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 March 31, 1997
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 March 31, 1997, there were issued and outstanding 82,983,544
shares of the registrant's Class A Common Stock, par value $0.10 per
share, and 117,496,048 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 16
Exhibit Index E-1
<PAGE> 2
FREEPORT-McMoRan COPPER & GOLD INC.
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements.
FREEPORT-McMoRan COPPER & GOLD INC.
CONDENSED BALANCE SHEETS (Unaudited)
<TABLE>
<CAPTION>
March 31, December 31,
1997 1996
---------- ----------
(In Thousands)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 25,064 $ 37,118
Accounts receivable 270,281 236,750
Inventories 350,204 375,712
Prepaid expenses and other 12,409 11,636
---------- ----------
Total current assets 657,958 661,216
Property, plant and equipment, net 3,206,955 3,088,644
Other assets 131,081 115,674
---------- ----------
Total assets $3,995,994 $3,865,534
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued liabilities $ 394,867 $ 358,255
Current portion of long-term debt and
short-term borrowings 122,818 136,617
Accrued income taxes 44,758 103,003
---------- ----------
Total current liabilities 562,443 597,875
Long-term debt, less current portion 1,663,328 1,426,299
Accrued postretirement benefits and
other liabilities 191,605 200,646
Deferred income taxes 369,622 359,684
Minority interests 67,454 105,644
Mandatory redeemable preferred stock 500,007 500,007
Stockholders' equity 641,535 675,379
---------- ----------
Total liabilities and stockholders'
equity $3,995,994 $3,865,534
========== ==========
</TABLE>
The accompany notes are an integral part of these financial
statements.
<PAGE> 3
FREEPORT-McMoRan COPPER & GOLD INC.
STATEMENTS OF INCOME (Unaudited)
<TABLE>
<CAPTION>
Three Months
Ended March 31,
-----------------------
1997 1996
---------- ----------
(In Thousands, Except
Per Share Amounts)
<S> <C> <C>
Revenues $ 523,780 $ 388,392
Cost of sales:
Production and delivery 249,486 204,842
Depreciation and amortization 47,256 35,161
---------- ----------
Total cost of sales 296,742 240,003
Exploration expenses 2,728 -
General and administrative expenses 26,702 42,846
---------- ----------
Total costs and expenses 326,172 282,849
---------- ----------
Operating income 197,608 105,543
Interest expense, net (33,148) (23,530)
Other income, net 1,998 907
---------- ----------
Income before income taxes and minority
interests 166,458 82,920
Provision for income taxes (78,605) (38,621)
Minority interests in net income of
consolidated subsidiaries (16,032) (8,163)
---------- ----------
Net income 71,821 36,136
Preferred dividends (9,370) (13,686)
---------- ----------
Net income applicable to common stock $ 62,451 $ 22,450
========== ==========
Net income per primary and fully diluted
share of common stock $.31 $.11
==== ====
Average common shares outstanding 203,047 198,530
======= =======
Dividends paid per common share $.225 $.225
===== =====
</TABLE>
The accompany notes are an integral part of these financial
statements.
<PAGE> 4
FREEPORT-McMoRan COPPER & GOLD INC.
STATEMENTS OF CASH FLOW (Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
------------------------
1997 1996
---------- ----------
(In Thousands)
<S> <C> <C>
Cash flow from operating activities:
Net income $ 71,821 $ 36,136
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization 47,256 35,161
Deferred income taxes 26,790 9,981
Deferral of unearned income 30,102 -
Recognition of unearned income (29,606) -
Minority interests' share of net income 16,032 8,163
Other (9,187) 10,636
(Increase) decrease in working capital:
Accounts receivable (38,680) 1,117
Inventories 20,994 (21,574)
Prepaid expenses and other (2,658) 7,303
Accounts payable and accrued
liabilities (492) 5,210
Accrued income taxes (58,245) (60,123)
---------- ----------
(Increase) decrease in working capital (79,081) (68,067)
---------- ----------
Net cash provided by operating activities 74,127 32,010
---------- ----------
Cash flow from investing activities:
Capital expenditures:
PT-FI (123,777) (68,902)
Atlantic Copper (3,439) (26,234)
Investment in Gresik smelter (8,232) (5,010)
---------- ----------
Net cash used in investing activities (135,448) (100,146)
---------- ----------
Cash flow from financing activities:
Proceeds from debt 207,363 317,439
Repayment of debt (73,568) (44,971)
Net proceeds from infrastructure
financing 27,344 -
Purchase of FCX common shares (47,434) (146,737)
Cash dividends paid:
Common stock (45,416) (44,509)
Preferred stock (10,433) (12,700)
Minority interests (8,491) (8,780)
Other (98) 1,272
---------- ----------
Net cash provided by financing activities 49,267 61,014
---------- ----------
Net decrease in cash and cash equivalents (12,054) (7,122)
Cash and cash equivalents at beginning
of year 37,118 26,883
---------- ----------
Cash and cash equivalents at end
of period $ 25,064 $ 19,761
========== ==========
</TABLE>
The accompany notes are an integral part of these financial
statements.
<PAGE> 5
FREEPORT-McMoRan COPPER & GOLD INC.
NOTES TO FINANCIAL STATEMENTS
1. BUSANG PROPERTIES
Freeport-McMoRan Copper & Gold Inc. (FCX) has commenced a due
diligence review of the Busang II and Busang III properties in East
Kalimantan, Indonesia. On March 26, 1997, FCX announced that it had
drilled seven core holes within the Busang II project area to
confirm the results of core holes previously drilled by BRE-X
Minerals LTD (BRE-X). To date, analyses of these cores, which
remain incomplete, indicate insignificant amounts of gold. After
FCX notified BRE-X of its findings, BRE-X engaged Strathcona Mineral
Services Ltd., an independent Canadian mining industry consultant,
to conduct an independent audit, the results of which are expected in
early May.
Subject to certain conditions described below, FCX has agreed
(1) to acquire a 15 percent interest in the Busang properties, (2)
to provide 25 percent of the total cost up to $400 million of
delineating proved and probable reserves and constructing the
initial Busang mine complex, (3) to arrange up to a $1.2 billion
project financing commitment for the initial Busang mine complex and
(4) to be the operator of the Busang properties. The transactions
are subject to the confirmation to the satisfaction of FCX of the
existence of one or more commercially viable gold or other mineral
resources, the approval of a feasibility study by the commissioners
and directors of the Indonesian companies to be formed to own any
Busang II and Busang III Contracts of Work (COWs) and the board of
directors of FCX, and to certain other conditions. In April 1997,
FCX's period for due diligence review was extended to June 30, 1997.
2. EARNINGS PER SHARE
In February 1997, the Financial Accounting Standards Board issued
Statement No. 128 (FAS 128), "Earnings Per Share," which simplifies
the computation of earnings per share (EPS). FAS 128 is effective
for financial statements issued for periods ending after December
15, 1997 and requires restatement for all prior period EPS data
presented. EPS and EPS assuming dilution calculated in accordance
with FAS 128 would have been unchanged from the amounts reported for
the first quarter of 1997 and 1996.
3. INTEREST COSTS
Interest expense excludes capitalized interest of $1.7 million and
$9.3 million in the first quarter of 1997 and 1996, respectively.
4. RATIO OF EARNINGS TO FIXED CHARGES
The ratio of earnings to fixed charges for the first three months of
1997 and 1996 was 5.7 to 1 and 3.2 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.
----------------------
Remarks
The information furnished herein should be read in conjunction with
FCX's financial statements contained in its 1996 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
March 31, 1997, and the related statements of income and cash flows
for the three-month periods ended March 31, 1997 and 1996. 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, 1996, 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 22, 1997, 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, 1996, 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
April 22, 1997
<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 worldwide marketing of
concentrates containing those metals. 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 is engaged in the
smelting and refining of copper concentrates in Spain and marketing
refined copper products.
Summary comparative results for the quarter follow (in millions,
except per share amounts):
First Quarter
------------------------
1997 1996
---------- ----------
Revenues $ 523.8 $ 388.4
Operating income 197.6 105.5 a
Net income applicable to common stock 62.5 22.5 a
Net income per common share .31 .11 a
Operating income (loss) by subsidiary:
PT-FI $ 185.7 $ 104.0
Atlantic 3.7 (4.2)
Eastern Mining (2.7) -
Intercompany eliminations and other b 10.9 5.7
---------- ----------
$ 197.6 $ 105.5
========== ==========
a. Includes charges totaling $18.7 million ($8.6 million to net
income or $0.04 per share) consisting of $12.7 million for stock
appreciation rights costs caused by the increase in FCX's common
stock price during the period, $3.0 million ($2.3 million to
production cost and $0.7 million to general and administrative
expenses) for an early retirement program and $3.0 million for costs
related to a civil disturbance during the period.
b. Profit on PT-FI sales to Atlantic is not reflected in FCX's
consolidated results until completion of the smelting and refining
process. The eliminations added $15.1 million to operating income
in the first quarter of 1997 and $9.3 million in the first quarter
of 1996. The increased level of PT-FI concentrate sales to Atlantic
resulting from the expanded smelter capacity may cause fluctuations
in FCX's consolidated quarterly earnings depending on the timing of
the shipments and prices.
FCX's revenues are derived primarily from PT-FI's sale of copper
concentrates which contain significant amounts of gold, and the sale
of copper cathodes and wire rod by Atlantic. FCX's first-quarter
1997 revenues reflect higher PT-FI and Atlantic sales volumes
compared with the 1996 period. First-quarter 1997 revenues also
reflect the benefits of re-pricing December 31, 1996 "open" pounds,
the sale of copper put option contracts and forward gold sales
contracts, which collectively added $33.5 million to net income or
approximately $0.16 per share. Cost of sales for 1997 was affected
by the higher sales volumes and an increase in the PT-FI
depreciation rate. FCX reported exploration expense in the first
quarter of 1997 for exploration costs incurred in the Eastern Mining
area not reimbursed by The RTZ-CRA Group (RTZ-CRA). As discussed
below, RTZ-CRA funding covered all of PT-FI's first-quarter 1997
exploration costs and all of FCX's 1996 exploration expenditures.
General and administrative expenses in the 1997 quarter were lower
primarily because of charges in 1996 for stock appreciation rights
costs. Net interest expense reflects higher average debt levels and
lower capitalized interest amounts in 1997. The increases in the
provision for income taxes and minority interests in 1997 primarily
reflect higher net income at PT-FI. Preferred dividends in the first
quarter of 1997 were lower when compared to the 1996 period because
of the December 1996 conversion of substantially all the depositary
shares representing Convertible Exchangeable Preferred Stock into
FCX common stock.
In March 1997, PT Nusamba Mineral Industri (Nusamba), a subsidiary
of PT Nusantara Ampera Bakti, acquired approximately 51 percent of
the capital stock of P.T. Indocopper Investama Corporation (PT-II).
PT-II owns 9.4 percent of the outstanding PT-FI stock. Nusamba
financed $254.0 million of the $315.0 million purchase price with a
commercial loan. FCX has agreed that if Nusamba defaults on the
loan, FCX will purchase the PT-II stock or the lenders' interest in
the commercial loan for the amount then due by Nusamba under the
loan. FCX also agreed to lend to Nusamba any shortfalls between the
interest payments due on the commercial loan and the dividends
received by Nusamba from PT-II.
<PAGE> 8
RESULTS OF OPERATIONS
PT-FI Revenues. PT-FI's first-quarter 1997 revenues benefited from
higher sales volumes than first-quarter 1996. PT-FI's 1997 first-
quarter revenues included a net $45.0 million upward adjustment on
open concentrate sales at December 31, 1996 while first-quarter 1996
PT-FI revenues included a net $7.9 million downward adjustment on
open concentrate sales at December 31, 1995. Treatment charges
increased because of higher sales volumes and higher negotiated
rates because of tighter market conditions at the end of 1996.
Despite higher sales volumes, royalties were lower because of lower
average copper prices. A reconciliation of PT-FI revenues between
the periods follows (in millions):
Revenues -1996 $ 303.1
Increases (decreases):
Sales volumes:
Copper 35.4
Gold 28.4
Price realizations:
Copper (1.7)
Gold (0.7)
Prior period adjustments 52.9
Treatment charges, royalties
and other (18.3)
----------
Revenues -1997 $ 399.1
==========
PT-FI Operating Results.
First Quarter
------------------------
1997 1996
---------- ----------
Ore milled (metric tons per day, MTPD) 124,000 125,900
Copper grade (%) 1.26 1.23
Gold grade (grams per metric ton) 1.33 1.28
Recovery rate (%)
Copper 84.3 81.2
Gold 76.4 70.8
Copper
Production (000s of recoverable pounds) 252,500 242,900
Sales (000s of recoverable pounds) 256,100 225,000
Average realized price $1.13 a $1.14
Gold
Production (recoverable ounces) 350,600 320,100
Sales (recoverable ounces) 373,500 301,100
Average realized price $390.80 b $392.73 b
Gross profit per pound of copper (cents):
Average realized price 113.2 113.9
----- -----
Production costs:
Site production and delivery 59.3 58.7 c
Gold and silver credits (56.2) (53.1)
Treatment charges 25.5 23.2
Royalty on metals 3.2 4.1
----- -----
Cash production costs 31.8 32.9
Depreciation and amortization 15.0 13.0
---- -----
Total production costs 46.8 45.9
----- -----
Revenue adjustments d 15.2 (5.0)
----- ------
Gross profit per pound of copper 81.6 63.0
===== =====
a. Amount was $1.04 before adjustments from the sale of put option
contracts.
b. Amounts were $351.79 for the 1997 quarter and $395.81 for the
1996 quarter before adjustments from forward gold sales contracts.
c. Includes $5.3 million (2.4 cents per pound) for costs related
to a civil disturbance and an early retirement program.
d. Reflects adjustments to prior period concentrate sales and
amortization of the price protection program cost.
<PAGE> 9
Cash production costs per pound averaged 31.8 cents in 1997 compared
with 32.9 cents in the 1996 quarter. The benefits of higher gold
credits and lower unit royalties were partially offset by higher
unit site production and delivery costs and treatment charges
compared with the year ago period. Higher unit site production
costs primarily relate to operating the first phase of an enhanced
infrastructure program (EIP) discussed below. Treatment charge
rates for a significant portion of PT-FI's 1997 projected sales were
negotiated in the fourth quarter of 1996 based on then current
market conditions. 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; the gold and silver
royalty rate is 1.0 percent.
PT-FI's depreciation rate of 15.0 cents per pound for 1997 reflects
an increase over the 1996 rate because of the first phase of the EIP
and certain other projected 1997 capital additions. The EIP is
designed to provide the infrastructure needed for PT-FI's
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 first phase of the
EIP was completed in 1996; therefore, the 1996 rate of 13.0 cents
per pound did not include the EIP for a full year.
PT-FI Outlook and Price Protection Program. PT-FI has commitments
from various parties, including Atlantic, to purchase virtually all
of its expected 1997 production at market prices. Sales for 1997
are estimated to total at least 1.1 billion pounds of copper and
1.65 million ounces of gold. Strong 1997 copper and gold sales
reflect the expectation of producing greater than mine life grades
during the year. Second-quarter 1997 sales are projected to be
slightly higher than first quarter levels.
The significant decline in gold prices in early 1997 increased the
value of PT-FI's forward gold sales contracts covering 876,000
ounces of gold at an average price of $376.08 per ounce from
February 1997 through August 1997. In February 1997, PT-FI closed
these contracts and realized $30.1 million cash. As a result, PT-FI
will report gold revenues through August 1997 at a higher price than
realized under its contract terms with customers, but no longer has
any forward gold sales position. During the first quarter of 1997
PT-FI recognized $14.1 million of gold revenues from the forward
sales contracts which included $6.6 million recognized from closed
forward sales contracts. PT-FI will also recognize $17.5 million in
the second quarter of 1997 and $6.0 million in the third quarter of
1997 from closed forward sales contracts. PT-FI has suspended its
program of selling gold forward on a six-month basis but may
reinstate the program in the future.
The significant decline in copper prices during 1996 increased the
value of put option contracts that PT-FI 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 at
an average cost of approximately $0.02 per pound. During the third
quarter of 1996, 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 is reporting copper revenues through June 30,
1997 at a higher price than realized under its copper concentrate
sales contracts, but PT-FI no longer has any price protection on its
copper sales. As conditions warrant, PT-FI may enter into new
contracts to provide a floor price for its future copper sales
through put option contracts, when attainable at an acceptable cost,
to protect cash flow from the impact of potentially significant
declines in copper prices while providing full participation in
potentially higher prices. For the first quarter of 1997, PT-FI
recognized $23.0 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 totaling $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 Metal Exchange
(LME) price for a specified future month. Copper revenues on
provisionally priced "open" pounds are adjusted monthly based on
then current prices. At March 31, 1997, copper sales totaling 317.5
million pounds, which were recorded at an average price of $1.05 per
pound, remained to be finally priced. Approximately 60 percent of
these "open" pounds are expected to be finally priced during the
second quarter of 1997 with most of the remaining pounds to be
priced during the third quarter of 1997. A one cent movement in the
average price used for these "open" pounds will have an approximate
$1.4 million impact on FCX's 1997 net income.
<PAGE> 10
PT-FI Exploration Activities. Exploration activities at Kucing Liar
continue on the southeast quadrant of the Grasberg intrusive.
Drilling is being conducted from within the Kucing Liar/Lembah
Tembaga drift being driven from the Amole adit. Surface drilling on
the northern flank of the Grasberg intrusive has also commenced to
test for Kucing Liar and heavy sulfide "skarn-type" mineralization
at the 2,500-2,900 meter elevation. FCX believes that both Kucing
Liar and heavy sulfide "skarn-type" mineralization could surround
the Grasberg intrusive at these depths. In PT-FI's Block B,
geophysical surveying and surface mapping and sampling have
identified a potential porphyry copper/gold target, which may
represent the source of previously announced mineralization at the
Wabu prospect, where a 3-4 million ounce gold resource has been
identified. Drilling is continuing at Wabu and will shortly
commence to test the porphyry mineralization. Exploration
activities also continue on Eastern Mining's Blocks I, II and III
areas, with four rigs actively exploring the Etna Bay prospect in
Block I where surface mineralization has been identified. Surface
mineralization has also been noted in Eastern Mining's Block II area
where exploratory drilling activities are under way.
Atlantic Results.
First Quarter
----------------------
1997 1996
---------- ----------
Revenues (in millions) $222.1 $161.7
Concentrate treated (metric tons) 232,400 164,700
Anode production (000s of pounds) 155,700 108,800
Cathode and wire rod sales
(000s of pounds) 121,600 101,200
Atlantic reported higher revenues and cost of sales in the
first quarter of 1997 because of increases in production from its
newly expanded facilities. Atlantic reached its full production
capacity of 270,000 metric tons of metal per year in June 1996.
Atlantic also began benefiting from higher treatment and refining
rates in March 1997 ($0.26 per pound in March 1997 compared with
$0.25 per pound in first-quarter 1997 and $0.23 per pound in first-
quarter 1996) and lower cathode cash production costs per pound
($0.13 per pound in the first quarter of 1997 and $0.17 per pound in
the first quarter of 1996). Higher treatment charges, which
negatively affect PT-FI, benefit Atlantic. The effect of an
equivalent change in treatment charges on PT-FI and Atlantic now
largely offset in FCX's consolidated financial results, after taking
into account income tax and minority interests.
A portion of Atlantic's operating costs are paid in Spanish
pesetas and certain assets and liabilities of Atlantic 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 $1.5 million change in FCX's annual net income
before any hedging effects. Atlantic has a currency hedging program
to reduce its exposure to changes in the U.S. dollar and Spanish
peseta exchange rate that involves options and foreign exchange
contracts which currently hedge approximately 80 percent of
Atlantic's projected net peseta cash outflows through April 1998.
Other income in first-quarter 1997 includes currency translation
gains totaling $9.6 million on Atlantic's net peseta liability
position and currency hedging losses totaling $4.5 million.
Other Financial Results. The FCX/RTZ-CRA joint ventures incurred
$13.5 million of exploration costs in the 1997 quarter compared with
$9.3 million in the 1996 quarter as they continued to aggressively
explore the Contract of Work (COW) areas. FCX reported $2.7 million
of exploration expense in the first quarter of 1997 for exploration
costs incurred in the Eastern Mining area not reimbursed by RTZ-CRA
while all first-quarter 1996 exploration costs were reimbursed by
RTZ-CRA. Approximately $19.7 million for PT-FI's Block A and $1.0
million for Block B remain to be applied to the RTZ-CRA $100 million
exploration funding received in 1996. Subsequent to these
expenditures, costs are to be shared 60 percent by FCX and 40
percent by RTZ-CRA. FCX expects to report exploration expenses
totaling approximately $15 million for 1997. FCX's general and
administrative expenses were $26.7 million for the first quarter of
1997 compared with $42.8 million in the 1996 period. First-quarter
1996 general and administrative expenses included charges of $12.7
million for stock appreciation rights costs caused by the increase
in FCX's common stock price.
FCX's total interest cost (before capitalization) rose to $34.8
million for the 1997 period from $32.9 million in the 1996 period
because of an increase in debt levels associated with the expansions
and the FCX share purchase program. PT-FI capitalized $1.7 million
of interest costs in the first quarter of 1997 for the "fourth
concentrator mill expansion" project. Because of the EIP project at
PT-FI and the expansion at Atlantic, $9.3 million of interest was
capitalized during the first quarter of 1996. Interest expense is
expected to be higher throughout 1997 because of the infrastructure
transactions with P.T. ALatieF Nusakarya Corporation (ALatieF)
discussed below, higher debt levels and reduced capitalized
interest.
<PAGE> 11
FCX's effective tax rate was 47 percent for the first quarter
of 1997 and 1996. 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 declined to 10 percent beginning February 1997
because of an amendment to the United States/Indonesia tax treaty.
Included in the first-quarter 1997 provision for income taxes is
$5.9 million representing additional amounts payable pursuant to an
Indonesian Presidential Decree. 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 are operating cash flows and
borrowings, while its primary cash outflows include capital
expenditures, dividends and purchases of its common stock. Net cash
provided by operating activities increased to $74.1 million for the
first quarter of 1997, compared with $32.0 million for the 1996
period, primarily because of higher net income. Cash flow used in
investing activities primarily reflects PT-FI capital expenditures
associated with the "fourth concentrator mill expansion" which are
being funded with nonrecourse borrowings from RTZ-CRA. Cash flow
provided by financing activities totaled $49.3 million in 1997
compared with $61.0 million in 1996. Increases in debt during 1997
provided funds for stock purchases, capital expenditures and
dividends.
Operating Activities. Higher net income was the primary reason for a
$42.1 million increase in first-quarter 1997 operating cash flow
compared with the 1996 period. The increase in depreciation and
amortization primarily reflects the higher rate at PT-FI. Accounts
receivable increased primarily because of the timing of payments on
trade receivables. Inventories decreased because of decreases in
both product inventories and materials and supplies inventories.
The decrease in accrued income taxes reflects the March 1997 payment
on PT-FI's 1996 income tax liability.
Investing Activities. FCX's 1997 capital expenditures have increased
compared to the 1996 period primarily because of PT-FI's "fourth
concentrator mill expansion." Atlantic completed its expansion in
1996 and incurred capital expenditures totaling $3.4 million in
1997.
PT-FI's capital expenditures for the remainder of 1997 are
expected to approximate $160 million (other than for the "fourth
concentrator mill expansion" discussed below), representing
primarily mine and mill sustaining capital and other long-term
projects. Funding is expected to be provided by operating cash
flow, PT-FI's bank credit facilities ($813.0 million commitment
available at April 18, 1997, subject to $521.0 million borrowing
base availability) and other financing sources. FCX and RTZ-CRA
have begun construction on the "fourth concentrator mill expansion"
of PT-FI's facilities. The optimum rate following this expansion is
expected to be at least 190,000-200,000 MTPD, subject to certain
approvals. Completion is anticipated during mid-1998. Costs for the
expansion are expected to approximate $960 million, including both
working capital and $300 million for a coal-fired power plant and
related facilities. The new power plant facilities are expected to
be sold in 1998 to the joint venture that owns the assets which
currently provide electricity to PT-FI.
Pursuant to the joint venture with RTZ-CRA, RTZ-CRA has a 40
percent interest in future production exceeding specified annual
amounts of copper, gold, and silver through 2021 from expansion of
PT-FI's existing mining and milling capacity financed by RTZ-CRA.
To finance the expansion, RTZ-CRA will provide up to $750 million
for defined costs, of which 40 percent will be funded directly and
60 percent will be loaned to PT-FI on a nonrecourse basis. PT-FI
expects to incur approximately $50 million in 1997 for expansion
costs not funded under the RTZ-CRA arrangements which are expected
to enhance the profitability of PT-FI's existing operations.
Incremental cash flow attributable to such expansion projects will
be shared on the basis of 60 percent to PT-FI and 40 percent RTZ-
CRA. PT-FI has assigned its interest in such incremental cash flow
to RTZ-CRA until RTZ-CRA has received an amount of funds from such
assigned interest equal to the funds loaned to PT-FI plus interest
based on RTZ-CRA's cost of borrowing. The incremental production
from the expansion, as well as production from PT-FI's existing
operations will share proportionately in operating and
administrative costs. PT-FI will continue to receive 100 percent of
the cash flow from specified annual amounts of copper, gold and
silver through 2021.
<PAGE> 12
Atlantic expects to receive approximately $8 million from the
Spanish government in mid-1997 which represents the final
installment of approximately $53 million in total grants related to
Atlantic's expansion of its production capacity to 270,000 metric
tons of metal per year. Atlantic has begun a $13.0 million
"debottlenecking" project that is expected to increase current
annual production capacity by 20,000 metric tons and improve
profitability. Completion is scheduled for mid-1997.
Construction began in 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 $625 million. This
project is being financed by a $300 million nonrecourse term loan
and a $110 million working capital facility from a group of
commercial banks. The remaining funding is being provided pro rata
by PT-FI (25 percent) and the other owners (75 percent). Upon
completion of the Gresik smelter in mid-1998 and the PT-FI "fourth
concentrator mill expansion," FCX anticipates that at least 50
percent of PT_FI's annual concentrate production will be sold to
Atlantic and the Gresik smelter at market prices.
Financing Activities. Net proceeds from debt totaled $133.8 million
in the first quarter of 1997, including $105.2 million of
nonrecourse borrowings from RTZ-CRA, while the 1996 period included
$272.5 million of net proceeds from debt. In March 1997, PT-FI
completed the final $75.1 million sale of infrastructure assets to
joint ventures owned one-third by PT-FI and two-thirds by ALatieF,
an Indonesian investor. The sales to the ALatieF joint ventures
totaled $270.0 million during the period from December 1993 to March
1997. PT-FI then sold its one-third interest in the joint ventures
to ALatieF and is leasing the infrastructure assets under capital
lease arrangements. PT-FI continues to guarantee a $50.3 million
bank loan associated with the purchases but PT-FI is no longer
consolidating the joint ventures.
During the first quarter of 1997, FCX acquired 1.7 million of
its shares for $52.8 million (an average of $30.22 per share) under
its open market share purchase program of up to 20 million shares.
From inception of this program through April 21, 1997, FCX has
purchased a total of 14.7 million shares for $410.7 million (an
average of $28.01 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.
CAUTIONARY STATEMENT
Management's discussion and analysis of financial condition and
results of operations contains forward-looking statements regarding
copper and gold sales volumes, capital expenditures, expansion
costs, Gresik smelter costs and the availability of financing.
Important factors that might cause future results to differ from
these projections are described in more detail in FCX's Form 10-K
filed with the Securities and Exchange Commission for the year ended
December 31, 1996.
--------------------
The results of operations reported and summarized above are not
necessarily indicative of future operating results.
<PAGE> 13
PART II. OTHER INFORMATION
Item 1. Legal Proceedings.
Tom Beanal v. Freeport-McMoRan Inc. and Freeport-McMoRan
Copper & Gold Inc., Civ. No. 96-1474 (E.D. La. Filed Apr. 29, 1996).
The plaintiff alleges environmental, human rights and
social/cultural violations in Indonesia. He seeks $6 billion in
monetary damages and other equitable relief. The Company denies
these allegations, which it believes are inconsistent with the
findings of a series of independent examinations of the Indonesian
mining operations of PT-FI. On April 9, 1997, the court granted the
Company's motion to dismiss but gave the plaintiff leave to amend.
On April 23, 1997, the plaintiff filed an amended complaint
realleging human rights and social/cultural violations and
seeking to add new parties. The Company believes that the action is
baseless and will continue to defend this action vigorously.
Yosefa Alomang v. Freeport-McMoRan Inc. and Freeport-
McMoRan Copper & Gold Inc., Civ. No. 96-9962 (Orleans Civ. Dist. Ct.
La. Filed June 19, 1996). In February 1997 the Civil District Court
of the Parish of Orleans, State of Louisiana dismissed this
purported class action for lack of subject matter jurisdiction
because the alleged conduct and damages occurred in Indonesia. The
Court also noted that venue was not proper in any Louisiana court.
The plaintiff had alleged substantially similar violations as those
alleged in the Beanal suit and sought unspecified monetary damages
and other equitable relief. In April 1997 the plaintiff filed a
notice of intent to appeal the dismissal. The Company will continue
to defend this action vigorously.
Item 4. Submission of Matters to a Vote of Security Holders.
(a) The Annual Meeting of Stockholders of the Company was held
on April 29, 1997 (the "Annual Meeting"). Proxies were solicited
pursuant to Regulation 14A under the Securities Exchange Act of
1934, as amended.
(b) At the Annual Meeting, William B. Harrison, Jr., J.
Bennett Johnston, Henry A. Kissinger, Rene L. Latiolais and J.
