (xii) shall also satisfy the Block B
Conditions (it being understood that any use of
the Block A Operations and Assets previously
approved by the Administrative Agent or Banks
holding 51% of the Commitments, as the case may
be, in connection with the predecessor Lien shall
17
be deemed to have been approved to the same extent
by such Banks for purposes of such extension,
renewal or replacement Lien)".
(u) Section 5.2(g) of the Credit Agreement is hereby
amended by:
(i) amending paragraph (ii) thereof to read in its
entirety as follows:
"(ii) the Specified Obligations, including ,
without limitation, the Capitalized Lease
Obligations and the take-or-pay contracts with
respect to the PFT Assets, the ALatieF-FI Assets,
the P&O Assets, the Airfast Assets, the New
Infrastructure Assets and the Additional
Infrastructure Assets;";
(ii) deleting from paragraph (vii) thereof the
words ", secured pursuant to the FCX Intercreditor
Agreement by the FCX Pledge Agreements"; and
(iii) deleting the word "and" at the end of
paragraph (ix), redesignating paragraph (x) as
paragraph (xii) and adding new paragraphs (x) and (xi)
to read as follows:
"(x) Non-Recourse Debt of FCX, FI or a
Restricted Subsidiary secured solely by New
Infrastructure Assets or Additional Infrastructure
Assets permitted to be pledged or encumbered under
Section 5.2(d)(x) or Section 5.2(d)(xi),
respectively, and Debt of FI or its Restricted
Subsidiaries secured solely by the pledged equity
or debt investment in applicable Third Parties
permitted to be pledged under Section 5.2(d)(vi);
provided that any unsecured portion of such Debt
is otherwise permitted by this Agreement;
(xi) Block B Debt of FCX, FI or a Restricted
Subsidiary, provided that such Block B Debt
satisfies the Block B Conditions; and".
18
(v) Section 5.2(h) of the Credit Agreement is hereby
amended to read in its entirety as follows:
"(h) Preferred Stock. FCX, FI and the Restricted
Subsidiaries shall not voluntarily redeem any preferred
stock issued by any of them except for common stock of
the issuer (with cash for fractional shares); provided
that FCX shall be permitted to deliver notices of
redemption with respect to all or part of its 7%
Convertible Exchangeable Special Preferred Stock and
its Step-Up Convertible Preferred Stock and to make any
cash redemption to be effected as a consequence
thereof, so long as FCX reasonably believes at the time
of the delivery of any such notice of redemption (based
on the market trading values of the common stock of FCX
or on standby underwriting arrangements with a
nationally recognized underwriter) that substantially
all of such preferred stock will be converted into, or
refinanced with, common stock of FCX on or prior to the
stated redemption date.".
(w) Section 5.2(j) of the Credit Agreement is hereby
amended by:
(i) deleting from the first sentence thereof all
of the words after the phrase "interest in FI" and
inserting a period immediately following such phrase;
and
(ii) deleting from the second sentence thereof the
words ", except for the Liens of the FCX Pledge
Agreements".
(x) Section 5.2(l) of the Credit Agreement is hereby
amended by:
(i) deleting each reference therein to
"$75,000,000" and substituting in lieu thereof a
reference to "$150,000,000";
(ii) deleting the words "consummate the Waste Water
Transaction and"; and
(iii) adding the following immediately after the
last sentence thereof:
"Notwithstanding the foregoing, (i) FCX, FI
19
and their Restricted Subsidiaries may also acquire
debt or equity investments in Third Parties in
consideration for transfers or sales to such Third
Parties, in accordance with and as permitted by
Section 5.2(c), of New Infrastructure Assets,
Additional Infrastructure Assets and Block B
Assets, and such acquisitions will not be included
in the calculation of the $150,000,000 annual
limit provided for above and (ii) FCX, FI and
their Restricted Subsidiaries may agree to
restrictions on, or assignments of, the payment of
dividends, distributions or interest payments
(collectively, "Third Party Distributions") made
in respect of investments in Third Parties made in
accordance with the provisions of Section
5.2(d)(vi), and may agree to subordinate the
payment of such Third Party Distributions to the
payment of interest, dividends, distributions or
other amounts to other investors in or lenders to
such Third Parties, and such agreements will not
be deemed to result in additional investments in
such Third Parties or be taken into account in the
calculation of the $150,000,000 annual limit
provided for above, provided that any such Third
Party Distributions, to the extent so assigned,
are, promptly after being paid or received,
transferred to the assignee thereof.".
(y) Section 5.2(n) of the Credit Agreement is hereby
amended by:
(i) deleting the word "and" at the end of
clause (i) and inserting a comma in lieu thereof;
(ii) deleting the reference in clause (ii) to "FCX
Collateral Agent" and substituting in lieu thereof a
reference to "FI Trustee";
(iii) deleting the period at the end of
clause (ii); and
(iv) adding the following new clause (iii)
immediately after clause (ii) that reads in its
entirety as follows:
"and (iii) transfers of Block B Assets in
accordance with Section 5.2(c)(v), transfers of
New Infrastructure Assets in accordance with
20
Section 5.2(c)(y)(3) and transfers of Additional
Infrastructure Assets in accordance with Section
5.2(c)(y)(4).".
(z) Section 5.2(o) of the Credit Agreement is hereby
amended by:
(i) adding the following words immediately after
the symbol (i):
"enter into any New Infrastructure Document
or Additional Infrastructure Document or any
amendment or modification thereto or";
(ii) deleting the word "or" immediately after the
first parenthetical in clause (ii) and substituting a
comma in lieu thereof;
(iii) deleting the words "or the Waste Water
Assets" in clause (iii) thereof and substituting in
lieu thereof the following:
", the New Infrastructure Assets or the
Additional Infrastructure Assets";
(iv) deleting the words "nor shall FCX and FI"
after the number "$125,000,000" in existing
clause (iii)(y) and substituting in lieu thereof the
words "; or (iv)"; and
(v) deleting the word "and" immediately after the
word "collateral)" in such newly designated clause (iv)
and adding at the end of the current text thereof,
immediately prior to the period, the following:
"and the transfer or pledge of New
Infrastructure Assets and Additional
Infrastructure Assets in connection with New
Infrastructure Projects and Additional
Infrastructure Projects, respectively, in each
case to the extent not prohibited by the other
provisions of this Agreement".
(aa) Section 5.2(p) of the Credit Agreement is hereby
amended by:
(vi) adding the words ", or such Restricted
Subsidiary, as the case may be," immediately after the
third and fourth references in clause (i) to
21
"Borrower"; and
(vii) adding the following sentence at the end of
such Section 5.2(p):
"Notwithstanding the foregoing, (x) FCX, FI
or a Restricted Subsidiary may engage in the
foregoing transactions with a Wholly-Owned
Restricted Subsidiary and (y) a Wholly-Owned
Restricted Subsidiary may engage in the foregoing
transactions with another Wholly-Owned Restricted
Subsidiary.".
(bb) Section 5.2(r) of the Credit Agreement is hereby
amended by deleting such Section in its entirety and
substituting in lieu thereof the words "Intentionally
Omitted".
(cc) Section 5.2 of the Credit Agreement is hereby
amended by adding a new subsection 5.2(t) that reads in its
entirety as follows:
"(t) Block B Projects. None of FCX, FI or any of
their Restricted Subsidiaries shall permit any Block B
Project to utilize any Block A Operations and Assets
unless such Block B Project satisfies the Block B
Conditions.".
(dd) Section 6.1(b) of the Credit Agreement is hereby
amended by:
(i) amending paragraph (b)(ii) to read in its
entirety as follows:
"(ii) The Administrative Agent and the
Documentary Agent shall have received, on behalf
of themselves and the Banks, a favorable written
opinion of (I) the General Counsel of FCX,
(II) Jones, Walker, Waechter, Poitevent, Carrere &
Denegre, L.L.P., counsel for FCX and FI, (III) Ali
Budiardjo, Nugroho, Reksodiputro, special
Indonesian counsel to FI, and (IV) Mochtar,
Karuwin & Komar, special Indonesian counsel for
the Agents, in each case (A) in the form approved
by the Agents and Cravath, Swaine & Moore, special
counsel for the Agents, (B) dated the FI Funding
Date, (C) addressed to the Agents and the Banks,
and (D) covering such other matters relating to
22
the July 1996 Amendment, the Loan Documents and
the transactions contemplated thereby as the
Administrative Agent and the Documentary Agent
shall reasonably request, and the FCX and FI
hereby instruct such counsel to deliver such
opinions.";
(ii) amending paragraph (b)(iv) to read in its
entirety as follows:
"(iv) The Administrative Agent shall have
received (I) (a) as to FI, signed Certificates of
the Secretary of State of the State of Delaware,
dated reasonably near the FI Funding Date, listing
the Certificate of Domestication and Certificate
of Incorporation of FI (as certified by the
Secretary or Assistant Secretary of FI in the
certificate described in clause (II) below) as
being on file in his office and stating that such
documents are the only charter documents of FI on
file in his office, that FI is duly incorporated
and in good standing in the State of Delaware and
has paid all franchise taxes required by law to be
paid by FI to the date of his Certificate and (b)
as to FCX, signed Certificates of the Secretary of
State of the State of Delaware, dated reasonably
near the FI Funding Date, listing the Certificate
of Incorporation of FCX (as certified by the
Secretary or Assistant Secretary of FCX in the
certificate described in clause (II) below) as
being on file in his office and stating that such
document is the only charter document of FCX on
file in his office, that FCX is duly incorporated
and in good standing in the State of Delaware and
has paid all franchise taxes required by law to be
paid by FCX to the date of his Certificate; (II) a
certificate of the Secretary or Assistant
Secretary of FCX and FI dated the FI Funding Date
and certifying (A) that there have not been any
amendments since July 15, 1996 to any of
(X) (a) the Certificate of Domestication of FI,
(b) the Indonesian Articles of Association of FI
or (c) the Certificate of Incorporation and By-
Laws of FCX, as such documents are described in
paragraphs 6(a)(i), (iii) and (vii), respectively,
of the Fifth Amendment dated as of July 17, 1995
to the FI Credit Agreement (the "FI Fifth
Amendment") and delivered to the Banks in
connection therewith or (Y) the Certificate of
23
Incorporation of FI as described in clause (I)(a)
above or, if any of such documents have been
amended since July 15, 1996, attaching a true and
complete copy of such amendments, (B) that
attached thereto is a true and complete copy of
resolutions duly adopted by the Board of Directors
of FCX and FI, and in the case of FI, concurred in
by the Board of Commissioners, in connection with
the July 1996 FI Amendment and the July 1996 CDF
Amendment and that such resolutions have not been
modified, rescinded or amended and are in full
force and effect, (C) that neither the certificate
of incorporation of FCX nor the certificate of
domestication or incorporation of FI has been
amended since the date of the last amendment
thereto shown on each Certificate of the Secretary
of State of the State of Delaware furnished
pursuant to clause (I)(a) or (I)(b) above, as the
case may be, and (D) as to the incumbency and
specimen signature of each officer executing the
July 1996 FI Amendment and the July 1996 CDF
Amendment or any document delivered in connection
therewith, including any amendments to the FI
Security Documents, on behalf of FCX and FI;
(III) a certificate of another officer as to the
incumbency and specimen signature of the Secretary
or Assistant Secretary executing the certificate
pursuant to (II) above; and (IV) such other
documents as the Banks or Cravath, Swaine & Moore,
counsel for the Agents, may reasonably request.";
(iii) amending paragraph (b)(vii) to read in its
entirety as follows:
"(vii) All Requisite Approvals (as defined
in Section 4.1(c)), including without limitation
all approvals listed in Part II of Schedule IV,
shall have been received in form and substance
satisfactory to the Administrative Agent and the
Documentary Agent and be in full force and
effect."; and
(iv) adding thereto a new paragraph (b)(viii) that
reads in its entirety as follows:
"(viii) The FI Security Documents shall have
been amended in form and substance satisfactory to
Mochtar, Karuwin & Komar, special Indonesian
counsel to the Agents.".
24
(ee) Section 7.1 of the Credit Agreement is hereby
amended by:
(i) deleting the text of paragraph (o) thereof in
its entirety and substituting in lieu thereof the words
"Intentionally Omitted"; and
(ii) deleting the words "or the FCX Pledge
Agreements" immediately before the proviso in the last
paragraph of Section 7.1.
(ff) Section 8.1(j) of the Credit Agreement is hereby
amended by:
(i) deleting the text of clause (ii) thereof and
substituting in lieu thereof the words "[intentionally
omitted]";
(ii) deleting the text of clause (iv)(y) thereof
and substituting in lieu thereof the following:
"to allow sales, transfers or other
dispositions, secured financings, capital leases
and sale leaseback transactions and pledges of
assets expressly permitted hereby, including
without limitation, sales, transfers or pledges of
Block B Assets, New Infrastructure Assets and
Additional Infrastructure Assets"; and
(iii) adding the following sentence immediately
after the period at the end of such Section:
"It is understood and agreed that releases in
connection with clauses (iii) and (iv) of this
Section 8.1(j) shall not require any further
consents by the Required Banks.".
(gg) Article VIII of the Credit Agreement is hereby
further amended by deleting each reference to (and the
surrounding text, if such text relates solely to "the FCX
Collateral Agent", "the FCX Pledge Agreements" or "the FCX
Intercreditor Agreement"): (i) "the FCX Collateral Agent",
(ii) "the FCX Pledge Agreements" and (iii) the "FCX
Intercreditor Agreement" therein.
(hh) Section 10.7 of the Credit Agreement is hereby
amended by deleting from clause (iv) of paragraph (b)
thereof the words "or the Collateral granted under the FCX
25
Pledge Agreements".
(ii) Section 10.17 of the Credit Agreement is hereby
amended by designating the existing text as paragraph (a)
and adding a new paragraph (b) to read as follows:
"(b) Notwithstanding anything to the contrary in
this Agreement, in the event the RTZ Transaction is for
any reason abandoned or terminated prior to the RTZ
Closing Date, the Agents and the Banks will, at the
request of FCX and FI, promptly negotiate and agree on
mutually satisfactory documentation, including
amendments to the FI Trust Agreement and other FI
Security Documents, to provide for the transfer of the
Contract of Work to the FI Trustee to be held pursuant
to the FI Trust Agreement and to provide the Agents and
the Banks with substantially the same rights and
benefits in respect of the Contract of Work as so
transferred (subject to substantially the same
limitations), in each case, in substantially the same
manner as contemplated by the proposed amendments to
the FI Security Documents anticipated to be entered
into pursuant to paragraph (a) of this Section, as the
same exist in draft form as of the date of the July
1996 CDF Amendment (subject to the approval of the
Banks in accordance with the terms of the RTZ
Amendment).".
(jj) Schedule II to the Credit Agreement is hereby
amended by deleting such Schedule in its entirety and
substituting in lieu thereof a revised Schedule II that
shall read in its entirety as set forth on Schedule II to
this Amendment.