Taylor Wharton were elected to serve until the 2000 annual meeting
of stockholders. In addition to the directors elected at the Annual
Meeting, the terms of the following directors continued after the
Annual Meeting: Robert W. Bruce III, R. Leigh Clifford, Leon A.
Davis, Robert A. Day, Bobby Lee Lackey, Gabrielle K. McDonald,
George A. Mealey, James R. Moffett, George Putnam and B. M. Rankin,
Jr.
(c) At the Annual Meeting, holders of the Company's Class A
Common Stock and the Company's Preferred Stock, voting as a class,
elected one director with the number of votes cast for or withheld
from the nominee as follows:
Name For Withheld
---- --- --------
J. Taylor Wharton 69,106,865 166,778
At the Annual Meeting, holders of shares of the Company's Class B
Common Stock elected four directors with the number of votes cast
for or withheld from each nominee as follows:
Name For Withheld
---- --- --------
William B. Harrison, Jr. 100,509,355 2,726,076
J. Bennett Johnston 101,376,911 1,858,520
Henry A. Kissinger 99,673,658 3,561,773
Rene L. Latiolais 101,456,168 1,779,263
With respect to the election of directors, there were no abstentions
or broker non-votes.
<PAGE> 14
At the Annual Meeting, the stockholders also voted on and
approved a proposal to ratify the appointment of Arthur Andersen LLP
to act as the independent auditors to audit the financial statements
of the Company and its subsidiaries for the year 1997. Holders of
170,862,821 shares voted for, holders of 280,565 shares voted
against and holders of 329,978 shares abstained from voting on such
proposal. There were no broker non-votes with respect to such
proposal.
At the Annual Meeting, the stockholders voted on and rejected a
stockholder proposal regarding the Company's Indonesian operations.
Holders of 3,768,293 shares voted for, holders of 140,980,562 shares
voted against and holders of 6,461,247 shares abstained from voting
on, such proposal. There were 20,249,800 broker non-votes with
respect to such proposal.
Item 6. Exhibits and Reports on Form 8-K.
(a) The exhibits to this report are listed in the Exhibit
Index beginning on Page E-1 hereof.
(b) During the quarter for which this report is filed,
the registrant filed six Current Reports on Form 8-K, dated February
18, 1997, February 21, 1997, February 26, 1997, February 27, 1997,
February 28, 1997 and March 26, 1997 reporting information under
Item 5. No financial statements were filed in connection with such
reports.
<PAGE> 15
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: May 2, 1997
<PAGE> 16
Freeport McMoRan Copper & Gold Inc.
EXHIBIT INDEX
-------------
Sequentially
Numbered
Number Description Page
- ------ ----------- -----------
2.1 Agreement, dated as of May 2, 1995 by and between FTX and FCX
and The RTZ Corporation PLC, RTZ Indonesia Limited, and RTZ America,
Inc. (the "RTZ Agreement"). Incorporated by reference to Exhibit
2.1 to the Current Report on Form 8-K of FTX dated as of May 26,
1995.
2.2 Amendment dated May 31, 1995 to the RTZ Agreement. Incorporated
by reference to Exhibit 2.1 to the Quarterly Report on Form 10-Q of
FTX for the quarter ended June 30, 1995.
2.3 Distribution Agreement dated as of July 5, 1995 between FTX and
FCX. Incorporated by reference to Exhibit 2.1 to the Quarterly
Report on Form 10-Q of FTX for the quarter ended September 30, 1995
(the "FTX 1995 Third Quarter Form 10-Q").
3.1 Composite copy of the Certificate of Incorporation of FCX.
Incorporated by reference to Exhibit 3.1 to the Quarterly Report on
Form 10-Q of FCX for the quarter ended June 30, 1995 (the "FCX 1995
Second Quarter Form 10-Q").
3.2 By-Laws of FCX, as amended. Incorporated by reference to
Exhibit 3.2 to the Annual Report on Form 10-K of FCX for the fiscal
year ended December 31, 1996 (the "FCX 1996 Form 10-K").
4.1 Certificate of Designations of the Step-Up Convertible Preferred
Stock of FCX. Incorporated by reference to Exhibit 4.2 to the FCX
1995 Second Quarter Form 10-Q.
4.2 Deposit Agreement dated as of July 1, 1993 among FCX, Chase
Mellon Shareholder Services, L.L.C., as Depositary, and holders of
depositary receipts ("Step-Up Depositary Receipts") evidencing
certain Depositary Shares, each of which, in turn, represents 0.05
shares of Step-Up Convertible Preferred Stock. Incorporated by
reference to Exhibit 4.5 to the Annual Report on Form 10-K of FCX
for the fiscal year ended December 31, 1993 (the "FCX 1993 Form
10-K").
4.3 Form of Step-Up Depositary Receipt. Incorporated by reference
to Exhibit 4.6 to the FCX 1993 Form 10-K.
4.4 Certificate of Designations of the Gold-Denominated Preferred
Stock of FCX. Incorporated by reference to Exhibit 4.3 to the FCX
1995 Second Quarter Form 10-Q.
4.5 Deposit Agreement dated as of August 12, 1993 among FCX, Chase
Mellon Shareholder Services, L.L.C., as Depositary, and holders of
depositary receipts ("Gold-Denominated Depositary Receipts")
evidencing certain Depositary Shares, each of which, in turn,
represents 0.05 shares of Gold-Denominated Preferred Stock.
Incorporated by reference to Exhibit 4.8 to the FCX 1993 Form 10-K.
4.6 Form of Gold-Denominated Depositary Receipt. Incorporated by
reference to Exhibit 4.9 to the FCX 1993 Form 10-K.
4.7 Certificate of Designations of the Gold-Denominated Preferred
Stock, Series II (the "Gold-Denominated Preferred Stock II") of FCX.
Incorporated by reference to Exhibit 4.4 to the FCX 1995 Second
Quarter Form 10-Q.
4.8 Deposit Agreement dated as of January 15, 1994, among FCX, Chase
Mellon Shareholder Services, L.L.C., as Depositary, and holders of
depositary receipts ("Gold-Denominated II Depositary Receipts")
evidencing certain Depositary Shares, each of which, in turn,
represents 0.05 shares of Gold-Denominated Preferred Stock II.
Incorporated by reference to Exhibit 4.2 to the Quarterly Report on
Form 10-Q of FCX for the quarter ended March 31, 1994 (the "FCX 1994
First Quarter Form 10-Q").
4.9 Form of Gold-Denominated II Depositary Receipt. Incorporated by
reference to Exhibit 4.3 to the FCX 1994 First Quarter Form 10-Q.
4.10 Certificate of Designations of the Silver-Denominated
Preferred Stock of FCX. Incorporated by reference to Exhibit 4.5 to
the FCX 1995 Second Quarter Form 10-Q.
<PAGE> E-1
4.11 Deposit Agreement dated as of July 25, 1994 among FCX, Chase
Mellon Shareholder Services, L.L.C., as Depositary, and holders of
depositary receipts ("Silver-Denominated Depositary Receipts")
evidencing certain Depositary Shares, each of which, in turn,
initially represents 0.025 shares of Silver-Denominated Preferred
Stock. Incorporated by reference to Exhibit 4.2 to the July 15,
1994 Form 8-A.
4.12 Form of Silver-Denominated Depositary Receipt. Incorporated
by reference to Exhibit 4.1 to the July 15, 1994, Form 8-A.
4.13 $550 million Composite Restated Credit Agreement dated as of
July 17, 1995 (the "PT-FI Credit Agreement") among PT-FI, FCX, the
several financial institutions that are parties thereto, First Trust
of New York, National Association, as PT-FI Trustee, Chemical Bank,
as administrative agent and FCX collateral agent, and The Chase
Manhattan Bank (National Association), as documentary agent.
Incorporated by reference to Exhibit 4.16 to the Annual Report of
FCX on Form 10-K for the year ended December 31, 1995 (the "FCX 1995
Form 10-K").
4.14 Amendment dated as of July 15, 1996 to the PT-FI Credit
Agreement among PT-FI, FCX, the several financial institutions that
are parties thereto, First Trust of New York, National Association,
as PT-FI Trustee, Chemical Bank, as administrative agent and FCX
collateral agent, and The Chase Manhattan Bank (National
Association), as documentary agent. Incorporated by reference to
Exhibit 4.2 to the Quarterly Report of FCX on Form 10-Q for the
quarter ended September 30, 1996 (the "FCX 1996 Third Quarter Form
10-Q").
4.15 Amendment dated as of October 9, 1996 to the PT-FI Credit
Agreement among PT-FI, FCX, the several financial institutions that
are parties thereto, First Trust of New York, National Association,
as PT-FI Trustee, The Chase Manhattan Bank (formerly Chemical Bank),
as administrative agent, security agent and JAA security agent, and
The Chase Manhattan Bank (as successor to The Chase Manhattan Bank
(National Association)), as documentary agent. Incorporated by
reference to Exhibit 10.2 to the Current Report on Form 8-K of FCX
dated and filed November 13, 1996 (the "FCX November 13, 1996 Form
8-K").
4.16 $200 million Credit Agreement dated as of June 30, 1995 (the
"CDF") among PT-FI, FCX, the several financial institutions that are
parties thereto, First Trust of New York, National Association, as
PT-FI Trustee, Chemical Bank, as administrative agent and FCX
collateral agent, and The Chase Manhattan Bank (National
Association), as documentary agent. Incorporated by reference to
Exhibit 4.2 to the FCX 1995 Third Quarter Form 10-Q.
4.17 Amendment dated as of July 15, 1996 to the CDF among PT-
FI, FCX, the several financial institutions that are parties
thereto, First Trust of New York, National Association, as PT-FI
Trustee, Chemical Bank, as administrative agent and FCX collateral
agent, and The Chase Manhattan Bank (National Association), as
documentary agent. Incorporated by reference to Exhibit 4.1 to the
FCX 1996 Third Quarter Form 10-Q.
4.18 Amendment dated as of October 9, 1996 to the CDF among PT-FI,
FCX, the several financial institutions that are parties thereto,
First Trust of New York, National Association, as PT-FI Trustee, The
Chase Manhattan Bank (formerly Chemical Bank), as administrative
agent, security agent and JAA security agent, and The Chase
Manhattan Bank (as successor to The Chase Manhattan Bank (National
Association)), as documentary agent. Incorporated by reference to
Exhibit 10.1 to the FCX November 13, 1996 Form 8-K.
4.19 Senior Indenture dated as of November 15, 1996 from FCX to The
Chase Manhattan Bank, as Trustee. Incorporated by reference to
Exhibit 4.1 to the Current Report on Form 8-K of FCX dated November
13, 1996 and filed November 15, 1996 (the "FCX November 15, 1996
Form 8-K").
4.20 First Supplemental Indenture dated as of November 18, 1996
from FCX to The Chase Manhattan Bank, as Trustee, providing for the
issuance of the Senior Notes and supplementing the Senior Indenture
dated November 15, 1996 from FCX to such Trustee, providing for the
issuance of Debt Securities. Incorporated by reference to Exhibit
4.20 to the FCX 1996 Form 10-K.
10.1 Put and Guaranty Agreement dated as of March 21, 1997 between
FCX and The Chase Manhattan Bank.
<PAGE> E-2
10.2 Master Agreement regarding the restructuring of business
relationships between the parties and certain affiliates dated as of
March 7, 1997 among PT-FI, P.T. AlatieF Nusakarya Corporation, P.T.
AlatieF Freeport Infrastructure Corporation and P.T. AlatieF
Freeport Hotel Corporation.
10.3 Amendment No. 1 dated as of April 30, 1997 to an agreement
dated as of February 26, 1997 among FCX, Bre-X Minerals Ltd., PT
Askatindo Karya Mineral and PT Amsya Lyna.
Executive Compensation Plans and Arrangements (Exhibits 10.4 through 10.6)
10.4 FCX Adjusted Stock Award Plan, as amended.
10.5 FCX 1995 Stock Option Plan, as amended.
10.6 FCX 1995 Stock Option Plan for Non-Employee Directors, as
amended.
11.1 Computation of Net Income per Common and Common Equivalent
Share
27.1 Financial Data Schedule
PUT AND GUARANTY AGREEMENT (this
"Agreement") dated as of March 21, 1997,
among FREEPORT-MCMORAN COPPER & GOLD INC., a
Delaware corporation ("FCX") and THE CHASE
MANHATTAN BANK, a banking corporation
organized under the laws of the State of New
York ("Chase"), as Security Agent (in such
capacity, the "Security Agent") under (a) the
Pledge Agreement dated as of the date hereof
between PT Nusamba Mineral Industri, a
limited liability company organized under the
laws of the Republic of Indonesia (the
"Borrower"), and the Security Agent (the
"Borrower Pledge Agreement") and (b) the
Pledge Agreement dated as of the date hereof
among PT Nusantara Ampera Bakti and PT
Mapindo Parama (collectively, the "PTMI
Shareholders"), each a limited liability
company organized under the laws of the
Republic of Indonesia, and the Security Agent
(the "Parents' Pledge Agreement").
The Borrower, certain banks (collectively, the
"Banks" and each, individually, a "Bank") and Chase, as
Agent (the "Agent"), have entered into a Loan Agreement
dated as of the date hereof (the "Loan Agreement") providing
for certain advances to be made by such banks to the
Borrower to finance the purchase by the Borrower of the
Pledged PTII Shares (as defined below). The Pledged
PTII Shares are being pledged to the Security Agent pursuant
to the Borrower Pledge Agreement and the Pledged Borrower
Shares (as defined below) are being pledged to the Security
Agent pursuant to the Parents' Pledge Agreement, in each
case to secure the obligations of the Borrower under the
Loan Agreement. It is a condition to the making of the
advances under the Loan Agreement that FCX shall have
entered into this Agreement with the Security Agent.
Accordingly, FCX and the Security Agent agree as
follows:
SECTION 1. Defined Terms. Subject to the
following sentence, all capitalized terms used in this
Agreement but not otherwise defined herein shall be defined
as set forth in each of the PTFI Revolver and the FCX
Revolver referred to below; provided that all capitalized
terms used in the provisions incorporated by reference into
this Agreement from each of the PTFI Revolver and the FCX
Revolver but not otherwise defined herein shall be defined
as set forth in each of the PTFI Revolver and the FCX
Revolver, each as in effect on the date hereof; provided
further that all references in each of the PTFI Revolver and
the FCX Revolver (or in provisions incorporated herein from
each of the PTFI Revolver and the FCX Revolver) to (a) any
"Borrower" shall be deemed to be references to FCX, (b) "FI"
shall be deemed to be references to PTFI, (c) "this
Agreement" shall be deemed to be references to this
Agreement, (d) any "Loan Document" or the "Loan Documents"
shall be deemed to be references to any Loan Document or the
Loan Documents as defined herein, (e) any "Bank" shall be
deemed to be references to any Bank as defined herein,
(f) "Required Banks" shall be deemed to be references to the
Majority Banks as defined herein, (g) the "Administrative
Agent" shall be deemed to be references to the Agent as
defined herein, (h) the "Documentary Agent" shall be
disregarded, (i) the "Collateral Agent" shall be deemed to
be references to the Security Agent as defined herein, (j)
"Agents" shall be deemed to be references to the Agent and
the Security Agent as defined herein and (k) any
"Commitment" or "Loan" shall be deemed to be references to
each Bank's Commitment under the Loan Agreement and the
Advances made pursuant to such Commitment (except that for
purposes of Section 5.2(e) of the FCX Revolver and the PTFI
Revolver, as incorporated by reference herein under Section
9, the terms "Commitment" and "this Agreement" shall have
the respective meanings assigned to them in the FCX Revolver
and the PTFI Revolver. As used in this Agreement (or in
provisions incorporated herein from each of the PTFI
Revolver and the FCX Revolver), the following terms shall
have the meanings specified below:
"Advances" shall mean the advances outstanding
under the Loan Agreement.
"Banking Day" shall mean a day other than Saturday
and Sunday, on which banks are open for business in New York
City and for interbank Dollar deposits in London.
"Bankruptcy Event" shall mean if (a) FCX or any
Restricted Subsidiary shall (i) voluntarily commence any
proceeding or file any petition seeking relief under
Title 11 of the United States Code, as now constituted or
hereafter amended, or any other Federal or state bankruptcy,
insolvency, liquidation or similar law, (ii) consent to the
institution of, or fail to contravene in a timely and
appropriate manner, any proceeding or the filing of any
petition described in clause (b) below, (iii) apply for or
consent to the appointment of a receiver, trustee,
custodian, sequestrator or similar official for FCX or such
Restricted Subsidiary or for a substantial part of its
property or assets, (iv) file an answer admitting the
material allegations of a petition filed against it in any
such proceeding, (v) make a general assignment for the
benefit of creditors, (vi) become unable, admit in writing
its inability or fail generally to pay its debts as they
become due or (vii) take any action for the purpose of
effecting any of the foregoing; or (b) an involuntary
proceeding shall be commenced or an involuntary petition
shall be filed in a court of competent jurisdiction seeking
(i) relief in respect of FCX or any Restricted Subsidiary,
or of a substantial part of the property or assets of FCX or
any Restricted Subsidiary, under Title 11 of the United
States Code, as now constituted or hereafter amended, or any
other Federal or state bankruptcy, insolvency, receivership
or similar law, (ii) the appointment of a receiver, trustee,
custodian, sequestrator or similar official for FCX or any
Restricted Subsidiary or for a substantial part of the
property of FCX or any Restricted Subsidiary or (iii) the
winding-up or liquidation of FCX or any Restricted
Subsidiary; and such proceeding or petition shall continue
undismissed for 60 days, or an order or decree approving or
ordering any of the foregoing shall continue unstayed and in
effect for 30 days.
"Capital Stock" shall mean any and all shares,
interests, rights to purchase, options, participations or
other equivalents of or interests (however designated) in
corporate stock, including any Preferred Stock.
"Change in Control" shall have the meaning
assigned to it under the PTFI Revolver and the FCX Revolver,
each as in effect on the date hereof.
"Commitment" shall have the meaning assigned to it
under the Loan Agreement.
"Dividend Reserve Account" shall have the meaning
assigned to it under the Loan Agreement.
"Event of Default" shall have the meaning assigned
to it under the Loan Agreement.
"FCX Obligations" shall mean the due and punctual
payment of all amounts payable hereunder by FCX and the due
and punctual performance of all other obligations of FCX
hereunder.
"FCX Option Agreement" shall have the meaning
assigned to it under the Loan Agreement.
"FCX Payment Date" shall have the meaning assigned
to it in Section 4(a).
"FCX Revolver" shall mean the $450,000,000 Credit
Agreement dated June 30, 1995, among PTFI, FCX and the
financial institutions named therein, as from time to time
amended, renewed or replaced with another loan agreement
which replacement facility has terms and conditions
reasonably satisfactory in all respects to the Agent.
"GAAP" shall have the meaning assigned to it under
the FCX Revolver and the PTFI Revolver, each as in effect on
the date hereof.
"Governmental Authority" shall mean any United
States Federal, state or local court or governmental agency,
authority, instrumentality or regulatory body, or any Indo-
nesian or other foreign (central or local) court or govern-
mental agency, authority, instrumentality or regulatory
body.
"Guaranteed Obligations" shall have the meaning
assigned to it in Section 4(b).
"Interest Shortfall Loans" shall have the meaning
assigned to it under the Loan Agreement.
"Lien" shall mean any mortgage, hypothecation,
power of attorney to establish hypothecation, power of
attorney to sell, assignment, pledge, lien, charge, security
interest, option or other encumbrance.
"Loan Documents" shall mean the Loan Agreement,
any promissory notes issued thereunder, the Borrower Pledge
Agreement, the Parents' Pledge Agreement, this Agreement,
the Pledge of Account and the Fee Letter dated as of
January 24, 1997, among Chase, the Borrower and FCX.
"Loan Parties" shall mean the Borrower, FCX and
the pledgors under each of the Pledge Agreements referred to
under the definition of the term "Loan Documents".
"Majority Banks" shall have the meaning assigned
to it under the Loan Agreement.
"Material Adverse Effect" shall mean (a) a materi-
ally adverse effect on the business, assets, operations or
condition, financial or otherwise, of FCX and its Restricted
Subsidiaries taken as a whole, (b) a material impairment of
the ability of FCX to perform any of its obligations here-
under or (c) a material impairment of the rights of or
benefits available to the Banks hereunder.
"Obligations" shall mean each of the payment and
performance obligations of each of the Loan Parties under
each of the Loan Documents.
"person" shall mean any natural person,
corporation, limited liability company, trust, joint
venture, association, company, partnership, Governmental
Authority or other entity.
"Pledged Borrower Shares" shall mean the shares of
capital stock of the Borrower pledged to the Security Agent
pursuant to the Parents' Pledge Agreement, excluding any
such shares released by the Security Agent from the Lien of
the Parents' Pledge Agreement in connection with the sale by
the PTMI Shareholders of such shares as contemplated by
Sections 2.04 and 7.01 of the Loan Agreement.
"Pledged PTII Shares" shall mean the shares of
capital stock of PTII pledged to the Security Agent pursuant
to the Borrower Pledge Agreement, excluding any such shares
released by the Security Agent from the Lien of the Borrower
Pledge Agreement in connection with the sale by the Borrower
of such shares as contemplated by Sections 2.04 and 7.01 of
the Loan Agreement.
"Preferred Stock", as applied to the Capital Stock
of any corporation, shall mean Capital Stock of any class or
classes, however designated, which is preferred as to the
payment of dividends, or as to the distribution of assets
upon any voluntary or involuntary liquidation or dissolution
of such corporation, over shares of Capital Stock of any
other class of such corporation.
"PTFI" shall mean PT Freeport Indonesia Company, a
limited liability company organized under the laws of the
Republic of Indonesia and domesticated in Delaware, and its
successors and assigns.
"PTFI Revolver" shall mean the $550,000,000 Credit
Agreement, dated as of October 27, 1989, among PTFI, FCX and
the financial institutions named therein, as from time to
time amended, renewed or replaced by another loan agreement
which replacement facility has terms and conditions
reasonably satisfactory in all respects to the Agent.
"PTII" shall mean PT Indocopper Investama
Corporation, a limited liability company organized under the
laws of the Republic of Indonesia.
"Put Price" shall mean, as of any date, (a) the
sum of (i) the principal of and interest accrued but unpaid
on all Advances outstanding (or, if the Advances shall be
deemed no longer to be outstanding as a result of any fore-
closure or similar proceeding, that would have been out-
standing but for such proceeding) under the Loan Agreement
as of such date and (ii) all fees, expenses (including any
enforcement expenses) and other amounts due to the Secured
Parties under the Loan Documents as of such date and (iii)
the unwind amounts related to all terminated Permitted
Secured Hedges, reduced by (b) all cash received by the
Security Agent on or prior to such date (i) upon the
disposition by the Security Agent of any securities or other
collateral held by the Security Agent under any Loan
Document or (ii) representing the Borrower's interest (based
on the Borrower's then percentage equity interest in PTII)
in the dividends payable to PTII, in each case to the extent
the Security Agent is permitted under applicable law to
apply such cash to the payment of the principal of or inter-
est accrued on outstanding Advances; provided, however, that
no reduction shall be made under this clause (b) to the
extent such cash has been applied to the payment of the
principal of or interest accrued on outstanding Advances or
other amounts payable under the Loan Documents prior to the
determination of the amount referred to in clause (a)(i)
above. The amounts received by the Security Agent on
account of the Put Price shall be distributed to the Agent
and the individual lenders and applied to satisfy the
amounts owed them under the Loan Agreement and the Permitted
Secured Hedges.
"Restricted Subsidiary" shall have the meaning
assigned to it in the PTFI Revolver and the FCX Revolver,
each as in effect on the date hereof.
"Secured Parties" shall mean the Banks, the Agent
and the Security Agent.
"Taxes" shall have the meaning assigned to it in
Section 10(a) hereof.
"Transactions" shall have the meaning assigned to
it in Section 7(b) hereof.
SECTION 2. Put of Shares. (a) In the event (i)
the Advances shall have become due in accordance with the
terms of the Loan Agreement (at their final maturity or upon
acceleration) but shall not have been paid and (ii) FCX
shall have notified the Security Agent that it will not
exercise its option to purchase the Pledged PTII Shares or
the Pledged Borrower Shares pursuant to the FCX Option
Agreement, the Security Agent shall have the right, upon
notice to FCX, to require FCX to purchase the Pledged
PTII Shares (or, if the Security Agent shall be unable at
the time to sell the Pledged PTII Shares to FCX, the Pledged
Borrower Shares), together, in each case, with any Related
Assets (as hereinafter defined), from the Security Agent at
the Put Price (determined as of the date of payment set
forth below and payable as provided in paragraph (e) below),
whether pursuant to the power of sale provided for in the
Borrower Pledge Agreement (or the Parents' Pledge Agreement,
in the case of the Pledged Borrower Shares), upon any fore-
closure or similar proceeding or otherwise, at a time set
forth in such notice, but not less than two Banking Days
after the giving of such notice. Any such purchase shall be
final and without recourse to or representation by the
Security Agent or any other Secured Party, other than as to
the satisfaction of the conditions set forth in
paragraph (b) below. For purposes hereof, the "Related
Assets" means, if any dividends payable to PTII have been
declared or paid to the Security Agent and the Borrower's
interest (based on the Borrower's then percentage equity
interest in PTII) in such dividends has not been reflected
in a reduction of the Put Price, all rights of the Security
Agent in and to such dividends.
(b) It is a condition to FCX's obligation to pur-
chase the Pledged PTII Shares or the Pledged Borrower Shares
pursuant to this Section 2 that (i) following such purchase,
such Pledged PTII Shares or Pledged Borrower Shares, as the
case may be, shall be free and clear of all Liens that have
been created or consented to in writing by the Banks, the
Agent or the Security Agent without the written consent of
FCX; and (ii) if Pledged Borrower Shares are to be so
purchased, no action shall have been taken or consented to
by the Banks, the Agent or the Security Agent that would
prevent such shares from constituting all the capital stock
of the Borrower, or the assets of the Borrower from consist-
ing solely of the Pledged PTII Shares, or the Borrower from
being free of outstanding liabilities other than those
arising under the Loan Documents or any guarantee thereof,
so that following such purchase FCX would own, directly or
indirectly, 100% of the Pledged PTII Shares free and clear
of all Liens or liabilities that have been created or
consented to in writing by the Banks, the Agent or the
Security Agent without the consent of FCX other than those
arising under the Loan Documents or any guarantee thereof
(it being expressly understood, however, that no provision
of the Loan Documents that permits or does not prohibit any
action referred to above shall be deemed to be a consent of
the Banks, the Agent or the Security Agent to such action).
In the event that, after FCX has received the notice
referred to in the first sentence of paragraph (a) above,
FCX is of the opinion that any of the conditions set forth
in clause (i) or (ii) above of this paragraph (b) have not
been met, it shall notify the Security Agent of such opinion
and of its basis therefor in reasonable detail in writing on
or before the time set forth in the notice referred to in
the first sentence of paragraph (a) above, whereupon the
Security Agent shall promptly (A) determine whether the
objections specified by FCX can be remedied and the
conditions set forth in this paragraph can be met within a
reasonable period of time and (B) notify FCX in writing of
such determination. If the Security Agent shall have
determined that the objections specified by FCX can be
remedied, the Security Agent shall be entitled to attempt to
remedy such objections within such reasonable period of time
and to redeliver the notice referred to in the first
sentence of paragraph (a) above once such objections have
been remedied, notwithstanding the 30-day limitation set
forth in paragraph (c) below.
(c) The Security Agent's notice referred to in
the first sentence of paragraph (a) above shall, except as
provided in paragraph (j) below, in no event be given after
11:59 p.m., New York City time, on the 30th day (or, if such
30th day shall not be a Banking Day, on the first Banking
Day thereafter) after the date on which the Security Agent
shall have obtained the right under this Agreement, the
Borrower Pledge Agreement (or the Parents' Pledge Agreement,
in the case of the Pledged Borrower Shares) and applicable
law to sell the Pledged PTII Shares (or the Pledged Borrower
Shares) as provided herein following receipt by the Security
Agent of actual notice of the occurrence of a payment
default by the Borrower upon the final maturity or accel-
eration of the Advances (or, if the Security Agent shall
notify FCX that the Security Agent reasonably believes that
it is prevented by an injunction or any other legal
restraint from exercising its right to require that FCX pur-
chase the Pledged PTII Shares or the Pledged Borrower Shares
hereunder, or that it has been advised by counsel that the
exercise of such right would or may be contrary to applica-
ble standards for the disposition of pledged securities or
would entail significant risk of liability on the part of
the Security Agent or the Banks, on the 30th day (or, if
such 30th day shall not be a Banking Day, on the first
Banking Day thereafter) after the date on which the Security
Agent believes that such restraint has ceased to be
applicable or such advice of counsel shall have been
withdrawn).
(d) The Security Agent shall be conclusively
deemed to have given the notice referred to in the first
sentence of paragraph (a) above on the last day of the 30-
day period specified in paragraph (c) above (and shall
thereafter specify a time for the purchase of Pledged PTII
Shares or Pledged Borrower Shares) unless the Security Agent
shall have previously (i) given such notice or (ii) acting
on the instructions of all the Banks, given notice to FCX
that the Security Agent will not exercise its rights under
this Section 2. If the Security Agent shall have given the
notice referred to in clause (ii) of the immediately preced-
ing sentence after the Security Agent has obtained the right
to sell the Pledged PTII Shares (or the Pledged Borrower
Shares) to FCX hereunder (A) all obligations of FCX under
this Section 2 and all expense reimbursement, indemnity and
other obligations of FCX under Section 10 and Section 18
shall terminate and (B) the Security Agent shall (1) request
from the other Secured Parties the amount of any funds
theretofore paid by FCX to any of such other Secured Parties
pursuant to this Agreement, together with interest thereon
at the rate borne by the Advances, and (2) return to FCX any
such amounts received by the Security Agent from such other
Secured Parties or received by the Security Agent from FCX
and not previously paid by the Security Agent to such other
Secured Parties. No Bank shall be deemed to have consented
to the delivery by the Security Agent of the notice referred
to in clause (ii) of this paragraph (d) unless such Bank
shall have returned to the Security Agent, in immediately
available funds, any amounts received by such Bank
representing payments previously made by FCX hereunder,
which funds each Bank hereby authorizes the Security Agent
to return to FCX pursuant to this paragraph (d).