(kk) Part II of Schedule IV to the Credit Agreement is
hereby amended to read as follows:
"Part II (FI Funding Date)
1. Letter signed by a duly authorized senior
official of the Bank of Indonesia approving
the Credit Agreement and the July 1996 CDF
Amendment.
2. Ministry of Mines Confirmation of Consent;
provided, that it is understood that the
Ministry of Mines Confirmation of Consent
26
referred to in Part III of this Schedule IV
has been obtained and will suffice to satisfy
this requirement so long as the RTZ Closing
Date occurs prior to the FI Funding Date. In
the event that the RTZ Closing Date has not
occurred prior to the FI Funding Date, a
separate Ministry of Mines Confirmation of
Consent will have to be obtained in order for
FI to borrow hereunder".
(ll) Exhibits A-1 and A-2 to the Credit Agreement are
amended by deleting such Exhibits in their entireties and
substituting in lieu thereof revised Exhibits A-1 and A-2 in
the form of Exhibits A-1 and A-2, respectively, to this
Amendment.
SECTION 2. Representations and Warranties. Each
of FCX and FI represents and warrants to the Administrative
Agent and to each of the Banks that:
(a) Each of this Amendment, the Credit Agreement
as amended by this Amendment (the "Amended Credit
Agreement") and the Promissory Notes executed in
connection with this Amendment has been duly
authorized, executed and delivered by it and
constitutes its legal, valid and binding obligations
enforceable in accordance with their terms, except as
such enforceability may be limited by bankruptcy,
reorganization, insolvency, moratorium or similar laws
affecting creditors' rights generally, or by general
principles of equity (whether enforcement is sought by
proceedings in equity or at law).
(b) The representations and warranties set forth
in Article IV of the Amended Credit Agreement and in
the other Loan Documents are true and correct in all
material respects with the same effect as if made on
the date hereof, except to the extent such
representations and warranties expressly relate to an
earlier date, in which case they were true and correct
in all material respects on and as of such earlier
date.
(c) As of the date hereof, no Default or Event of
Default has occurred and is continuing under the
Amended Credit Agreement.
27
SECTION 3. Conditions to Effectiveness. This
Amendment shall become effective on the date that each of
the following conditions shall have been satisfied (such
date of effectiveness being the "Effective Date"):
(a) Receipt by Cravath, Swaine & Moore, special
counsel for the Agents, of executed counterparts of
this Amendment which, when taken together, bear the
signatures of FI, FCX, the FI Trustee, the Agents and
each Bank.
(b) The representations and warranties on the
part of FCX and FI contained in Article IV of the
Credit Agreement shall be true and correct in all
material respects at and as of the Effective Date as
though made on and as of such date.
(c) FCX and FI shall be in compliance with all
the terms and provisions set forth in this Amendment
and the Credit Agreement to be observed or performed on
their part, and as of the Effective Date, no Event of
Default nor any event which upon notice or lapse of
time or both would constitute such an Event of Default
shall have occurred and be continuing.
(d) All legal matters incident to this Amendment
shall be satisfactory to the Banks, the Administrative
Agent and Cravath, Swaine & Moore, special counsel for
the Agents.
(e) Each of FCX and FI shall have delivered to
the Administrative Agent, a duly executed Promissory
Note in favor of each Bank in the amount of such Bank's
Commitment after giving effect to this Amendment,
substantially in the form of Exhibit A-1 and Exhibit A-
2 to this Amendment.
(f) The Administrative Agent shall have received
all fees and other amounts due and payable on or prior
to the Effective Date, including, to the extent
invoiced, reimbursement or payment of all out-of-pocket
expenses required to be reimbursed or paid by FCX or FI
hereunder or under any Loan Document.
(g) FCX and FI shall have received the written
consent of TCB, the Required FM Lenders, the Required
FI Lenders, the Required CDF Lenders and the Required
Pel-Tex Lenders (each as defined in the FCX
28
Intercreditor Agreement in effect prior to the
Effective Date) in connection with the consummation of
the transactions contemplated by Section 8 hereof.
(h) The Administrative Agent shall have received
on behalf of itself and the Banks a favorable written
opinion of (i) Jones, Walker, Waechter, Poitevent,
Carrere & Denegre, counsel for FCX and FI, (ii) Ali
Budiardjo, Nugroho, Reksodiputro, special Indonesian
counsel for FI, (iii) Henry A. Miller, general counsel
of FCX and (iv) Mochtar, Karuwin & Komar, special
Indonesian counsel for the Agents, each dated the
Effective Date and addressed to the Administrative
Agent and the Banks, each in the form approved by the
Agents and Cravath, Swaine & Moore, special counsel for
the Agents. FCX and FI and, in the case of (iv) above,
the Agents, hereby instruct such counsel to deliver
such opinions.
(i) The Administrative Agent shall have received
(i) (a) as to FI, signed Certificates of the Secretary
of State of the State of Delaware, dated reasonably
near the Effective Date, listing the Certificate of
Domestication and Certificate of Incorporation of FI
(as certified by the Secretary or Assistant Secretary
of FI in the certificate described in clause (ii)
below) as being on file in his office and stating that
such documents are the only charter documents of FI on
file in his office, that FI is duly incorporated and in
good standing in the State of Delaware and has paid all
franchise taxes required by law to be paid by FI to the
date of his Certificate and (b) as to FCX, signed
Certificates of the Secretary of State of the State of
Delaware, dated reasonably near the Effective Date,
listing the Certificate of Incorporation of FCX (as
certified by the Secretary or Assistant Secretary of
FCX in the certificate described in clause (ii) below)
as being on file in his office and stating that such
document is the only charter document of FCX on file in
his office, that FCX is duly incorporated and in good
standing in the State of Delaware and has paid all
franchise taxes required by law to be paid by FCX to
the date of his Certificate; (ii) a certificate of the
Secretary or Assistant Secretary of FCX and FI dated
the Effective Date and certifying (A) that there have
not been any amendments since July 17, 1995 to any of
(X) (a) the Certificate of Domestication of FI, (b) the
Indonesian Articles of Association of FI or (c) the
Certificate of Incorporation and By-Laws of FCX, as
29
such documents are described in paragraphs 6(a)(i),
(iii) and (vii), respectively, of the Fifth Amendment
dated as of July 17, 1995 to the FI Credit Agreement
(the "FI Fifth Amendment") and delivered to the Banks
in connection therewith or (Y) the Certificate of
Incorporation of FI as described in clause (i)(a) above
or, if any of such documents have been amended since
the FI Fifth Amendment, attaching a true and complete
copy of such amendments, (B) that attached thereto is a
true and complete copy of resolutions duly adopted by
the Board of Directors of FCX and FI, and in the case
of FI, concurred in by the Board of Commissioners,
authorizing the execution, delivery and performance of
this Amendment, the Amended Credit Agreement, the
Promissory Notes executed and delivered in connection
with this Amendment, any amendments to the FI Security
Documents that may be required in connection with the
FI Funding Date, the FI Security Documents as amended
by such amendments and the other Loan Documents and the
borrowings under the Amended Credit Agreement, and that
such resolutions have not been modified, rescinded or
amended and are in full force and effect, (C) that
neither the certificate of incorporation of FCX nor the
certificate of incorporation or domestication of FI has
been amended since the date of the last amendment
thereto shown on each Certificate of the Secretary of
State of the State of Delaware furnished pursuant to
clause (i)(a) or (i)(b) above, as the case may be, and
(D) as to the incumbency and specimen signature of each
officer executing this Amendment or any document
delivered in connection herewith on behalf of FCX and
FI; (iii) a certificate of another officer as to the
incumbency and specimen signature of the Secretary or
Assistant Secretary executing the certificate pursuant
to (ii) above; and (iv) such other documents as the
Banks or Cravath, Swaine & Moore, counsel for the
Agents, may reasonably request.
(j) The Administrative Agent shall have received a
certificate, dated the Effective Date and signed by a
Financial Officer of FCX and FI, confirming compliance
with the conditions precedent set forth in paragraphs
(i) and (iii) of Section 6.2 of the Credit Agreement.
(k) No action shall have been taken by any
Governmental Authority which restrains or prevents or
seeks to restrain or prevent, or imposes or seeks to
impose materially adverse conditions upon the execution
and delivery of this Amendment and the Promissory Notes
30
executed in connection herewith or the performance of
this Amendment, such Promissory Notes, the Credit
Agreement as amended by this Amendment and the
transactions contemplated hereby or thereby.
SECTION 4. Increase in Aggregate of the
Commitments under the Credit Agreement. (a) It is hereby
acknowledged that, pursuant to the terms of this Amendment,
the Total Commitment under the Credit Agreement is being
increased from $200,000,000 to $450,000,000 (such aggregate
amount being, a "Commitment Increase"), effective as of the
Effective Date. The Commitment Increase will be implemented
through the increase of the Commitments of one or more of
the Banks (each such Bank that is willing to increase its
Commitment hereunder being an "Increasing Bank") and the
decrease of the Commitments of one or more of the Banks
(each such Bank that is willing to reduce its Commitment
hereunder being a "Reducing Bank"). If agreement is reached
on or prior to the Effective Date with any Increasing Banks
or Reducing Banks as to a commitment increase or a
commitment reduction, as the case may be, the Commitments of
such Increasing Banks and such Reducing Banks shall be, as
of the Effective Date, the amounts set forth in Schedule II
to this Amendment; provided that each Bank shall have
delivered to the Administrative Agent within 30 Business
Days of the Effective Date, its existing Promissory Notes of
FCX issued under the Credit Agreement as in effect prior to
the Effective Date. The Administrative Agent, upon receipt
of such Promissory Notes from each Bank shall promptly
deliver such Promissory Notes to FCX.
(b) On the Effective Date, the Administrative
Agent shall record in the Register the relevant information
with respect to each Increasing Bank and each Reducing Bank.
Each Increasing Bank shall, before 2:00 P.M. (New York City
time) on the Effective Date, make available to the
Administrative Agent in New York, New York, in immediately
available funds, an amount equal to the excess of (i) such
Increasing Bank's ratable portion of the borrowings then
outstanding (calculated based on its Commitment as a
percentage of the Total Commitments outstanding after giving
effect to the Commitment Increase) over (ii) such Increasing
Bank's pro rata share of the borrowings then outstanding
(calculated based on its Commitment (without giving effect
to the Commitment Increase) as a percentage of the Total
Commitments (without giving effect to the Commitment
31
Increase). After the Administrative Agent's receipt of such
funds from each such Increasing Bank, the Administrative
Agent will promptly thereafter cause to be distributed like
funds to the Reducing Banks for their account in an amount
to each Reducing Bank such that the aggregate amount of the
outstanding borrowings owing to each Reducing Bank after
giving effect to such distribution equals such Reducing
Bank's pro rata share of the borrowings then outstanding
(calculated based on its Commitment as a percentage of the
aggregate Commitments outstanding after giving effect to the
Commitment Increase). Pursuant to Section 3.13 of the
Credit Agreement, FCX and FI shall pay any losses any Bank
may sustain or incur as a consequence of any Breakage Event
that may occur in connection with or as a result of the
transactions contemplated by this Amendment. Within one
Business Day prior to the Effective Date, each of FI and
FCX, at its own expense, shall execute and deliver to the
Administrative Agent Promissory Notes payable to the order
of each Increasing Bank and each Reducing Bank, dated as of
June 30, 1995, in a principal amount equal to such Bank's
Commitment after giving effect to such commitment increase
or commitment reduction, as the case may be, substantially
in the form of Exhibits A-1 and A-2, respectively, to this
Amendment. The Administrative Agent, upon receipt of such
Promissory Notes from FI and FCX, shall promptly deliver
such Promissory Notes to the applicable Increasing Banks and
Reducing Banks.
SECTION 5. Counterparts. This Amendment may be
executed in multiple counterparts, each of which shall
constitute an original, and all of which when taken together
shall constitute but one instrument.
SECTION 6. Limited Effect of Amendment.
Section 1 hereof constitutes an amendment of the Credit
Agreement effective as of the Effective Date. Except as,
and until, expressly amended by such Section as of the
Effective Date, the Credit Agreement shall continue in full
force and effect in accordance with the provisions thereof
as in effect prior to the Effective Date. Except as
expressly set forth herein, this Amendment shall not by
implication or otherwise limit, impair, constitute a waiver
of, or otherwise affect the rights and remedies of the Banks
and the Agents under the Credit Agreement, nor alter,
modify, amend or in any way affect any of the terms,
conditions, obligations, covenants or agreements contained
in the Credit Agreement, all of which are ratified and
32
affirmed in all respects and shall continue in full force
and effect. This Amendment shall apply and be effective
only with respect to the provisions of the Credit Agreement
specifically referred to in Section 1 hereof. As used in
the Credit Agreement, the terms "Agreement" , "herein",
"hereinafter", "hereunder", "hereto" and words of similar
import shall mean, from and after the date hereof, the
Credit Agreement as amended by this Amendment.
SECTION 7. Receipt of Documents and Consent
thereto. Each Bank acknowledges receipt of the Credit
Agreement and each amendment thereto, including the
Amendment Agreement dated as of April 1, 1996 relating to
the RTZ Transactions (the "RTZ Amendment"). By
countersigning this Amendment, each Bank confirms its
consent and agreement to, and agrees to be bound by the
terms of the RTZ Amendment.
SECTION 8. Termination of FCX Pledge Agreements
and FCX Intercreditor Agreement. Pursuant to Section 4.02
of the FCX Intercreditor Agreement, effective as of the
Effective Date, each of the FCX Pledge Agreements and the
FCX Intercreditor Agreement shall be terminated and
discharged and all security interests granted under the FCX
Pledge Agreements shall be deemed automatically and
permanently released and discharged; provided that all
protections, exculpations and indemnities provided to
Chemical Bank in its capacity as FCX Collateral Agent under
the Credit Agreement (including without limitation under
Article VIII and Section 10.4 thereof), the FCX Pledge
Agreements and the FCX Intercreditor Agreement (including
without limitation under Section 14 and Section 2.03,
respectively, thereof) shall survive the Effective Date, the
termination and discharge of each of the FCX Pledge
Agreements and the FCX Intercreditor Agreement and release
of the security interests under the FCX Pledge Agreements.
Chemical Bank in its capacity as Collateral Agent (as
defined in the FCX Pledge Agreements) shall execute and
deliver such instruments as FCX shall reasonably request and
shall deliver to FCX any and all Pledged Securities (as
defined in the FCX Pledge Agreements) and any and all
certificates or other instruments or documents representing
the Collateral (as defined in the FCX Pledge Agreements)
that were delivered to it pursuant to Section 2 of the FCX
33
Pledge Agreements, in order to release the Collateral (as
defined in the FCX Pledge Agreements) to FCX as contemplated
by Section 17 of the FCX Pledge Agreements and Section 4.02
of the FCX Intercreditor Agreement. Any such release shall
be at the sole expense of FCX (including without limitation
the reasonable fees, expenses and disbursements of counsel
to Chemical Bank in connection therewith) and without
recourse or liability to Chemical Bank whatsoever. Each
Bank hereby approves the termination and discharge of the
FCX Pledge Agreements and the FCX Intercreditor Agreement
and the release of the security interests created under the
FCX Pledge Agreements and authorizes Chemical Bank in its
capacity as FCX Collateral Agent to release the Collateral
as provided above.