(e) If the Security Agent shall deliver or be
deemed to have delivered a notice pursuant to paragraph (a)
or paragraph (d) above, FCX shall pay the Put Price in cash
in immediately available funds.
(f) FCX agrees that it will remain bound under
this Section 2 and under Section 3 in the event of any
extension or renewal of any Obligation made with its written
consent.
(g) Except as otherwise provided herein with
respect to the conditions to the obligations of FCX under
this Section 2 or under Section 3, as the case may be, the
obligations of FCX under this Section 2 or under Section 3,
respectively, shall not be discharged or impaired or other-
wise affected by (i) the failure of any Secured Party to
enforce any right or remedy under the provisions of any Loan
Document or any guarantee or any other agreement; (ii) any
waiver, amendment or modification of any of the terms or
provisions of any Loan Document not materially affecting the
rights or obligations of FCX or made with the written
consent of FCX; (iii) the voluntary release of any security
held by any Secured Party for the Obligations made with the
written consent of FCX or pursuant to any provision
contained in any Loan Document; (iv) the failure of any
Secured Party to exercise any right or remedy against any
other guarantor, if any, of any of the Obligations; (v) any
default, failure or delay, wilful or otherwise, in the
performance of the Obligations; or (vi) except to the extent
covered by clauses (i) through (v) above, any other act or
omission that may or might in any manner or to any extent
vary the risk of FCX or otherwise operate as a discharge of
FCX as a matter of law or equity.
(h) FCX further waives any right to require that
any resort be had by the Security Agent to any security held
for payment of the Obligations or to any balance of any
deposit account or credit on the books of any Secured Party
in favor of the Borrower or any other person (but the
Security Agent will endeavor in good faith to realize upon
liquid assets held by it as security and apply the same to
reduce the Obligations).
(i) The obligations of FCX hereunder shall not be
affected by the actual or asserted invalidity, illegality or
unenforceability of any of the Obligations.
(j) FCX further agrees that its obligations under
this Section 2 or under Section 3 shall continue to be
effective or be reinstated, as the case may be, if at any
time payment, or any part thereof, of any Obligation is
rescinded or must otherwise be restored by any Secured Party
upon the bankruptcy or reorganization of any Loan Party, or
otherwise. In any such event, the 30-day period described
in paragraph (c) of this Section 2 shall not begin to run
until the day on which such payment is rescinded or must
otherwise be restored and the other conditions referred to
in such paragraph have been satisfied.
SECTION 3. Purchase and Assumption of Certain
Interests of Banks under Loan Documents. FCX (a) shall have
the right, upon notice to the Agent and the Security Agent
at any time after either (i) the Advances shall have become
due and payable pursuant to Section 9.02 of the Loan Agree-
ment or (ii) FCX shall have been obligated to make any pay-
ment to the Security Agent under Section 2 or Section 4, and
(b) shall have the obligation, upon the occurrence of any of
the following events and notice thereof from the Security
Agent, namely that
(i) 60 days have elapsed following the occurrence of
any Event of Default and such Event of Default is
continuing or the Advances have become due and payable
pursuant to Section 9.02 of the Loan Agreement,
(ii) either (A) FCX is in default of its obligations
under Section 2, 4, 8 or 9 (and, in the case of any
default under Section 8 or 9, any applicable grace
period set forth herein or in the FCX Revolver or the
PTFI Revolver has expired) or (B) any representation
made by FCX hereunder proves to have been false or mis-
leading in any material respect when made (unless such
misrepresentation does not result in or entail a
Material Adverse Effect),
(iii) an event of default has occurred and is
continuing under any agreement or agreements to which
PTII, FCX or PTFI is a party relating to the borrowing
of money in an aggregate amount for all such agreements
collectively in excess of $10,000,000 or any guarantee
thereof, as a result of which indebtedness in such
amount has become or may immediately be declared due
and payable prior to its scheduled final maturity,
(iv) a Bankruptcy Event occurs,
(v) a Change in Control occurs,
(vi) an Event of Default occurs due to (a) a failure
to renew (or replace with a revolving credit facility
or facilities that has or have terms and conditions
reasonably satisfactory in all respects to the Security
Agent) by October 31, 1999 each of the PTFI Revolver
and the FCX Revolver to a maturity date beyond the
maturity date under the Loan Agreement or (b) a
failure, at any time, to maintain under the PTFI
Revolver and the FCX Revolver a minimum aggregate
commitment level of $600,000,000,
to purchase and assume, without recourse to or representa-
tion by any Secured Party other than as to the satisfaction
of the conditions set forth in this Section 3, all inter-
ests, rights and obligations of the Secured Parties under
the Loan Documents (other than any rights of the Secured
Parties to reimbursement of expenses, yield protection
payments or indemnities, all of which shall continue to
benefit the Secured Parties following any such purchase and
assumption) at a price equal to the Put Price, determined as
of and payable by FCX in cash in immediately available funds
on the closing date specified in the applicable notice
referred to above (which closing date shall be not fewer
than two Banking Days after the date of such notice). Not-
withstanding the giving of the notice required by clause (b)
above in connection with the occurrence of an event of
default described in subclause (iii) above, FCX shall not be
obligated to purchase and assume the interests of the
Secured Parties under the Loan Documents as a result of the
occurrence of such event of default described in sub-
clause (iii) if, prior to the time at which FCX would be
required to purchase and assume such interests, the event of
default described in such subclause (iii) is waived by the
lenders under the affected agreements and no other events
described in clause (b) shall have occurred and be continu-
ing at the time. Notwithstanding the foregoing, in the case
of an occurrence of an Event of Default described in
subclause (iv) above, such occurrence, without further
action by the Security Agent, will automatically be deemed
to be notice to FCX of its obligation to perform the actions
contemplated by this Section 3, and the closing date for
FCX's purchase and assumption of all the Secured Parties'
interests under the Loan Documents shall be the date of the
occurrence of such Event of Default.
In the event that following any purchase by FCX of
the Pledged PTII Shares or Pledged Borrower Shares pursuant
to Section 2, or any payment by FCX of the Put Price
pursuant to this Section 3, (a) any Secured Party shall be
required to return to the Borrower or any other Loan Party,
pursuant to any bankruptcy, insolvency or similar law or any
order of a court or other Governmental Authority, or other-
wise, any principal, interest or other amount received by it
under any Loan Document, or (b) any such payment of
principal, interest or other amount shall be rescinded, the
Put Price shall be deemed to have been increased by such
amount and FCX shall promptly pay such amount to such
Secured Party.
SECTION 4. Limited Guaranty of Payment of
Advances. (a) In addition to, and not in lieu of, any
other obligation of FCX under this Agreement, FCX guarantees
and agrees, as a primary obligor and not merely as surety,
that, in the event that, at any time prior to (i) the date
on which all amounts due (or which would have been due but
for any foreclosure or similar proceeding) to the Secured
Parties under the Loan Documents have been paid in full in
cash following the exercise or deemed exercise by the
Security Agent of its rights under Section 2 or (ii) in the
event the Security Agent shall have notified FCX that it
will not exercise its rights under Section 2, the last day
of the 30-day period described in paragraph (c) of
Section 2, any scheduled payment of interest on or principal
of the Advances (excluding principal due by reason of the
acceleration of the Advances prior to their scheduled
maturity) shall remain unpaid for 90 days following the due
date thereof (or such shorter period as would, in the
judgment of the Agent, result in the Advances being required
to be classified as "nonperforming" for regulatory or
reporting purposes) (the last day of such 90-day or shorter
period being referred to herein as the "FCX Payment Date"),
(A) FCX will pay to the Security Agent on such FCX Payment
Date the full amount of such unpaid interest or principal
and (B) if the Borrower shall fail or continue in its fail-
ure after such FCX Payment Date to make scheduled payments
of interest on or principal of the Advances, FCX will, in
each case not later than two Banking Days after receipt of
notice from the Security Agent, pay to the Security Agent
the full amount of interest and principal when and as due.
(b) The payment obligations of the Borrower guar-
anteed by FCX pursuant to clauses (A) and (B) of para-
graph (a) of this Section 4 above are referred to herein as
the "Guaranteed Obligations". FCX agrees that it will
remain bound upon its guarantee under this Section 4 in the
event of any extension or renewal of any Guaranteed Obliga-
tion made with its written consent.
(c) The obligations of FCX under this Section 4
shall not be discharged or impaired or otherwise affected by
(i) the failure of any Secured Party to enforce any right or
remedy under the provisions of any Loan Document or any
guarantee or any other agreement; (ii) any waiver, amendment
or modification of any of the terms or provisions of any
Loan Document not materially affecting the rights or
obligations of FCX or made with the written consent of FCX;
(iii) the voluntary release of any security held by any
Secured Party for the Obligations or any of them made with
the written consent of FCX; (iv) any default, failure or
delay, wilful or otherwise, in the performance of the
Obligations; or (v) except to the extent covered by
clauses (i) through (iv) above, any other act or omission
that may or might in any manner or to any extent vary the
risk of FCX or otherwise operate as a discharge of FCX as a
matter of law or equity.
(d) FCX further waives any right to require that
any resort be had by the Security Agent to any security held
for payment of the Guaranteed Obligations or to any balance
of any deposit account or credit on the books of any Secured
Party in favor of the Borrower or any other person (but the
Security Agent will endeavor in good faith to realize upon
liquid assets held by it as security and apply the same to
reduce the Obligations).
(e) The obligations of FCX hereunder shall not be
affected by the actual or asserted invalidity, illegality or
unenforceability of any of the Obligations.
(f) FCX further agrees that its guarantee under
this Section 4 shall continue to be effective or be rein-
stated, as the case may be, if at any time payment, or any
part thereof, of any Guaranteed Obligation is rescinded or
must otherwise be restored by any Secured Party upon the
bankruptcy or reorganization of any Loan Party, or other-
wise.
SECTION 5. Notice of Acceleration; Cooperation
with FCX. (a) The Security Agent shall promptly notify FCX
of any acceleration of the maturity of the Advances pursuant
to Section 9.02 of the Loan Agreement.
(b) At any time when an Event of Default shall
have occurred and be continuing, and whether or not FCX
shall have given the notice described in Section 2(a)(ii),
the Security Agent, acting on behalf of the Banks, will use
its commercially reasonable best efforts to cooperate with
FCX's efforts to protect its rights and interests as a party
entitled or obligated under the circumstances set forth in
Sections 2 and 3 to purchase the Pledged PTII Shares or the
Pledged Borrower Shares or to purchase and assume the
interests, rights and obligations of the Secured Parties
under the Loan Documents. Without limiting the foregoing,
the Security Agent shall promptly take such actions
(including, without limitation, the implementation of
foreclosure or similar proceedings, the diligent pursuit of
other remedies available to it hereunder and, if action by
the shareholders of PTII shall be required, cooperation with
FCX in calling a shareholders' meeting of PTII to take such
action and voting the Pledged PTII Shares in the manner
necessary to approve such action) as are available to it,
and as FCX may reasonably request, to acquire title to the
Pledged PTII Shares or the Pledged Borrower Shares or the
right to dispose of such shares pursuant to Section 2.
Notwithstanding the foregoing, the Security Agent shall not
be required to take any action under this Section (i) that
it reasonably believes to be prevented by any injunction or
other legal restraint, (ii) that it reasonably believes
would (A) expose it to any material expense or liability for
which it shall not have been reimbursed or indemnified by
FCX, (B) expose any officer or agent of the Security Agent
to danger or (C) materially affect the economic interests of
the Security Agent, or (iii) that it believes in good faith,
after consultation with counsel, to be contrary to
applicable standards of good faith and fair dealing or to
applicable standards for the disposition of pledged securi-
ties. The Security Agent shall have no obligation to take
any action under this Section (x) following the sale of the
Pledged PTII Shares or the Pledged Borrower Shares to FCX
pursuant to Section 2 or pursuant to the FCX Option
Agreement, (y) following the purchase and assumption of the
interests, rights and obligations of the Secured Parties
under the Loan Documents pursuant to Section 3 or (z) during
the continuance of an Event of Default resulting from any
act or omission of FCX.
(c) FCX acknowledges and agrees for the benefit
of each Bank that its obligations under Section 2 and
Section 3 of this Agreement will not be suspended or reduced
by any breach by the Security Agent of its obligations under
this Section 5; provided that nothing herein shall be
construed to prevent FCX from bringing an action at law or
in equity against the Security Agent to compel performance
by the Security Agent or to collect damages resulting from
such breach.
SECTION 6. Right of First Refusal. The Security
Agent agrees that if the Security Agent shall have acquired
the right to sell any Pledged PTII Shares or Pledged
Borrower Shares pursuant to any exercise of its remedies and
if at any time thereafter it shall receive a Bona Fide Offer
(as hereinafter defined) from a third party to purchase all
or any portion of such Pledged PTII Shares or Pledged
Borrower Shares, the Security Agent shall first notify FCX
of such Bona Fide Offer by providing FCX all relevant data
and information concerning the proposed transaction,
including, but not limited to, a copy of the purchase
contract (if any) with the proposed buyer and shall give to
FCX the right to purchase such shares, upon the terms and
conditions stipulated in such Bona Fide Offer (the "Offer"),
such right to purchase to be communicated by the Security
Agent by notice given hereunder; provided, however, that the
obligation of the Security Agent to offer the Pledged PTII
Shares or the Pledged Borrower Shares to FCX hereunder shall
terminate if (a) a Bankruptcy Event occurs or (b) FCX shall
be in default of any payment obligation under Section 2, 3
or 4. For the purposes of the foregoing, a "Bona Fide
Offer" shall be an offer reflected in an executed purchase
contract with a ready, willing and able buyer (or a contract
in a fully-negotiated form which the Security Agent and such
a buyer are willing to execute) providing for the purchase
of the shares referred to in the Offer subject only to the
obtaining of any necessary governmental approvals and the
waiver or non-exercise of FCX's rights in this Section 6.
Any such right to purchase may be exercised in whole only
and not merely in part. In the event that such right to
purchase shall not be exercised in full by notice given
hereunder and received by the Security Agent within fifteen
days after the date of the notice to FCX with respect to
such right to purchase, the Security Agent shall be entitled
to sell, as a whole and not in part only, the number of
Pledged PTII Shares or Pledged Borrower Shares described in
the Offer to the third party making the Offer on terms and
conditions no more favorable to such third party than the
terms and conditions of the Offer. If the Security Agent
shall fail to consummate a sale to such third party of the
entire number of Pledged PTII Shares or Pledged Borrower
Shares set forth in the Offer within sixty days after the
Security Agent shall become entitled under this Section 6 to
sell such Pledged PTII Shares or Pledged Borrower Shares to
such third party, no sale or transfer to a third party of
such Pledged PTII Shares or Pledged Borrower Shares may
thereafter be made by the Security Agent without again com-
plying with the provisions of this Section 6.
SECTION 7. Representations and Warranties. FCX
represents and warrants to each of the Banks that as of the
date hereof:
(a) Each of FCX and any Restricted Subsidiary
thereof (i) is a corporation duly organized, validly
existing and in good standing under the laws of the
jurisdiction of its incorporation, (ii) has all requisite
power and authority to own its property and assets and to
carry on its business as now conducted, (iii) is qualified
to do business in every jurisdiction where such
qualification is required, except where the failure so to
qualify would not result in a Material Adverse Effect and
(iv) has the corporate power and authority to execute,
deliver and perform its obligations hereunder.
(b) The execution, delivery and performance by
FCX of this Agreement and the transactions contemplated
hereby (collectively, the "Transactions") (i) have been duly
authorized by all requisite corporate and, if required,
stockholder action and (ii) will not (A) violate (x) any
provision of law, statute, rule or regulation, or of the
certificate or articles of incorporation or other constitu-
tive documents or by-laws of FCX or any Restricted
Subsidiary thereof, (y) any order of any Governmental
Authority or (z) any provision of any indenture, agreement
or other instrument to which FCX or any Restricted
Subsidiary thereof is a party or by which any of them or any
of their property is or may be bound, (B) be in conflict
with, result in a breach of or constitute (alone or with
notice or lapse of time or both) a default under any such
indenture, agreement or other instrument or (C) result in
the creation or imposition of any Lien upon or with respect
to any property or assets now owned or hereafter acquired by
FCX or any Restricted Subsidiary thereof.
(c) This Agreement has been duly executed and
delivered by FCX and constitutes a legal, valid and binding
obligation of FCX enforceable against FCX in accordance with
its terms (subject to applicable bankruptcy, reorganization,
insolvency, moratorium and similar laws affecting creditors'
rights generally).
(d) No action, consent or approval of, registra-
tion or filing with or any other action by any Governmental
Authority or other third party is required in connection
with the Transactions, except such as have been made or
obtained and are in full force and effect and such
appropriate governmental approvals as may be necessary to
delist PTII from the Surabaya Stock Exchange prior to any
sale of the Pledged PTII Shares pursuant to Section 2.
(e) FCX has heretofore furnished to the Security
Agent the following items with respect to FCX and its
consolidated subsidiaries: (i) its consolidated balance
sheets and statements of operations and changes in retained
earnings and cash flow as of and for the fiscal year ended
December 31, 1996, audited by and accompanied by the opinion
of Arthur Andersen LLP, independent public accountants,
included in FCX's Annual Report on Form 10-K for the year
ended December 31, 1996 and (ii) a certificate of the
Treasurer or another authorized financial officer of FCX
certifying that FCX (and, as applicable, PTFI) is in
compliance with the Borrowing Base under each of the PTFI
Revolver and the FCX Revolver. All such balance sheets and
statements of operations and cash flow present fairly the
financial condition and results of operations of each entity
as of such dates and for such periods. Such financial
statements and the notes thereto disclose all material lia-
bilities, direct or indirect, fixed or contingent, of each
entity as of the date thereof which are required to be
disclosed in the footnotes to financial statements prepared
in accordance with GAAP. The financial statements referred
to in this Section 7(e) have been prepared in accordance
with GAAP.
(f) There has been no material adverse change in
the business, assets, operations or condition, financial or
otherwise, of FCX or any Restricted Subsidiary thereof since
the date of the last balance sheet described in
paragraph (e) above.
(g) No information, report, financial statement,
exhibit or schedule furnished by or on behalf of FCX to the
Security Agent in connection with the negotiation of this
Agreement or included herein or delivered pursuant hereto
contains any material misstatement of fact or omits to state
any material fact necessary to make the statements therein,
in the light of the circumstances under which they were
made, not misleading.
(h) Except as disclosed in FCX's Annual Report on
Form 10-K for the year ended December 31, 1996, there are no
actions, suits or proceedings at law or in equity or by or
before any governmental instrumentality or other agency or
regulatory authority now pending or, to the knowledge of FCX
or PTFI, threatened against or affecting FCX or PTFI or any
Restricted Subsidiary or the businesses, assets or rights of
FCX or PTFI or any Restricted Subsidiary (i) which involve
this Agreement or any of the other Loan Documents or any of
the Transactions or the collateral for the Advances or
(ii) as to which there is a reasonable possibility of an
adverse determination and which, if adversely determined,
could, individually or in the aggregate, materially impair
the ability of FCX or PTFI to conduct its business
substantially as now conducted, or materially and adversely
affect the businesses, assets, operations, prospects or
condition, financial or otherwise, of FCX or PTFI, or impair
the validity or enforceability of, or the ability of FCX to
perform its obligations under, this Agreement or any of the
other Loan Documents to which it is a party.
(i) Neither FCX nor any Restricted Subsidiary
thereof is in violation of any law, rule or regulation, or
in default with respect to any judgment, writ, injunction or
decree of any Governmental Authority, where such violation
or default would reasonably be expected to result in a
Material Adverse Effect.
(j) With respect to environmental matters:
(i) the properties owned or operated by FCX and
its Restricted Subsidiaries and by PTFI (the
"Properties") and all operations of FCX and its
Restricted Subsidiaries and by PTFI are in compliance,
and in the last three years have been in compliance,
with all Environmental Laws and all necessary
Environmental Permits have been obtained and are in
effect, except to the extent that such non-compliance
or failure to obtain any necessary permits, in the
aggregate, could not reasonably be expected to result
in a Material Adverse Effect;
(ii) there have been no Releases or threatened
Releases at, from, under or proximate to the Properties
or otherwise in connection with the operations of FCX,
its Restricted Subsidiaries or PTFI, which Releases or
threatened Releases, in the aggregate, could reasonably
be expected to result in a Material Adverse Effect;
(iii) none of FCX, its Restricted Subsidiaries or
PTFI has received any notice of an Environmental Claim
in connection with the Properties or the operations of
FCX, its Restricted Subsidiaries or PTFI or with regard
to any person whose liabilities for environmental
matters FCX, its Restricted Subsidiaries or PTFI has
retained or assumed, in whole or in part,
contractually, by operation of law or otherwise, which,
in the aggregate, could reasonably be expected to
result in a Material Adverse Effect, nor do FCX, its
Restricted Subsidiaries or PTFI have reason to believe
that any such notice will be received or is being
threatened; and
(iv) Hazardous Materials have not been transported
from the Properties, nor have Hazardous Materials been
generated, treated, stored or disposed of at, on or
under any of the Properties in a manner that could give
rise to liability under any Environmental Law, nor have
FCX, its Restricted Subsidiaries or PTFI retained or
assumed any liability, contractually, by operation of
law or otherwise, with respect to the generation,
treatment, storage or disposal of Hazardous Materials,
which transportation, generation, treatment, storage or
disposal, or retained or assumed liabilities, in the
aggregate, could reasonably be expected to result in a
Material Adverse Effect.
(k) No stamp or similar tax is required to be
paid on or in connection with this Agreement to ensure the
legality, validity, enforceability or admissibility in
evidence thereof in Delaware, New York or the Republic of
Indonesia, except that a copy of this Agreement should be
stamped in nominal amounts when it is first used in
Indonesia if it is to be admissible in an Indonesian court.
(l) None of FCX, its Restricted Subsidiaries or
any of their property has any right to immunity in any
jurisdiction or court from set-off, legal proceedings,
attachment prior to judgment or other attachment, judgment
or execution of judgment or other legal process on the
grounds of sovereignty or otherwise, and, to the extent FCX,
any of its Restricted Subsidiaries or any of their property
may acquire any such right to immunity, each of FCX and its
Restricted Subsidiaries hereby irrevocably waives such right
to immunity in respect of its respective obligations under
the Loan Documents.
(m) Each of FCX and its Restricted Subsidiaries
has timely filed or caused to be filed all Tax returns and
reports required to have been filed and has paid or caused
to be paid all Taxes required to have been paid by it,
except (a) Taxes that are being contested in good faith by
appropriate proceedings and for which the Borrower or such
subsidiary has set aside on its books adequate reserves or
(b) to the extent that the failure to do so could not
reasonably be expected to result in a Material Adverse
Effect.
SECTION 8. Covenants. FCX covenants and agrees
with the Security Agent that so long as this Agreement shall
remain in effect or any amounts payable hereunder shall be
unpaid and unless the Security Agent shall otherwise consent
in writing:
(a) FCX will furnish to the Security Agent:
(i) within 95 days after the end of each fiscal
year of each of FCX and PTFI, the following items with
respect to FCX and its consolidated subsidiaries and
with respect to PTFI: its consolidated balance sheet
and consolidated statements of operations and changes
in retained earnings and cash flow, showing its
financial condition as of the close of such fiscal year
and the results of its operations during such year, all
audited by independent public accountants of recognized
national standing in the United States and accompanied
by an opinion of such accountants to the effect that
such consolidated financial statements fairly present
its financial condition and results of operations on a
consolidated basis in accordance with GAAP, except as
disclosed in such auditor's report;
(ii) within 50 days after the end of each of the
first three fiscal quarters of each fiscal year of each
of FCX and PTFI, the following items with respect to
FCX and its consolidated subsidiaries and with respect
to PTFI: its consolidated balance sheet and
consolidated statements of income of each such entity,
showing its financial condition as of the close of such
fiscal quarter and the results of its operations during
such fiscal quarter and the then elapsed portion of the
fiscal year, all certified by one of its financial
officers as fairly presenting its financial condition
and results of operations on a consolidated basis in
accordance with GAAP, subject to normal year-end audit
adjustments;
(iii) promptly after the same become publicly
available, copies of all periodic and other reports,
proxy statements and other materials filed by either
FCX or PTFI with the Securities and Exchange Commission
or any other Governmental Authority, or with any
national securities exchange, or distributed to its
shareholders, as the case may be; and
(iv) promptly, from time to time, such other infor-
mation regarding the operations, business affairs and
financial condition of each of FCX and PTFI, or
compliance with the terms hereof as the Security Agent
may reasonably request.
(b) FCX shall, at the time of provision of the
financial statements referred to in Sections 8(a)(i) and
(ii) above, furnish to the Agent a certificate of the
Treasurer or another authorized Financial Officer of FCX
certifying that FCX (and, as applicable, PTFI) is in
compliance with the Borrowing Base under each of the PTFI
Revolver and the FCX Revolver.
(c) FCX shall, and shall cause each of its
Restricted Subsidiaries to, obtain all authorizations and
approvals, and other actions by, and shall make all notices
to or filings with, any Governmental Authority or regulatory
body now or hereafter required for its making and
performance of the Loan Documents to be made and performed
by FCX and promptly furnish copies thereof to the Agent.
(d) If FCX chooses to exercise its option to
purchase the Pledged PTII Shares or the Pledged Borrower
Shares under the FCX Option Agreement, FCX will, at the time
it takes title to such shares, assume all the Obligations,
and will cause such Obligations to be paid in full within
three Banking Days after such assumption.
(e) FCX shall promptly, upon the request of the
Security Agent, give such further assurances and perform
such other acts, as shall be necessary to effectuate the
purposes of any Loan Document.
(f) FCX shall not create, incur, assume or permit
to exist any Lien securing any Debt upon any Capital Stock
or other equity interest of PTFI owned by FCX or any of its
Subsidiaries unless, contemporaneously therewith, effective
provision is made to secure the obligations of FCX to the
Banks under this Agreement and the other Loan Documents
equally and ratably with such Debt for so long as such Debt
is so secured.
SECTION 9. Incorporation by Reference. The
provisions of Sections 5.1 (a)(4) and (8), (b), (c), (d),
(e), (g), (i) (but only the first sentence thereof) and (j),
and 5.2(c),(e), (f), (i) and (p) of each of the PTFI
Revolver and the FCX Revolver, each as in effect on the date
hereof, are incorporated herein by reference in their
entirety (but with the defined terms used therein and the
definitions of such terms being construed in accordance with
Section 1 above). It is acknowledged that the failure of
PTFI to conduct its existing mining operations in Irian Jaya
will constitute a material alteration in the nature of the
business of FCX and PTFI for purposes of such Section
5.2(i).
SECTION 10. Taxes. (a) Any and all payments by
FCX hereunder shall be made, in accordance with Section 19,
free and clear of and without deduction for any and all
present or future taxes, levies, imposts, deductions,
charges or withholdings imposed by a Governmental Authority,
and all liabilities with respect thereto, excluding taxes
imposed on the net income of any Secured Party (or any
transferee or assignee thereof, including a participation
holder (any such entity being called a "Transferee")) and
franchise taxes imposed on any Secured Party (or Trans-
feree), in either case by any jurisdiction under the laws of
which such Secured Party (or Transferee), is organized
(including the United States, in the case of any Secured
Party (or Transferee) organized under the laws of a state of
the United States), or in which such Secured Party (or
Transferee) books this transaction, or any political sub-
division thereof (all such nonexcluded taxes, levies,
imposts, deductions, charges, withholdings and liabilities
being hereinafter referred to as "Taxes"). If FCX shall be
required by law to deduct any Taxes from or in respect of
any sum payable hereunder to any Secured Party (or any
Transferee), (i) the sum payable shall be increased by the
amount necessary so that after making all required deduc-
tions (including deductions applicable to additional sums
payable under this Section 10) such Secured Party (or Trans-
feree) shall receive an amount equal to the sum it would
have received had no such deductions been made, (ii) FCX
shall make such deductions and (iii) FCX shall pay the full
amount deducted to the relevant Governmental Authority in
accordance with applicable law.
(b) In addition, FCX agrees to pay any present or
future stamp or documentary taxes or similar levies which
arise from any payment made hereunder or from the execution,
delivery or registration of, or otherwise with respect to,
this Agreement (hereinafter referred to as "Other Taxes").
(c) FCX will indemnify each Secured Party (or
Transferee) for the full amount of Taxes and Other Taxes
paid by such Secured Party (or Transferee) and any liability
(including penalties, interest and expenses) arising there-
from or with respect thereto, whether or not such Taxes or
Other Taxes were correctly or legally asserted by a Govern-
mental Authority. Such indemnification shall be made within
30 days after the date any Secured Party (or Transferee)
makes written demand therefor. Such demand shall be made by
a responsible account officer of the Secured Party (or
Transferee) and shall set forth the computation of the
amount or amounts as shall be necessary to compensate such
Secured Party (or Transferee) under this Section 10. The
Security Agent agrees, on behalf of itself, the Agent and
each Bank, that each such Secured Party will promptly notify
FCX of any event which would entitle any Secured Party to
any additional payment pursuant to this Section 10 (provided
that the Security Agent shall not be liable for any other
Secured Party's failure so to notify FCX). The Security
Agent agrees, on behalf of itself, the Agent and each Bank,
that each such Secured Party will, to the extent such
Secured Party is actually aware of a Tax or Other Tax with
respect to which such Secured Party would be entitled to
payments from FCX hereunder, use reasonable diligence
(consistent with legal and regulatory restrictions) to, at
FCX's expense, (i) file any certificate or document, (ii) in
the case of a Bank, change the jurisdiction of its Banking
Office (as defined in the Loan Agreement) or (iii) take
other appropriate action if (A) the making of such a filing
or change or the taking of such other action would avoid the
need for or reduce the amounts that would be payable by FCX
under this Section 10 and would not otherwise adversely
affect such Secured Party (as determined by such Secured
Party in good faith) and (B) either (1) FCX has requested
such Secured Party to make such filing or change or to take
such other action or (2) the officers of such Secured Party
administering this transaction are actually aware that the
making of such filing or change or the taking of such other
action will have the effect specified in clause (A) above
(provided that the Security Agent shall not be liable for
any other Secured Party's failure to take any of the actions
specified in clauses (i), (ii) or (iii) above).
(d) Within 30 days after the date of any payment
of Taxes or Other Taxes withheld by FCX in respect of any
payment to any Secured Party (or Transferee), FCX will
furnish to the Security Agent, at its address referred to in
Section 17, the original or a certified copy of a receipt
evidencing payment thereof.
(e) Without prejudice to the survival of any
other agreement contained herein, the agreements and obliga-
tions contained in this Section 10 shall survive the payment
in full of all Obligations.
SECTION 11. Subordination of Rights of FCX.
(a) FCX hereby agrees that all its rights to payments
arising by virtue of any payment made by FCX to the Security
Agent hereunder, whether pursuant to Section 2, Section 4 or
otherwise (collectively, the "Subordinated Obligations"),
are hereby expressly subordinated, to the extent and in the
manner set forth in this Section, to the prior indefeasible
payment in full in cash of all Obligations in accordance
with the terms thereof.
(b) No payment in respect of the Subordinated
Obligations shall be made (other than payments with respect
to the Interest Shortfall Loans made with funds in the
Dividend Reserve Account as permitted under the Loan
Agreement), or any security therefor given (other than a
security interest over the Pledged PTII Shares and the
Pledged Borrower Shares securing FCX's rights against the
Borrower arising by virtue of any payment made by FCX
hereunder with respect to any obligations for which the
Borrower is liable to any Secured Party under the Loan
Documents, provided such security interest is expressly
junior in right of payment to the security interest held by
or on behalf of the Secured Parties on terms satisfactory to
the Security Agent), by the Borrower or FCX or received or
accepted by or on behalf of FCX unless and until all
Obligations then due and payable have been paid in full in
cash and (i) no Default or Event of Default exists under the
Loan Agreement and (ii) no default exists hereunder.
(c) Upon any distribution of the assets of the
Borrower or of FCX or upon any dissolution, winding up,
liquidation or reorganization of the Borrower or of FCX,
whether in bankruptcy, insolvency, reorganization, arrange-
ment or receivership proceedings or otherwise, or upon any
assignment for the benefit of creditors or any other mar-
shalling of the assets and liabilities of the Borrower or of
FCX, or otherwise:
(i) the Secured Parties shall first be entitled to
receive payment in full of the Obligations in accor-
dance with the terms of the Obligations before FCX
shall be entitled to receive any payment on account of
any Subordinated Obligation; and
(ii) any payment by, or distribution of the assets
of, the Borrower or of FCX of any kind or character,
whether in cash, property or securities, to which FCX
would be entitled except for the provisions of this
Agreement shall be paid or delivered by the person
making such payment or distribution (whether a trustee
in bankruptcy, a receiver, custodian or liquidating
trustee or otherwise) directly to the Security Agent to
the extent necessary to make payment in full in cash of
all Obligations remaining unpaid, after giving effect
to any concurrent payment or distribution to the
Secured Parties in respect of Obligations.
(d) In the event that any payment by or distribu-
tion of the assets of the Borrower or FCX of any kind or
character, whether in cash, property or securities, and
whether directly, by exercise of any right of set-off or
otherwise, shall be received by or on behalf of FCX at a
time when such payment is prohibited by this Agreement, such
payment or distribution shall be held in trust for the
benefit of, and shall be paid over to, the Security Agent to
the extent necessary to make payment in full of all
Obligations remaining unpaid, after giving effect to any
concurrent payment or distribution to the Secured Parties in
respect of Obligations.
(e) FCX agrees that, except upon the request or
with the consent of the Security Agent, it will not exercise
any remedies or take any action or proceeding to enforce any
Subordinated Obligation until the Obligations have been paid
in full in cash, and FCX further agrees not to join with any
other creditors of the Borrower or of FCX, as the case may
be, in filing any petition commencing any bankruptcy,
insolvency, reorganization, arrangement or receivership
proceeding or any assignment for the benefit of creditors
against or in respect of the Borrower or FCX, respectively,
or any other marshalling of the assets and liabilities of
the Borrower or FCX, respectively.
(f) FCX shall be entitled to be secured, on terms
acceptable to the Banks and on a basis fully subordinated to
the rights of the Secured Parties, by the Pledged PTII
Shares and the Pledged Borrower Shares, with respect to
payments made by FCX relating to obligations for which the
Borrower is liable to any Secured Party under the Loan
Documents. Payment by FCX of amounts payable by the
Borrower under the Loan Documents shall not relieve the
Borrower of its obligation to make such payments, and FCX
shall be subrogated to all rights of the Secured Parties
against the Borrower or any of the other Loan Parties, as
the case may be, with respect to such amounts. If, after
all Obligations then due and payable have been paid in full
in cash, any of the Secured Parties shall receive payment
from the Borrower of any such amounts with respect to which
FCX shall have made a payment hereunder, such Secured Party
shall, provided that (i) no Default or Event of Default
under the Loan Agreement shall have occurred and be
continuing at the time and (ii) no default hereunder shall
have occurred and be continuing at the time, pay such
amounts so received to FCX. Until FCX has received payment
of all amounts payable to it pursuant to such subrogation,
FCX shall remain secured by the collateral referred to in
the first sentence of this paragraph (f).
SECTION 12. Successors and Assigns. Whenever in
this Agreement any of the parties hereto is referred to,
such reference shall be deemed to include the successors and
assigns of such party; and all covenants, promises and
agreements by or on behalf of FCX that are contained in this
Agreement shall bind and inure to the benefit of its
successors and assigns. FCX may not assign or transfer any
of its rights or obligations hereunder without the prior
written consent of all the Banks and any such purported
assignment or transfer without such consent shall be void.
SECTION 13. Waivers; Amendments. (a) No failure
on the part of the Security Agent to exercise, and no delay
in exercising, any right, power or remedy hereunder shall
operate as a waiver thereof, nor shall any single or partial
exercise of any such right, power or remedy by the Security
Agent preclude any other or further exercise thereof or the
exercise of any other right, power or remedy. All remedies
hereunder are cumulative and are not exclusive of any other
remedies provided by law. No waiver of any provision of
this Agreement or consent to any departure by FCX therefrom
shall in any event be effective unless the same shall be
permitted by paragraph (b) below, and then such waiver or
consent shall be effective only in the specific instance and
for the purpose for which given. No notice or demand on FCX
in any case shall entitle FCX to any other or further notice
or demand in similar or other circumstances.
(b) Neither this Agreement nor any provision
hereof may be waived, amended or modified except pursuant to
an agreement or agreements in writing entered into by FCX
and the Security Agent acting on instructions from the
Majority Banks; provided that (i) any amendment or waiver of
this Section 13(b) or any amendment or waiver that changes
or could have the effect of changing the amount of any
payment required to be made by FCX under Section 2, 3 or 4
hereof, or the timing of any such payment, or the conditions
under which FCX shall be required to purchase the Pledged
PTII Shares or the Pledged Borrower Shares or to purchase
and assume the interests, rights and obligations of the
Secured Parties under the Loan Documents, or this Section
13, shall require the consent of each Bank; (ii) amendments
to and waivers of the covenants (including the definitions
used in such covenants) set forth or incorporated by
reference in Section 8 or 9 may be effected by the Security
Agent acting on instructions from Banks representing more
than 51% of the principal amount of the Advances outstanding
under the Loan Agreement or, if no Advances are outstanding,
more than 51% of the aggregate Commitments of the Banks; and
(iii) any release of the Pledged PTII Shares or the Pledged
Borrower Shares pursuant to and in compliance with Sections
2.04 and 7.01 of the Loan Agreement, and any amendment or
modification to this Agreement required to give effect
thereto, shall not require any instructions from the Banks,
but shall be effected by the Security Agent at the request
of the Borrower in accordance with Section 11.02 of the Loan
Agreement.
SECTION 14. Applicable Law; Submission to Juris-
diction; Consent to Service of Process. (a) THIS AGREEMENT
AND THE OTHER LOAN DOCUMENTS (EXCEPT THE SHARE PLEDGES,
WHICH SHALL BE GOVERNED BY THE LAWS PROVIDED FOR THEREIN)
SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
LAWS OF THE STATE OF NEW YORK, UNITED STATES OF AMERICA.
(b) FCX hereby irrevocably and unconditionally
submits, for itself and its property, to the jurisdiction of
any New York State court and of any Federal court of the
United States of America, in each case sitting in New York
City, and any appellate court from any thereof, for the
purpose of any suit, action or other proceeding arising out
of, or relating to, this Agreement, Article 11 of each of
the Share Pledges or any of the other Loan Documents, and
FCX hereby irrevocably agrees that all claims in respect of
such action or proceeding may be heard and determined in
such state or Federal court. FCX hereby irrevocably waives,
to the fullest extent it may effectively do so, and agrees
not to assert, by way of motion, as a defense, or otherwise,
in any such suit, action or proceeding, any claim that it is
not subject to the jurisdiction of the above-named courts
for any reason whatsoever, that such suit, action or pro-
ceeding is brought in an inconvenient forum or that the
venue of such suit, action or proceeding is improper or that
this Agreement, Article 11 of each of the Share Pledges or
any of the other Loan Documents may not be enforced in or by
such courts. FCX agrees that a final judgment in any such
action or proceeding shall be conclusive and may be enforced
in other jurisdictions by suit on the judgment or in any
other manner provided by law.
(c) Each party to this Agreement, each of the
Share Pledges and each of the other Loan Documents
irrevocably consents to service of process in the manner
provided for notices in Section 17. Nothing in this
Agreement, Article 11 of each of the Share Pledges or any of
the other Loan Documents will affect the right of any party
to this Agreement, either of the Share Pledges or any of the
other Loan Documents to serve process in any other manner
permitted by law.
SECTION 15. Waiver of Trial By Jury. Each party
hereto hereby waives, to the fullest extent permitted by
applicable law, any right it may have to a trial by jury in
respect of any litigation directly or indirectly arising out
of, under or in connection with this Agreement or any of the
other Loan Documents. Each party hereto (a) certifies that
no representative, agent or attorney of any other party has
represented, expressly or otherwise, that such other party
would not, in the event of litigation, seek to enforce the
foregoing waiver and (b) acknowledges that it and the other
parties hereto have been induced to enter into this Agree-
ment and the other Loan Documents, as applicable, by, among
other things, the mutual waivers and certifications in this
Section 15.
SECTION 16. Severability. In case any one or
more of the provisions contained in this Agreement should be
held invalid, illegal or unenforceable in any respect, the
validity, legality and enforceability of the remaining pro-
visions contained herein shall not in any way be affected or
impaired. The parties shall endeavor in good-faith negotia-
tions to replace the invalid, illegal or unenforceable pro-
visions with valid, legal and enforceable provisions, the
economic effect of which comes as close as possible to that
of the invalid, illegal or unenforceable provisions.
SECTION 17. Notices. Any notice by a party
hereto required or permitted to be given hereunder shall be
in writing and shall be (a) personally delivered, (b) trans-
mitted by postage prepaid registered mail (air mail if
international), or (c) transmitted by facsimile to the
addressee at the address or facsimile number indicated below
or at such other address or facsimile number as such
addressee shall have conveyed by notice to the other party:
(i) if to FCX, to it at 1615 Poydras Street,
New Orleans, Louisiana 70112, Attention of the
Treasurer (Telecopy No. (504) 582-4511); and
(ii) if to the Security Agent, to it at One
Chase Manhattan Plaza, 5th Floor, New York, New
York 10081, Attention of James H. Ramage (Telecopy
No. (212) 552-5555).
Unless otherwise provided herein, the date of any notice
hereunder shall be deemed to be (A) the date of receipt if
delivered personally or transmitted by facsimile or (B) the
date seven days after posting if transmitted by mail (air
mail if international).
SECTION 18. Expenses; Indemnity. (a) FCX agrees
to pay all out-of-pocket expenses incurred by the Security
Agent or the Agent in connection with the exercise,
enforcement or protection of the rights or remedies of any
of the Secured Parties under each of the Loan Documents,
including the fees, charges and disbursements of Cravath,
Swaine & Moore, counsel for the Security Agent, and the
fees, charges and disbursements of any other counsel for the
Security Agent or the Agent.
(b) FCX agrees to indemnify each of the Secured
Parties and each of their respective directors, officers,
employees and agents (each such person being called an
"Indemnitee") against, and to hold each Indemnitee harmless
from, any and all losses, claims, damages, liabilities and
related expenses, including counsel fees, charges and
disbursements, incurred by or asserted against any
Indemnitee arising out of, in any way connected with, or as
a result of (i) the exercise, enforcement or purported
exercise or enforcement by the Security Agent or the Agent
of any of the rights and remedies of any of the Secured
Parties hereunder (including, without limitation, any
exercise by the Security Agent or the Agent of any action in
accordance with Section 5 of this Agreement) or under any of
the other Loan Documents, or the Transactions and the other
transactions contemplated hereby or (ii) any actual or
threatened claim, litigation, investigation or proceeding
relating to any of the foregoing, whether or not any Indem-
nitee is a party thereto; provided that such indemnity shall
not, as to any Indemnitee, be available to the extent that
such losses, claims, damages, liabilities or related
expenses are determined by a court of competent jurisdiction
by final and nonappealable judgment to have resulted from
the gross negligence or wilful misconduct of such Indemnitee
(it being understood that actions contemplated by the Loan
Documents will in no event be deemed to constitute gross
negligence or wilful misconduct).
(c) The provisions of this Section 18 shall
remain operative and in full force and effect regardless of
the expiration of the term of this Agreement, the consumma-
tion of the transactions contemplated hereby, and repayment
of any of the Loans, the invalidity or unenforceability of
any term or provision of this Agreement or any other Loan
Document, or any investigation made by or on behalf of the
Security Agent or any other Secured Party. All amounts due
under this Section 18 shall be payable on written demand
therefor.
SECTION 19. Payments. FCX shall make each
payment hereunder not later than 12:00 noon, New York City
time, on the date when due in United States dollars to the
Security Agent at its offices at 270 Park Avenue, New York,
N.Y. 10017, or at such other address as the Security Agent
may have specified in writing, in immediately available
funds.
SECTION 20. Entire Agreement. This Agreement and
the other Loan Documents constitute the entire contract
between the parties relative to the subject matter hereof.
Any previous agreement among the parties with respect to the
subject matter hereof is superseded by this Agreement and
the other Loan Documents. Nothing in this Agreement or in
the other Loan Documents, expressed or implied, is intended
to confer upon any party other than the parties hereto and
thereto any rights, remedies, obligations or liabilities
under or by reason of this Agreement or the other Loan Docu-
ments.
SECTION 21. Execution in Counterparts. This
Agreement may be executed in two or more counterparts, each
of which shall constitute an original, but all of which,
when taken together, shall constitute but one instrument.
SECTION 22. Banks as Third Party Beneficiaries.
This Agreement is made for the benefit of the Banks that are
parties to the Loan Agreement, and each Bank shall have the
right to enforce any agreement of FCX hereunder as if it
were a party hereunder.
IN WITNESS WHEREOF, the parties hereto have caused
this Agreement to be executed as of the day and year first
above written.
FREEPORT-MCMORAN COPPER & GOLD INC.,
by /s/ R. F. Duncan
Name: R. F. Duncan
Title: Vice President & Treasurer
THE CHASE MANHATTAN BANK, as Security
Agent,
by /s/ James H. Ramage
Name: James H. Ramage
Title: Vice President
ANNEX I
NON-INTERFERENCE AGREEMENT AND ACKNOWLEDGMENT
The undersigned hereby acknowledge and agree that, upon the
occurrence of an Event of Default under the Loan Agreement
and the acceleration of the Advances thereunder (a) the
Security Agent intends to exercise its rights under
Section 2 of the foregoing Put and Guaranty Agreement to
sell the Pledged PTII Shares or the Pledged Borrower Shares
to FCX for a price equal to the Put Price (which the
undersigned understand may be substantially less than the
value of the Pledged PTII Shares or Pledged Borrower
Shares), and the undersigned hereby consent to such sale;
and (b) the Security Agent shall have no obligation to offer
or sell the Pledged PTII Shares or the Pledged Borrower
Shares to any third party even if a higher price could be
obtained from such a third party. The undersigned hereby
consent to the other agreements and arrangements set forth
in the foregoing Put and Guaranty Agreement and waive any
and all claims that they might otherwise have against the
Security Agent or any Bank as a result of the exercise of
any right or the performance of any obligation that the
Security Agent or such Bank may have hereunder or under any
other Loan Document. The undersigned agree to take no
action to interfere with or restrain the exercise by the
Security Agent of its rights under the foregoing Put and
Guaranty Agreement or under the Pledge Agreements referred
to therein. The undersigned also agree that (i) payment by
FCX of amounts payable by the Borrower under the Loan
Documents shall not relieve the Borrower of its obligations
to make such payments and (ii) FCX shall be subrogated to
all rights of the Secured Parties against the Borrower or
any of the other Loan Parties, as the case may be, with
respect to such amounts.
PT NUSAMBA MINERAL INDUSTRI,
by /s/ Ir. Abdulmadjid
Name: Ir. Abdulmadjid
Title: President Director
PT NUSANTARA AMPERA BAKTI,
by /s/
Name:
Title:
PT MAPINDO PARAMA,
by /s/ Ir. Herman Hidayat
Name: Ir. Herman Hidayat
Title:
Ehibit 10.2
MASTER AGREEMENT
by and among
P.T. FREEPORT INDONESIA COMPANY,
P.T. ALATIEF NUSAKARYA CORPORATION,
P.T. ALATIEF FREEPORT INFRASTRUCTURE CORPORATION
and
P.T. ALATIEF FREEPORT HOTEL CORPORATION
[In Regard to the Restructuring
of Business Relationships
Between the Parties and
Certain Affiliates]
MASTER AGREEMENT
TABLE OF CONTENTS
PAGE
Article 1 DEFINITIONS. . . . . . . . . . . . . . . . . . . . . .6
1.1 Definitions. . . . . . . . . . . . . . . . . . . . . .6
1.2 Singular Plural and Gender . . . . . . . . . . . . . 11
1.3 Interpretations. . . . . . . . . . . . . . . . . . . 11
Article 2 CLOSING; ESCROW; EFFECTIVENESS OF AGREEMENT;
CLOSING COSTS. . . . . . . . . . . . . . . . . . . . 11
2.1 Closing. . . . . . . . . . . . . . . . . . . . . . . 11
2.2 Escrow; Breaking of Escrow . . . . . . . . . . . . . 11
2.3 Effectiveness of Agreement . . . . . . . . . . . . . 11
Article 3 CONTEMPORANEOUS CLOSING OF TRANSACTIONS. . . . . . . 11
3.1 FI/ALatieF Agreements. . . . . . . . . . . . . . . . 12
3.2 FI/PTAC Agreements . . . . . . . . . . . . . . . . . 12
3.3 FI/AFIC Agreements . . . . . . . . . . . . . . . . . 12
3.4 FI/AFHC Agreements . . . . . . . . . . . . . . . . . 13
3.5 FI/PNK Agreement . . . . . . . . . . . . . . . . . . 13
3.6 FI/TDS Agreement . . . . . . . . . . . . . . . . . . 13
Article 4 CANCELLATION OF JVA AND HOTEL JVA. . . . . . . . . . 14
4.1 Fulfillment of Obligations . . . . . . . . . . . . . 14
4.2 Termination of JVA and Hotel JVA . . . . . . . . . . 14
Article 5 FINANCING; DEBT SERVICE; RETURN ON EQUITY. . . . . . 15
5.1 Acquisition Capital Financing/Amortization . . . . . 15
5.2 Debt Service . . . . . . . . . . . . . . . . . . . . 15
5.3 Return on Invested Equity. . . . . . . . . . . . . . 15
5.4 Advances on the Variable Rent Payment. . . . . . . . 16
5.5 Invested Equity Adjustment . . . . . . . . . . . . . 17
Article 6 AUDITING . . . . . . . . . . . . . . . . . . . . . . 17
6.1 Requested Financial Statements . . . . . . . . . . . 17
6.2 Right to Examine Books . . . . . . . . . . . . . . . 17
6.3 Generally Acceptable Accounting Principles . . . . . 18
6.4 Other Contracts. . . . . . . . . . . . . . . . . . . 18
6.5 Years Subject to Audit . . . . . . . . . . . . . . . 18
Article 7 WARRANTIES AND REPRESENTATIONS . . . . . . . . . . . 18
7.1 Corporate Power. . . . . . . . . . . . . . . . . . . 18
7.2 Statements True. . . . . . . . . . . . . . . . . . . 18
Article 8 REACQUISITION OF PROPERTY. . . . . . . . . . . . . . 19
8.1 FI's Right to Reacquire. . . . . . . . . . . . . . . 19
8.2 AFIC's/AFHC's Option . . . . . . . . . . . . . . . . 19
8.3 Transfer of Property . . . . . . . . . . . . . . . . 20
Article 9 FI'S RIGHT OF FIRST REFUSAL. . . . . . . . . . . . . 21
9.l Restrictions on Transfer of AFIC Assets and AFHC
Assets . . . . . . . . . . . . . . . . . . . . . . . 21
9.2 Right of First Refusal . . . . . . . . . . . . . . . 21
9.3 ALatieF to Obligate Affiliate. . . . . . . . . . . . 22
Article 10 EXECUTION OF OTHER AGREEMENTS . . . . . . . . . 22
Article 11 CONFIDENTIALITY . . . . . . . . . . . . . . . . 22
11.1 Confidential Treatment/Permitted Disclosures . . . . 22
11.2 Implementation . . . . . . . . . . . . . . . . . . . 23
11.3 Parties Retain Property Rights . . . . . . . . . . . 23
11.4 Obligations to Survive . . . . . . . . . . . . . . . 23
Article 12 FORCE MAJEURE . . . . . . . . . . . . . . . . . 23
Article 13 DISPUTE RESOLUTION PROCEDURES . . . . . . . . . 23
13.1 Amicable Settlement. . . . . . . . . . . . . . . . . 23
13.2 Arbitration Rules. Situs and Language. . . . . . . . 23
13.3 Cooperation. . . . . . . . . . . . . . . . . . . . . 24
13.4 Arbitrators' Fees and Expenses . . . . . . . . . . . 24
13.5 Waiver of Right to Appeal. . . . . . . . . . . . . . 24
13.6 Limitation on Right to Court Action. . . . . . . . . 24
13.7 Performance of Obligations Pending Decision. . . . . 24
13.8 Waiver of Right to Terminate Board of Arbitration. . 25
13.9 Survival . . . . . . . . . . . . . . . . . . . . . . 25
Article 14 TERMINATION . . . . . . . . . . . . . . . . . . 25
Article 15 ASSIGNMENT. . . . . . . . . . . . . . . . . . . 25
Article 16 LAW AND INTERPRETATION. . . . . . . . . . . . . 25
16.1 Governing Law. . . . . . . . . . . . . . . . . . . . 25
16.2 Governing Language of this Agreement . . . . . . . . 26
16.3 Headings . . . . . . . . . . . . . . . . . . . . . . 26
Article 17 SEVERABILITY. . . . . . . . . . . . . . . . . . 26
Article 18 NOTICES . . . . . . . . . . . . . . . . . . . . 26
18.1 Manner of Delivery/Addresses . . . . . . . . . . . . 26
18.2 Change of Address. . . . . . . . . . . . . . . . . . 27
Article 19 OTHER PROVISIONS. . . . . . . . . . . . . . . . 27
Article 20 ENTIRE AGREEMENT. . . . . . . . . . . . . . . . 27
Signatures. . . . . . . . . . . . . . . . . . . . . . . . . . 29, 30
MASTER AGREEMENT
THIS MASTER AGREEMENT (this "Agreement"), which shall be effective as of March
14, 1997, is entered into by and among:
1. P.T. FREEPORT INDONESIA COMPANY, an Indonesian limited liability company
also domesticated in the State of Delaware, United States of America,
having an office at Plaza 89, 5th Floor, J1. H.R. Rasuna Said Kav. X-7
No. 6, Jakarta 12940 (hereinafter referred to as "FI");
2. P.T. ALATIEF NUSAKARYA CORPORATION, an Indonesian limited liability
company, having an office at J1. Iskandarsyah II No. 2, Blok M, Jakarta,
Selatan (hereinafter referred to as "ALatieF");
3. P. T. ALATIEF FREEPORT INFRASTRUCTURE CORPORATION, an Indonesian limited
liability company, having an office at J1. Iskandarsyah II No. 2, Blok
M. Kebayoran Baru, Jakarta, Selatan (hereinafter referred to as "AFIC");
and
4. P.T. ALATIEF FREEPORT HOTEL CORPORATION, an Indonesian limited liability
company, having an office at J1. Iskandarsyah II No. 2, Blok M Kebayoran
Baru, Jakarta, Selatan (hereinafter referred to as "AFHC").