SECTION 9. Calculation of Applicable Margin.
Following the effectiveness of this Amendment as provided in
Section 3, the Applicable Margin shall be deemed to have
accrued (a) prior to the Effective Date, at the rates
provided for in the Credit Agreement before giving effect to
this Amendment, and (b) on and after the Effective Date, at
the rates provided for in the Credit Agreement after giving
effect to this Amendment.
SECTION 10. Authorization by Banks to Security
Agent. Each of the Banks hereby authorizes the Security
Agent (or its successor) to act on its behalf as Security
Agent with full power of substitution to represent it in
connection with:
(a) amendments to the following FI Security
Documents in connection with the FI Funding Date:
(i) the Amended and Restated Surat Kuasa
(Power of Attorney), set out in deed number 53;
(ii) the Amended and Restated Fiduciary
Transfer of Assets (Penyerahan Hak Secara
Fidusia), set out in deed number 54;
(iii) the Amended and Restated Penyerahan Hak
Atas Tagihan (Fiduciary Assignment of Accounts
Receivable), set out in deed number 55; and
(iv) the Amended and Restated Power of
Attorney To Establish Fiduciary Transfer (Kuasa
34
Untuk Memasang Penyerahan Hak Milik Fidusia), set
out in deed number 56,
each dated July 7, 1995, and each passed before Arie
Sutardjo, notary public in Jakarta, Indonesia. The FI
Security Documents listed in this clause (a) will be
amended to specifically provide that the increase of
the Total Commitment under the Credit Agreement from
$200,000,000 to $450,000,000, as provided for in
Sections 1(jj) and 4(a) of this Amendment, shall be
entitled to the full benefits of the FI Security
Documents; and
(b) the termination of the FCX Indonesian Pledge
Agreement, set out in deed number 57 and dated July 7,
1995.
For the purposes referred to in clauses (a) and (b) above,
each Bank hereby authorizes the Security Agent to appear
before any Indonesian notary, to execute and deliver any and
all documents necessary or desirable in connection
therewith, to receive deeds, agreements and other documents
and instruments and to do and perform, without limitation,
any of the foregoing and any other acts or things required,
useful or necessary in connection therewith.
SECTION 11. FI Borrowings under the Credit
Agreement. FI acknowledges that it is not permitted to
borrow under the Credit Agreement as amended by this
Amendment until each of the conditions set forth in Section
6.1(b) of the Credit Agreement as amended by this Amendment
has been satisfied.
SECTION 12. APPLICABLE LAW. THIS AMENDMENT SHALL
BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF NEW YORK.
SECTION 13. Expenses. FI and FCX jointly and
severally shall pay all out-of-pocket expenses incurred by
the Agents in connection with the preparation of this
Amendment, including, but not limited to, the reasonable
fees and disbursements of Cravath, Swaine & Moore, special
counsel for the Agents, and Mochtar, Karuwin & Komar,
special Indonesian counsel to the Agents.
35
SECTION 14. Headings. The headings of this
Amendment are for reference only and shall not limit or
otherwise affect the meaning hereof.
IN WITNESS WHEREOF, the parties hereto have caused
this Amendment to be executed by their duly authorized offi-
cers or agents as of the date first above written.
P.T. FREEPORT INDONESIA COMPANY,
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: Vice President and
Treasurer
FIRST TRUST OF NEW YORK, NATIONAL
ASSOCIATION, as FI Trustee and as
Security Agent,
by /s/ P. J. Crowley
---------------------
Name: P. J. Crowley
Title: Vice President
36
CHEMICAL BANK, individually and as
Administrative Agent and
FCX Collateral Agent,
by /s/ James H. Ramage
----------------------
Name: James H. Ramage
Title: Vice President
THE CHASE MANHATTAN BANK (National
Association), individually and as
Documentary Agent,
by /s/ James H. Ramage
----------------------
Name: James H. Ramage
Title: Vice President
ABN AMRO BANK N.V., HOUSTON AGENCY,
by ABN AMRO NORTH AMERICA,
INC., as Agent for ABN
AMRO BANK N.V.,
by /s/ H. Gene Shiels
-------------------------
Name: H. Gene Shiels
Title: Vice President and
Director
by /s/ Mike Oakes
-----------------
Name: Mike Oakes
Title: Vice President
37
ARAB BANKING CORPORATION (B.S.C.),
by /s/ Stephen A. Plauche
--------------------------
Name: Stephen A. Plauche
Title: Vice President
AUSTRALIA AND NEW ZEALAND BANKING
GROUP LIMITED, CAYMAN ISLANDS
BRANCH,
by /s/ Paul Clifford
---------------------
Name: Paul Clifford
Title: Vice President
BANK AUSTRIA AKTIENGESELLSCHAFT,
by /s/ Mark Nolan
---------------------
Name: Mark Nolan
Title: Assistant Vice
President
by /s/ J. Anthony Seay
-----------------------
Name: J. Anthony Seay
Title: Vice President
38
BANK OF AMERICA ILLINOIS,
by /s/ Thomas H. Pearson
------------------------
Name: Thomas H. Pearson
Title: Vice President
BANK OF MONTREAL,
by /s/ Michael P. Sassos
-------------------------
Name: Michael P. Sassos
Title: Director
THE BANK OF NOVA SCOTIA,
by /s/ F. C. H. Ashby
----------------------
Name: F. C. H. Ashby
Title: Senior Manager
Loan Operations
THE BANK OF TOKYO-MITSUBISHI, LTD.
HOUSTON AGENCY,
by /s/ Tsuneo Kumada
---------------------
Name:Tsuneo Kumada
Title:General Manager
BANQUE NATIONALE DE PARIS,
by /s/ Aurora L. Abella
-----------------------
Name: Aurora L. Abella
Title: Vice President
BANQUE PARIBAS,
39
by /s/ Barton D. Schouest
--------------------------
Name: Barton D. Schouest
Title: Group Vice President
by /s/ Marian Livingston
-------------------------
Name: Marian Livingston
Title: Vice President
BARCLAYS BANK PLC,
by /s/ Carol A. Cowan
---------------------
Name: Carol A. Cowan
Title: Director
CHRISTIANIA BANK OG KREDITKASSE,
by /s/ William S. Phillips
--------------------------
Name: William S. Phillips
Title: Vice President
by /s/ Jahn O. Roising
----------------------
Name: Jahn O. Roising
Title: First Vice President
DAI-ICHI KANGYO BANK, LTD.,
by /s/ Mitsuaki Yamazaki
-------------------------
Name: Mitsuaki Yamazaki
Title: Vice President
40
DEUTSCHE BANK, AG, NEW YORK AND/OR
CAYMAN ISLANDS BRANCHES,
by /s/ Surendra V. Shah
-----------------------
Name: Surendra V. Shah
Title: Vice President
by /s/ Kurt A. Schreder
------------------------
Name: Kurt A. Schreder
Title: Associate
DEUTSCHE BANK, AG, SINGAPORE
BRANCH,
by /s/ David Tan Tiat Hern
---------------------------
Name: David Tan Tiat Hern
Title: Assistant General
Manager
by /s/ Raymond Lee Weng Fatt
--------------------------
Name: Raymond Lee Weng Fatt
Title: Head, Credit
Department
DRESDNER BANK AG, NEW YORK BRANCH
AND GRAND CAYMAN BRANCH,
by /s/ P. Douglas Sherrod
--------------------------
Name: P. Douglas Sherrod
Title: Vice President
by /s/ Raymond F. Keenan
------------------------
Name: Raymond F. Keenan
Title: Senior Vice President
41
THE FIRST NATIONAL BANK OF CHICAGO,
by /s/ George R. Schanz
-----------------------
Name: George R. Schanz
Title: Vice President
FIRST NATIONAL BANK OF COMMERCE,
by /s/ Nemesio J. Viso
-----------------------
Name: Nemesio J. Viso
Title: Assistant Vice
President
THE FUJI BANK, LIMITED, HOUSTON
AGENCY,
by /s/ Yutaka Taniuchi
-----------------------
Name: Yutaka Taniuchi
Title: Joint General Manager
HIBERNIA NATIONAL BANK,
by /s/ Steven Nance
-----------------------
Name: Steven Nance
Title: Banking Officer
THE INDUSTRIAL BANK OF JAPAN,
LIMITED NEW YORK BRANCH,
by /s/ Kensaku Iwata
----------------------------
Name: Kensaku Iwata
Title: Senior Vice President
42
THE LONG-TERM CREDIT BANK OF JAPAN,
LIMITED,
by /s/ Satoru Otsubo
----------------------------
Name: Satoru Otsubo
Title: Joint General Manager
THE MITSUI TRUST AND BANKING
COMPANY, LTD,
by /s/ Margaret Holloway
------------------------
Name: Margaret Holloway
Title: Vice President and
Manager
MORGAN GUARANTY TRUST COMPANY OF
NEW YORK,
by /s/ Philip W. McNeal
-----------------------
Name: Philip W. McNeal
Title: Vice President
NATIONAL WESTMINSTER BANK PLC,
by /s/ Ian M. Plester
---------------------
Name: Ian M. Plester
Title: Vice President
NATIONAL WESTMINSTER BANK PLC
(NASSAU BRANCH),
by /s/ Ian M. Plester
------------------
Name: Ian M. Plester
Title: Vice President
43
THE NORINCHUKIN BANK, NEW YORK
BRANCH,
by /s/ Takeshi Akimoto
-----------------------
Name: Takeshi Akimoto
Title: General Manager
PT BANK NEGARA INDONESIA (PERSERO),
by /s/ Dewa Suthapa
----------------------
Name: Dewa Suthapa
Title: General Manager
P.T. BANK RAKYAT INDONESIA
(PERSERO),
by /s/ Kemas M. Arief
---------------------
Name: Kemas M. Arief
Title: General Manager
by /s/ David W. Opdyke
-----------------------
Name: David W. Opdyke
Title: Deputy General
Manager
REPUBLIC NATIONAL BANK OF NEW YORK,
by /s/ R. J. Ward
-------------------
Name: R. J. Ward
Title: Vice President
44
THE ROYAL BANK OF SCOTLAND PLC,
by /s/ Grant F. Stoddart
----------------------------
Name: Grant F. Stoddart
Title: Senior Vice President
and Manager
THE SAKURA BANK, LIMITED, HOUSTON
AGENCY,
by /s/ Akira Hara
-----------------------
Name: Akira Hara
Title: General Manager
THE SANWA BANK LIMITED, DALLAS
AGENCY,
by /s/ Toru Sakamuro
---------------------
Name: Toru Sakamuro
Title: Vice President
SOCIETE GENERALE, SOUTHWEST AGENCY,
by /s/ Elizabeth W. Hunter
----------------------------
Name: Elizabeth W. Hunter
Title: Vice President
THE SUMITOMO BANK, LIMITED, HOUSTON
AGENCY,
by /s/ Harumitsu Seki
---------------------
Name: Harumitsu Seki
Title: General Manager
45
THE TOKAI BANK, LIMITED,
by /s/ Masahara Muto
----------------------
Name: Masahara Muto
Title: Deputy General
Manager
UNION BANK OF SWITZERLAND, HOUSTON
AGENCY,
by /s/ Dan O. Boyle
------------------------
Name: Dan O. Boyle
Title: Managing Director
by /s/ Finley Biggerstaff
-----------------------
Name: Finley Biggerstaff
Title: Assistant Treasurer
WESTDEUTSCHE LANDESBANK
GIROZENTRALE,
by /s/ Richard R. Newman
------------------------
Name: Richard R. Newman
Title: Vice President
by /s/ R. Carino
--------------------
Name: R. Carino
Title: Vice President
46
YASUDA TRUST AND BANKING COMPANY,
by /s/ Makoto Tagawa
----------------------
Name: Makoto Tagawa
Title: Deputy General
Manager
SCHEDULE I
APPLICABLE MARGINS
FI Libor FCX Libor Commitment Fee
Ratings Spread Spread Percentage
----------------- -------- -------- ----------
BBB/Baa2 or above .500% .625% .175%
BBB-/Baa3 .625% .750% .225%
BB+/Ba1 .875% 1.000% .300%
BB/Ba2 1.250% 1.375% .375%
BB-/Ba3 or below 1.750% 1.875% .500%
(The ABR Spread under the Credit Agreement will not change)
SCHEDULE II
COMMITMENTS OF THE BANKS
Applicable
Bank Percentage Commitment
------------------------- ---------- ----------
THE CHASE MANHATTAN BANK
(NATIONAL ASSOCIATION) 3.90% $17,550,000
BANK OF MONTREAL 3.60% $16,200,000
BARCLAYS BANK PLC 3.60% $16,200,000
DEUTSCHE BANK, AG, NEW YORK
AND/OR CAYMAN ISLANDS
BRANCHES, SINGAPORE BRANCH 3.60% $16,200,000
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK 3.60% $16,200,000
NATIONAL WESTMINSTER BANK PLC 3.60% $16,200,000
THE BANK OF NOVA SCOTIA 3.60% $16,200,000
THE BANK OF TOKYO-MITSUBISHI,
LTD. HOUSTON AGENCY 3.60% $16,200,000
THE FIRST NATIONAL BANK OF
CHICAGO 3.60% $16,200,000
THE FUJI BANK, LIMITED, HOUSTON
AGENCY 3.60% $16,200,000
THE INDUSTRIAL BANK OF JAPAN,
LIMITED NEW YORK BRANCH 3.60% $16,200,000
THE LONG-TERM CREDIT BANK OF
JAPAN, LIMITED 3.60% $16,200,000
THE SANWA BANK LIMITED,
DALLAS AGENCY 3.60% $16,200,000
THE SUMITOMO BANK, LIMITED,
HOUSTON AGENCY 3.60% $16,200,000
ABN AMRO BANK N.V., HOUSTON 2.50% $11,250,000
AGENCY
ARAB BANKING CORPORATION
(B.S.C) 2.50% $11,250,000
AUSTRALIA AND NEW ZEALAND
BANKING GROUP LIMITED,
CAYMAN ISLANDS BRANCH 2.50% $11,250,000
BANQUE NATIONALE DE PARIS 2.50% $11,250,000
BANQUE PARIBAS, NEW YORK/CAYMAN
ISLANDS BRANCHES 2.50% $11,250,000
DAI-ICHI KANGYO BANK, LTD. 2.50% $11,250.000
DRESDNER BANK AG, NEW YORK
BRANCH AND GRAND CAYMAN BRANCH 2.50% $11,250,000
THE NORINCHUKIN BANK, NEW YORK
BRANCH 2.50% $11,250,000
THE ROYAL BANK OF SCOTLAND PLC 2.50% $11,250,000
UNION BANK OF SWITZERLAND,
HOUSTON AGENCY 2.50% $11,250,000
BANK AUSTRIA
AKTIENGESELLSCHAFT 2.00% $9,000,000
CHRISTIANIA BANK OG KREDITKASSE 2.00% $9,000,000
P.T. BANK RAKYAT INDONESIA
(PERSERO) 2.00% $9,000,000
REPUBLIC NATIONAL BANK OF NEW
YORK 2.00% $9,000,000
THE MITSUI TRUST AND BANKING
COMPANY, LTD 2.00% $9,000,000
THE SAKURA BANK, LIMITED,
HOUSTON AGENCY 2.00% $9,000,000
YASUDA TRUST AND BANKING
COMPANY 2.00% $9,000,000
FIRST NATIONAL BANK OF COMMERCE 1.50% $6,750,000
HIBERNIA NATIONAL BANK 1.50% $6,750,000
PT BANK NEGARA INDONESIA
(PERSERO) 1.50% $6,750,000
SOCIETE GENERALE, SOUTHWEST
AGENCY 1.50% $6,750,000
THE TOKAI BANK, LIMITED 1.50% $6,750,000
WESTDEUTSCHE LANDESBANK
GIROZENTRALE 1.50% $6,750,000
BANK OF AMERICA ILLINOIS 1.30% $5,850,000
----- ------------
TOTAL 100 $450,000,000
SCHEDULE III
DESCRIPTION OF NEW INFRASTRUCTURE PROJECTS
EXHIBIT 4.2
CONFORMED COPY
AMENDMENT dated as of July 15, 1996
(this "Amendment"), to the Credit Agreement
dated as of October 27, 1989 (as amended and
in effect prior to the Effective Date (as
defined below), the "Credit Agreement"),
among P.T. FREEPORT INDONESIA COMPANY, a
limited liability company organized under the
laws of the Republic of Indonesia and also
domesticated in Delaware ("FI"), FREEPORT-
McMoRan COPPER & GOLD INC., a Delaware
corporation ("FCX"), the undersigned
financial institutions (collectively, the
"Banks"), FIRST TRUST OF NEW YORK, NATIONAL
ASSOCIATION, a national banking association,
as trustee under the FI Trust Agreement (in
such capacity, the "FI Trustee") and as
security agent for the Banks (in such
capacity, the "Security Agent") under the FI
Security Documents (as defined in the Credit
Agreement), CHEMICAL BANK, a New York banking
corporation ("Chemical"), as administrative
agent for the Banks (in such capacity, the
"Administrative Agent") and as collateral
agent for the Banks and certain other lenders
(in such capacity, the "FCX Collateral
Agent") under the FCX Pledge Agreements (as
defined in the Credit Agreement), and THE
CHASE MANHATTAN BANK (NATIONAL ASSOCIATION),
a national banking association ("Chase"), as
documentary agent for the Banks (in such
capacity, the "Documentary Agent"; the
Administrative Agent, the Security Agent, the
FCX Collateral Agent and the Documentary
Agent being collectively referred to herein
as the "Agents"). Capitalized terms used
herein and not defined herein shall have the
meanings given such terms in the Credit
Agreement.