R E C I T A L S:
WHEREAS, FI operates a mining enterprise in Irian Jaya, Indonesia
pursuant to a Contract of Work dated December 30, 1991, between FI and the
Government of the Republic of Indonesia (as the same may hereafter be amended,
modified or supplemented, the "COW");
WHEREAS, FI and ALatieF entered into that certain Joint Venture
Agreement dated March 11, 1993, (as amended, the "JVA"), pursuant to which FI
and ALatieF intended, inter alia, that FI would sell US$270 million of
infrastructure assets which were classified by FI an non-core assets for its
mining enterprise (the "Transferable Infrastructure Properties") to a company
jointly established by them, which would then operate such assets in support
of FI's mining enterprise and, to the extent excess capacity existed and other
requirements were satisfied, for third parties;
WHEREAS, subsequent to entering into the JVA, it was determined that two
separate companies would have to be formed to purchase and operate the
Transferable Infrastructure Properties because among such assets which were
contemplated to be sold was the Sheraton Inn at Timika (the "Hotel") and a
golf course and clubhouse facility (as hereinafter further defined, the "Golf
Facility") and Indonesian law required that any company engaged in the hotel
and hospitality business be a single purpose entity dedicated exclusively to
the hotel and hospitality business;
WHEREAS, in order to effectuate their original agreement while complying
with the Indonesian legal requirements referred to above, FI and ALatieF
amended the JVA to delete the Hotel and Golf Facility from the Transferable
Infrastructure Properties which were contemplated to be sold to and operated
by the company which would be formed pursuant thereto and FI and ALatieF
entered into a second Joint Venture Agreement dated August 11, 1994 (the
"Hotel JVA"), pursuant to which FI and ALatieF agreed to form a second company
which would purchase and operate the Hotel and Golf Facility;
WHEREAS, in furtherance of the JVA, FI and ALatieF formed AFIC and,
prior to the date hereof, AFIC has purchased Transferable Infrastructure
Properties from FI in three separate transactions for an aggregate purchase
price of US$151,920,000;
WHEREAS, in furtherance of the Hotel JVA, FI and ALatieF formed AFHC
and, prior to the date hereof, AFHC has purchased the Hotel from FI for
US$42,948,000;
WHEREAS, in order to complete the sale and purchase of an aggregate of
US$270 million of Transferable Infrastructure Properties as originally
contemplated, FI and ALatieF have agreed that FI will sell an additional
US$68,079,986 of Transferable Infrastructure Properties to AFIC pursuant to a
certain Purchase and Sale Agreement between FI and AFIC of even date herewith
(the "AFIC Purchase and Sale Agreement"), which will result in AFIC having
acquired a total of US$220 million of Transferable Infrastructure Properties
(all such assets acquired by AFIC from FI, by purchase or by exchange and
whether acquired heretofore, contemporaneously with the execution of this
Agreement or hereafter, being hereinafter referred to as the "AFIC Assets"),
and FI will sell the Golf Facility to AFHC for US$7,052,000 pursuant to a
certain Purchase and Sale Agreement between FI and AFHC of even date herewith
(the "AFHC Purchase and Sale Agreement"), which will result in AFHC having
acquired a total of US$50 million of Transferable Infrastructure Properties
(all such assets acquired by AFHC from FI being hereinafter referred to as the
"AFHC Assets");
AND
WHEREAS, the JVA and the Hotel JVA recognized that FI's rights to
utilize the land on which the Transferable Infrastructure Properties were
situated were derived from the COW and the JVA and Hotel JVA contemplated that
FI would, prior to or after the closing of the sale of each Transferable
Infrastructure Property obtain and transfer Hak Guna Bangunan land rights
("HGB") to the land on which such Transferable Infrastructure Property was
located;
WHEREAS, subsequent to entering into the JVA, FI was advised by the
Indonesian Government that, for governmental reasons, HGB would not be granted
for any land above Mile 50 (as measured on FI's road beginning at Amamapare
and leading to Tembagapura) and that pursuant to regulations issued by the
Ministry of Sea Communications, HGB would not be granted for any land within
100 meters of the river at Amamapare (those areas described above as areas
where the Government has indicated it will not issue HGB are hereinafter
referred to as the "Non-HGB Lands");
WHEREAS, the aforementioned restrictions as to the granting of HGB have
resulted in FI not being able to obtain and transfer HGB for the land on which
certain AFIC Assets are situated (but such restrictions have not affected FI's
ability to obtain and transfer HGB title to the land on which the AFHC Assets
are situated);
WHEREAS, FI and ALatieF have also agreed that FI will reacquire from
AFIC certain AFIC Assets at Amamapare in exchange for FI transferring certain
infrastructure assets of comparable value located at Tembagapura to AFIC
pursuant to that certain Purchase and Sale Agreement between FI and AFIC of
even date herewith (the "Facilities Purchase and Sale Agreement");
WHEREAS, the aforementioned restrictions as to the granting of HGB will
prevent FI from obtaining and transferring HGB to AFIC for the land on which
the infrastructure assets located at Tembagapura which land would otherwise
become AFIC Assets upon the completion of the exchange contemplated by the
Facilities Purchase and Sale Agreement, are situated;
WHEREAS, through an error in the description of certain land previously
transferred by FI to AFHC located adjacent to the electric power generation
facilities and the sewerage and water facilities, each of which is located
near the Timika airport, such land description included approximately 2
hectares more land than intended and included land which FI intended to
transfer to PT Puncakjaya Power, the buyer of such electric power generation
facilities, and land which FI intended to retain in connection with its usage
of the sewerage and water facilities (such land being hereinafter collectively
referred to as the "Timika Land");
WHEREAS, FI and AFHC have further agreed to amend the description of the
land included in the previous transfer by FI to AFHC to delete the Timika
Land, or for AFHC to retransfer such land to FI, as appropriate;
WHEREAS, a religious organization has approached AFHC requesting the
donation of a mutually agreed plot of land measuring approximately 30 meters
by 30 meters located near FI's exploration base camp in Timika for the purpose
of allowing such organization to construct a mosque on such land (the "Mosque
Land");
WHEREAS, FI and AFHC have yet further agreed that AFHC shall transfer
the Mosque Land to the religious organization requesting such land at such
time as is agreed between AFHC and the religious organization requesting such
land;
WHEREAS, in order to resolve all issues related to FI's inability to
transfer HGB to land within the Non-HGB Lands, certain other issues related to
the amount of land transferred to AFIC in connection with all transfers of
Transferable Infrastructure Assets by FI to AFIC, the land description error
which resulted in the Timika Land being transferred to AFHC, and the donation
of the Mosque Land to a religious organization, FI, ALatieF, AFIC and AFHC
have agreed that FI shall transfer HGB to certain land located at Kuala
Kencana to AFIC pursuant to that certain Land Settlement Agreement between FI
and AFIC of even date herewith (the "Land Settlement Agreement");
AND
WHEREAS, each of AFIC and AFHC were formed with ALatieF owning 2/3rds
and FI owning 1/3rd of the issued share capital of those companies;
WHEREAS, upon the completion of the recapitalization of AFIC in
connection with the acquisition of the final US$68,079,986 of Transferable
Infrastructure Properties pursuant to the AFIC Purchase and Sale Agreement,
the total equity invested in AFIC shall be US$73,333,333;
WHEREAS, upon the completion of the recapitalization of AFHC in
connection with the final US$7,052,000 acquisition of the Golf Facility
pursuant to the AFHC Purchase and Sale Agreement, the total equity invested in
AFHC shall be US$16,666,667;
WHEREAS, the JVA and the Hotel JVA each provided that ALatieF would have
the option to purchase all of the shares owned by FI on the seventh
anniversary of the date of the formation of each of these companies or at any
time thereafter;
WHEREAS, FI and ALatieF have agreed, conditioned upon the receipt of all
necessary approvals, which approvals shall be obtained by ALatieF, that
ALatieF's Affiliate, P.T. ALatieF Corporation ("PTAC"), shall purchase all of
the shares of AFIC then owned by FI pursuant to a certain Share Transfer
Agreement between FI and PTAC of even date herewith (the "AFIC Share Transfer
Agreement") and PTAC shall purchase all of the shares of AFHC then owned by FI
pursuant to a certain Share Transfer Agreement between FI and PTAC of even
date herewith (the "AFHC Share Transfer Agreement");
AND
WHEREAS, the JVA and the Hotel JVA contemplated that over a period of
time the prices charged by and/or payable to each of AFIC and AFHC would be
revised from a cost plus a percentage fee type of payment basis to the basis
reflective of comparable market prices;
WHEREAS, each of AFIC and AFHC have begun the transition to a market
price economic basis and the parties hereto have each agreed that those
certain Master Services Agreements presently in effect between FI and each of
AFIC and AFHC which provide for payments to be made on a cost plus percentage
fee basis (collectively, as amended, the "Master Services Agreements") shall
be superseded and replaced by (i) this Agreement, (ii) two new Master Lease
Agreements between FI and AFIC of even date herewith whereby FI will lease all
of the AFIC Assets at rental rates comparable to the rates charged for the
lease of comparable properties in Jakarta on comparable terms and conditions,
with such leases giving due consideration to newly enacted tax rules
concerning the payment of a final tax on real property rentals in structuring
rents payable to AFIC (each, a "Master Lease Agreement"), and (iii) a Master
Use Agreement between FI and AFHC of even date herewith whereby AFHC shall
undertake to assure that the Hotel and Golf Facility will continue to be used
and operated in a manner consistent with their current usage, that quality
standards currently in effect will be maintained or improved, and that prices
charged to FI and its employees and to FI's contractors and consultants and
their employees, will be no higher than the average rates charged in Jakarta
by comparable hotel and golf facilities which are open for use by the general
public (the "Master Use Agreement");
WHEREAS, FI and/or AFIC and/or AFHC shall enter into certain further
agreements with Affiliates (as hereinafter defined) of ALatieF (the "Service
Providers") to provide management, operations and maintenance services for
certain of the AFIC Assets and the AFHC Assets;
AND
WHEREAS, the JVA and the Hotel JVA contemplated that FI would be
responsible for arranging financing for the indebtedness incurred by AFIC in
acquiring the AFIC Assets and by AFHC in acquiring the AFHC Assets
(collectively, the "Acquisition Debt") on the basis that such financing would
have an interest rate chargeable to AFIC and AFHC which would not exceed 5%
per annum and a principal amortization of 5% per annum for the initial 7 year
term (maturing in the year 2000) and, after such 7 year period, each of AFIC
and AFHC would be responsible for arranging their own refinancing;
WHEREAS, the JVA and the Hotel JVA contemplated that FI would guarantee
a minimum annual after-tax cash flow to AFIC and AFHC, collectively, on the
purchase price paid to FI for the purchase of the Transferable Infrastructure
Properties with the guaranteed amount being 10% on the Acquisition Debt and
15% on the equity funds invested by the shareholders of AFIC and AFHC which
were used for the acquisition of the Transferable Infrastructure Properties
(as such amount may be adjusted pursuant to this Agreement, the "Invested
Equity");
WHEREAS, the Parties have agreed to modify their prior agreements such
that FI will continue to be responsible for the financing and refinancing of
the Acquisition Debt, the amortization of such debt will be accelerated such
that the Acquisition Debt will be fully amortized in equal annual, semi-annual
or quarterly installments by January 1, 2009, (except that the indebtedness of
AFIC and AFHC to P.T. ALatieF Freeport Finance Company, B.V. will continue to
be non-amortizing through its term), all costs (except the parties internal
costs, if any) of arranging and servicing the Acquisition Debt will be paid by
FI on a pass through basis, and, as a result of the foregoing, the Acquisition
Debt shall henceforward be excluded in calculating the guaranteed minimum
after-tax cash flow of AFIC and AFHC, collectively, such that FI's continuing
guarantee shall be that AFIC and AFHC, collectively, shall receive the Revised
Guaranteed Return, as hereinafter defined;
WHEREAS, the Parties have further agreed to modify their prior
agreements such that FI shall not be obligated to make any payment to enable
AFIC and AFHC, collectively, to achieve the Revised Guaranteed Return unless
the profits earned by AFIC and AFHC and, if applicable, any excess profits
above the Revised Guaranteed Return earned by AFIC and AFHC in prior years,
collectively, do not equal or exceed the Revised Guaranteed Return;
AND
WHEREAS, for all of the foregoing and other reasons, FI and ALatieF
desire by this Agreement to supersede and cancel the JVA and the Hotel JVA and
to henceforward have their relationship governed by this Agreement, and FI and
each of AFIC and AFHC desire by this Agreement to supersede and cancel their
respective Master Services Agreements, with the relationship between FI and
AFIC being governed by this Agreement and the Master Lease Agreements, with
the relationship between FI and AFHC being governed by this Agreement and the
Master Use Agreement, and with the relationship between FI and the Service
Providers being governed by contracts between those parties.
NOW, THEREFORE, in consideration of the mutual covenants and promises
herein contained, the Parties hereto agree to enter into this Agreement on the
following terms and conditions:
Article 1
DEFINITIONS
1.1 Definitions. In this Agreement, the following terms shall have the
meanings provided below in this Section 1.1.
"Acquisition Debt" shall have the meaning assigned to such term on page
4 of the Recitals hereof.
"Advance" shall have the meaning assigned to such term in Section 5.4
hereof.
"Affected Property" shall have the meaning assigned to such term in
Section 8.1 hereof.
"Affiliate" shall mean any person or entity which directly or indirectly
controls, is controlled by, or is under common control with a Party.
"AFHC Assets" shall have the meaning assigned to such term on page 2 of
the Recitals hereof.
"AFHC Net Profits" shall mean AFHC's gross revenues from all sources
less AFHC's Allowable Expenses less AFHC's Taxes; in each case, directly
related to or reasonably allocated to AFHC Assets. All items of income
and expense shall be computed on a cash basis of accounting for purposes
of this Agreement.
"AFHC Purchase and Sale Agreement" shall have the meaning assigned to
such term on page 2 of the Recitals hereof.
"AFHC Share Transfer Agreement" shall have the meaning assigned to that
term on page 5 of the Recitals hereof.
"AFIC Assets" shall have the meaning assigned to such term on page 2 of
the Recitals hereof.
"AFIC Net Profits" shall mean AFIC's gross revenues from all sources
less AFIC's Allowable Expenses less AFIC's Taxes, in each case, directly
related to or reasonably allocated to AFIC Assets. All items of income
and expense shall be computed on a cash basis of accounting for purposes
of this Agreement.
"AFIC Purchase and Sale Agreement" shall have the meaning assigned to
such term on page 2 of the Recitals hereof.
"AFIC Share Transfer Agreement" shall have fine meaning assigned to such
term on page 4 of the Recitals hereof.
"Agreement" shall mean this Master Agreement and any and all subsequent
amendments and renewals hereof.
"Agreement for Minimum Support of Retail Operations" shall mean that
certain Agreement for Minimum Support of Retail Operations between FI
and PNK dated of even date herewith.
"Allowable Expenses" shall mean, for each of AFIC and AFHC, all costs,
expenses, fees and other amounts reasonably and prudently incurred in
the conduct of its business (in each case, limited to its business
involving the AFIC Assets and the AFHC Assets, as appropriate),
including operating expenses, expenses for obtaining necessary working
capital, expenses for obtaining insurance not provided by FI and
deductibles under such insurance, and general and administrative
expenses, but excluding all costs, expenses, fees and other amounts
imprudently incurred (including, but not limited to, amounts incurred to
procure services or goods which are in excess of the amounts for which
FI could have procured comparable services or goods of comparable
quantity and quality, and amounts which become payable as interest or
penalty because of any underpayment of any Taxes), in satisfaction of
any indemnity obligations owed to FI, in connection with any other
business, investment or other activity outside the scope of the business
conducted utilizing the AFIC Assets or the AFHC Assets, as appropriate,
and Taxes, depreciation and any other "non-cash" cost or expense, and
voluntary charitable contributions.
"Bona Fide Offer" shall have the meaning assigned to such term in
Section 9.2 hereof.
"Business Day" shall mean a day other than a Saturday, Sunday or other
day on which commercial banks in Jakarta, Indonesia or Hong Kong are
authorized or required by law to close.
"Carryforward Amount" shall mean the amount by which the after-tax cash
flow to AFIC and AFHC, collectively, from the effective date of the
Agreement to the date of calculation, exceeds the Revised Guaranteed
Return. If less than the entire Carryforward Amount is necessary to be
applied in any year pursuant to Section 5.3 of the Agreement in order
for AFIC and AFHC, collectively, to have achieved the Revised Guaranteed
Return, then only so much of the Carryforward Amount as is necessary to
achieve the Revised Guaranteed Return will be so applied (with that
portion of the Carryforward Amount applicable to the year furthest from
the date of such calculation to be applied first) and the balance, if
any, of the Carryforward Amount shall be available for application
pursuant to Section 5.3 of the Agreement in future years.
"Cash Flow" shall mean AFIC Net Profits or AFHC Net Profits, as
applicable, less Debt Service.
"Cash Shortfall" shall have the meaning assigned to such term in Section
5.4 hereof.
"Closing" shall have the meaning assigned to such term in the opening
paragraph of Article 2.
"COW" shall have the meaning assigned to such term on page 1 of the
Recitals hereof.
"Debt Service" shall mean an amount equal to the sum of (i) in the case
of amortizing debt, the aggregate amount of principal, interest, fees
and other amounts required to be paid on the indebtedness described in
Section 5.1 hereof pursuant to the terms of the agreements between AFIC
or AFHC and the Lenders party thereto, with such principal being fully
amortized in equal quarterly installments by December 31, 2009, plus
(ii) in the case of non-amortizing debt, the sum of (a) an amount
necessary to fully amortize the principal thereof in equal quarterly
installments by December 31, 2009, plus (b) an amount equal to the
actual interest required to be paid under the terms of the agreements
between AFIC or AFHC and the Lenders party thereto minus an amount equal
to the FI Interest Credit, plus (c) fees and other amounts required to
be paid pursuant to the terms of the agreements between AFIC or AFHC and
the Lenders party thereto.
"Escrow Agent" shall have the meaning assigned to such term in Section
2.01.
"Escrow Break Date" shall have the meaning assigned to such term in
Section 2.02.
"Escrow Conditions" shall have the meaning assigned to such term in
Section 2.02.
"Escrow Lapse Date" shall have the meaning assigned to such term in
Section 2.02.
"Escrow Letter" shall have the meaning assigned to such term in Section
2.02.
"Facilities Purchase and Sale Agreement" shall have the meaning assigned
to such term on page 3 of the Recitals hereof.
"FI Interest Credit" shall mean the product derived by multiplying (i)
the cumulative total amount previously withheld by FI for the
amortization of principal of non-amortizing debt pursuant to subsection
(ii) (a) of the definition of Debt Service, which has not yet been paid
by FI to the Lenders participating in such non-amortizing debt, and (ii)
the average interest rate paid by FI on its primary bank credit facility
during the comparable period.
"Golf Facility" shall mean that certain 18 hole golf course designed by
Coore & Crenshaw, together with the clubhouse and related facilities,
situated at Kuala Kencana, Irian Jaya and known as the "Rimba Irian Klub
Golf".
"HGB" shall have the meaning assigned to such term on page 2 of the
Recitals hereof.
"Hotel" shall have the meaning assigned to such term on page l of the
Recitals hereof.
"Hotel JVA" shall have the meaning assigned to such term on page 2 of
the Recitals hereof.
"Invested Equity" shall have the meaning assigned to such term on page 6
of the Recitals hereto. At the Closing, the Invested Equity shall be a
total of US$90 million. Invested Equity shall be adjusted in the future
as provided in Section 5.5.
"JVA" shall have the meaning assigned to such term on page l of the
Recitals hereof.
"Land Settlement Agreement" shall have the meaning assigned to such term
on page 4 of the Recitals hereof.
"Lenders" shall mean any and all lending institutions to which
indebtedness will be owed under the financing required to be arranged by
FI pursuant to Section 5.l hereof.
"Management and Maintenance Agreement" shall mean that certain
Management and Maintenance Agreement between FI and TDS of even date
herewith.
"Master Lease Agreement" shall have the meaning assigned to such term on
page 5 of the Recitals hereof.
"Master Services Agreements" shall have the meaning assigned to such
term on page 5 of the Recitals hereof.
"Master Use Agreement" shall have the meaning assigned to such term on
page 5 of the Recitals hereof.
"Mosque Land" shall have the meaning assigned to such term on page 4 of
the Recitals hereof.
"Non-HGB Lands" shall have the meaning assigned to such term on page 3
of the Recitals hereof.
"Offer" shall have the meaning assigned to such term in Section 9.2.
"Parties", and individually a "Party", shall mean FI, ALatieF, AFIC and
AFHC.
"PNK" shall mean P.T. Pasaraya Nusakarya, an Indonesian limited
liability company.
"PNK Service Contract Portion" shall mean fifty percent (50%) of the
amount by which PNK's profits on the Agreement for Minimum Support of
Retail Operations exceed an agreed amount.
"PTAC" shall have the meaning assigned to such term on page 4 of the
Recitals hereof.
"Reconstructed Property" shall have the meaning assigned to such term in
Section 8.2(a) hereof.
"Revised Guaranteed Return" shall mean an amount of cash, net of
Allowable Expenses, Taxes and Debt Service, which is equal to the
Invested Equity multiplied by 15% per annum.
"Service Provider" shall mean any of PNK, TDS or any other Affiliate of
ALatieF which provides services to FI or AFIC or AFHC in connection with
the operation or maintenance of the AFIC Assets or the AFHC Assets.
"Substituted Property" shall have the meaning assigned to such term in
Section 8.2(b) hereof.
"TDS" shall mean P.T. Tata Disantara, an Indonesian limited liability
company.
"Taxes" shall mean amounts which AFIC or AFHC, as applicable, (i) is
required by applicable Indonesian law, rule, regulation or decree to
pay, or which FI is required by applicable Indonesian law, rule,
regulation or decree to withhold and pay on their behalf, to any
Indonesian governmental authority, and (ii) which is levied solely with
respect to the business involving the AFIC Assets or the AFHC Assets, as
applicable, and (iii) which is not refundable or creditable under the
law to AFIC or AFHC, as applicable; provided, however, in no event shall
any penalty or interest which may be assessed against either AFIC or
AFHC as a result of any underpayment of any tax be reimbursable by FI.
"Timika Land" shall have the meaning assigned to such term on page 3 of
the Recitals hereof.
"Transferable Infrastructure Properties" shall have the meaning assigned
to such term on page 1 of the Recitals hereof.
"Variable Rent Payment" shall mean a payment to be made by FI to AFIC
and/or AFHC, as directed by ALatieF, as additional rent for the use of
property, to enable AFIC and AFHC, collectively, to achieve the Revised
Guaranteed Return, with such Variable Rent Payment to be made as
provided in Section 5.3.
1.2 Singular Plural and Gender. In this Agreement a reference to the
singular shall, where appropriate, also include a reference to the
plural and vice versa. A reference to any gender shall include any
other gender.
1.3 Interpretations. The words "hereof", "herein" and "hereunder" and words
of similar import when used in this Agreement shall refer to this
Agreement as a whole and not to any particular provision of this
Agreement, and section, subsection, schedule and exhibit references are
to this Agreement unless otherwise specified.
Article 2
CLOSING; ESCROW; EFFECTIVENESS OF AGREEMENT; CLOSING COSTS
2.1 Closing. (a) This Agreement will be signed by the Parties at a closing
(the "Closing") to be held on or before January 30, 1997, or such other
date as is mutually agreeable to the Parties (the "Closing Date"), in
the Jakarta office of FI at 4:00 P.M., local time and shall, immediately
after signing, be delivered to and thereafter held in escrow by Makarim
& Taira S. (the "Escrow Agent") as provided in Section 2.02 hereof.
2.2 Escrow; Breaking of Escrow. This Agreement shall be held in escrow by
the Escrow Agent until such time as the conditions specified by the
Parties (the "Escrow Conditions") in a letter of instructions signed by
the Parties and provided to the Escrow Agent at the Closing (the "Escrow
Letter") have been fulfilled or the date specified by the Parties in the
Escrow letter elapses (the "Escrow Lapse Date"). If the Escrow
Conditions are fulfilled prior to the Escrow Lapse Date, then on the
date when the last of the Escrow Conditions have been fulfilled, the
Escrow Agent shall date this Agreement and distribute signed copies of
this Agreement to the Parties in accordance with the instructions in the
Escrow Letter. If the Escrow Conditions have not been fulfilled by the
Escrow Lapse Date and the Parties have not otherwise instructed the
Escrow Agent in a writing signed by all Parties, then on the Escrow
Lapse Date the Escrow Agent shall destroy this Agreement in accordance
with the instructions in the Escrow Letter. The date on which the
Escrow Agent either dates and distributes this Agreement to the Parties
or destroys this Agreement shall be the "Escrow Break Date".
2.3 Effectiveness of Agreement. This Agreement shall become legally
effective and shall be binding upon the Parties when dated by the Escrow
Agent.
Article 3
CONTEMPORANEOUS CLOSING OF TRANSACTIONS
This Agreement and the agreements indicated below shall be structured to
achieve the maximum tax advantage to FI and shall be contemporaneously
executed at the Closing.
3.1 FI/ALatieF Agreements. At the Closing, FI and ALatieF shall execute
agreements terminating the JVA and the Hotel JVA as contemplated by
Article 4 hereof.
3.2 FI/PTAC Agreements. At the Closing, FI and PTAC shall execute the AFIC
Share Transfer Agreement and the AFHC Share Transfer Agreement pursuant
to which PTAC shall acquire all shares of AFIC and AFHC owned by FI.
Each of the aforementioned Share Transfer Agreements shall provide that
following the Closing of this Agreement and of the purchase of FI's
shares, ALatieF and PTAC shall promptly apply to change the name of the
each of AFIC and AFHC to delete the word "Freeport"; ALatieF and PTAC
shall have the right to apply for a change of the status of AFIC and
AFHC from PMA (reflective of companies with foreign participation in the
share ownership) to PMDN (reflective of 100% domestic share ownership);
FI shall procure the resignation of the member of the Board of
Commissioners of each of AFIC and AFHC nominated by it; and FI shall
cooperate with ALatieF and PTAC to accomplish the foregoing by signing
applications, notarial deeds and other documents as reasonably
necessary.
3.3 FI/AFIC Agreements. At the Closing, FI and AFIC shall execute the
following agreements:
a) AFIC Purchase and Sale Agreement pursuant to which FI shall sell
and AFIC shall purchase US$68,079,986 of additional Transferable
Infrastructure Properties identified in said agreement, bringing
the total of all AFIC Assets purchased to US$220 million;
b) Master Lease Agreements pursuant to which FI shall lease all of
the AFIC Assets, including those AFIC Assets located at
Tembagapura which are being obtained by AFIC in exchange for AFIC
Assets located at Amamapare in accordance with the Facilities
Purchase and Sale Agreement, with the rental for each individual
AFIC Asset, unless otherwise agreed, being based on the rental
which would be payable to lease a comparable property in Jakarta
on comparable terms and conditions, with such rental to be
adjusted every three years, provided, that FI shall agree, and the
Master Lease Agreements shall reflect, that FI will determine, on
an annual basis, how the residential properties under the Master
Lease Agreements shall be allocated among FI and others,
including, without limitation, P.T. ALatieF P&O Port Development
Company, P.T. Airfast Aviation Facilities Company, P. T.
Puncakjaya Power, Nusantara Power Services, PNK and TDS, for the
coming year.
c) Termination Agreement pursuant to which FI and AFIC shall
terminate the Master Services Agreement(s) presently in effect
between them;
d) Facilities Purchase and Sale Agreement pursuant to which FI shall
reacquire certain AFIC Assets located at Amamapare which are
identified in said agreement from AFIC and shall transfer
ownership of certain infrastructure assets located at Tembagapura
identified in said agreement in exchange therefor;
e) Land Settlement Agreement pursuant to which FI shall transfer
ownership of certain land located at Kuala Kencana identified in
said agreement, including approximately 15.817 hectares of
undeveloped unreticulated land constituting a portion of RW"C" on
FI's master plan for Kuala Kencana and three reticulated lots in
RW"B", which transfer of land shall fully and finally resolve all
issues arising out or FI's inability to obtain and transfer HGB
for all Transferable Infrastructure Properties on Non-HGB Lands
(but without relieving FI of the obligation to obtain and transfer
HGB title to those Transferable Infrastructure Properties located
elsewhere for which FI has not yet transferred HGB to AFIC), the
retransfer of the erroneously transferred PJP Land, and the
donation of the Mosque Land to a religious organization.
3.4 FI/AFHC Agreements. At the Closing, FI and AFHC shall execute the
following agreements:
a) AFHC Purchase and Sale Agreement pursuant to which FI shall sell
and AFHC shall purchase the Golf Facility for US$7,052,000,
bringing the total of all AFHC Assets purchased by AFHC to US$50
million;
b) Termination Agreement pursuant to which FI and AFHC shall
terminate the Master Services Agreement(s) presently in effect
between them; and
c) Master Use Agreement pursuant to which AFHC shall undertake to
assure that the Hotel and Golf Facility will continue to be used
and operated in a manner consistent with their current usage, that
quality standards currently in effect will be maintained or
improved, and that prices charged to FI and its employees and to
FI's contractors and consultants and their employees, will be no
higher than the average rates which are charged from time to time
by comparable hotels and golf facilities in Jakarta which are open
for use by the general public, with due regard to the contracts
between AFHC and Indo-Pacific Sheraton Limited.
3.5 FI/PNK Agreement. At the Closing, FI and PNK shall execute the Agreement
for Minimum Support of Retail Operations pursuant to which PNK shall
continue to conduct commercial and retail grocery and miscellaneous
operations in AFIC Assets leased by FI from AFIC pursuant to the Master
Lease Agreement or in infrastructure assets otherwise owned by FI and
pursuant to which PNK shall establish prices as specified therein for so
long as FI is providing a limited subsidy to PNK as provided therein.
3.6 FI/TDS Agreement. At the Closing, FI and TDS shall execute the
Management and Maintenance Agreement pursuant to which TDS shall manage
and maintain substantially all of the AFIC Assets which FI leases from
AFIC pursuant to the Master Lease Agreement and certain additional
infrastructure assets owned by FI.
Each of the agreements described in Sections 3.5 and 3.6 above, and any other
agreements which may be entered into between FI, AFIC or AFHC and any
Affiliate of ALatieF, shall, to the extent practicable, provide for payment on
the basis of unit rates and each of AFIC and AFHC hereby agree to provide, and
ALatieF hereby agrees to cause each of its Affiliates to provide, necessary
non-public cost and other information, whether developed internally or by
consultants or contractors, to FI so that FI and AFIC, AFHC or such Affiliate,
as appropriate, can, in good faith, negotiate unit rates which are expected to
result in total payments which are competitive with the price for which such
services could be obtained from unaffiliated third parties. Each such
agreement shall be on terms and conditions, including terms of compensation,
as could be expected to be obtained from unaffiliated third parties for the
performance of the same or similar services or the purchase of goods of
comparable quality and quantity on the same terms and conditions.
The agreement described in Section 3.5 above shall further provide that if at
the end of any year there shall be a PNK Service Contract Portion payable by
PNK, then such PNK Service Contract Portion shall be paid to AFIC and/or AFHC
or to FI, as directed by FI, after consulting with ALatieF as to whether or
not the Revised Guaranteed Return has been achieved and, if not, how much of
the PNK Service Contract Portion ALatieF desires to have paid to each of AFIC
and AFHC. Any such PNK Service Contract Portion which is payable shall be paid
as directed by FI within 5 Business Days after FI has instructed PNK as to how
such PNK Service Contract Portion is to be paid.
Article 4
CANCELLATION OF JVA AND HOTEL JVA
4.1 Fulfillment of Obligations. The Parties agree that the acquisition by
AFIC of the additional Transferable Infrastructure Properties pursuant
to the AFIC Purchase and Sale Agreement and the acquisition of the Golf
Facility by AFHC pursuant to the AFHC Purchase and Sale Agreement and
the transfer of properties by FI to AFIC and by AFIC to FI pursuant to
the Facilities Exchange Agreement will completely fulfill any and all
obligations including, without limitation, any obligation that FI has or
had or may have or may have had to transfer infrastructure assets to
AFIC and/or AFHC under the terms of the JVA and the Hotel JVA. Except
as expressly provided in Article 8 hereof, and except for FI's
obligation to obtain and transfer HGB for AFIC Assets and AFHC Assets
situated outside of the Non-HGB Lands, each of ALatieF, AFIC and AFHC
agree that AFIC and/or AFHC shall have no further right to require FI to
transfer any buildings, improvements, properties, land or rights therein
to AFIC and/or AFHC in accordance with the JVA, the Hotel JVA or
otherwise.
4.2 Termination of JVA and Hotel JVA. FI and ALatieF hereby agree that, as
contemplated by Section 3.1, at the Closing they shall execute
termination agreements terminating and canceling each of the JVA and the
Hotel JVA, as amended, such termination agreements to become effective
upon the Breaking of Escrow and neither FI nor ALatieF shall have any
further rights or obligations thereunder.
Article 5
FINANCING; DEBT SERVICE; RETURN ON EQUITY
5.1 Acquisition Capital Financing/Amortization. FI shall arrange financing
and/or refinancing on behalf of AFIC and AFHC of their respective
portions of the Acquisition Debt, but of no other debt which AFIC or
AFHC may incur including, but not limited to, debt for financing working
capital requirements. The terms of such financing shall provide that
such debt shall be fully amortized in equal annual, semi-annual or
quarterly installments by January 1, 2009, (except that the indebtedness
of AFIC and AFHC to P.T. ALatieF Freeport Finance Company, B.V. will
continue to be non-amortizing through its term). All such financings
shall contain such other terms and conditions as shall be approved by
and are acceptable to FI.