Pursuant to the terms of the Credit Agreement, the
FI Obligations are guaranteed by FCX. The guarantee is
secured by the FCX Pledge Agreements. FCX and FI have
requested that the Banks agree to amend the Credit Agreement
in various respects and release the pledge under the FCX
Pledge Agreements and, in connection therewith, terminate
and discharge the FCX Pledge Agreements and, subject to the
consent of all applicable secured parties thereunder, the
FCX Intercreditor Agreement; the Banks have advised FCX and
FI that they are willing to do so, on the terms and subject
to the conditions hereinafter set forth. The parties hereto
accordingly wish to enter into this Amendment to, among
other things, (i) reflect the release of the pledge of the
2
Collateral (as defined in the FCX Pledge Agreements),
(ii) terminate and discharge the FCX Pledge Agreements and
the FCX Intercreditor Agreement, (iii) reduce the Commitment
Fees and the Applicable Margin in respect of LIBO Rate Loans
and (iv) effect the other amendments to the Credit Agreement
hereinafter set forth.
Accordingly, FI, FCX, the FI Trustee, the Banks
and the Agents agree as follows:
SECTION 1. Amendments to the Credit Agreement.
Effective as of the Effective Date, the Credit Agreement is
hereby amended as follows:
(a) Section 1.1 of the Credit Agreement is hereby
amended by adding the following defined terms in the
appropriate alphabetical order:
(i) "Additional Infrastructure Assets" means non-
mining assets, other than Block B Assets, transferred,
sold, pledged, encumbered or otherwise disposed of by
FI, in each case in accordance with the terms of this
Agreement, in connection with the Additional
Infrastructure Projects.
(ii) "Additional Infrastructure Basket" has the
meaning assigned to such term in paragraph (y) of
Section 5.2(c).
(iii) "Additional Infrastructure Documents" means
the agreements and other documents (whether now
existing or hereafter entered into) governing the
Additional Infrastructure Transactions.
(iv) "Additional Infrastructure Projects" means
future infrastructure projects of FI involving
Additional Infrastructure Assets that are not otherwise
included in the definitions of New Infrastructure
Projects or Block B Projects.
(v) "Additional Infrastructure Transactions"
means the transactions in connection with the
implementation, financing and operation of the
Additional Infrastructure Projects, as contemplated by
Additional Infrastructure Documents.
(vi) "Block A Operations and Assets" means the
existing and future mining, concentration, processing,
3
transportation, delivery and related operations (and
assets used in connection therewith) in respect of FI
Product obtained or provided from Contract Area Block A
(as defined in the Contract of Work).
(vii) "Block B Assets" means assets now owned or
hereafter acquired and utilized in connection with the
development and exploitation of Contract Area Block B
(as defined in the Contract of Work), including with
respect to mining, concentrating, processing,
transportation, delivery and related operations (and
assets used in connection therewith) in respect of FI
Product obtained or provided from Contract Area Block
B, but such term shall not in any event include Block A
Operations and Assets.
(viii) "Block B Conditions" means, with respect to
Block B Debt or Block B Projects including, but not
limited to, transfers or dispositions of Block B Assets
or Liens on Block B Assets relating thereto, the
following conditions:
(X) any such Block B Debt is Non-Recourse
Debt to FI, FCX and the Restricted Subsidiaries
except as to the Block B Assets (and income
relating thereto) and except as otherwise
permitted by Section 5.2(g)(xii); and
(Y) any Block B Project relating to any such
Block B Assets or Block B Debt shall not (1) make
use of any assets that constitute ore that were
originally extracted from or located in Contract
Area Block A or (2) unless Banks holding 51% of
the Commitments otherwise consent in writing, make
any other use of the Block A Operations and
Assets; provided however that such Bank consent
shall not be required with respect to any such use
of Block A Operations and Assets relating solely
to (i) shipping, (ii) storage or warehouse
facilities that are not used for storage of FI
Product, (iii) emergency-related uses, (iv) the
administration or management of Contract Area
Block A or (v) infrastructure projects involving
Contract Area Block A, which use, either in cases
requiring the consent of Banks holding 51% of the
Commitments or in cases involving clauses (i)
through (v) above, has been approved in writing by
the Administrative Agent as not, in the sole
4
discretion of the Administrative Agent, impairing
or adversely affecting the FI Collateral and
Rights relating to the Block A Operations and
Assets (and in cases requiring the consent of
Banks holding 51% of the Commitments or in cases
involving clauses (i) through (v) above, the
Administrative Agent shall have received an
opinion of counsel to FI reasonably satisfactory
to the Administrative Agent to such effect and as
to the non-recourse nature of the Block B Debt);
provided further, that (x) temporary, de minimis
usage of Block A Operations and Assets that would
not in any way adversely affect the development,
exploitation or operations relating to Block A
Operations and Assets or the FI Collateral and
Rights and (y) usage of Block A Operations and
Assets that FI has reasonably determined to be
surplus (i.e., not required for the scheduled
production of year-end 1994 10-K ore reserves
referred to on Schedule VII) shall be permitted
without the approval of the Administrative Agent
or the Banks. Notwithstanding the foregoing, it
is understood that any usage by FCX, FI and any
Restricted Subsidiary of non-mining assets in
connection with any Block B Project shall be
permissible without the consent of the
Administrative Agent or the Banks so long as such
usage would not in any way adversely affect the
scheduled production of year-end 1994 10-K ore
reserves or the FI Collateral and Rights and so
long as FCX, FI or such Restricted Subsidiary has
determined that such usage is in its best
interest.
(ix) "Block B Debt" means Debt incurred for the
purpose of developing or exploiting Contract Area
Block B or acquiring or financing Block B Assets.
(x) "Block B Project" means any project or
transaction, including but not limited to any joint
venture, investment, sale, transfer or leasing of
assets, sale leaseback transaction or financing, which
involves the development or exploitation of Contract
Area Block B or the acquisition, financing or
disposition of Block B Assets, and shall include all
contracts and agreements relating to any such project
or transaction.
5
(xi) "July 1996 CDF Amendment" shall mean the
amendment dated as of July 15, 1996 to the FCX Credit
Agreement.
(xii) "July 1996 FI Amendment" shall mean the
amendment dated as of July 15, 1996 to this Agreement.
(xiii) "New Infrastructure Assets" means non-mining
assets transferred, sold, pledged, encumbered or
otherwise disposed of by FI, in each case in accordance
with the terms of this Agreement, in connection with
the New Infrastructure Projects.
(xiv) "New Infrastructure Documents" means the
agreements and other documents (whether now existing or
hereinafter entered into) governing the New
Infrastructure Transactions.
(xv) "New Infrastructure Projects" means the
infrastructure projects of FI involving New
Infrastructure Assets relating to waste water
facilities, the limestone joint venture, the coal power
plant, the cattle joint venture and the G-III aircraft,
each as generally described on Schedule III to the July
1996 FI Amendment.
(xvi) "New Infrastructure Transactions" means the
transactions in connection with the implementation,
financing and operation of the New Infrastructure
Projects, as contemplated by New Infrastructure
Documents.
(xvii) "1995 Form 10-K" has the meaning assigned
to such term in Section 4.1(e).
(xviii) "Non-Recourse Debt" means, with respect to
any Person and its assets, Debt the obligees of which
will not have, directly or indirectly, recourse
(including by way of any Guarantee or other
undertaking, agreement or instrument that would
constitute Debt) for repayment of the principal,
premium (if any), and interest on such Debt or any
fees, indemnities, expense reimbursements or other
amounts of whatever nature accrued or payable in
connection with such Debt against any assets of such
Person other than pursuant to any pledge of specified
assets of such Person.
6
(b) Section 1.1 of the Credit Agreement is hereby
further amended by substituting the following modified
defined terms for the equivalent defined terms that
presently appear in such Section:
(i) "FCX Credit Agreement Total Commitment" means
$450,000,000, the committed amount under the FCX Credit
Agreement, as the same may be permanently terminated or
reduced from time to time.
(ii) "Loan Documents" means the Amendment
Agreement, the Corporate Group Facilities, the
Corporate Group Notes, the FI Intercreditor Agreement,
the FI Security Documents and all other agreements,
certificates and instruments now or hereafter entered
into in connection with any of the foregoing, in each
case as amended and modified from time to time.
(iii) "Net Proceeds Transactions" means any sales,
transfers, distributions or other dispositions
(including by merger or consolidation) of assets or
properties (including any capital or other equity
interests) owned by FI or its Restricted Subsidiaries,
but excluding (a) the ALatieF Transaction, the PFT
Transaction, the P&O Transaction, the Airfast
Transaction, the New Infrastructure Transactions and
the Additional Infrastructure Transactions, (b) sale
and leaseback transactions permitted by
Section 5.2(g)(vi), (c) dispositions of obsolete or
worn-out property or real estate not used or useful in
its or their business, (d) permitted transfers of
assets from FCX or FI to a Restricted Subsidiary or
from a Restricted Subsidiary to FCX or FI or another
Restricted Subsidiary, (e) sales or other dispositions
of Nonrestricted Subsidiaries or interests therein,
(f) sales or other dispositions by Nonrestricted
Subsidiaries of their assets, (g) direct sales of
equity by FI or a Restricted Subsidiary of FI,
(h) sales of accounts receivable, (i) transfers of
assets pursuant to permitted sale and leaseback
transactions, (j) the granting of the RTZ Interests to
PT-RTZ as contemplated by the Participation Agreement
and (k) sales or other dispositions of Block B Assets
in transactions satisfying the Block B Conditions.
(iv) "RTZ Closing Date" has the meaning assigned
to such term in Section 6.1(c) of the FCX Credit
Agreement.
7
(v) "Specified Documents" mean the Airfast
Documents, the ALatieF-FI Documents, the Caterpillar
Documents, the PFT Documents, the P&O Documents, the
New Infrastructure Documents and the Additional
Infrastructure Documents.
(vi) "Specified Obligations" mean the Airfast
Obligations, the ALatieF-FI Obligations, the
Caterpillar Obligations, the PFT Obligations, the P&O
Obligations and all obligations of FCX, FI or any
Restricted Subsidiary (including, without limitation,
as appropriate, in respect of take-or-pay contracts and
Capitalized Lease Obligations) relating to the New
Infrastructure Projects and the Additional
Infrastructure Projects.
(vii) "Specified Transactions" mean the Airfast
Transaction, the ALatieF-FI Transaction, the
Caterpillar Transaction, the PFT Transaction, the P&O
Transaction, the New Infrastructure Transactions and
the Additional Infrastructure Transactions.
(c) Section 1.1 of the Credit Agreement is hereby
further amended by deleting the following defined terms that
presently appear in such Section:
(i) "1994 Form 10-K";
(ii) "Waste Water";
(iii) "Waste Water Assets";
(iv) "Waste Water Documents";
(v) "Waste Water Obligations"; and
(vi) "Waste Water Transaction".
(d) Section 1.1 of the Credit Agreement is hereby
further amended by:
(i) amending the definition of "Applicable Margin"
by substituting a revised Schedule I to the Credit
Agreement that shall read in its entirety as set forth
on Schedule I to this Amendment; and
(ii) amending the definition of "Nonrestricted
Subsidiaries" by adding the following words immediately
after the words "FCX may (x)" in the last sentence of
8
such definition:
"at any time other than when a Default or an
Event of Default has occurred and is continuing or
would exist after giving effect to such
declaration,".
(e) Section 4.1(b) of the Credit Agreement is hereby
amended by deleting from clause (ii) (C) the words "the FCX
Pledge Agreements and".
(f) Section 4.1(c) of the Credit Agreement is hereby
amended to read in its entirety as follows:
"(c) Governmental Approvals. (i) Except for
those consents, approvals and registrations of, or
other actions by, any Governmental Authority
(individually, a "Requisite Approval" and collectively,
the "Requisite Approvals") which have been obtained and
are in full force and effect, no Requisite Approval is
or will be required in connection with (A) the
execution, delivery and performance by FI or FCX, as
appropriate, of this Agreement or any other Loan
Document to which it is, or is to be, a party (other
than, in the case of FI, performance related to
borrowings under the FCX Credit Agreement and the
promissory notes of FI issued thereunder) or (B) the
borrowings hereunder by FI.