AFIC and AFHC hereby acknowledge and agree that they shall, at their
expense, provide all assistance which FI may reasonably request in
arranging such financing and in complying with the terms and conditions
of such financing including, but not limited to, providing such non-
public information and data as may be requested by the Lenders and/or
prospective lenders.
5.2 Debt Service. FI shall (i) guarantee the payment of all principal,
interest, fees and other amounts required to be paid to the Lenders on
the financing of the Acquisition Debt, (ii) shall be entitled to
withhold amounts otherwise due and payable by FI to either of AFIC or
AFHC an amount equal to Debt Service on the Acquisition Debt of both
AFIC and AFHC, and (iii) all principal, interest, fees and other amounts
required to be paid to the Lenders on the financing of the Acquisition
Debt, when due, directly to the Lenders or into a lock box account, as
agreed by FI and the Lenders.
5.3 Return on Invested Equity. FI guarantees that each year AFIC and AFHC
will receive, on a combined basis, the Revised Guaranteed Return from a
combination of payments made by third parties, payments of the PNK
Service Contract Portion, if any, made by PNK as contemplated by the
last paragraph of Article 3, payments made by FI pursuant to the Master
Lease Agreements and the Master Use Agreement, the application, if
applicable, of any Carryforward Amount, and, if necessary to achieve the
Revised Guaranteed Return, a Variable Rent Payment by FI.
FI shall not be required to make any Variable Rent Payment in any year
when the sum of (i) AFIC Net Profits plus (ii) AFHC Net Profits plus
(iii) the PNK Service Contract Portion, if any, payable by PNK to AFIC
and/or AFHC as contemplated by the last paragraph of Article 3, plus,
(iv) the Carryforward Amount, if any, equal or exceed the Revised
Guaranteed Return.
Any Variable Rent Payment which FI is required to make shall be payable
within 30 days following the submission of a claim by ALatieF, with
appropriate supporting information and data which establishes that a
Variable Rent Payment is due, the amount of such Variable Rent Payment
and the amount of such Variable Rent Payment to be paid to each of AFIC
and AFHC. If as a result of any audit conducted pursuant to Article 6
hereof and any recalculation of AFIC Net Profits, AFHC Net Profits
and/or the PNK Service Contract Portion resulting therefrom, it is
determined that any Variable Rent Payment made by FI exceeds the amount
actually owed by FI, then FI shall have the right to withhold the amount
of such overpayment from the next amounts due and payable to AFIC and/or
AFHC until the full amount of such overpayment, together with interest
at a rate of 12% per annum has been recovered by FI.
5.4 Advances on the Variable Rent Payment. If at any time during a year the
cumulative cash flow of either AFIC or AFHC is not sufficient to allow
AFIC or AFHC, as applicable, to pay its Allowable Excesses, Debt Service
and Taxes when and as due (a "Cashflow Shortfall"), then ALatieF shall
have the right, but not more frequently than once per month, to request
FI to make an advance on the Variable Rent Payment (each such payment an
"Advance") , by presenting a claim therefor together with appropriate
supporting information and data, and instructions as to the amount of
such Advance to be paid to each of AFIC and AFHC. Each request for an
Advance which is complete and has no obvious errors shall be paid by FI
within ten (10) days of the receipt of such request.
If at the end of each calendar quarter in each year, the cumulative Cash
Flow (including any Advances previously made during such year) of either
AFIC or AFHC during such year is less than the proportionate amount of
the Revised Guaranteed Return as of the end of such calendar quarter
(3.75% as of March 31, 7.5% as of June 30, 11.25% as of September 30 and
15% as of December 31), then ALatieF shall have the right to request an
additional Advance in an amount equal to the difference between the
actual cumulative Cash Flow of AFIC or AFHC during such year through the
end of such calendar quarter and the proportionate amount of the Revised
Guaranteed Return which should have been received at the end of such
calendar quarter, by presenting a claim therefor together with
appropriate supporting information and data and instructions as to the
amount of such Advance to be paid to each of AFIC and AFHC. Each request
for an Advance which is complete and has no obvious errors shall be paid
by FI within ten (10) days of the receipt of such request.
All Advances made during a year shall be excluded in calculating, as
provided in the second paragraph of Section 5.3 above, whether or not FI
is required to make a Variable Rent Payment for such year. If, based on
such calculation:
(a) FI is not required to make a Variable Rent Payment for such year,
then FI shall have the right to withhold an amount equal to the
sum of all Advances made during such year from the next amounts
due and payable to AFIC and/or AFHC until the full amount of such
Advances made during such year, together with interest at a rate
of 12% per annum, has been recovered by FI, and
(b) FI is required to make a Variable Rent Payment for such year, then
(i) if the sum of the Advances made during such year exceed the
amount of the Variable Rent Payment owed, FI shall have the right
to withhold the amount by which the sum of such Advances made
during such year exceeds the amount of the Variable Rent Payment
owed, together with interest at a rate of 12% per annum, from the
next amounts due and payable to AFIC and/or AFHC until the full
amount of such overpayment has been recovered by FI or (ii) if the
sum of the Advances made during such year is less than the amount
of the Variable Rent Payment owed, then the sum of such Advances
made during such year shall be credited against the amount of the
Variable Rent Payment owed and FI shall pay the balance of the
Variable Rent Payment owed as provided in the last paragraph of
Section 5.3 above.
5.5 Invested Equity Adjustment. Any sale or other disposition by AFIC of any
AFIC Asset, or by AFHC of any AFHC Asset, shall be on terms and
conditions, including fair market value compensation, as could be
expected to be obtained from unaffiliated third parties.
Should AFIC, at any time, sell or otherwise dispose of any AFIC Asset or
any part thereof, or AFHC, at any time, sell or otherwise dispose of any
AFHC Asset or any part thereof, including, without limitation, pursuant
to Article 9 or Section 8.2(c) hereof, the amount of Invested Equity on
which the Revised Guaranteed Return is calculated shall be reduced by
1/3rd of the original purchase price paid by AFIC or AFHC to acquire
such AFIC Assets or AFHC Asset.
Article 6
AUDITING
In the event that ALatieF shall request FI to make either an Advance or a
Variable Rent Payment, or both, in any year, then FI shall have the right to
audit the financial and other books and records of AFIC, AFHC, PNK and each
Service Provider as hereinafter provided.
6.1 Requested Financial Statements. Upon the request of FI, each of
ALatieF, AFIC and AFHC, as applicable, shall provide or cause to be
provided, to FI, or its outside auditors, detailed financial statements,
tax returns, ledgers and other records, financial or non-financial,
showing all revenues received, allocated or accrued and all operating
and other expenses paid, allocated or accrued by AFIC, AFHC, PNK and
each other Service Provider, in the latter case limited to those
revenues and expenses directly or indirectly related to its respective
Service Contract, and such other information as FI shall reasonably
request.
6.2 Right to Examine Books. FI shall have, and each of ALatieF, AFIC and
AFHC, as applicable, shall ensure, the right, upon reasonable notice and
at reasonable times, to examine those financial and other books and
records of AFIC, AFHC, PNK and each other Service Provider as it deems
necessary and which are reasonably related to this Agreement or any
other agreement between FI and any of AFIC, AFHC, PNK and any Service
Provider, including without limitation, the salaries, fees and other
amounts paid to Affiliated companies and individuals (which salaries,
fees and other amounts are to be commensurate with amounts paid to or
charged by third parties unaffiliated with ALatieF for the same or
comparable services and/or the same or similar quantities and quality of
goods purchased under similar circumstances and conditions and in no
case shall Allowable Expenses include any amount payable for services
and goods which is in excess of the price at which FI could have
purchased such services or goods). Such right to examine books and
records shall serve, among other purposes, to enable FI to identify any
expenses which are not Allowable Expenses and all such expenses which
are not Allowable Expenses shall be credited to the calculation of the
Revised Guarantee Return in the same manner as if such amount had been
earned as net profit by the entity concerned.
6.3 Generally Acceptable Accounting Principles. In keeping books and records
on its operations hereunder, AFIC, AFHC, PNK and each other Service
Provider shall follow and adhere to generally accepted accounting
principles in the United States ("GAAP"), or such other basis as may be
acceptable to FI.
6.4 Other Contracts. ALatieF, AFIC, AFHC, PNK and any other Service Provider
shall include, or cause to be included, a provision in any and all
contracts which it or any of its Affiliates enters into with any other
Affiliated company or individual in connection with providing any
services or goods which are applicable, in whole or in part, to services
or goods to be provided to FI, which provision shall obligate such
company or individual to provide the information and data, and permit FI
to audit the financial and other books and records of each such company
and individual, as provided and for the purposes set forth in this
Article 6.
6.5 Years Subject to Audit. The rights and obligations of the Parties
provided in this Article 6 shall include the year for which an Advance
or Variable Rent Payment has been requested and the 5 previous years.
Article 7
WARRANTIES AND REPRESENTATIONS
7.1 Corporate Power. Each Party represents and warrants to the others that
it has full corporate power and authority to enter into this Agreement
and to perform its obligations hereunder according to the terms of this
Agreement, and that it has taken all necessary corporate or other
actions to authorize its entry into and performance of this Agreement.
7.2 Statements True. Each Party represents and warrants to the others that
the statements made relating to it in this Agreement are true and
accurate and that nothing further needs to be stated to prevent such
statements from being misleading.
Article 8
REACQUISITION OF PROPERTY
8.1 FI's Right to Reacquire. If, at any time hereafter FI's Board of
Commissioners adopts a resolution to the effect that, for any of the
reasons specified below, it is necessary or advisable for FI to
reacquire any AFIC Asset or any AFHC Asset (any such property to be
reacquired being hereinafter referred to as the "Affected Property"), FI
shall promptly notify AFIC or AFHC of such resolution, the date on which
the Affected Property is required to be reconveyed to FI (which date
shall not be earlier than 12 months from the date of the notice unless
the reason specified in such notice is that described in clause (c)
below, in which case the time period will be reasonable based on the
hazard giving rise to such notice) and the reasons why the Affected
Property is being reacquired. AFIC and AFHC hereby agree to execute and
deliver any and all documents which FI determines are necessary or
advisable in connection with the reacquisition of Affected Property
pursuant hereto. The reasons which will permit FI to reacquire Affected
Property under this Article 8 are as follows:
a) FI has determined that a commercially exploitable deposit of
minerals exists under, near or as part of the Affected Property;
b) FI requires all or part of the Affected Property as the location
for equipment or other facilities in connection with FI's mining
enterprise;
c) FI becomes aware that the Affected Property has become or is
likely to become a physical hazard to any person or property, or
its condition is such that continued maintenance and repair is not
economically justified by prudent business standards; and
d) FI reasonably determines that such reacquisition is necessary or
advisable to enable it to comply with the COW or any Indonesian
law, rule, regulation or decree.
8.2 AFIC's/AFHC's Option. AFIC or AFHC shall have the option, exercisable
within 60 days after receipt of the notice of the adoption of any such
resolution, to require FI to either:
a) if economically viable, warranted by prudent business standards
and legally possible, construct, or cause to be constructed, as
soon as reasonably practical, in a location mutually satisfactory
to FI and AFIC or AFHC, as applicable, a property substantially
similar in all material aspects to the Affected Property
(hereinafter the "Reconstructed Property"), but in no event shall
FI be required to construct or cause to be constituted a
Reconstructed Property where the cost of construction is estimated
to exceed the sum of (i)1/3 of the original purchase price paid by
AFIC or AFHC to FI to acquire such Affected Property, plus (ii) a
prorata portion of the then outstanding balance of the Acquisition
Debt applicable to or encumbering such Affected Property;
b) if available and warranted by prudent business standards,
substitute as soon as reasonably practical, another property owned
by FI (hereinafter the "Substituted Property") for the Affected
Property, which Substituted Property shall be in a location and
otherwise be satisfactory in all material respects to AFIC or
AFHC, but in no event shall FI be required to provide a
Substituted Property where FI's cost to construct such property
exceeds the sum of (i) 1/3 of the original purchase price paid by
AFIC or AFHC to FI to acquire such Affected Property, plus (ii) a
prorata portion of the then outstanding balance of the Acquisition
Debt applicable to or encumbering such Affected Property; or
c) repurchase the Affected Property for a purchase price equal to the
greater of: (i) the fair market value of the Affected Property,
excluding any subsurface properties or rights therein, and (ii)
the sum of (A) 1/3 of the original purchase price paid by AFIC or
AFHC to FI to acquire such Affected Property, plus (B) a prorata
portion of the then outstanding balance of the Acquisition Debt
applicable to or encumbering such Affected Property. The fair
market value of any Affected Property shall be determined by an
appraisal procedure conducted by a mutually acceptable third party
appraiser in accordance with procedures to be established, it
being understood that the method of appraisal shall be the method
which is based on the greater of depreciated book value or on
comparable sales.
If AFIC or AFHC has not made an election within the 60 day period
referred to above or if a reconstructed Property is not economically
viable, warranted by prudent business standards or legally available in
the case of option (a) or if a Substituted Property is not otherwise
available and warranted by prudent business standards in the case of
option (b), then AFIC or AFHC shall be deemed to have elected the
repurchase option described in this Section 8.2(c).
8.3 Transfer of Property. Regardless of which option AFIC or AFHC, as
applicable, has elected or has been deemed to have elected pursuant to
Section 8.2 above, AFIC or AFHC, as applicable, shall transfer such
Affected Property to FI and FI shall accept the transfer of the Affected
Property from AFIC or AFHC, not later than the date specified in FI's
notice provided for in Section 8.1 above. FI and AFIC or AFHC, as
applicable, shall cooperate in good faith to effectuate the applicable
option at the earliest possible time. If the Affected Property is an
AFIC Asset, the Master Lease Agreement shall be amended to remove the
Affected Property from the scope thereof and to reduce pro-tanto the
Fixed Rent and Impositions (as each such term is defined in the Master
Lease) and other amounts payable under the Master Lease Agreement. In
all instances, ALatieF shall cause any other agreements relating to or
otherwise affecting, in whole or in part, any Affected Property to be
amended to remove the services for such Affected Property therefrom. All
Reconstructed Property or Substituted Property shall, at the sole option
of FI, exercisable by written notice to the owner of the Affected
Property to be conveyed to FI in exchange for the Reconstructed Property
or Substituted Property, be substituted in place of such Affected
Property in the Master Lease Agreement and/or other agreements, as
applicable. The Parties acknowledge that it may be necessary for a
payment to be made by one Party to another in the event that the value
of any Reconstructed Property or Substituted Property has a different
value than the Affected Property. The Parties further recognize that, in
the event either of the options described in Sections 8.2(a) or 8.2(b)
is elected and AFIC or AFHC is required to surrender or vacate the
Affected Property before a Reconstructed Property or Substituted
Property is available to lease by AFIC or occupancy by AFHC, FI may be
required to pay AFIC amounts payable under the Master Lease Agreement
related to such surrendered or vacated property until the Reconstructed
Property or Substituted Property is available for lease to FI or FI may
be required to pay AFHC an amount reasonably necessary to compensate
AFHC for the interruption of the business conducted at the Affected
Property for the period commencing with the date on which AFHC ceases to
conduct business at the Affected Property and terminating on the date
that AFHC is able to recommence business at the Reconstructed Property
or Substituted Property.
Article 9
FI'S RIGHT OF FIRST REFUSAL
9.l Restrictions on Transfer of AFIC Assets and AFHC Assets. Each of
ALatieF, AFIC and AFHC recognize that the AFIC Assets and the AFHC
Assets are essential and/or desirable in connection with FI's mining
enterprise. AFIC hereby agrees not to sell or otherwise transfer any
AFIC Asset, and AFHC hereby agrees not to sell or otherwise transfer any
AFHC Asset, to any person or legal entity who or which is not an
Affiliate of ALatieF, without first offering to sell such AFIC Asset or
AFHC Asset to FI as provided in Section 9.2 below. ALatieF shall cause
AFIC and AFHC to fulfill their obligations under this Article 9.
9.2 Right of First Refusal. If at any time AFIC and/or AFHC shall receive a
Bona Fide Offer from a third party to purchase all or any portion of the
AFIC Assets or the AFHC Assets, respectively, which AFIC and/or AFHC
desires to accept, then prior to closing such sale AFIC and/or AFHC
shall first notify FI of such Bona Fide Offer by providing FI all data
and information concerning the proposed transaction, including, but not
limited to, a copy of the purchase contract with the proposed buyer, and
shall give to FI the right to purchase such AFIC Assets and/or AFHC
Assets, as appropriate, covered by such Bona Fide Offer, upon the terms
and conditions stipulated in such Bona Fide Offer (the "Offer"), such
right to purchase to be communicated by AFIC and/or AFHC by notice given
hereunder. For the purposes of the foregoing, a "Bona Fide Offer" shall
be an offer reflected in an executed purchase contract with a ready,
willing and able buyer (or a contract in a fully negotiated form which
AFIC and/or AFHC and such a buyer are willing to execute) providing for
the purchase of the AFIC Assets and/or the AFHC Assets as referred to in
the Offer subject only to the waiver or non-exercise of FI's rights in
this Section 9.2.
Any right of FI under this Section 9.2 to purchase AFIC Assets and/or
AFHC Assets may be exercised only as to the entire quantity of AFIC
Assets and/or AFHC Assets covered by the Bona Fide Offer and not merely
in part. In the event that such right to purchase shall not be exercised
in full by notice given hereunder and received by AFIC and/or AFHC
within 15 days after the date of the notice to FI with respect to such
right to purchase, then AFIC and/or AFHC shall be entitled to sell, as a
whole and not in part only, the AFIC Assets and/or the AFHC Assets which
are described in the Offer, to the third party making the Offer on terms
and conditions no more favorable to such third party than the terms and
conditions of the Offer. If AFIC and/or AFHC shall fail to consummate a
sale to such third party of the entire number of AFIC Assets and/or AFHC
Assets described in the Offer within 60 days after AFIC and/or AFHC
shall become entitled hereunder to sell to such third party, no sale or
transfer may thereafter be made by AFIC and/or AFHC without again
complying with the provisions of this Section 9.2.
9.3 ALatieF to Obligate Affiliate. In the event any AFIC Asset or AFHC Asset
is transferred to an Affiliate of ALatieF, then ALatieF shall cause such
Affiliate to be bound by the terms of this Article 9 and shall cause
such Affiliate to fulfill its obligations hereunder.
Article 10
EXECUTION OF OTHER AGREEMENTS
The Parties acknowledge and agree that to implement this Agreement, it may be
necessary to enter into, execute and deliver, and each Party hereby agrees and
covenants to enter into, execute and deliver, any and all other documents or
instruments necessary or requested by any Party hereto in order to give full
effect to the provisions of this Agreement.
Article 11
CONFIDENTIALITY
11.1 Confidential Treatment/Permitted Disclosures. The Parties agree and
shall undertake, that any and all information ("Proprietary
Information") received by any Party in connection with this Agreement
which is derived from another Party (however acquired and in whatever
form) shall be treated by it as confidential and such Party shall not
disclose all or any part of such Proprietary Information to any third
party or otherwise seek to exploit all or any part of such Proprietary
Information without the prior written consent of the other Parties,
provided that this clause shall not apply to information which at any
time comes into the public domain through no fault of any Party, or is
required to be furnished to any government or public authority pursuant
to any law, rule, regulation or judicial order applicable to any Party
or any Affiliate of a Party, or is required to be disclosed in
compliance with the rules of a stock exchange on which a Party's or an
Affiliate or a Party's stock is listed, or which is disclosed to a
Party's bankers, attorneys, accountants, tax advisors or other
consultants who agree to maintain the secrecy of such Proprietary
Information.
11.2 Implementation. Each Party further agrees to make all reasonable
efforts, and to take all reasonable precaution, to prevent any of its
employees or personnel, or any other persons, from obtaining or making
any unauthorized use of, or effecting any disclosure of any Proprietary
Information. The Parties shall implement this policy of confidentiality
in part by appropriate contract provisions, including but not limited to
appropriate terms in contracts of employment.
11.3 Parties Retain Property Rights. It is understood by the Parties that
Proprietary Information shall remain the property of the Party from
which such Proprietary Information was derived and upon termination or
expiration of this Agreement for any cause whatsoever, the Party
receiving the Proprietary Information shall cease to use the same and
shall return the same to the Party from which it was derived together
with all related documents and copies.
11.4 Obligations to Survive. The obligations contained in this Article 11
shall bind the Parties during the term of this Agreement and shall
continue to bind the Parties for a period of five years after this
Agreement is terminated (for whatever cause) or expires.
Article 12
FORCE MAJEURE
No Party shall be liable to any other Party for non-performance or delay in
performance of any of its obligations (other than the obligation to pay money
when due) under this Agreement resulting from any Act of God, flood, fire,
war, riot, civil commotion, natural catastrophe, strike, act of government,
change of law, or other like or dissimilar causes beyond the reasonable
control of, or not preventable by reasonable diligence of, such party,
provided the Party prevented or delayed makes every reasonable effort to
remove the obstacle and to resume performance at the earliest practicable
time.
Article 13
DISPUTE RESOLUTION PROCEDURES
13.1 Amicable Settlement. If at any time the representatives of the Parties
are unable to reach agreement on any matter arising in connection
herewith, any representative of a Party may request that the matter be
submitted to binding arbitration, as provided in this Article 13.
13.2 Arbitration Rules. Situs and Language. The Parties hereby consent to
submit any and all disputes arising under this Agreement, which are not
resolved pursuant to the procedures set forth in Section 13.1, for final
settlement either by conciliation, or by arbitration. Where the Parties
seek an amicable settlement of a dispute by conciliation, the
conciliation shall take place in accordance with the UNCITRAL
Conciliation Rules contained in Resolution 35/52 adopted by the United
Nations General Assembly on December 4, 1980 and entitled "Conciliation
Rules of the United Nations Commission on International Trade Law", as
such rules may be amended from time to time. Where the Parties elect to
arbitrate, the arbitration shall take place in accordance with the
UNCITRAL Arbitration Rules contained in Resolution 31/98 adopted by the
United Nations General Assembly on December l5, 1976 and entitled
"Arbitration Rules of the United Nations Commission on International
Trade Law", as such rules may be amended from time to time. The language
to be used in conciliation and arbitration shall be in the English
language, unless the Parties otherwise agree. Conciliation or
arbitration proceedings conducted pursuant to this Section 13.2 shall be
held in Jakarta unless the Parties otherwise agree or unless the
aforesaid rules or the procedures thereunder otherwise require. An award
pursuant to any arbitration proceedings shall be enforceable against and
binding upon the Parties hereto, and shall be specifically enforceable
in Indonesia.
13.3 Cooperation. Each Party shall cooperate in good faith to expedite to the
maximum practicable extent the conduct of any arbitral proceedings
commenced under this Agreement. If any Party should believe that another
Party has defaulted in its obligation under this Section 13.3 so to
cooperate, such Party may apply to the arbitrator or arbitrators during
the course of the proceedings for a determination to such effect. If the
arbitrator or arbitrators should determine that a Party has defaulted
under this Section 13.3, the final award shall contain an assessment
against such defaulting Party of all costs incurred by the non-defaulting
Party in connection with the arbitration resulting from such
default, including, without limitation, the reasonable fees and
disbursements of its counsel.
13.4 Arbitrators' Fees and Expenses. Except as provided for above in this
Article 13, the Parties shall equally share the expenses of arbitration
and fees or the arbitrators, not including the attorneys' fees and
expenses of the respective Parties.
13.5 Waiver of Right to Appeal. The Parties expressly agree to and do hereby
waive the following Indonesian laws: Section 641 of the Reglement op de
Rechtsvordering ("R.V.") and Articles 15 and 108 of Law No. 1 of 1950
(Supreme Court Rules) so that accordingly there shall be no appeal to
any court or other authority from the decision of the arbitrator. The
arbitrators shall be bound by strict rules of law in making their
decision and shall not be entitled to render a decision ex aequo et
bono.
13.6 Limitation on Right to Court Action. No Party shall be entitled to
commence or maintain any action in a court of law upon any matter in
dispute arising from or in relation to this Agreement except for the
enforcement of an arbitral award granted pursuant to this Article 13.
13.7 Performance of Obligations Pending Decision. During the period of
submission to arbitration and thereafter until the granting of the
arbitral award, the Parties shall, except in the event of termination,
continue to perform all their obligations under this Agreement without
prejudice to a final adjustment in accordance with the said award.
13.8 Waiver of Right to Terminate Board of Arbitration. The Parties hereby
waive Articles 620(1) and 650(2) of the R.V. so that the mandate of a
board of arbitration duly constituted in accordance with the terms of
this Agreement shall remain in effect until a final arbitration award
has been issued by the board of arbitration.
13.9 Survival. The provisions contained in this Article 13 shall survive the
termination and/or expiration of this Agreement.
Article 14
TERMINATION
This Agreement shall terminate upon the first to occur of the following
events:
a) the cessation or termination of FI's mining enterprise and the
settlement of all liabilities associated therewith which accrued
during the term thereof;
b) the failure of ALatieF and its Affiliates to, collectively, own at
least 50.1% of AFIC or AFHC, without the prior written approval of
FI;
c) the completion of the liquidation and winding up of the affairs of
any of FI, ALatieF, PTAC, AFIC or AFHC; or
d) the mutual agreement to terminate.
The Parties hereby waive Article 1266 of the Indonesian Civil Code but only to
the extent that judicial cancellation of this Agreement would otherwise be
required to terminate this Agreement.
Article 15
ASSIGNMENT
No Party may assign any of its rights or obligations under this Agreement
without the prior written consent of the other Parties, except that any Party
may at its option assign its rights and obligations hereunder to an Affiliate
if such Affiliate has a net worth acceptable to the other Parties (or the
transferring Party undertakes to guarantee such affiliated company's
fulfillment of all or its obligations under this Agreement) and provided, that
such transfer is permitted by the Indonesian government. In the event an
assignment is consented to by the other Parties, this Agreement shall inure to
the benefit of and be binding upon such assignee and its successors or
assigns; and such assignee shall become a Party to this Agreement.
Article 16
LAW AND INTERPRETATION
16.1 Governing Law. The provisions of this Agreement shall be governed in
all respects by and construed in accordance with the laws of the
Republic of Indonesia.
16.2 Governing Language of this Agreement. This Agreement is executed in a
text using the English language which shall be the governing language
despite translation into any other language(s).
16.3 Headings. The headings of the Articles and Sections in this Agreement
and table of contents shall not form part of this Agreement and shall
not be regarded in interpreting and construing this Agreement.
Article 17
SEVERABILITY
If one or more of the provisions herein shall be void, invalid, illegal or
unenforceable in any respect under any applicable law or decision, the
validity, legality and enforceability of the remaining provisions contained
shall not be affected or impaired in any way.
Each Party hereto shall; in any such event, execute such additional documents
as any other Party may reasonably request in order to give valid, legal and
enforceable effect to any provision hereof which is determined to be invalid,
illegal or unenforceable.
Article 18
NOTICES
18.1 Manner of Delivery/Addresses. Except as expressly set out in this
Agreement to the contrary, all notices and other communications to be
given to a Party under this Agreement shall be in writing in the English
language and communicated by personal delivery, certified or registered
mail, postage prepaid, return receipt requested, telex or facsimile from
one Party to another Party at their respective addresses as follows:
FI:
P.T. Freeport Indonesia Company
Plaza 89, 5th Floor
J1. H.R. Rasuna Said Kav. X-7 No. 6
Jakarta 12940, Indonesia
Fax Number: (62) (21) 850-6736
Attention: President Director
ALatieF:
P.T. ALATIEF Nusakarya Corporation
J1. Iskandarsyah II No.2, Blok M
Jakarta, Indonesia
Fax Number: (62) (21) 739-0695
Attention : Messrs. Abdul Latief/Usman Ja'far/
Somnath Guharoy
AFIC:
P.T. ALatieF Freeport Infrastructure Corporation
J1. Iskandarsyah II No. 2
Blok M Kebayoran Baru
Jakarta, Selatan
Fax Number: (62) (21) 739-0695
Attention : Mr. Somnath Guharoy
AFHC
P.T. ALatieF Freeport Hotel Corporation
J1. Iskandarsyah II No. 2
Blok M Kebayoran Baru
Jakarta, Selatan
Fax Number: (62) (21) 739-0695
Attention : Mr. Somnath Guharoy
Subject to any express provisions contained in this Agreement to the
contrary, the notices and other communications referred to in Section
18.1 shall be deemed delivered upon actual receipt or in the case of
personal delivery or mail the delivery of which is refused, upon the
date of attempted delivery.
18.2 Change of Address. Any Party hereto may at any time change its address
by written notice to the other Parties of such change.
Article 19
OTHER PROVISIONS
Subject to the other provisions of this Agreement each Party shall be bound by
this Agreement from the date it is signed by all Parties.
Article 20
ENTIRE AGREEMENT
This Agreement constitutes the entire agreement between the Parties with
respect to the subject matter hereof and supersedes all prior agreements,
understandings and negotiations, both written and oral, between the Parties
with respect to the subject matter of this Agreement. No representation,
inducement, promise, understanding, condition or warranty not set forth herein
has been made or relied upon by any Party hereto.
This Agreement may not be modified or amended except in writing and with the
unanimous agreement of the Parties hereto.
Neither this Agreement nor any provision hereof is intended to confer upon any
person firm, corporation or other entity other than the Parties hereto any
rights or remedies hereunder.
[Remainder of page intentionally left blank]
IN WITNESS WHEREOF, the Parties have executed this Agreement in the English
language, by duly authorized representatives of the Parties to be effective on
the date and year written above.