(ii) Other than routine authorizations,
permissions or consents which are of a minor nature and
which are customarily granted in due course after
application or the denial of which would not materially
adversely affect the business, financial condition or
operations of FCX or FI, such Person has all
franchises, licenses, certificates, authorizations,
approvals or consents from all national, state and
local governmental and regulatory authorities required
to carry on its business as now conducted and as
proposed to be conducted.".
(g) Section 4.1(e) of the Credit Agreement is hereby
amended by:
(i) deleting each reference therein to
"December 31, 1993 and 1994" and substituting in lieu
thereof a reference to "December 31, 1994 and 1995";
9
(ii) deleting each reference therein to
"December 31, 1994" and substituting in lieu thereof a
reference to "December 31, 1995";
(iii) deleting the parenthetical "(the '1994 Form
10-K')" and substituting in lieu thereof the
parenthetical "(the '1995 Form 10-K')"; and
(iv) deleting each reference therein to "March 31,
1995" and substituting in lieu thereof a reference to
"March 31, 1996".
(h) Section 4.1(f) of the Credit Agreement is hereby
amended by:
(i) deleting the reference therein to "1994 Form
10-K" and substituting in lieu thereof a reference to
"1995 Form 10-K,"; and
(ii) deleting the words immediately following such
reference to the "1995 Form 10-K" through and including
the words "delivered to the Banks," in such Section.
(i) Section 4.1(g) of the Credit Agreement is hereby
amended by:
(i) adding the following phrase at the beginning
of the second sentence:
"Other than routine authorizations, permissions or
consents which are of a minor nature and which are
customarily granted in due course after application or
the denial of which would not materially adversely
affect the business, financial condition or operations
of FI,";
(ii) adding the words "in the case of FCX, FI and
their Restricted Subsidiaries," immediately after the
word "reserves)," in the first sentence thereof; and
(iii) adding the word "Restricted" immediately
after the words "or the respective" in the first
sentence thereof.
(j) Section 4.1(m) of the Credit Agreement is hereby
amended by adding the words "and, in the case of FI and its
Restricted Subsidiaries, Liens permitted by
Section 5.2(d)(vi)" immediately after the words
"Section 4.1(o)" contained in the parenthetical in the
10
second sentence thereof.
(k) Section 4.1(o) of the Credit Agreement is hereby
amended by deleting the second sentence thereof in its
entirety.
(l) Section 5.1(f) of the Credit Agreement is hereby
amended by deleting the word "Subsidiaries" in the second
line thereof and substituting in lieu thereof the words
"ERISA Affiliates".
(m) Section 5.l(h) of the Credit Agreement is hereby
amended by:
(i) deleting paragraph (ii) thereof in its
entirety;
(ii) deleting the symbol "(i)" relating to the
first paragraph thereof and ending such paragraph
immediately following the words "Section 8.1(j)"; and
(iii) adding the words "to Liens expressly
permitted by Section 5.2(d) and" immediately following
the words "subject only".
(n) Section 5.1(k) of the Credit Agreement is hereby
amended by:
(i) adding the words "for the first time" in
clause (ii) thereof immediately prior to the words "be
a Major Concentrate Sales Agreement";
(ii) adding the words "(together with the original
Concentrate Sales Agreement that is the subject of such
amendment, waiver or supplement)" in clause (ii)
thereof immediately prior to the phrase ", in each
case"; and
(iii) adding immediately following the word
"thereof" at the end of clause (ii) thereof a new
clause (iii) that reads in its entirety as follows:
", and (iii) promptly notify the
Administrative Agent and the FI Trustee of any
material default under a Major Concentrate Sales
Agreement of which it has knowledge.".
11
(o) Section 5.1(l) of the Credit Agreement is hereby
amended to read as follows:
"(l) Protection of Contract Rights. FI will not
terminate, suspend, amend or grant waivers of any
provisions of any of the Assigned Agreements without
the prior written consent of the Required Banks;
provided, however, that FI may amend or waive
provisions in any Concentrate Sales Agreement or, in
the ordinary course of business and so long as no
Default or Event of Default shall have occurred and be
continuing hereunder, terminate any Concentrate Sales
Agreement, so long as such amendment, waiver or
termination will not materially adversely affect the
business, financial condition or operations of FI or
any rights of the FI Trustee or the Banks. Upon the
request of the Administrative Agent or the FI Trustee,
FI will promptly provide the Administrative Agent or
the FI Trustee, as the case may be, with access to FI's
books, records and offices for the purpose of
permitting the Administrative Agent or the FI Trustee
to inspect and review any amendments, waivers or
supplements to, or terminations of, any Concentrate
Sales Agreement and make copies thereof. If a Default
or Event of Default shall have occurred and be
continuing, upon the request of the Administrative
Agent or the FI Trustee, FI will provide the
Administrative Agent or the FI Trustee, as the case may
be, with copies of any such amendments, waivers,
supplements or terminations. FI shall take all steps
necessary or advisable to protect its rights (and the
rights of the FI Trustee) under the Assigned
Agreements.".
(p) Section 5.1(n) of the Credit Agreement is hereby
amended by deleting the phrases "the FCX Pledge Agreements
and" and "and the FCX Pledge Agreements" from the first
sentence thereof.
(q) Section 5.2(a) of the Credit Agreement is hereby
amended to read in its entirety as follows:
"(a) Conflicting Agreements. FCX, FI and the
Restricted Subsidiaries shall not enter into any
agreement with any Person containing any provision
which would (i) be violated or breached by the
12
performance of their obligations under any Loan
Document or under any instrument or document
delivered or to be delivered by them hereunder or
thereunder or in connection herewith or therewith,
(ii) prohibit or restrict FI and the other
Restricted Subsidiaries in the payment of
dividends or other distributions or (iii) except
as provided in this clause (iii) and in the second
sentence of this paragraph 5.2(a), prohibit or
restrict the ability of FCX, FI and the other
Restricted Subsidiaries to create Liens on any of
their assets (other than as provided in Sections
7.2.5 and 7.3 of the Participation Agreement and
other than on assets which are subject to Liens
permitted pursuant to paragraphs (i) (with respect
to such required margin deposits only), (ii),
(iii), (iv), (vi), (vii), (ix), (x), (xi) and
(xii) of Section 5.2(d) and extensions and
renewals and replacements thereof to the extent
permitted pursuant to Section 5.2(d)(xiii)).
Notwithstanding the limitations set forth in the
immediately preceding sentence, FCX, FI and any
other Restricted Subsidiary and any special
purpose issuing Restricted Subsidiary of FCX may,
in connection with the placement or issuance of
additional Debt (and any refinancings or
replacements of or exchanges for such additional
Debt), enter into agreements containing a covenant
prohibiting or restricting its ability to grant or
create a Lien on any of its assets unless the
holders of such Debt share equally and ratably in
such Lien, provided that (x) such covenant does
not apply to any Lien which is in effect, or which
may be granted, pursuant to any Loan Document
existing on the date of original placement or
issuance of such additional Debt, (y) the
placement or issuance of such additional Debt does
not contravene any other provision of any Loan
Document including, without limitation, Section
5.2(b) of this Agreement and (z) the terms of such
covenant are approved by the Agents.".
(r) Section 5.2(c) of the Credit Agreement is hereby
amended by:
(i) deleting from clause (B)(v) thereof the
reference to "FCX,";
(ii) deleting the words "any Restricted Subsidiary"
13
in clause (B)(v) and substituting in lieu thereof the
words "any of its Restricted Subsidiaries";
(iii) adding a new paragraph (v) immediately prior
to paragraph (w) that reads in its entirety as follows:
"(v) FCX, FI and the Restricted Subsidiaries
may transfer and dispose of Block B Assets in
transactions satisfying the Block B Conditions;";
(iv) amending paragraph (y) to read as follows:
"(y) FI and the Restricted Subsidiaries may
engage in sale and leaseback transactions
(including sale and leaseback transactions which
initially take the form of a purchase money
transaction in that title to the equipment passes
through FI or a Restricted Subsidiary prior to
being held by the lessor in the sale and leaseback
transaction) for assets with a cumulative
aggregate fair market value not in excess of
$50,000,000 and FI may consummate (1) the transfer
of the remaining PFT Assets and ALatieF-FI Assets
as required by the PFT Documents and the
ALatieF-FI Documents, respectively, (2) the
transfer or disposition in respect of Contract
Area Block B referred to in Section 8.1(j) subject
to the conditions precedent thereto set forth in
Section 8.1(j), (3) the transfer or disposition of
New Infrastructure Assets solely in connection
with the New Infrastructure Projects; provided
that, immediately after giving effect to any such
transfer or disposition, the cumulative aggregate
value (based on the higher of fair market or book
value at the time of transfer or encumbrance) of
all New Infrastructure Assets so transferred or
disposed of, or which are pledged or otherwise
encumbered in connection with New Infrastructure
Projects, does not exceed $375,000,000 and (4) the
transfer or disposition of Additional
Infrastructure Assets solely in connection with
Additional Infrastructure Projects; provided that
any such transfer or disposition pursuant to this
clause (y)(4) shall be permitted only to the
extent that, immediately after giving effect to
such transfer or disposition, the cumulative
aggregate fair market value (determined for any
14
asset at the time of its transfer or encumbrance)
of all Additional Infrastructure Assets which are
transferred or disposed of pursuant to this
clause (y)(4), or which are pledged or otherwise
encumbered in connection with Additional
Infrastructure Projects, does not exceed an amount
equal to 10% of FCX's total consolidated assets
reflected in its most recent audited consolidated
balance sheet that has been delivered to the Banks
pursuant to Section 5.1(a)(1) or, if such audited
consolidated balance sheet has not yet been
delivered to the Banks, in a certificate of a
Financial Officer of FCX to the Administrative
Agent certifying as to FCX's audited total
consolidated assets (the "Additional
Infrastructure Basket"); provided that, if upon
receipt of the audited financial statements
delivered pursuant to Section 5.1(a)(1), FI shall
have transferred or disposed of Additional
Infrastructure Assets in excess of 10% of FCX's
total consolidated assets as reflected in such
audited financial statements, then within 30 days
of the delivery of such audited financial
statements to the Banks, FI shall arrange for
certain assets to be transferred back to it or for
pledges of certain assets to be released in order
that the condition set forth in the first
provision of this clause (y)(4) shall be
satisfied; and"; and
(v) amending paragraph (z) by deleting the words
"and by Section 5.2(r)" wherever they appear and the
words "pledged pursuant to the FCX Pledge Agreements".
(s) Section 5.2(d) of the Credit Agreement is hereby
amended by:
(i) deleting from paragraph (v) thereof the words
"Liens in favor of the Collateral Agent (for the equal
and ratable benefit of the Lenders (as defined in the
FCX Intercreditor Agreement) and the holders of the
B.V. Notes as provided in the FCX Pledge Agreements,
and";
(ii) amending paragraph (vi) thereof by adding the
following words at the end of such paragraph:
"and Liens on equity or debt investments in Third
15
Parties owned by FI or a Restricted Subsidiary
(which Lien in any case is limited to such pledged
equity or debt investment) which secure Debt of
Third Parties or other Third Party obligations (or
Guarantees thereof); provided that such pledged
investments were initially acquired in accordance
with Section 5.2(l);";
(iii) amending paragraph (vii) thereof by:
(A) inserting the words "(other than
Additional Infrastructure Transactions and New
Infrastructure Transactions)" immediately after
the reference to "Specified Transactions" in
paragraph (vii) clause (x); and
(B) amending paragraph (vii) clause (z) to
read in its entirety as follows:
"to the extent permitted by
Section 5.2(g)(vi) pursuant to other sale and
leaseback transactions entered into after the
Fifth Amendment Closing Date.";
(iv) deleting the word "and" at the end of
paragraph (ix), redesignating paragraph (x) as
paragraph (xiii) and adding new paragraphs (x), (xi)
and (xii) to read as follows:
"(x) Liens on New Infrastructure Assets
(which Lien in any such case is limited to such
New Infrastructure Assets) pursuant to Capitalized
Lease Obligations arising under New Infrastructure
Transactions or securing Debt which is Non-
Recourse Debt of FI or a Restricted Subsidiary
except as to such New Infrastructure Assets,
provided that, the cumulative aggregate value
(based on the higher of fair market or book value
at the time of encumbrance or transfer) of all New
Infrastructure Assets which are subject to such
Liens or which have been transferred or disposed
of pursuant to Section 5.2(c)(y)(3) does not
exceed $375,000,000;
(xi) Liens on Additional Infrastructure
Assets (which Lien in any such case is limited to
such Additional Infrastructure Assets) pursuant to
16
Capitalized Lease Obligations arising under
Additional Infrastructure Transactions or securing
Debt which is Non-Recourse Debt of FI or a
Restricted Subsidiary except as to such Additional
Infrastructure Assets, provided that, immediately
after any such Lien is granted or incurred, the
cumulative aggregate fair market value (determined
for any asset at the time of its encumbrance or
transfer) of all Additional Infrastructure Assets
which are subject to such Liens or which have been
transferred or disposed of pursuant to
Section 5.2(c)(y)(4) does not exceed the
Additional Infrastructure Basket;
(xii) Liens on Block B Assets securing Block B
Debt provided that such Liens and Block B Debt
satisfy the Block B Conditions;"; and
(v) in redesignated paragraph (xiii) deleting the
reference to "and (ix)" and inserting in place
thereof ", (ix), (x), (xi) and (xii)" and adding,
immediately prior to the period at the end of such
paragraph the following:
"and provided further, however, that any such
extension, renewal or replacement Lien relating to
paragraph (xii) shall also satisfy the Block B
Conditions (it being understood that any use of
the Block A Operations and Assets previously
approved by the Administrative Agent or Banks
holding 51% of the Commitments, as the case may
be, in connection with the predecessor Lien shall
be deemed to have been approved to the same extent
by such Banks for purposes of such extension,
renewal or replacement Lien)".
17
(t) Section 5.2(g) of the Credit Agreement is hereby
amended by:
(i) amending paragraph (ii) thereof to read in its
entirety as follows:
"(ii) the Specified Obligations, including ,
without limitation, the Capitalized Lease
Obligations and the take-or-pay contracts with
respect to the PFT Assets, the ALatieF-FI Assets,
the P&O Assets, the Airfast Assets, the New
Infrastructure Assets and the Additional
Infrastructure Assets;";
(ii) deleting from paragraph (vii) thereof the
words ", secured pursuant to the FCX Intercreditor
Agreement by the FCX Pledge Agreements"; and
(iii) deleting the word "and" at the end of
paragraph (ix), redesignating paragraph (x) as
paragraph (xii) and adding new paragraphs (x) and (xi)
to read as follows:
"(x) Non-Recourse Debt of FCX, FI or a
Restricted Subsidiary secured solely by New
Infrastructure Assets or Additional Infrastructure
Assets permitted to be pledged or encumbered under
Section 5.2(d)(x) or Section 5.2(d)(xi),
respectively, and Debt of FI or its Restricted
Subsidiaries secured solely by the pledged equity
or debt investment in applicable Third Parties
permitted to be pledged under Section 5.2(d)(vi);
provided that any unsecured portion of such Debt
is otherwise permitted by this Agreement;
(xi) Block B Debt of FCX, FI or a Restricted
Subsidiary, provided that such Block B Debt
satisfies the Block B Conditions; and".
18
(u) Section 5.2(h) of the Credit Agreement is hereby
amended to read in its entirety as follows:
"(h) Preferred Stock. FCX, FI and the Restricted
Subsidiaries shall not voluntarily redeem any preferred
stock issued by any of them except for common stock of
the issuer (with cash for fractional shares); provided
that FCX shall be permitted to deliver notices of
redemption with respect to all or part of its 7%
Convertible Exchangeable Special Preferred Stock and
its Step-Up Convertible Preferred Stock and to make any
cash redemption to be effected as a consequence
thereof, so long as FCX reasonably believes at the time
of the delivery of any such notice of redemption (based
on the market trading values of the common stock of FCX
or on standby underwriting arrangements with a
nationally recognized underwriter) that substantially
all of such preferred stock will be converted into, or
refinanced with, common stock of FCX on or prior to the
stated redemption date.".
(v) Section 5.2(j) of the Credit Agreement is hereby
amended by:
(i) deleting from the first sentence thereof all
of the words after the phrase "interest in FI" and
inserting a period immediately following such phrase;
and
(ii) deleting from the second sentence thereof the
words ", except for the Liens of the FCX Pledge
Agreements".
(w) Section 5.2(l) of the Credit Agreement is hereby
amended by:
(i) deleting each reference therein to
"$75,000,000" and substituting in lieu thereof a
reference to "$150,000,000";
(ii) deleting the words "consummate the Waste Water
Transaction and"; and
(iii) adding the following immediately after the
last sentence thereof:
"Notwithstanding the foregoing, (i) FCX, FI
19
and their Restricted Subsidiaries may also acquire
debt or equity investments in Third Parties in
consideration for transfers or sales to such Third
Parties, in accordance with and as permitted by
Section 5.2(c), of New Infrastructure Assets,
Additional Infrastructure Assets and Block B
Assets, and such acquisitions will not be included
in the calculation of the $150,000,000 annual
limit provided for above and (ii) FCX, FI and
their Restricted Subsidiaries may agree to
restrictions on, or assignments of, the payment of
dividends, distributions or interest payments
(collectively, "Third Party Distributions") made
in respect of investments in Third Parties made in
accordance with the provisions of Section
5.2(d)(vi), and may agree to subordinate the
payment of such Third Party Distributions to the
payment of interest, dividends, distributions or
other amounts to other investors in or lenders to
such Third Parties, and such agreements will not
be deemed to result in additional investments in
such Third Parties or be taken into account in the
calculation of the $150,000,000 annual limit
provided for above, provided that any such Third
Party Distributions, to the extent so assigned,
are, promptly after being paid or received,
transferred to the assignee thereof.".
(x) Section 5.2(n) of the Credit Agreement is hereby
amended by:
(i) deleting the word "and" at the end of
clause (i) and inserting a comma in lieu thereof;
(ii) deleting the reference in clause (ii) to "FI
Collateral Agent" and substituting in lieu thereof a
reference to "FI Trustee";
(iii) deleting the period at the end of
clause (ii); and
(iv) adding the following new clause (iii)
immediately after clause (ii) that reads in its
entirety as follows:
"and (iii) transfers of Block B Assets in
accordance with Section 5.2(c)(v), transfers of
New Infrastructure Assets in accordance with
20
Section 5.2(c)(y)(3) and transfers of Additional
Infrastructure Assets in accordance with Section
5.2(c)(y)(4).".
(y) Section 5.2(o) of the Credit Agreement is hereby
amended by:
(i) adding the following words immediately after
the symbol (i):
"enter into any New Infrastructure Document
or Additional Infrastructure Document or any
amendment or modification thereto or";
(ii) deleting the word "or" immediately after the
first parenthetical in clause (ii) and substituting a
comma in lieu thereof;
(iii) deleting the words "or the Waste Water
Assets" in clause (iii) thereof and substituting in
lieu thereof the following:
", the New Infrastructure Assets or the
Additional Infrastructure Assets";
(iv) deleting the words "nor shall FCX and FI"
after the number "$125,000,000" in existing
clause (iii)(y) and substituting in lieu thereof the
words "; or (iv)"; and
(v) deleting the word "and" immediately after the
word "collateral)" in such newly designated clause (iv)
and adding at the end of the current text thereof,
immediately prior to the period, the following:
"and the transfer or pledge of New
Infrastructure Assets and Additional
Infrastructure Assets in connection with New
Infrastructure Projects and Additional
Infrastructure Projects, respectively, in each
case to the extent not prohibited by the other
provisions of this Agreement".
(z) Section 5.2(p) of the Credit Agreement is hereby
amended by:
(i) adding the words ", or such Restricted
Subsidiary, as the case may be," immediately after the
third and fourth references in clause (i) to "FI"; and
21
(ii) adding the following sentence at the end of
such Section 5.2(p):
"Notwithstanding the foregoing, (x) FCX, FI
or a Restricted Subsidiary may engage in the
foregoing transactions with a Wholly-Owned
Restricted Subsidiary and (y) a Wholly-Owned
Restricted Subsidiary may engage in the foregoing
transactions with another Wholly-Owned Restricted
Subsidiary.".
(aa) Section 5.2(r) of the Credit Agreement is hereby
amended by deleting such Section in its entirety and
substituting in lieu thereof the words "Intentionally
Omitted".
(bb) Section 5.2 of the Credit Agreement is hereby
amended by adding a new subsection 5.2(t) that reads in its
entirety as follows:
"(t) Block B Projects. None of FCX, FI or any of
their Restricted Subsidiaries shall permit any Block B
Project to utilize any Block A Operations and Assets
unless such Block B Project satisfies the Block B
Conditions.".
(cc) Section 7.1 of the Credit Agreement is hereby
amended by:
(i) deleting the text of paragraph (o) thereof in
its entirety and substituting in lieu thereof the words
"Intentionally Omitted"; and
(ii) deleting the words "or the FCX Pledge
Agreements" immediately before the proviso in the last
paragraph of Section 7.1.
(dd) Section 8.1(j) of the Credit Agreement is hereby
amended by:
(i) deleting the text of clause (ii) thereof and
substituting in lieu thereof the words "[intentionally
omitted]";
(ii) deleting the text of clause (iv)(y) thereof
and substituting in lieu thereof the following:
22
"to allow sales, transfers or other
dispositions, secured financings, capital leases
and sale leaseback transactions and pledges of
assets expressly permitted hereby, including
without limitation, sales, transfers or pledges of
Block B Assets, New Infrastructure Assets and
Additional Infrastructure Assets"; and
(iii) adding the following sentence immediately
after the period at the end of such Section:
"It is understood and agreed that releases in
connection with clauses (iii) and (iv) of this
Section 8.1(j) shall not require any further
consents by the Required Banks.".
(ee) Article VIII of the Credit Agreement is hereby
further amended by deleting each reference to (and the
surrounding text, if such text relates solely to "the FCX
Collateral Agent", "the FCX Pledge Agreements" or "the FCX
Intercreditor Agreement"): (i) "the FCX Collateral Agent",
(ii) "the FCX Pledge Agreements" and (iii) the "FCX
Intercreditor Agreement" therein.
(ff) Section 10.7 of the Credit Agreement is hereby
amended by deleting from clause (iv) of paragraph (b)
thereof the words "or the Collateral granted under the FCX
Pledge Agreements".
(gg) Section 10.17 of the Credit Agreement is hereby
amended by designating the existing text as paragraph (a)
and adding a new paragraph (b) to read as follows:
"(b) Notwithstanding anything to the contrary in
this Agreement, in the event the RTZ Transaction is for
any reason abandoned or terminated prior to the RTZ
Closing Date, the Agents and the Banks will, at the
request of FCX and FI, promptly negotiate and agree on
mutually satisfactory documentation, including
amendments to the FI Trust Agreement and other FI
Security Documents, to provide for the transfer of the
Contract of Work to the FI Trustee to be held pursuant
to the FI Trust Agreement and to provide the Agents and
the Banks with substantially the same rights and
benefits in respect of the Contract of Work as so
transferred (subject to substantially the same
limitations), in each case, in substantially the same
manner as contemplated by the proposed amendments to
the FI Security Documents anticipated to be entered
23
into pursuant to paragraph (a) of this Section, as the
same exist in draft form as of the date of the July
1996 FI Amendment (subject to the approval of the Banks
in accordance with the terms of the RTZ Amendment).".
SECTION 2. Representations and Warranties. Each
of FCX and FI represents and warrants to the Administrative
Agent and to each of the Banks that:
(a) Each of this Amendment, the Credit Agreement
as amended by this Amendment (the "Amended Credit
Agreement") and the Promissory Notes executed in
connection with this Amendment has been duly
authorized, executed and delivered by it and
constitutes its legal, valid and binding obligations
enforceable in accordance with their terms, except as
such enforceability may be limited by bankruptcy,
reorganization, insolvency, moratorium or similar laws
affecting creditors' rights generally, or by general
principles of equity (whether enforcement is sought by
proceedings in equity or at law).
(b) The representations and warranties set forth
in Article IV of the Amended Credit Agreement and in
the other Loan Documents are true and correct in all
material respects with the same effect as if made on
the date hereof, except to the extent such
representations and warranties expressly relate to an
earlier date, in which case they were true and correct
in all material respects on and as of such earlier
date.
(c) As of the date hereof, no Default or Event of
Default has occurred and is continuing under the
Amended Credit Agreement.
SECTION 3. Conditions to Effectiveness. This
Amendment shall become effective on the date that each of
the following conditions shall have been satisfied (such
date of effectiveness being the "Effective Date"):
(a) Receipt by Cravath, Swaine & Moore, special
counsel for the Agents, of executed counterparts of
this Amendment which, when taken together, bear the
signatures of FI, FCX, the FI Trustee, the Agents and
each Bank.
24
(b) The representations and warranties on the
part of FCX and FI contained in Article IV of the
Credit Agreement shall be true and correct in all
material respects at and as of the Effective Date as
though made on and as of such date.
(c) FCX and FI shall be in compliance with all
the terms and provisions set forth in this Amendment
and the Credit Agreement to be observed or performed on
their part, and as of the Effective Date, no Event of
Default nor any event which upon notice or lapse of
time or both would constitute such an Event of Default
shall have occurred and be continuing.
(d) All legal matters incident to this Amendment
shall be satisfactory to the Banks, the Administrative
Agent and Cravath, Swaine & Moore, special counsel for
the Agents.
(e) FI shall have delivered to the Administrative
Agent a duly executed Promissory Note in favor of each
Bank in the amount of such Bank's Commitment after
giving effect to this Amendment, substantially in the
form of Exhibit A to this Amendment.
(f) The Administrative Agent shall have received
all fees and other amounts due and payable on or prior
to the Effective Date, including, to the extent
invoiced, reimbursement or payment of all out-of-pocket
expenses required to be reimbursed or paid by FCX or FI
hereunder or under any Loan Document.
(g) FCX and FI shall have received the written
consent of TCB, the Required FM Lenders, the Required
FI Lenders, the Required CDF Lenders and the Required
Pel-Tex Lenders (each as defined in the FCX
Intercreditor Agreement in effect prior to the
Effective Date) in connection with the consummation of
the transactions contemplated by Section 8 hereof.
(h) The Administrative Agent shall have received
on behalf of itself and the Banks a favorable written
opinion of (i) Jones, Walker, Waechter, Poitevent,
Carrere & Denegre, counsel for FCX and FI, (ii) Ali
Budiardjo, Nugroho, Reksodiputro, special Indonesian
counsel for FI, (iii) Henry A. Miller, general counsel
of FCX and (iv) Mochtar, Karuwin & Komar, special
Indonesian counsel for the Agents, each dated the
Effective Date and addressed to the Administrative
25
Agent and the Banks, each in the form approved by the
Agents and Cravath, Swaine & Moore, special counsel for
the Agents. FCX and FI and, in the case of (iv) above,
the Agents, hereby instruct such counsel to deliver
such opinions.
(i) The Administrative Agent shall have received
(i) (a) as to FI, signed Certificates of the Secretary
of State of the State of Delaware, dated reasonably
near the Effective Date, listing the Certificate of
Domestication and Certificate of Incorporation of FI
(as certified by the Secretary or Assistant Secretary
of FI in the certificate described in clause (ii)
below) as being on file in his office and stating that
such documents are the only charter documents of FI on
file in his office, that FI is duly incorporated and in
good standing in the State of Delaware and has paid all
franchise taxes required by law to be paid by FI to the
date of his Certificate and (b) as to FCX, signed
Certificates of the Secretary of State of the State of
Delaware, dated reasonably near the Effective Date,
listing the Certificate of Incorporation of FCX (as
certified by the Secretary or Assistant Secretary of
FCX in the certificate described in clause (ii) below)
as being on file in his office and stating that such
document is the only charter document of FCX on file in
his office, that FCX is duly incorporated and in good
standing in the State of Delaware and has paid all
franchise taxes required by law to be paid by FCX to
the date of his Certificate; (ii) a certificate of the
Secretary or Assistant Secretary of FCX and FI dated
the Effective Date and certifying (A) that there have
not been any amendments since July 17, 1995 to any of
(X) (a) the Certificate of Domestication of FI, (b) the
Indonesian Articles of Association of FI or (c) the
Certificate of Incorporation and By-Laws of FCX, as
such documents are described in paragraphs 6(a)(i),
(iii) and (vii), respectively, of the Fifth Amendment
dated as of July 17, 1995 to the Credit Agreement (the
"FI Fifth Amendment") and delivered to the Banks in
connection therewith or (Y) the Certificate of
Incorporation of FI as described in clause (i)(a) above
or, if any of such documents have been amended since
the FI Fifth Amendment, attaching a true and complete
copy of such amendments, (B) that attached thereto is a
true and complete copy of resolutions duly adopted by
the Board of Directors of FCX and FI, and in the case
of FI, concurred in by the Board of Commissioners,
authorizing the execution, delivery and performance of
26
this Amendment, the Amended Credit Agreement, the
Promissory Notes executed and delivered in connection
with this Amendment, any amendments to the FI Security
Documents that may be required in connection with the
FI Funding Date, the FI Security Documents as amended
by such amendments and the other Loan Documents and the
borrowings under the Amended Credit Agreement, and that
such resolutions have not been modified, rescinded or
amended and are in full force and effect, (C) that
neither the certificate of incorporation of FCX nor the
certificate of incorporation or domestication of FI has
been amended since the date of the last amendment
thereto shown on each Certificate of the Secretary of
State of the State of Delaware furnished pursuant to
clause (i)(a) or (i)(b) above, as the case may be, and
(D) as to the incumbency and specimen signature of each
officer executing this Amendment or any document
delivered in connection herewith on behalf of FCX and
FI; (iii) a certificate of another officer as to the
incumbency and specimen signature of the Secretary or
Assistant Secretary executing the certificate pursuant
to (ii) above; and (iv) such other documents as the
Banks or Cravath, Swaine & Moore, counsel for the
Agents, may reasonably request.