FI:
P.T. FREEPORT INDONESIA COMPANY
Paul Murphy
Director
Prihadi Santoso
Director
ALatieF:
P.T. ALATIEF NUSAKARYA CORPORATION
Usman Ja'far
President Director
AFIC:
P.T. ALATIEF FREEPORT INFRASTRUCTURE
Usman Ja'far
President Director
AFHC:
P.T. ALATIEF FREEPORT HOTEL CORPORATION
Usman Ja'far
President Director
This photo-copy is in conformance with its original shown to me, Notary.
Jakarta, March 7, 1997
A. Partomuan Pohan, SH, LL.M
Notary in Jakarta
Exhibit 10.3
AMENDMENT NUMBER ONE
TO
AGREEMENT
This Amendment is made and entered into effective as of the
30th day of April, 1997 to that certain agreement dated as of
February 26, 1997 (the "Agreement") by and among Freeport-McMoRan
Copper & Gold Inc. ("FCX"); Bre-X Minerals Ltd., on behalf of
itself and its subsidiaries, including without limitation,
Dorchester Holdings B.V. and Bre-X Minerals Amsterdam B.V.
(collectively, "Bre-X"); PT Askatindo Karya Mineral, on behalf of
itself and all persons or entities claiming under or through any
arrangement with it (collectively, "PTAKM"); and PT Amsya Lyna,
on behalf of itself and all persons or entities claiming under or
through any arrangement with it (collectively, "PTAL") (Bre-X,
PTAKM, and PTAL being sometimes collectively referred to as the
"Current Owners").
WITNESSETH
WHEREAS, FCX and the Current Owners entered into the
Agreement related to the Busang I Site, the Busang II Site and
the Busang III Site (as defined in the Agreement); and
WHEREAS, FCX and the Current Owners desire by this Amendment
Number One to amend the Agreement as provided hereinafter.
NOW, THEREFORE, for and in consideration of the mutual
covenants herein contained, and subject to the terms and
conditions hereof, it is agreed that:
1. Amendment to Section 3. The date "April 30, 1997"which
appears in line 2 of Section 3 is hereby deleted and the date
"June 30, 1997" is hereby substituted therefor.
2. Other Terms and Conditions. Except as expressly provided
herein, all other terms and conditions of the Agreement remain in
full force and effect.
3. Counterparts. This Amendment Number One may be executed in
counterparts and all counterparts taken together will be deemed
to constitute the same instrument.
IN WITNESS WHEREOF, the parties hereto have executed this
Amendment Number One as of the date first set forth above.
FREEPORT-McMoRan COPPER & GOLD INC.
By: s/ Richard A. Adkerson
-----------------------
Name: Richard C. Adkerson
Title: Executive Vice President
BRE-X MINERALS LTD., on behalf of
itself and its subsidiaries
including, without limitation,
Dorchester Holdings B.V. and Bre-X
Minerals Amsterdam B.V.
By: s/ David G. Walsh
------------------
Name: David G. Walsh
Title: Chairman, President and
Chief Executive Officer
AND
By: s/ Rolando C. Francisco
------------------------
Name: Rolando C. Francisco
Title: Executive Vice President
and Chief Financial Officer
PT ASKATINDO KARYA MINERAL
By: s/ Abdulmadjid
--------------------
Name: Abdulmadjid
Title: Vice President
PT AMSYA LYNA
By: s/ Abdulmadjid
-----------------
Name: Abdulmadjid
Title: Vice President
Exhibit 10.4
FREEPORT-McMoRan COPPER & GOLD INC.
ADJUSTED STOCK AWARD PLAN
SECTION 1
Purpose. The purpose of the Freeport-McMoRan Copper & Gold Inc.
Adjusted Stock Award Plan (the "Plan") is to provide for the issuance and
administration of certain awards relating to common stock of the Company
issued to employees, officers and directors of Freeport-McMoRan Inc.
("FTX"), the Company's current parent, in connection with FTX's
distribution to FTX stockholders of all of the Class B Common Stock of
the Company.
SECTION 2
Definitions. As used in the Plan, the following terms shall have
the meanings set forth below:
"Award" shall mean any Option, Limited Right, Stock Appreciation
Right or Stock Incentive Unit granted under this Plan.
"Award Agreement" shall mean any written agreement, contract or
other instrument or document evidencing any Award, which may, but need
not, be executed or acknowledged by a Participant.
"Board" shall mean the Board of Directors of the Company.
"Code" shall mean the Internal Revenue Code of 1986, as amended
from time to time.
"Committee" shall mean a committee of the Board designated by the
Board to administer the Plan and composed of not fewer than two
directors, each of whom, to the extent necessary to comply with
Rule 16b-3 only, is a "non-employee director" within the meaning of
Rule 16b-3 and, to the extent necessary to comply with Section 162(m)
only, is an "outside director" under Section 162(m). Until otherwise
determined by the Board, the Committee shall be the Corporate Personnel
Committee of the Board.
"Company" shall mean Freeport-McMoRan Copper & Gold Inc.
"Consent Solicitation Statement" shall mean the consent
solicitation statement dated February 7, 1995 distributed to Company
stockholders in connection with the transactions relating to the
Distribution.
"Designated Beneficiary" shall mean the beneficiary designated
by the Participant, in a manner determined by the Committee, to receive
the benefits due the Participant under the Plan in the event of the
Participant's death. In the absence of an effective designation by the
Participant, Designated Beneficiary shall mean the Participant's estate.
"Distribution" shall mean the distribution by FTX of all the then
outstanding Shares owned by FTX to the holders of FTX common stock, as
described in the Consent Solicitation Statement.
"Distribution Date" shall mean the effective date of the
Distribution.
"Eligible Individual" shall mean any present or former employee,
officer or director of FTX who on the Distribution Date holds an FTX
Award.
"Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended from time to time.
"FTX Award" shall mean any of the FTX Options, FTX Director
Options, FTX SARs and FTX SIUs, and any limited rights appertaining
thereto.
"FTX Director Option" shall mean an option to purchase FTX common
stock granted under the FTX 1988 Stock Option Plan for Non-Employee
Directors that is outstanding and unexercised on the Distribution Date.
"FTX Option" shall mean an option to purchase FTX common stock
granted by FTX to a present or former officer or employee of FTX that is
outstanding and unexercised on the Distribution Date.
"FTX SAR" shall mean a stock appreciation right granted to a
present or former officer or employee of FTX that is outstanding and
unexercised on the Distribution Date.
"FTX SIU" shall mean a stock incentive unit granted under the FTX
1992 Stock Incentive Unit Plan that is outstanding and unexercised on the
Distribution Date.
"Limited Right" shall mean any right granted under Section 8 of
the Plan.
"Offer" shall mean any tender offer, exchange offer or series of
purchases or other acquisitions, or any combination of those
transactions, as a result of which any person, or any two or more persons
acting as a group, and all affiliates of such person or persons, shall
beneficially own more than 40% of all classes and series of the Company's
stock outstanding, taken as a whole, that has voting rights with respect
to the election of directors of the Company (not including any series of
preferred stock of the Company that has the right to elect directors only
upon the failure of the Company to pay dividends).
"Offer Price" shall mean the highest price per Share paid in any
Offer that is in effect at any time during the period beginning on the
ninetieth day prior to the date on which a Limited Right is exercised and
ending on and including the date of exercise of such Limited Right. Any
securities or property that comprise all or a portion of the
consideration paid for Shares in the Offer shall be valued in determining
the Offer Price at the higher of (i) the valuation placed on such
securities or property by the person or persons making such Offer, or
(ii) the valuation, if any, placed on such securities or property by the
Committee or the Board.
"Option" shall mean an option granted under Section 6 of the
Plan.
"Participant" shall mean any Eligible Individual granted an Award
under the Plan.
"Person" shall mean any individual, corporation, partnership,
association, joint-stock company, trust, unincorporated organization,
government or political subdivision thereof or other entity.
"Rule 16b-3" shall mean Rule 16b-3 promulgated by the SEC under
the Exchange Act, or any successor rule or regulation thereto as in
effect from time to time.
"SAR" shall mean a Stock Appreciation Right.
"SEC" shall mean the Securities and Exchange Commission,
including the staff thereof, or any successor thereto.
"Section 162(m)" shall mean Section 162(m) of the Code and all
regulations promulgated thereunder as in effect from time to time.
"SIU" shall mean any Stock Incentive Unit.
"Shares" shall mean the shares of Class B Common Stock, par value
$.10 per share, of the Company and such other securities of the Company
or a Subsidiary as the Committee may from time to time designate.
"Stock Appreciation Right" shall mean any award of stock
appreciation rights granted under Section 7 of the Plan.
"Stock Incentive Unit" shall mean any award of stock incentive
units granted under Section 9 of the Plan.
"Subsidiary" shall mean any corporation or other entity in which
the Company possesses directly or indirectly equity interests
representing at least 50% of the total ordinary voting power or at least
50% of the total value of all classes of equity interests of such
corporation or other entity.
SECTION 3
Administration. The Plan shall be administered by the Committee.
Subject to the terms of the Plan and applicable law, and in addition to
other express powers and authorizations conferred on the Committee by the
Plan, the Committee shall have full power and authority to interpret and
administer the Plan and any instrument or agreement relating to, or Award
made under, the Plan; establish, amend, suspend or waive such rules and
regulations and appoint such agents as it shall deem appropriate for the
proper administration of the Plan; and make any other determination and
take any other action that the Committee deems necessary or desirable for
the administration of the Plan. The Committee shall have no discretion
relating to the timing, price and size of Awards granted under the Plan,
which shall be determined in accordance with the provisions of Sections
6 through 9. Unless otherwise expressly provided in the Plan, all
designations, determinations, interpretations and other decisions under
or with respect to the Plan or any Award shall be within the sole
discretion of the Committee, may be made at any time and shall be final,
conclusive and binding upon all Persons, including the Company, any
Subsidiary, any Participant, any holder or beneficiary of any Award, any
stockholder of the Company and any Eligible Individual.
SECTION 4
Eligibility. Each Eligible Individual shall be granted an Award
in accordance with the provisions of the Plan.
SECTION 5
(a) Shares Available for Awards. Subject to adjustment as
provided in paragraph 5(b):
(i) Calculation of Number of Shares Available. The number of
Shares with respect to which Awards may be granted under the Plan shall
be such number of Shares as results from the application of the award
formulas set forth in Sections 6 through 8. Such number of Shares shall
not be reduced by the number of Shares with respect to which SIUs shall
be granted, which shall be determined in accordance with Section 9. If,
after the effective date of the Plan, an Award granted under the Plan
expires or is exercised, forfeited, canceled or terminated without the
delivery of Shares, then the Shares covered by such Award or to which
such Award relates, or the number of Shares otherwise counted against the
aggregate number of Shares with respect to which Awards may be granted,
to the extent of any such expiration, exercise, forfeiture, cancellation
or termination, shall not thereafter be available for grants or Awards
under the Plan.
(ii) Sources of Shares Deliverable Under Awards. Any Shares
delivered pursuant to an Award may consist of authorized and unissued
Shares or of treasury Shares, including Shares held by the Company or a
Subsidiary and Shares acquired in the open market or otherwise obtained
by the Company or a Subsidiary.
(b) Adjustments. In the event that the Committee determines
that any dividend or other distribution (whether in the form of cash,
Shares, Subsidiary securities, other securities or other property),
recapitalization, stock split, reverse stock split, reorganization,
merger, consolidation, split-up, spin-off, combination, repurchase or
exchange of Shares or other securities of the Company, issuance of
warrants or other rights to purchase Shares or other securities of the
Company, or other similar corporate transaction or event affects the
Shares such that an adjustment is determined by the Committee to be
appropriate to prevent dilution or enlargement of the benefits or
potential benefits intended to be made available under the Plan, then the
Committee may, in its sole discretion and in such manner as it may deem
equitable, adjust any or all of (i) the number and type of Shares (or
other securities or property) subject to outstanding Awards, and (ii) the
grant or exercise price with respect to any Award and, if deemed
appropriate, make provision for a cash payment to the holder of an
outstanding Award; provided, that the number of Shares subject to any
Award denominated in Shares shall always be a whole number.
SECTION 6
(a) Stock Options. Immediately prior to the Distribution, each
holder of an FTX Option or an FTX Director Option shall receive an Option
to purchase such number of Shares (disregarding any fractional Share) as
such holder would be eligible to receive in the Distribution with respect
to the number of shares of FTX common stock subject to such FTX Award if
such holder were the owner of record of such FTX shares on the record
date for the Distribution. Except as set forth in paragraph 6(b), each
such Option shall have the same remaining term and other terms and
conditions (whether such terms and conditions are contained in the
related FTX Award agreement or in the plan under which such FTX Award was
made) and shall be exercisable to the same extent as the FTX Award from
which they were derived, with such changes and modifications as are
necessary to substitute the Company for FTX as the issuer of the Option;
provided, however, if the FTX Award from which an Option is derived has
a term that will expire prior to one hundred and eighty days after the
effective date of the Distribution, the term of such Option shall expire
on the one hundred and eightieth day after the effective date of the
Distribution. Notwithstanding the foregoing, no Option shall be
exercisable prior to the ninetieth day after the effective date of the
Distribution.
(b) Exercise Price. The per Share exercise price of each Option
granted pursuant to paragraph 6(a) shall be the per share exercise price
or grant price of the FTX Award from which such Option was derived
multiplied by a fraction, the numerator of which is the per Share fair
market value at the time of the Distribution, determined as set forth
below, and the denominator of which is the per share fair market value
of FTX common stock (trading with due bills) at the time of the
Distribution, determined as set forth below. For purposes of this
paragraph 6(b), the per Share fair market value at the time of the
Distribution shall be the weighted average when-issued per Share price
on the New York Stock Exchange on the first day on which the Shares are
traded on a when-issued basis on the New York Stock Exchange, and the per
share fair market value of FTX common stock (trading with due bills) at
the time of the Distribution shall be the weighted average per share
price of FTX common stock (trading with due bills) on the New York Stock
Exchange on such trading day.
(c) Tax-Offset Payment Right. If the FTX Award from which the
Option granted under this Section 6 derives contained a right to receive
a cash payment upon exercise of such FTX Award related to and intended
to defray the income tax liability associated therewith, the Option
granted under this Section 6 shall contain a similar tax-offset payment
right feature.
(d) Payment. No Shares shall be delivered pursuant to any
exercise of an Option until payment in full of the option price therefor
is received by the Company. Such payment may be made in cash, or its
equivalent, or, if and to the extent permitted by the Committee, by
applying cash amounts payable by the Company upon the exercise of such
Option or other Awards by the holder thereof or by exchanging whole
Shares owned by such holder (which are not the subject of any pledge or
other security interest), or by a combination of the foregoing, provided
that the combined value of all cash, cash equivalents, cash amounts so
payable by the Company upon exercises of Awards and the fair market value
of any such whole Shares so tendered to the Company, valued (in
accordance with procedures established by the Committee) as of the
effective date of such exercise, is at least equal to such option price.
SECTION 7
(a) Stock Appreciation Rights. Immediately prior to the
Distribution, each holder of an FTX SAR shall receive a Stock
Appreciation Right relating to such number of Shares (disregarding any
fractional Share) as such holder would be eligible to receive in the
Distribution with respect to the number of shares of FTX common stock to
which such FTX SAR relates if such holder were the owner of record of
such FTX shares on the record date for the Distribution. Except as set
forth below, each such SAR shall have the same remaining term and other
terms and conditions (whether such terms and conditions are contained in
the related FTX SAR agreement or in the plan under which such FTX SAR was
awarded) and shall be exercisable to the same extent as the FTX SAR from
which they were derived, with such changes and modifications as are
necessary to substitute the Company for FTX as the issuer of the SAR.
The per Share grant price of each SAR shall be determined in the same
manner as the exercise price of Options granted pursuant to Section 6,
as described in paragraph 6(b).
(b) A Stock Appreciation Right shall entitle the holder thereof
to receive upon exercise, for each Share to which the SAR relates, an
amount in cash equal to the excess, if any, of the fair market value of
a Share on the date of exercise of the SAR over the grant price.
SECTION 8
(a) Limited Rights. Each holder of an FTX Option shall receive,
at the same time as and in tandem with each Option granted to such holder
under Section 6, Limited Rights equal in number to the number of Shares
subject to such Option with which such Limited Rights are in tandem.
Such Limited Rights shall have a grant price equal to the exercise price
of the Option with which it is in tandem, and shall in all other respects
contain the same terms and conditions as in the agreement pertaining to
the FTX Option from which they derived.
(b) A Limited Right shall entitle the holder thereof to receive
upon exercise, for each Share to which the Limited Right relates, an
amount in cash equal to the excess, if any, of the Offer Price on the
date of exercise of the Limited Right over the grant price. Any Limited
Right shall only be exercisable during a period beginning not earlier
than one day and ending not more than ninety days after the expiration
date of an Offer.
SECTION 9
(a) Stock Incentive Units. Immediately prior to the
Distribution, each holder of an FTX SIU shall receive a Stock Incentive
Unit relating to such number of Shares (disregarding any fractional
Share) as such holder would be eligible to receive in the Distribution
with respect to the number of shares of FTX common stock to which such
FTX SIU relates if such holder were the owner of record of such FTX
shares on the record date for the Distribution. Except as set forth
below, each such SIU shall have the same remaining term and other terms
and conditions (whether such terms and conditions are contained in the
related FTX SIU agreement or in the plan under which such FTX SIU was
awarded) and shall be exercisable to the same extent as the FTX SIU from
which they were derived, with such changes and modifications as are
necessary to substitute the Company for FTX as the issuer of the SIU.
The per Share exercise price of each SIU shall be determined in the same
manner as the exercise price of Options granted pursuant to Section 6,
as described in paragraph 6(b).
(b) A Stock Incentive Unit shall entitle the holder thereof to
receive upon exercise, for each Share to which the SIU relates, an amount
in cash equal to the excess, if any, of the fair market value of a Share
on the date of exercise of the SIU over the exercise price. In the event
that the SIU is exercised during a period beginning not earlier than one
day after the expiration date of an Offer and ending not more than ninety
days after the expiration date of such Offer, an SIU shall entitle the
holder thereof to receive upon exercise, for each Share to which the SIU
relates, the higher of (i) the amount described in the first sentence of
this paragraph 9(b) and (ii) an amount in cash equal to the excess, if
any, of the Offer Price on the date of exercise of the SIU over the
exercise price.
SECTION 10
(a) Amendments to the Plan. The Board may amend, suspend or
terminate the Plan or any portion thereof at any time, provided that no
amendment shall be made without stockholder approval if such approval is
necessary to comply with any tax or regulatory requirement.
Notwithstanding anything to the contrary contained herein, (i) the
Committee may amend the Plan in such manner as may be necessary for the
Plan to conform with local rules and regulations in any jurisdiction
outside the United States and (ii) any amendment, suspension or
termination made in accordance with this paragraph 10(a) that would
adversely affect a holder's rights under an Award made under the Plan may
not be made without such holder's consent.
(b) Amendments to Awards. The Committee may amend, modify or
terminate any outstanding Award with the holder's consent at any time
prior to payment or exercise in any manner not inconsistent with the
terms of the Plan, including without limitation, (i) to change the date
or dates as of which an Award becomes exercisable, or (ii) to cancel an
Award and grant a new Award in substitution therefor under such different
terms and conditions as it determines in its sole and complete discretion
to be appropriate.
(c) Adjustment of Awards Upon the Occurrence of Certain Unusual
or Nonrecurring Events. The Committee is hereby authorized to make
adjustments in the terms and conditions of, and the criteria included in,
Awards in recognition of unusual or nonrecurring events (including,
without limitation, the events described in paragraph 5(b) hereof)
affecting the Company, or the financial statements of the Company or any
Subsidiary, or of changes in applicable laws, regulations, or accounting
principles, whenever the Committee determines that such adjustments are
appropriate to prevent dilution or enlargement of the benefits or
potential benefits intended to be made available under the Plan.
(d) Cancellation. Any provision of this Plan or any Award
Agreement to the contrary notwithstanding, the Committee may cause any
Award granted hereunder to be canceled in consideration of a cash payment
or alternative Award made to the holder of such canceled Award equal in
value to such canceled Award. The determinations of value under this
subparagraph shall be made by the Committee in its sole discretion.
SECTION 11
(a) Award Agreements. Each Award hereunder shall be evidenced
by a writing delivered to the Participant that shall specify the terms
and conditions thereof and any rules applicable thereto and that shall,
in accordance with the provisions of the Plan, replicate as closely as
possible the terms, conditions and other contractual attributes of the
FTX Award from which the Award is derived, as in effect on the
Distribution Date.
(b) Transferability. No Awards granted hereunder may be
transferred, pledged, assigned or otherwise encumbered by a Participant
except: (i) by will; (ii) by the laws of descent and distribution; (iii)
pursuant to a domestic relations order, as defined in the Code, if
permitted by the Committee and so provided in the Award Agreement or an
amendment thereto; or (iv) as to Options only, if permitted by the
Committee and so provided in the Award Agreement or an amendment thereto,
(a) to Immediate Family Members, (b) to a partnership in which Immediate
Family Members, or entities in which Immediate Family Members are the
owners, members or beneficiaries, as appropriate, are the partners, (c)
to a limited liability company in which Immediate Family Members, or
entities in which Immediate Family Members are the owners, members or
beneficiaries, as appropriate, are the members, or (d) to a trust for the
benefit of Immediate Family Members; provided, however, that no more than
a de minimus beneficial interest in a partnership, limited liability
company or trust described in (b), (c) or (d) above may be owned by a
person who is not an Immediate Family Member or by an entity that is not
beneficially owned solely by Immediate Family Members. "Immediate Family
Members" shall be defined as the spouse and natural or adopted children
or grandchildren of the Participant and their spouses. Any attempted
assignment, transfer, pledge, hypothecation or other disposition of
Awards, or levy of attachment or similar process upon Awards not
specifically permitted herein, shall be null and void and without effect.
The designation of a Designated Beneficiary shall not be a violation of
this Section 11(b).
(c) Share Certificates. All certificates for Shares or other
securities delivered under the Plan pursuant to any Award or the exercise
thereof shall be subject to such stop transfer orders and other
restrictions as the Committee may deem advisable under the Plan or the
rules, regulations, and other requirements of the SEC, any stock exchange
upon which such Shares or other securities are then listed, and any
applicable federal or state laws, and the Committee may cause a legend
or legends to be put on any such certificates to make appropriate
reference to such restrictions.
(d) No Limit on Other Compensation Arrangements. Nothing
contained in the Plan shall prevent the Company from adopting or
continuing in effect other compensation arrangements, which may, but need
not, provide for the grant of options, stock appreciation rights and
other types of Awards provided for hereunder (subject to stockholder
approval of any such arrangement if approval is required), and such
arrangements may be either generally applicable or applicable only in
specific cases.
(e) No Right to Employment. The grant of an Award shall not be
construed as giving a Participant the right to be engaged or employed by
or retained in the employ of FTX, the Company or any Subsidiary. FTX,
the Company or any Subsidiary may at any time dismiss a Participant from
engagement or employment, free from any liability or any claim under the
Plan, unless otherwise expressly provided in the Plan or in any Award
Agreement or any agreement relating to the engagement or employment of
the Participant by FTX, the Company or any Subsidiary.
(f) Governing Law. The validity, construction, and effect of
the Plan, any rules and regulations relating to the Plan and any Award
Agreement shall be determined in accordance with the laws of the State
of Delaware.
(g) Severability. If any provision of the Plan or any Award is
or becomes or is deemed to be invalid, illegal, or unenforceable in any
jurisdiction or as to any Person or Award, or would disqualify the Plan
or any Award under any law deemed applicable by the Committee, such
provision shall be construed or deemed amended to conform to applicable
laws, or if it cannot be construed or deemed amended without, in the
determination of the Committee, materially altering the intent of the
Plan or the Award, such provision shall be stricken as to such
jurisdiction, Person or Award and the remainder of the Plan and any such
Award shall remain in full force and effect.
(h) No Trust or Fund Created. Neither the Plan nor any Award
shall create or be construed to create a trust or separate fund of any
kind or a fiduciary relationship between the Company and a Participant
or any other Person. To the extent that any Person acquires a right to
receive payments from the Company pursuant to an Award, such right shall
be no greater than the right of any unsecured general creditor of the
Company.
(i) No Fractional Shares. No fractional Shares shall be issued
or delivered pursuant to the Plan or any Award, and the Committee shall
determine, in accordance with the terms of the Plan, as applicable,
whether cash, other securities or other property shall be paid or
transferred in lieu of any fractional Shares or whether such fractional
Shares or any rights thereto shall be canceled, terminated, or otherwise
eliminated.
(j) Headings. Headings are given to the subsections of the Plan
solely as a convenience to facilitate reference. Such headings shall not
be deemed in any way material or relevant to the construction or
interpretation of the Plan or any provision thereof.
SECTION 12
Effective Date of the Plan. The Plan shall be effective as of
the date of its approval by the holders of the common stock of the
Company.
SECTION 13
Term of the Plan. Subject to paragraph 5(b), no Award shall be
granted under the Plan except the Awards provided for in Sections 6, 7,
8 and 9. Awards granted hereunder shall continue until their respective
expiration dates, and the authority of the Committee to administer,
interpret, amend, alter, adjust, suspend, discontinue, or terminate, in
accordance with the provisions of the Plan, any such Award or to waive
any conditions or rights under any such Award shall extend until the
latest such date.
Exhibit 10.5
FREEPORT-McMoRan COPPER & GOLD INC.
1995 STOCK OPTION PLAN
SECTION 1
Purpose. The purpose of the Freeport-McMoRan Copper & Gold
Inc. 1995 Stock Option Plan (the "Plan") is to motivate and reward key
personnel by giving them a proprietary interest in the Company's
continued success.
SECTION 2
Definitions. As used in the Plan, the following terms shall
have the meanings set forth below:
"Award" shall mean any Option, Stock Appreciation Right,
Limited Right or Other Stock-Based Award.
"Award Agreement" shall mean any written agreement, contract
or other instrument or document evidencing any Award, which may, but need
not, be executed or acknowledged by a Participant.
"Board" shall mean the Board of Directors of the Company.
"Code" shall mean the Internal Revenue Code of 1986, as
amended from time to time.
"Committee" shall mean a committee of the Board designated by
the Board to administer the Plan and composed of not fewer than two
directors, each of whom, to the extent necessary to comply with
Rule 16b-3 only, is a "non-employer director" within the meaning of
Rule 16b-3 and, to the extent necessary to comply with Section 162(m)
only, is an "outside director" under Section 162(m). Until otherwise
determined by the Board, the Committee shall be the Corporate Personnel
Committee of the Board.
"Company" shall mean Freeport-McMoRan Copper & Gold Inc.
"Designated Beneficiary" shall mean the beneficiary designated
by the Participant, in a manner determined by the Committee, to receive
the benefits due the Participant under the Plan in the event of the
Participant's death. In the absence of an effective designation by the
Participant, Designated Beneficiary shall mean the Participant's estate.
"Employee" shall mean (i) any person providing services as an
officer of the Company or a Subsidiary, whether or not employed by such
entity, including any such person who is also a director of the Company,
(ii) any employee of the Company or a Subsidiary, including any director
who is also an employee of the Company or a Subsidiary, (iii) any officer
or employee of an entity with which the Company has contracted to receive
executive or management services who provides services to the Company or
a Subsidiary through such arrangement and (iv) any person who has agreed
in writing to become a person described in clauses (i), (ii) or (iii)
within not more than 30 days following the date of grant of such person's
first Award under the Plan.
"Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended from time to time.
"Incentive Stock Option" shall mean an option granted under
Section 6 of the Plan that is intended to meet the requirements of
Section 422 of the Code or any successor provision thereto.
"Limited Right" shall mean any right granted under Section 8
of the Plan.
"Nonqualified Stock Option" shall mean an option granted under
Section 6 of the Plan that is not intended to be an Incentive Stock
Option.
"Offer" shall mean any tender offer, exchange offer or series
of purchases or other acquisitions, or any combination of those
transactions, as a result of which any person, or any two or more persons
acting as a group, and all affiliates of such person or persons, shall
beneficially own more than 40% of all classes and series of the Company's
stock outstanding, taken as a whole, that has voting rights with respect
to the election of directors of the Company (not including any series of
preferred stock of the Company that has the right to elect directors only
upon the failure of the Company to pay dividends).
"Offer Price" shall mean the highest price per Share paid in
any Offer that is in effect at any time during the period beginning on
the ninetieth day prior to the date on which a Limited Right is exercised
and ending on and including the date of exercise of such Limited Right.
Any securities or property that comprise all or a portion of the
consideration paid for Shares in the Offer shall be valued in determining
the Offer Price at the higher of (i) the valuation placed on such
securities or property by the person or persons making such Offer, or
(ii) the valuation, if any, placed on such securities or property by the
Committee or the Board.
"Option" shall mean an Incentive Stock Option or a
Nonqualified Stock Option.
"Other Stock-Based Award" shall mean any right or award
granted under Section 9 of the Plan.
"Participant" shall mean any Employee granted an Award under
the Plan.
"Person" shall mean any individual, corporation, partnership,
association, joint-stock company, trust, unincorporated organization,
government or political subdivision thereof or other entity.
"Rule 16b-3" shall mean Rule 16b-3 promulgated by the SEC
under the Exchange Act, or any successor rule or regulation thereto as
in effect from time to time.
"SAR" shall mean any Stock Appreciation Right.
"SEC" shall mean the Securities and Exchange Commission,
including the staff thereof, or any successor thereto.
"Section 162(m)" shall mean Section 162(m) of the Code and all
regulations promulgated thereunder as in effect from time to time.
"Shares" shall mean the shares of Class B Common Stock, par
value $0.10 per share, of the Company and such other securities of the
Company or a Subsidiary as the Committee may from time to time designate.
"Stock Appreciation Right" shall mean any right granted under
Section 7 of the Plan.