(j) The Administrative Agent shall have received a
certificate, dated the Effective Date and signed by a
Financial Officer of FCX and FI, confirming compliance
with the conditions precedent set forth in
paragraphs (i) and (iii) of Section 6.1 of the Credit
Agreement.
(k) FI and FCX shall have received all Requisite
Approvals (as defined in Section 4.1(c)(i) of the
Credit Agreement as amended by this Amendment),
including without limitation the Requisite Approval of
the Bank of Indonesia, required in connection with the
execution and delivery of this Amendment and the
Promissory Notes executed in connection herewith and
the performance of this Amendment, such Promissory
Notes, the Credit Agreement as amended by this
Amendment and the transactions contemplated hereby or
thereby. All such Requisite Approvals, including any
conditions imposed thereby, shall be in form and
substance acceptable to the Agents and Cravath, Swaine
& Moore, special counsel for the Agents. No action
shall have been taken by any Governmental Authority
which restrains or prevents or seeks to restrain or
prevent, or imposes or seeks to impose materially
27
adverse conditions upon the execution and delivery of
this Amendment and the Promissory Notes executed in
connection herewith or the performance of this
Amendment, such Promissory Notes, the Credit Agreement
as amended by this Amendment and the transactions
contemplated hereby or thereby.
SECTION 4. Reallocation of the Banks' Commitments
under the Credit Agreement. (a) It is hereby acknowledged
that, pursuant to the terms of this Amendment, the Total
Commitment under the Credit Agreement is not being changed
but the allocations of the Banks' commitments are being
changed (the "Commitment Reallocation"), effective as of the
Effective Date. The Commitment Reallocation will be
implemented through the increase of the Commitments of one
or more of the Banks (each such Bank that is willing to
increase its Commitment hereunder being an "Increasing
Bank"), the decrease of the Commitments of one or more of
the Banks (each such Bank that is willing to reduce its
Commitment hereunder being a "Reducing Bank") and the
continuation of the amount of the Commitments of one or more
Banks (each such bank whose Commitment is not changing, a
"Non-Changing Bank"). If agreement is reached on or prior
to the Effective Date with any Increasing Banks or Reducing
Banks as to a commitment increase or a commitment reduction,
as the case may be, the Commitments of such Increasing
Banks, such Reducing Banks and the Non-Changing Banks shall
be, as of the Effective Date, the amounts set forth in
Schedule II to this Amendment; provided that each Bank shall
have delivered to the Administrative Agent within 30
Business Days of the Effective Date, its existing Promissory
Note of FI issued under the Credit Agreement as in effect
prior to the Effective Date. The Administrative Agent, upon
receipt of such Promissory Notes from each Bank, shall
promptly deliver such Promissory Notes to FI.
(b) On the Effective Date, the Administrative
Agent shall record in the Register the relevant information
with respect to each Increasing Bank and each Reducing Bank.
Each Increasing Bank shall, before 2:00 P.M. (New York City
time) on the Effective Date, make available to the
Administrative Agent in New York, New York, in immediately
available funds, an amount equal to the excess of (i) such
Increasing Bank's ratable portion of the borrowings then
outstanding (calculated based on its Commitment as a
percentage of the Total Commitments outstanding after giving
28
effect to the Commitment Reallocation) over (ii) such
Increasing Bank's pro rata share of the borrowings then
outstanding (calculated based on its Commitment (without
giving effect to the Commitment Reallocation) as a
percentage of the Total Commitments (without giving effect
to the Commitment Reallocation). After the Administrative
Agent's receipt of such funds from each such Increasing
Bank, the Administrative Agent will promptly thereafter
cause to be distributed like funds to the Reducing Banks for
their account in an amount to each Reducing Bank such that
the aggregate amount of the outstanding borrowings owing to
each Reducing Bank after giving effect to such distribution
equals such Reducing Bank's pro rata share of the borrowings
then outstanding (calculated based on its Commitment as a
percentage of the aggregate Commitments outstanding after
giving effect to the Commitment Reallocation). Pursuant to
Section 3.13 of the Credit Agreement, FI shall pay any
losses any Bank may sustain or incur as a consequence of any
Breakage Event that may occur in connection with or as a
result of the transactions contemplated by this Amendment.
Within one Business Day prior to the Effective Date, FI, at
its own expense, shall execute and deliver to the
Administrative Agent Promissory Notes payable to the order
of each Bank, dated as of July 17, 1995, in a principal
amount equal to such Bank's Commitment after giving effect
to the Commitment Reallocation, substantially in the form of
Exhibit A to this Amendment. The Administrative Agent, upon
receipt of such Promissory Notes from FI, shall promptly
deliver such Promissory Notes to the Banks.
SECTION 5. Counterparts. This Amendment may be
executed in multiple counterparts, each of which shall
constitute an original, and all of which when taken together
shall constitute but one instrument.
SECTION 6. Limited Effect of Amendment.
Section 1 hereof constitutes an amendment of the Credit
Agreement effective as of the Effective Date. Except as,
and until, expressly amended by such Section as of the
Effective Date, the Credit Agreement shall continue in full
force and effect in accordance with the provisions thereof
as in effect prior to the Effective Date. Except as
expressly set forth herein, this Amendment shall not by
implication or otherwise limit, impair, constitute a waiver
of, or otherwise affect the rights and remedies of the Banks
and the Agents under the Credit Agreement, nor alter,
modify, amend or in any way affect any of the terms,
29
conditions, obligations, covenants or agreements contained
in the Credit Agreement, all of which are ratified and
affirmed in all respects and shall continue in full force
and effect. This Amendment shall apply and be effective
only with respect to the provisions of the Credit Agreement
specifically referred to in Section 1 hereof. As used in
the Credit Agreement, the terms "Agreement", "herein",
"hereinafter", "hereunder", "hereto" and words of similar
import shall mean, from and after the date hereof, the
Credit Agreement as amended by this Amendment.
SECTION 7. Receipt of Documents and Consent
thereto. Each Bank acknowledges receipt of the Credit
Agreement and each amendment thereto, including the
Amendment Agreement dated as of April 1, 1996 relating to
the RTZ Transactions (the "RTZ Amendment"). By
countersigning this Amendment, each Bank confirms its
consent and agreement to, and agrees to be bound by the
terms of the RTZ Amendment.
SECTION 8. Termination of FCX Pledge Agreements
and FCX Intercreditor Agreement. Pursuant to Section 4.02
of the FCX Intercreditor Agreement, effective as of the
Effective Date, each of the FCX Pledge Agreements and the
FCX Intercreditor Agreement shall be terminated and
discharged and all security interests granted under the FCX
Pledge Agreements shall be deemed automatically and
permanently released and discharged; provided that all
protections, exculpations and indemnities provided to
Chemical Bank in its capacity as FCX Collateral Agent under
the Credit Agreement (including without limitation under
Article VIII and Section 10.4 thereof), the FCX Pledge
Agreements and the FCX Intercreditor Agreement (including
without limitation under Section 14 and Section 2.03,
respectively, thereof) shall survive the Effective Date, the
termination and discharge of each of the FCX Pledge
Agreements and the FCX Intercreditor Agreement and release
of the security interests under the FCX Pledge Agreements.
Chemical Bank in its capacity as Collateral Agent (as
defined in the FCX Pledge Agreements) shall execute and
deliver such instruments as FCX shall reasonably request and
shall deliver to FCX any and all Pledged Securities (as
defined in the FCX Pledge Agreements) and any and all
certificates or other instruments or documents representing
30
the Collateral (as defined in the FCX Pledge Agreements)
that were delivered to it pursuant to Section 2 of the FCX
Pledge Agreements, in order to release the Collateral (as
defined in the FCX Pledge Agreements) to FCX as contemplated
by Section 17 of the FCX Pledge Agreements and Section 4.02
of the FCX Intercreditor Agreement. Any such release shall
be at the sole expense of FCX (including without limitation
the reasonable fees, expenses and disbursements of counsel
to Chemical Bank in connection therewith) and without
recourse or liability to Chemical Bank whatsoever. Each
Bank hereby approves the termination and discharge of the
FCX Pledge Agreements and the FCX Intercreditor Agreement
and the release of the security interests created under the
FCX Pledge Agreements and authorizes Chemical Bank in its
capacity as FCX Collateral Agent to release the Collateral
as provided above.
SECTION 9. Calculation of Applicable Margin.
Following the effectiveness of this Amendment as provided in
Section 3, the Applicable Margin shall be deemed to have
accrued (a) prior to the Effective Date, at the rates
provided for in the Credit Agreement before giving effect to
this Amendment, and (b) on and after the Effective Date, at
the rates provided for in the Credit Agreement after giving
effect to this Amendment.
SECTION 10. Authorization by Banks to Security
Agent. Each of the Banks hereby authorizes the Security
Agent (or its successor) to act on its behalf as Security
Agent with full power of substitution to represent it in
connection with the termination of the FCX Indonesian Pledge
Agreement, set out in deed number 57 and dated July 7, 1995.
For the purpose referred to in the preceding sentence, each
Bank hereby authorizes the Security Agent to appear before
any Indonesian notary, to execute and deliver any and all
documents necessary or desirable in connection therewith, to
receive deeds, agreements and other documents and
instruments and to do and perform, without limitation, any
of the foregoing and any other acts or things required,
useful or necessary in connection therewith.
SECTION 11. APPLICABLE LAW. THIS AMENDMENT SHALL
BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF NEW YORK.
31
SECTION 12. Expenses. FI and FCX jointly and
severally shall pay all out-of-pocket expenses incurred by
the Agents in connection with the preparation of this
Amendment, including, but not limited to, the reasonable
fees and disbursements of Cravath, Swaine & Moore, special
counsel for the Agents, and Mochtar, Karuwin & Komar,
special Indonesian counsel to the Agents.
32
SECTION 13. Headings. The headings of this
Amendment are for reference only and shall not limit or
otherwise affect the meaning hereof.
IN WITNESS WHEREOF, the parties hereto have caused
this Amendment to be executed by their duly authorized offi-
cers or agents as of the date first above written.
P.T. FREEPORT INDONESIA COMPANY,
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: Vice President and
Treasurer
FIRST TRUST OF NEW YORK, NATIONAL
ASSOCIATION, as FI Trustee and as
Security Agent,
by /s/ P. J. Crowley
---------------------
Name: P. J. Crowley
Title: Vice President
33
CHEMICAL BANK, individually and as
Administrative Agent and
FCX Collateral Agent,
by /s/ James H. Ramage
-----------------------
Name: James H. Ramage
Title: Vice President
THE CHASE MANHATTAN BANK (National
Association), individually and as
Documentary Agent,
by /s/ James H. Ramage
----------------------
Name: James H. Ramage
Title: Vice President
ABN AMRO BANK N.V., HOUSTON AGENCY,
by ABN AMRO NORTH AMERICA,
INC., as Agent for ABN
AMRO BANK N.V.,
by /s/ H. Gene Shiels
-------------------------
Name: H. Gene Shiels
Title: Vice President and
Director
by /s/ Mike Oakes
-----------------
Name: Mike Oakes
Title: Vice President
34
ARAB BANKING CORPORATION (B.S.C.),
by /s/ Stephen A. Plauche
-------------------------
Name: Stephen A. Plauche
Title: Vice President
AUSTRALIA AND NEW ZEALAND BANKING
GROUP LIMITED, CAYMAN ISLANDS
BRANCH,
by /s/ Paul Clifford
---------------------
Name: Paul Clifford
Title: Vice President
BANK AUSTRIA AKTIENGESELLSCHAFT,
by /s/ Mark Nolan
-----------------
Name: Mark Nolan
Title: Assistant Vice
President
by /s/ J. Anthony Seay
----------------------
Name: J. Anthony Seay
Title: Vice President
35
BANK OF AMERICA ILLINOIS,
by /s/ Thomas H. Pearson
------------------------
Name: Thomas H. Pearson
Title: Vice President
BANK OF MONTREAL,
by /s/ Michael P. Sassos
-------------------------
Name: Michael P. Sassos
Title: Director
THE BANK OF NOVA SCOTIA,
by /s/ F. C. H. Ashby
----------------------
Name: F. C. H. Ashby
Title: Senior Manager
Loan Operations
THE BANK OF TOKYO-MITSUBISHI, LTD.
HOUSTON AGENCY,
by /s/ Tsuneo Kumada
----------------------
Name:Tsuneo Kumada
Title:General Manager
BANQUE NATIONALE DE PARIS,
by /s/ Aurora L. Abella
-------------------------
Name: Aurora L. Abella
Title: Vice President
BANQUE PARIBAS,
36
by /s/ Barton D. Schouest
---------------------------
Name: Barton D. Schouest
Title: Group Vice President
by /s/ Marian Livingston
-------------------------
Name: Marian Livingston
Title: Vice President
BARCLAYS BANK PLC,
by /s/ Carol A. Cowan
----------------------
Name: Carol A. Cowan
Title: Director
CHRISTIANIA BANK OG KREDITKASSE,
by /s/ William S. Phillips
--------------------------
Name: William S. Phillips
Title: Vice President
by /s/ Jahn O. Roising
---------------------------
Name: Jahn O. Roising
Title: First Vice President
DAI-ICHI KANGYO BANK, LTD.,
by /s/ Mitsuaki Yamazaki
-------------------------
Name: Mitsuaki Yamazaki
Title: Vice President
37
DEUTSCHE BANK, AG, NEW YORK AND/OR
CAYMAN ISLANDS BRANCHES,
by /s/ Surendra V. Shah
------------------------
Name: Surendra V. Shah
Title: Vice President
by /s/ Kurt A. Schreder
-----------------------
Name: Kurt A. Schreder
Title: Associate
DEUTSCHE BANK, AG, SINGAPORE
BRANCH,
by /s/ David Tan Tiat Hern
---------------------------
Name: David Tan Tiat Hern
Title: Assistant General
Manager
by /s/ Raymond Lee Weng Fatt
----------------------------
Name: Raymond Lee Weng Fatt
Title: Head, Credit
Department
DRESDNER BANK AG, NEW YORK BRANCH
AND GRAND CAYMAN BRANCH,
by /s/ P. Douglas Sherrod
--------------------------
Name: P. Douglas Sherrod
Title: Vice President
by /s/ Raymond F. Keenan
----------------------------
Name: Raymond F. Keenan
Title: Senior Vice President
38
THE FIRST NATIONAL BANK OF CHICAGO,
by /s/ George R. Schanz
------------------------
Name: George R. Schanz
Title: Vice President
FIRST NATIONAL BANK OF COMMERCE,
by /s/ Nemesio J. Viso
----------------------
Name: Nemesio J. Viso
Title: Assistant Vice
President
THE FUJI BANK, LIMITED, HOUSTON
AGENCY,
by /s/ Yutaka Taniuchi
-----------------------------
Name: Yutaka Taniuchi
Title: Joint General Manager
HIBERNIA NATIONAL BANK,
by /s/ Steven Nance
----------------------
Name: Steven Nance
Title: Banking Officer
THE INDUSTRIAL BANK OF JAPAN,
LIMITED NEW YORK BRANCH,
by /s/ Kensaku Iwata
----------------------------
Name: Kensaku Iwata
Title: Senior Vice President
39
THE LONG-TERM CREDIT BANK OF JAPAN,
LIMITED,
by /s/ Satoru Otsubo
------------------------------
Name: Satoru Otsubo
Title: Joint General Manager
THE MITSUI TRUST AND BANKING
COMPANY, LTD,
by /s/ Margaret Holloway
--------------------------
Name: Margaret Holloway
Title: Vice President and
Manager
MORGAN GUARANTY TRUST COMPANY OF
NEW YORK,
by /s/ Philip W. McNeal
------------------------
Name: Philip W. McNeal
Title: Vice President
NATIONAL WESTMINSTER BANK PLC,
by /s/ Ian M. Plester
----------------------
Name: Ian M. Plester
Title: Vice President
NATIONAL WESTMINSTER BANK PLC
(NASSAU BRANCH),
by /s/ Ian M. Plester
----------------------
Name: Ian M. Plester
Title: Vice President
40
THE NORINCHUKIN BANK, NEW YORK
BRANCH,
by /s/ Takeshi Akimoto
-----------------------
Name: Takeshi Akimoto
Title: General Manager
PT BANK NEGARA INDONESIA (PERSERO),
by /s/ Dewa Suthapa
----------------------
Name: Dewa Suthapa
Title: General Manager
P.T. BANK RAKYAT INDONESIA
(PERSERO),
by /s/ Kemas M. Arief
-----------------------
Name: Kemas M. Arief
Title: General Manager
by /s/ David W. Opdyke
-----------------------
Name: David W. Opdyke
Title: Deputy General
Manager
REPUBLIC NATIONAL BANK OF NEW YORK,
by /s/ R. J. Ward
---------------------
Name: R. J. Ward
Title: Vice President
41
THE ROYAL BANK OF SCOTLAND PLC,
by /s/ Grant F. Stoddart
----------------------------
Name: Grant F. Stoddart
Title: Senior Vice President
and Manager
THE SAKURA BANK, LIMITED, HOUSTON
AGENCY,
by /s/ Akira Hara
----------------------
Name: Akira Hara
Title: General Manager
THE SANWA BANK LIMITED, DALLAS
AGENCY,
by /s/ Toru Sakamuro
---------------------
Name: Toru Sakamuro
Title: Vice President
SOCIETE GENERALE, SOUTHWEST AGENCY,
by /s/ Elizabeth W. Hunter
--------------------------
Name: Elizabeth W. Hunter
Title: Vice President
THE SUMITOMO BANK, LIMITED, HOUSTON
AGENCY,
by /s/ Harumitsu Seki
----------------------
Name: Harumitsu Seki
Title: General Manager
42
THE TOKAI BANK, LIMITED,
by /s/ Masahara Muto
---------------------
Name: Masahara Muto
Title: Deputy General
Manager
UNION BANK OF SWITZERLAND, HOUSTON
AGENCY,
by /s/ Dan O. Boyle
-------------------------
Name: Dan O. Boyle
Title: Managing Director
by /s/ Finley Biggerstaff
---------------------------
Name: Finley Biggerstaff
Title: Assistant Treasurer
WESTDEUTSCHE LANDESBANK
GIROZENTRALE,
by /s/ Richard R. Newman
------------------------
Name: Richard R. Newman
Title: Vice President
by /s/ R. Carino
---------------------
Name: R. Carino
Title: Vice President
43
YASUDA TRUST AND BANKING COMPANY,
by /s/ Makoto Tagawa
---------------------
Name: Makoto Tagawa
Title: Deputy General
Manager
EXHIBIT A
PROMISSORY NOTE
$ New York, New York
July 17, 1995
FOR VALUE RECEIVED, the undersigned, P.T. FREEPORT
INDONESIA COMPANY, a limited liability company organized
under the laws of Indonesia and also domesticated in
Delaware (the "Borrower"), hereby promises to pay to the
order of [name of Bank] (the "Bank"), at the office of
Chemical Bank (the "Administrative Agent"), at 270 Park
Avenue, New York, New York 10017, on the Maturity Date as
defined in the Credit Agreement entered into as of October
27, 1989 (as amended, restated or modified from time to
time, the "Credit Agreement"), among the Borrower, FREEPORT-
McMoRan COPPER & GOLD INC., a Delaware corporation, the
Banks named therein, FIRST TRUST OF NEW YORK, NATIONAL
ASSOCIATION (for purposes of Article VIII thereof only) as
trustee for the Banks under the FI Trust Agreement (as
defined therein), the Administrative Agent, CHEMICAL BANK,
as FCX Collateral Agent, and THE CHASE MANHATTAN BANK
(NATIONAL ASSOCIATION), as Documentary Agent, the lesser of
the principal sum of [amount of commitment] Dollars ($ )
and the aggregate unpaid principal amount of all Loans made
by the Bank to the Borrower pursuant to Section 3.2 of the
Credit Agreement, in lawful money of the United States of
America in same day funds, and to pay interest from the date
hereof on such principal amount from time to time
outstanding, in like funds, at said office, at a rate or
rates per annum and payable on such dates as determined
pursuant to the Credit Agreement.
The Borrower promises to pay interest, on demand,
on any overdue principal and, to the extent permitted by
law, overdue interest from their due dates at a rate or
rates determined as set forth in the Credit Agreement.
The Borrower hereby waives diligence, presentment,
demand, protest and notice of any kind whatsoever. The
nonexercise by the holder of any of its rights hereunder in
any particular instance shall not constitute a waiver
thereof in that or any subsequent instance.
All borrowings evidenced by this Promissory Note
and all payments and prepayments of the principal hereof and
interest hereon and the respective dates thereof shall be
endorsed by the holder hereof on the schedule attached
hereto and made a part hereof, or on a continuation thereof
which shall be attached hereto and made a part hereof, or
otherwise recorded by such holder in its internal records;
provided, however, that any failure of the holder hereof to
make a notation or any error in such notation shall not in
any manner affect the obligation of the Borrower to make
payments of principal and interest in accordance with the
terms of this Promissory Note and the Credit Agreement.
This Promissory Note is one of the Promissory
Notes referred to in the Credit Agreement which, among other
things, contains provisions for the acceleration of the
maturity hereof upon the happening of certain events, for
optional and mandatory prepayment of the principal hereof
prior to the maturity thereof and for the amendment or
waiver of certain provisions of the Credit Agreement, all
upon the terms and conditions therein specified. This
Promissory Note and the borrowings evidenced hereby are
entitled to the benefits of the FI Security Documents (as
defined in the Credit Agreement). THIS PROMISSORY NOTE
SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE
LAWS OF THE STATE OF NEW YORK AND ANY APPLICABLE LAWS OF THE
UNITED STATES OF AMERICA.
P.T. FREEPORT INDONESIA
COMPANY,
by
Name:
Title:
Loans and Payments
------------------
Unpaid Name of
Amount Payments Principal Person
and Type Maturity ------------------- Balance Making
Date of Loan Date Principal Interest of Note Notation
---- ------- -------- --------- -------- --------- --------
SCHEDULE I
APPLICABLE MARGINS
FI Libor FCX Libor Commitment Fee
Ratings Spread Spread Percentage
------- -------- --------- --------------
BBB/Baa2 or above .500% .625% .175%
BBB-/Baa3 .625% .750% .225%
BB+/Ba1 .875% 1.000% .300%
BB/Ba2 1.250% 1.375% .375%
BB-/Ba3 or below 1.750% 1.875% .500%
(The ABR Spread under the Credit Agreement will not change)
SCHEDULE II
COMMITMENTS OF THE BANKS
Applicable
Bank Percentage Commitment
-------------------------- ---------- -----------
THE CHASE MANHATTAN BANK
(NATIONAL ASSOCIATION) 3.90% $21,450,000
BANK OF MONTREAL 3.60% $19,800,000
BARCLAYS BANK PLC 3.60% $19,800,000
DEUTSCHE BANK, AG, NEW YORK
AND/OR CAYMAN ISLANDS BRANCHES, 3.60% $19,800,000
SINGAPORE BRANCH
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK 3.60% $19,800,000
NATIONAL WESTMINSTER BANK PLC 3.60% $19,800,000
THE BANK OF NOVA SCOTIA 3.60% $19,800,000
THE BANK OF TOKYO-MITSUBISHI,
LTD. HOUSTON AGENCY 3.60% $19,800,000
THE FIRST NATIONAL BANK OF
CHICAGO 3.60% $19,800,000
THE FUJI BANK, LIMITED, HOUSTON
AGENCY 3.60% $19,800,000
THE INDUSTRIAL BANK OF JAPAN,
LIMITED NEW YORK BRANCH 3.60% $19,800,000
THE LONG-TERM CREDIT BANK OF
JAPAN, LIMITED 3.60% $19,800,000
THE SANWA BANK LIMITED,
DALLAS AGENCY 3.60% $19,800,000
THE SUMITOMO BANK, LIMITED,
HOUSTON AGENCY 3.60% $19,800,000
ABN AMRO BANK N.V., HOUSTON
AGENCY 2.50% $13,750,000
ARAB BANKING CORPORATION
(B.S.C.) 2.50% $13,750,000
AUSTRALIA AND NEW ZEALAND
BANKING GROUP LIMITED,
CAYMAN ISLANDS BRANCH 2.50% $13,750,000
BANQUE NATIONALE DE PARIS 2.50% $13,750,000
BANQUE PARIBAS, NEW YORK/CAYMAN
ISLANDS BRANCHES 2.50% $13,750,000
DAI-ICHI KANGYO BANK, LTD. 2.50% $13,750,000
DRESDNER BANK AG, NEW YORK
BRANCH AND GRAND CAYMAN BRANCH 2.50% $13,750,000
THE NORINCHUKIN BANK, NEW YORK
BRANCH 2.50% $13,750,000
THE ROYAL BANK OF SCOTLAND PLC 2.50% $13,750,000
UNION BANK OF SWITZERLAND,
HOUSTON AGENCY 2.50% $13,750,000
BANK AUSTRIA
AKTIENGESELLSCHAFT 2.00% $11,000,000
CHRISTIANIA BANK OG KREDITKASSE 2.00% $11,000,000
P.T. BANK RAKYAT INDONESIA
(PERSERO) 2.00% $11,000,000
REPUBLIC NATIONAL BANK OF NEW
YORK 2.00% $11,000,000
THE MITSUI TRUST AND BANKING
COMPANY, LTD 2.00% $11,000,000
THE SAKURA BANK, LIMITED,
HOUSTON AGENCY 2.00% $11,000,000
YASUDA TRUST AND BANKING
COMPANY 2.00% $11,000,000
FIRST NATIONAL BANK OF COMMERCE 1.50% $8,250,000
HIBERNIA NATIONAL BANK 1.50% $8,250,000
PT BANK NEGARA INDONESIA
(PERSERO) 1.50% $8,250,000
SOCIETE GENERALE, SOUTHWEST
AGENCY 1.50% $8,250,000
THE TOKAI BANK, LIMITED 1.50% $8,250,000
WESTDEUTSCHE LANDESBANK
GIROZENTRALE 1.50% $8,250,000
BANK OF AMERICA ILLINOIS 1.30% $7,150,000
TOTAL 100 $550,000,000.00
SCHEDULE III
DESCRIPTION OF NEW INFRASTRUCTURE PROJECTS
EXHIBIT 11.1
FREEPORT-McMoRan COPPER & GOLD INC.
COMPUTATION OF NET INCOME PER COMMON AND
COMMON EQUIVALENT SHARE
Three Months Ended Nine Months Ended
September 30, September 30,
------------------------ ------------------------
1995 1996 1995 1996
---------- ---------- ---------- ----------
(In Thousands, Except Per Share Amounts)
Primary:
Net income applicable
to common stock $ 46,126 $ 60,533 $ 97,621 $ 145,151
========== ========== ========== ==========
Average common shares
outstanding 193,815 202,592 195,201 204,567
Common stock equivalents:
Stock options 1,796 1,466 1,849 489
---------- ---------- ---------- ----------
Common and common
equivalent shares 195,611 204,058 197,050 205,056
========== ========== ========== ==========
Net income per common and
common equivalent
share $.24 $.30 $.50 $.71
==== ==== ==== ====
Fully diluted: (1)
Net income applicable to common stock :
Net Income $ 46,126 $ 60,533 $ 97,621 $ 145,151
Plus preferred
dividends 9,168 9,168 27,504 27,499
---------- ---------- ---------- ----------
Net Income applicable
to common stock $ 55,294 $ 69,701 $ 125,125 $ 172,650
========== ========== ========== ==========
Average common shares
outstanding 193,815 202,592 195,201 204,567
Common stock
equivalents:
Stock options 1,872 1,782 1,872 594
Convertible securities:
Preferred stock 20,628 20,834 20,628 20,834
---------- ---------- ---------- ----------
Common and common
equivalent shares 216,315 225,208 217,701 225,995
========== ========== ========== ==========
Net income per common
and common equivalent
share $.26 $.31 $.57 $.76
==== ==== ==== ====
(1) This calculation is submitted in accordance with Regulation S-K
item 601 (b)(11), despite not being required by APB Opinion No. 15
because it results in no dilution.
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<ARTICLE> 5
<CIK> 0000831259
<NAME> FREEPORT-MCMORAN COPPER & GOLD INC.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> SEP-30-1996
<CASH> 49,031
<SECURITIES> 0
<RECEIVABLES> 101,551
<ALLOWANCES> 0
<INVENTORY> 408,609
<CURRENT-ASSETS> 712,962
<PP&E> 3,806,519
<DEPRECIATION> 841,113
<TOTAL-ASSETS> 3,782,410
<CURRENT-LIABILITIES> 487,154
<BONDS> 1,493,390
500,007
568,844
<COMMON> 20,911
<OTHER-SE> 55,165
<TOTAL-LIABILITY-AND-EQUITY> 3,782,410
<SALES> 1,287,404
<TOTAL-REVENUES> 1,287,404
<CGS> 798,178
<TOTAL-COSTS> 789,178
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 81,641
<INCOME-PRETAX> 307,829
<INCOME-TAX> 140,651
<INCOME-CONTINUING> 138,446
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 138,446
<EPS-PRIMARY> .50
<EPS-DILUTED> .50
</TABLE>