"Subsidiary" shall mean (i) any corporation or other entity in
which the Company possesses directly or indirectly equity interests
representing at least 50% of the total ordinary voting power or at least
50% of the total value of all classes of equity interests of such
corporation or other entity and (ii) any other entity in which the
Company has a direct or indirect economic interest that is designated as
a Subsidiary by the Committee.
SECTION 3
Administration. The Plan shall be administered by the
Committee. Subject to the terms of the Plan and applicable law, and in
addition to other express powers and authorizations conferred on the
Committee by the Plan, the Committee shall have full power and authority
to: (i) designate Participants; (ii) determine the type or types of
Awards to be granted to an eligible Employee; (iii) determine the number
of Shares to be covered by, or with respect to which payments, rights or
other matters are to be calculated in connection with, Awards; (iv)
determine the terms and conditions of any Award; (v) determine whether,
to what extent, and under what circumstances Awards may be settled or
exercised in cash, whole Shares, other whole securities, other Awards,
other property or other cash amounts payable by the Company upon the
exercise of that or other Awards, or canceled, forfeited or suspended and
the method or methods by which Awards may be settled, exercised,
canceled, forfeited or suspended; (vi) determine whether, to what extent,
and under what circumstances cash, Shares, other securities, other
Awards, other property, and other amounts payable by the Company with
respect to an Award shall be deferred either automatically or at the
election of the holder thereof or of the Committee; (vii) interpret and
administer the Plan and any instrument or agreement relating to, or Award
made under, the Plan; (viii) establish, amend, suspend or waive such
rules and regulations and appoint such agents as it shall deem
appropriate for the proper administration of the Plan; and (ix) make any
other determination and take any other action that the Committee deems
necessary or desirable for the administration of the Plan. Unless
otherwise expressly provided in the Plan, all designations,
determinations, interpretations and other decisions under or with respect
to the Plan or any Award shall be within the sole discretion of the
Committee, may be made at any time and shall be final, conclusive and
binding upon all Persons, including the Company, any Subsidiary, any
Participant, any holder or beneficiary of any Award, any stockholder of
the Company and any Employee.
SECTION 4
Eligibility. Any Employee who is not a member of the
Committee shall be eligible to be granted an Award.
SECTION 5
(a) Shares Available for Awards. Subject to adjustment as
provided in Section 5(b):
(i) Calculation of Number of Shares Available. The number of
Shares with respect to which Awards may be granted under the Plan shall
be 10,000,000. If, after the effective date of the Plan, an Award
granted under the Plan expires or is exercised, forfeited, canceled or
terminated without the delivery of Shares, then the Shares covered by
such Award or to which such Award relates, or the number of Shares
otherwise counted against the aggregate number of Shares with respect to
which Awards may be granted, to the extent of any such expiration,
exercise, forfeiture, cancellation or termination without the delivery
of Shares, shall again be, or shall become, Shares with respect to which
Awards may be granted.
(ii) Substitute Awards. Any Shares delivered by the Company,
any Shares with respect to which Awards are made by the Company, or any
Shares with respect to which the Company becomes obligated to make
Awards, through the assumption of, or in substitution for, outstanding
awards previously granted by an acquired company or a company with which
the Company combines, shall not be counted against the Shares available
for Awards under the Plan.
(iii) Sources of Shares Deliverable Under Awards. Any Shares
delivered pursuant to an Award may consist of authorized and unissued
Shares or of treasury Shares, including Shares held by the Company or a
Subsidiary and Shares acquired in the open market or otherwise obtained
by the Company or a Subsidiary.
(iv) Individual Limit. Any provision of the Plan to the
contrary notwithstanding, no individual may receive in any year Awards
under the Plan that relate to more than 1,750,000 Shares.
(b) Adjustments. In the event that the Committee determines
that any dividend or other distribution (whether in the form of cash,
Shares, Subsidiary securities, other securities or other property),
recapitalization, stock split, reverse stock split, reorganization,
merger, consolidation, split-up, spin-off, combination, repurchase or
exchange of Shares or other securities of the Company, issuance of
warrants or other rights to purchase Shares or other securities of the
Company, or other similar corporate transaction or event affects the
Shares such that an adjustment is determined by the Committee to be
appropriate to prevent dilution or enlargement of the benefits or
potential benefits intended to be made available under the Plan, then the
Committee may, in its sole discretion and in such manner as it may deem
equitable, adjust any or all of (i) the number and type of Shares (or
other securities or property) with respect to which Awards may be
granted, (ii) the number and type of Shares (or other securities or
property) subject to outstanding Awards, and (iii) the grant or exercise
price with respect to any Award and, if deemed appropriate, make
provision for a cash payment to the holder of an outstanding Award and,
if deemed appropriate, adjust outstanding Awards to provide the rights
contemplated by Section 9(b) hereof; provided, in each case, that with
respect to Awards of Incentive Stock Options no such adjustment shall be
authorized to the extent that such authority would cause the Plan to
violate Section 422(b)(1) of the Code or any successor provision thereto
and, with respect to all Awards under the Plan, no such adjustment shall
be authorized to the extent that such authority would be inconsistent
with the requirements for full deductibility under Section 162(m) of the
Code and the regulations thereunder; and provided further, that the
number of Shares subject to any Award denominated in Shares shall always
be a whole number.
SECTION 6
(a) Stock Options. Subject to the provisions of the Plan,
the Committee shall have sole and complete authority to determine the
Employees to whom Options shall be granted, the number of Shares to be
covered by each Option, the option price therefor and the conditions and
limitations applicable to the exercise of the Option. The Committee
shall have the authority to grant Incentive Stock Options, Nonqualified
Stock Options or both. In the case of Incentive Stock Options, the terms
and conditions of such grants shall be subject to and comply with such
rules as may be required by Section 422 of the Code, as from time to time
amended, and any implementing regulations. Except in the case of an
Option granted in assumption of or substitution for an outstanding award
of a company acquired by the Company or with which the Company combines,
the exercise price of any Option granted under this Plan shall not be
less than 100% of the fair market value of the underlying Shares on the
date of grant.
(b) Exercise. Each Option shall be exercisable at such times
and subject to such terms and conditions as the Committee may, in its
sole discretion, specify in the applicable Award Agreement or thereafter,
provided, however, that in no event may any Option granted hereunder be
exercisable after the expiration of 10 years after the date of such
grant. The Committee may impose such conditions with respect to the
exercise of Options, including without limitation, any condition relating
to the application of Federal or state securities laws, as it may deem
necessary or advisable.
(c) Payment. No Shares shall be delivered pursuant to any
exercise of an Option until payment in full of the option price therefor
is received by the Company. Such payment may be made in cash, or its
equivalent, or, if and to the extent permitted by the Committee, by
applying cash amounts payable by the Company upon the exercise of such
Option or other Awards by the holder thereof or by exchanging whole
Shares owned by such holder (which are not the subject of any pledge or
other security interest), or by a combination of the foregoing, provided
that the combined value of all cash, cash equivalents, cash amounts so
payable by the Company upon exercises of Awards and the fair market value
of any such whole Shares so tendered to the Company, valued (in
accordance with procedures established by the Committee) as of the
effective date of such exercise, is at least equal to such option price.
SECTION 7
(a) Stock Appreciation Rights. Subject to the provisions of
the Plan, the Committee shall have sole and complete authority to
determine the Employees to whom Stock Appreciation Rights shall be
granted, the number of Shares to be covered by each Award of Stock
Appreciation Rights, the grant price thereof and the conditions and
limitations applicable to the exercise thereof. Stock Appreciation
Rights may be granted in tandem with another Award, in addition to
another Award, or freestanding and unrelated to any other Award. Stock
Appreciation Rights granted in tandem with or in addition to an Option
or other Award may be granted either at the same time as the Option or
other Award or at a later time. Stock Appreciation Rights shall not be
exercisable after the expiration of 10 years after the date of grant.
Except in the case of a Stock Appreciation Right granted in assumption
of or substitution for an outstanding award of a company acquired by the
Company or with which the Company combines, the grant price of any Stock
Appreciation Right granted under this Plan shall not be less than 100%
of the fair market value of the Shares covered by such Stock Appreciation
Right on the date of grant or, in the case of a Stock Appreciation Right
granted in tandem with a then outstanding Option or other Award, on the
date of grant of such related Option or Award.
(b) A Stock Appreciation Right shall entitle the holder
thereof to receive upon exercise, for each Share to which the SAR
relates, an amount equal to the excess, if any, of the fair market value
of a Share on the date of exercise of the Stock Appreciation Right over
the grant price. Any Stock Appreciation Right shall be settled in cash,
unless the Committee shall determine at the time of grant of a Stock
Appreciation Right that it shall or may be settled in cash, Shares or a
combination of cash and Shares.
SECTION 8
(a) Limited Rights. Subject to the provisions of the Plan,
the Committee shall have sole and complete authority to determine the
Employees to whom Limited Rights shall be granted, the number of Shares
to be covered by each Award of Limited Rights, the grant price thereof
and the conditions and limitations applicable to the exercise thereof.
Limited Rights may be granted in tandem with another Award, in addition
to another Award, or freestanding and unrelated to any Award. Limited
Rights granted in tandem with or in addition to an Award may be granted
either at the same time as the Award or at a later time. Limited Rights
shall not be exercisable after the expiration of 10 years after the date
of grant and shall only be exercisable during a period determined at the
time of grant by the Committee beginning not earlier than one day and
ending not more than ninety days after the expiration date of an Offer.
Except in the case of a Limited Right granted in assumption of or
substitution for an outstanding award of a company acquired by the
Company or with which the Company combines, the grant price of any
Limited Right granted under this Plan shall not be less than 100% of the
fair market value of the Shares covered by such Limited Right on the date
of grant or, in the case of a Limited Right granted in tandem with a then
outstanding Option or other Award, on the date of grant of such related
Option or Award.
(b) A Limited Right shall entitle the holder thereof to
receive upon exercise, for each Share to which the Limited Right relates,
an amount equal to the excess, if any, of the Offer Price on the date of
exercise of the Limited Right over the grant price. Any Limited Right
shall be settled in cash, unless the Committee shall determine at the
time of grant of a Limited Right that it shall or may be settled in cash,
Shares or a combination of cash and Shares.
SECTION 9
(a) Other Stock-Based Awards. The Committee is hereby
authorized to grant to eligible Employees an "Other Stock-Based Award",
which shall consist of an Award, the value of which is based in whole or
in part on the value of Shares, that is not an instrument or Award
specified in Sections 6 through 8 of this Plan. Other Stock-Based Awards
may be awards of Shares or may be denominated or payable in, valued in
whole or in part by reference to, or otherwise based on or related to,
Shares (including, without limitation, securities convertible or
exchangeable into or exercisable for Shares), as deemed by the Committee
consistent with the purposes of the Plan. The Committee shall determine
the terms and conditions of any such Other Stock-Based Award. Except in
the case of an Other Stock-Based Award granted in assumption of or in
substitution for an outstanding award of a company acquired by the
Company or with which the Company combines, the price at which securities
may be purchased pursuant to any Other Stock-Based Award granted under
this Plan, or the provision, if any, of any such Award that is analogous
to the purchase or exercise price, shall not be less than 100% of the
fair market value of the securities to which such Award relates on the
date of grant.
(b) Dividend Equivalents. In the sole and complete
discretion of the Committee, an Award, whether made as an Other Stock-Based
Award under this Section 9 or as an Award granted pursuant to
Sections 6 through 8 hereof, may provide the holder thereof with
dividends or dividend equivalents, payable in cash, Shares, Subsidiary
securities, other securities or other property on a current or deferred
basis.
SECTION 10
(a) Amendments to the Plan. The Board may amend, suspend or
terminate the Plan or any portion thereof at any time, provided that no
amendment shall be made without stockholder approval if such approval is
necessary to comply with any tax or regulatory requirement.
Notwithstanding anything to the contrary contained herein, the Committee
may amend the Plan in such manner as may be necessary for the Plan to
conform with local rules and regulations in any jurisdiction outside the
United States.
(b) Amendments to Awards. The Committee may amend, modify or
terminate any outstanding Award with the holder's consent at any time
prior to payment or exercise in any manner not inconsistent with the
terms of the Plan, including without limitation, (i) to change the date
or dates as of which an Award becomes exercisable, or (ii) to cancel an
Award and grant a new Award in substitution therefor under such different
terms and conditions as it determines in its sole and complete discretion
to be appropriate.
(c) Adjustment of Awards Upon the Occurrence of Certain
Unusual or Nonrecurring Events. The Committee is hereby authorized to
make adjustments in the terms and conditions of, and the criteria
included in, Awards in recognition of unusual or nonrecurring events
(including, without limitation, the events described in Section 5(b)
hereof) affecting the Company, or the financial statements of the Company
or any Subsidiary, or of changes in applicable laws, regulations, or
accounting principles, whenever the Committee determines that such
adjustments are appropriate to prevent dilution or enlargement of the
benefits or potential benefits intended to be made available under the
Plan.
(d) Cancellation. Any provision of this Plan or any Award
Agreement to the contrary notwithstanding, the Committee may cause any
Award granted hereunder to be canceled in consideration of a cash payment
or alternative Award made to the holder of such canceled Award equal in
value to such canceled Award. The determinations of value under this
subparagraph shall be made by the Committee in its sole discretion.
SECTION 11
(a) Delegation. Subject to the terms of the Plan and
applicable law, the Committee may delegate to one or more officers of the
Company the authority, subject to such terms and limitations as the
Committee shall determine, to grant Awards to, or to cancel, modify or
waive rights with respect to, or to alter, discontinue, suspend, or
terminate Awards held by, Employees who are not officers or directors of
the Company for purposes of Section 16 of the Exchange Act, or any
successor section thereto, or who are otherwise not subject to such
Section.
(b) Award Agreements. Each Award hereunder shall be
evidenced by a writing delivered to the Participant that shall specify
the terms and conditions thereof and any rules applicable thereto,
including but not limited to the effect on such Award of the death,
retirement or other termination of employment of the Participant and the
effect thereon, if any, of a change in control of the Company.
(c) Withholding. A Participant may be required to pay to the
Company, and the Company shall have the right to deduct from all amounts
paid to a Participant (whether under the Plan or otherwise), any taxes
required by law to be paid or withheld in respect of Awards hereunder to
such Participant. The Committee may provide for additional cash payments
to holders of Awards to defray or offset any tax arising from the grant,
vesting, exercise or payment of any Award.
(d) Transferability. No Awards granted hereunder may be
transferred, pledged, assigned or otherwise encumbered by a Participant
except: (i) by will; (ii) by the laws of descent and distribution; (iii)
pursuant to a domestic relations order, as defined in the Code, if
permitted by the Committee and so provided in the Award Agreement or an
amendment thereto; or (iv) as to Options only, if permitted by the
Committee and so provided in the Award Agreement or an amendment thereto,
(a) to Immediate Family Members, (b) to a partnership in which Immediate
Family Members, or entities in which Immediate Family Members are the
owners, members or beneficiaries, as appropriate, are the partners, (c)
to a limited liability company in which Immediate Family Members, or
entities in which Immediate Family Members are the owners, members or
beneficiaries, as appropriate, are the members, or (d) to a trust for the
benefit of Immediate Family Members; provided, however, that no more than
a de minimus beneficial interest in a partnership, limited liability
company or trust described in (b), (c) or (d) above may be owned by a
person who is not an Immediate Family Member or by an entity that is not
beneficially owned solely by Immediate Family Members. "Immediate Family
Members" shall be defined as the spouse and natural or adopted children
or grandchildren of the Participant and their spouses. To the extent
that an Incentive Stock Option is permitted to be transferred during the
lifetime of the Participant, it shall be treated thereafter as a
Nonqualified Stock Option. Any attempted assignment, transfer, pledge,
hypothecation or other disposition of Awards, or levy of attachment or
similar process upon Awards not specifically permitted herein, shall be
null and void and without effect. The designation of a Designated
Beneficiary shall not be a violation of this Section 11(d).
(e) Share Certificates. All certificates for Shares or other
securities delivered under the Plan pursuant to any Award or the exercise
thereof shall be subject to such stop transfer orders and other
restrictions as the Committee may deem advisable under the Plan or the
rules, regulations, and other requirements of the SEC, any stock exchange
upon which such Shares or other securities are then listed, and any
applicable federal or state laws, and the Committee may cause a legend
or legends to be put on any such certificates to make appropriate
reference to such restrictions.
(f) No Limit on Other Compensation Arrangements. Nothing
contained in the Plan shall prevent the Company from adopting or
continuing in effect other compensation arrangements, which may, but need
not, provide for the grant of options, stock appreciation rights and
other types of Awards provided for hereunder (subject to stockholder
approval of any such arrangement if approval is required), and such
arrangements may be either generally applicable or applicable only in
specific cases.
(g) No Right to Employment. The grant of an Award shall not
be construed as giving a Participant the right to be retained in the
employ of the Company or any Subsidiary or in the employ of any other
entity providing services to the Company. The Company or any Subsidiary
or any such entity may at any time dismiss a Participant from employment,
or terminate any arrangement pursuant to which the Participant provides
services to the Company, free from any liability or any claim under the
Plan, unless otherwise expressly provided in the Plan or in any Award
Agreement. No Employee, Participant or other person shall have any claim
to be granted any Award, and there is no obligation for uniformity of
treatment of Employees, Participants or holders or beneficiaries of
Awards.
(h) Governing Law. The validity, construction, and effect of
the Plan, any rules and regulations relating to the Plan and any Award
Agreement shall be determined in accordance with the laws of the State
of Delaware.
(i) Severability. If any provision of the Plan or any Award
is or becomes or is deemed to be invalid, illegal, or unenforceable in
any jurisdiction or as to any Person or Award, or would disqualify the
Plan or any Award under any law deemed applicable by the Committee, such
provision shall be construed or deemed amended to conform to applicable
laws, or if it cannot be construed or deemed amended without, in the
determination of the Committee, materially altering the intent of the
Plan or the Award, such provision shall be stricken as to such
jurisdiction, Person or Award and the remainder of the Plan and any such
Award shall remain in full force and effect.
(j) No Trust or Fund Created. Neither the Plan nor any Award
shall create or be construed to create a trust or separate fund of any
kind or a fiduciary relationship between the Company and a Participant
or any other Person. To the extent that any Person acquires a right to
receive payments from the Company pursuant to an Award, such right shall
be no greater than the right of any unsecured general creditor of the
Company.
(k) No Fractional Shares. No fractional Shares shall be
issued or delivered pursuant to the Plan or any Award, and the Committee
shall determine whether cash, other securities or other property shall
be paid or transferred in lieu of any fractional Shares or whether such
fractional Shares or any rights thereto shall be canceled, terminated,
or otherwise eliminated.
(l) Headings. Headings are given to the subsections of the
Plan solely as a convenience to facilitate reference. Such headings
shall not be deemed in any way material or relevant to the construction
or interpretation of the Plan or any provision thereof.
SECTION 12
Effective Date of the Plan. The Plan shall be effective as of
the date of its approval by the holders of the common stock of the
Company.
SECTION 13
Term of the Plan. No Award shall be granted under the Plan
after the fifth anniversary of the effective date of the Plan; however,
unless otherwise expressly provided in the Plan or in an applicable Award
Agreement, any Award theretofore granted may, and the authority of the
Committee to amend, alter, adjust, suspend, discontinue, or terminate any
such Award or to waive any conditions or rights under any such Award
shall, extend beyond such date.
Exhibit 10.6
FREEPORT-McMoRan COPPER & GOLD INC.
1995 STOCK OPTION PLAN FOR NON-EMPLOYEE DIRECTORS
ARTICLE I
PURPOSE OF THE PLAN
The purpose of the 1995 Stock Option Plan for Non-Employee
Directors (the "Plan") is to align more closely the interests of the
non-employee directors of Freeport-McMoRan Copper & Gold Inc. (the
"Company") with that of the Company's stockholders by providing for the
automatic grant to such directors of stock options ("Options") to
purchase Shares (as hereinafter defined), in accordance with the terms
of the Plan.
ARTICLE II
DEFINITIONS
For the purposes of this Plan, the following terms shall have the
meanings indicated:
Applicable Rate: With respect to the exercise of an Option, the
rate, expressed as a percentage, determined according to the following
formula:
x divided by (1-x)
in which x equals the maximum federal income tax rate applicable to
individuals in effect on the date of such exercise of such Option.
Board: The Board of Directors of the Company.
Change in Control: A Change in Control shall be deemed to have
occurred if either (a) any person, or any two or more persons acting as
a group, and all affiliates of such person or persons, shall, otherwise
than as a result of the Distribution, beneficially own more than 20% of
all classes and series of the Company's stock outstanding, taken as a
whole, that has voting rights with respect to the election of directors
of the Company (not including any series of preferred stock of the
Company that has the right to elect directors only upon the failure of
the Company to pay dividends) pursuant to a tender offer, exchange offer
or series of purchases or other acquisitions, or any combination of those
transactions, or (b) there shall be a change in the composition of the
Board at any time within two years after any tender offer, exchange
offer, merger, consolidation, sale of assets or contested election, or
any combination of those transactions (a "Transaction"), so that (i) the
persons who were directors of the Company immediately before the first
such Transaction cease to constitute a majority of the Board of Directors
of the corporation which shall thereafter be in control of the companies
that were parties to or otherwise involved in such Transaction, or (ii)
the number of persons who shall thereafter be directors of such
corporation shall be fewer than two-thirds of the number of directors of
the Company immediately prior to such first Transaction. A Change in
Control shall be deemed to take place upon the first to occur of the
events specified in the foregoing clauses (a) and (b).
Code: The Internal Revenue Code of 1986, as amended from time
to time.
Committee: A committee of the Board designated by the Board to
administer the Plan and composed of not fewer than two directors, each
of whom, to the extent necessary to comply with Rule 16b-3 only, is a
"non-employee director" within the meaning of Rule 16b-3 and, to the
extent necessary to comply with Section 162(m) only, is an "outside
director" under Section 162(m). Until otherwise determined by the Board,
the Committee shall be the Corporate Personnel Committee of the Board.
Distribution: The distribution by Freeport-McMoRan Inc. ("FTX")
of all the then outstanding Shares owned by FTX to the holders of FTX
common stock.
Election Period: The period beginning on the third business day
following a date on which the Company releases for publication its
quarterly or annual summary statements of sales and earnings, and ending
on the twelfth business day following such date.
Eligible Director: A director of the Company who is not, and
within the preceding one year has not been, an officer or an employee of
the Company or a Subsidiary, an officer or an employee of an entity with
which the Company has contracted to receive executive or management
services, or otherwise eligible for selection to participate in any plan
of the Company or any Subsidiary that entitles the participants therein
to acquire stock, stock options or stock appreciation rights of the
Company or its Subsidiaries.
Exchange Act: The Securities Exchange Act of 1934, as amended
from time to time.
Fair Market Value: The average of the per Share high and low
quoted sale prices on the date in question (or, if there is no reported
sale on such date, on the last preceding date on which any reported sale
occurred) on the principal exchange or market where such Shares are
quoted.
Grant Date: The first day of the first month following the month
in which the Distribution occurs.
Option Cancellation Gain: With respect to the cancellation of
an Option pursuant to Section 3 of Article IV hereof, the excess of the
Fair Market Value as of the Option Cancellation Date (as that term is
defined in Section 3 of Article IV hereof) of all the outstanding Shares
covered by such Option, whether or not then exercisable, over the
purchase price of such Shares under such Option.
Option Gain: The excess of the Fair Market Value of the Shares
covered by the exercise of an Option over the purchase price of such
Shares under such Option, as such Fair Market Value is determined on the
date of such exercise.
Rule 16b-3: Rule 16b-3 promulgated by the SEC under the Exchange
Act, or any successor rule or regulation thereto as in effect from time
to time.
SEC: The Securities and Exchange Commission, including the staff
thereof, or any successor thereto.
Section 162(m): Section 162(m) of the Code and all regulations
promulgated thereunder as in effect from time to time.
Shares: Shares of Class B Common Stock, par value $0.10 per
share, of the Company and any shares into which such Shares may be
converted or combined in accordance with the terms of the Company's
Certificate of Incorporation.
Subsidiary: Any corporation of which stock representing at least
50% of the ordinary voting power is owned, directly or indirectly, by the
Company; and any other entity of which equity securities or interests
representing at least 50% of the ordinary voting power or 50% of the
total value of all classes of equity securities or interests of such
entity are owned, directly or indirectly, by the Company.
ARTICLE III
ADMINISTRATION OF THE PLAN
This Plan shall be administered by the Board. The Board will
interpret this Plan and may from time to time adopt such rules and
regulations for carrying out the terms and provisions of this Plan as it
may deem best; however, the Board shall have no discretion with respect
to the selection of directors who receive Options, the timing of the
grant of Options, the number of Shares subject to any Options or the
purchase price thereof. Notwithstanding the foregoing, the Committee
shall have the authority to make all determinations with respect to the
transferability of Options in accordance with Article VIII hereof. All
determinations by the Board or the Committee shall be made by the
affirmative vote of a majority of its respective members, but any
determination reduced to writing and signed by a majority of its
respective members shall be fully as effective as if it had been made by
a majority vote at a meeting duly called and held. Subject to any
applicable provisions of the Company's By-Laws or of this Plan, all
determinations by the Board and the Committee pursuant to the provisions
of this Plan, and all related orders or resolutions of the Board and the
Committee, shall be final, conclusive and binding on all persons,
including the Company and its stockholders, employees, directors and
optionees. In the event of any conflict or inconsistency between
determinations, orders, resolutions, or other actions of the Committee
and the Board taken in connection with this Plan, the action of the Board
shall control.
ARTICLE IV
STOCK SUBJECT TO THE PLAN
SECTION 1. The Shares to be issued or delivered upon exercise
of Options shall be made available, at the discretion of the Board,
either from the authorized but unissued Shares of the Company or from
Shares reacquired by the Company, including Shares purchased by the
Company in the open market or otherwise obtained; provided, however, that
the Company, at the discretion of the Board, may, upon exercise of
Options granted under this Plan, cause a Subsidiary to deliver Shares
held by such Subsidiary.
SECTION 2. Subject to the provisions of Section 3 of this
Article IV, the aggregate number of Shares which may be purchased
pursuant to Options shall not exceed 2,000,000.
SECTION 3. In the event of the payment of any dividends payable
in Shares, or in the event of any subdivision or combination of the
Shares, the number of Shares which may be purchased under this Plan, and
the number of Shares subject to each Option granted in accordance with
Section 2 of Article VII, shall be increased or decreased
proportionately, as the case may be, and the number of Shares deliverable
upon the exercise thereafter of any Option theretofore granted (whether
or not then exercisable) shall be increased or decreased proportionately,
as the case may be, without change in the aggregate purchase price. In
the event the Company is merged or consolidated into or with another
corporation in a transaction in which the Company is not the survivor,
or in the event that substantially all of the Company's assets are sold
to another entity not affiliated with the Company, any holder of an
Option, whether or not then exercisable, shall be entitled to receive
(unless the Company shall take such alternative action as may be
necessary to preserve the economic benefit of the Option for the
optionee) on the effective date of any such transaction (the "Option
Cancellation Date"), in cancellation of such Option, an amount in cash
equal to the Option Cancellation Gain relating thereto, determined as of
the Option Cancellation Date.
ARTICLE V
PURCHASE PRICE OF OPTIONED SHARES
The purchase price per Share under each Option shall be 100% of
the Fair Market Value of a Share at the time such Option is granted, but
in no case shall such price be less than the par value of the Shares
subject to such Option.
ARTICLE VI
ELIGIBILITY OF RECIPIENTS
Options will be granted only to individuals who are Eligible
Directors at the time of such grant.
ARTICLE VII
GRANT OF OPTIONS
SECTION 1. Each Option shall constitute a nonqualified stock
option which is not intended to qualify under Section 422 of the Code.
SECTION 2. On the Grant Date in 1995 and on the anniversary of
such date in each subsequent year through and including 2004, each
Eligible Director, as of each such date, shall be granted an Option to
purchase 10,000 Shares. Each Option shall become exercisable with
respect to 2,500 Shares on each of the first, second, third and fourth
anniversaries of the date of grant and may be exercised by the holder
thereof with respect to all or any part of the Shares comprising each
installment as such holder may elect at any time after such installment
becomes exercisable but no later than the termination date of such
Option; provided that each Option shall become exercisable in full upon
a Change in Control.
SECTION 3. Each Option shall provide that, promptly following
the exercise of all or any portion of such Option, the Company shall pay
to the holder of such Option an amount in cash equal to the Option Gain
multiplied by the Applicable Rate. If an Option has been transferred
pursuant to clause (c) of Article VIII hereof, the right to any payment
under this Article VII, Section 3 remains with the original holder of the
Option, except that in the case of a transfer pursuant to a domestic
relations order, such payment shall be made to the spouse responsible for
the federal income tax related to the Option exercise.
ARTICLE VIII
TRANSFERABILITY OF OPTIONS
No Options granted hereunder may be transferred, pledged,
assigned or otherwise encumbered by an optionee except:
(a) by will;
(b) by the laws of descent and distribution; or
(c) if permitted by the Committee and so provided in the
Option or an amendment thereto, (i) pursuant to a domestic
relations order, as defined in the Code, (ii) to Immediate Family
Members, (iii) to a partnership in which Immediate Family
Members, or entities in which Immediate Family Members are the
owners, members or beneficiaries, as appropriate, are the
partners, (iv) to a limited liability company in which Immediate
Family Members, or entities in which Immediate Family Members are
the owners, members or beneficiaries, as appropriate, are the
members, or (v) to a trust for the benefit of Immediate Family
Members; provided, however, that no more than a de minimus
beneficial interest in a partnership, limited liability company
or trust described in (iii), (iv) or (v) above may be owned by
a person who is not an Immediate Family Member or by an entity
that is not beneficially owned solely by Immediate Family
Members. "Immediate Family Members" shall be defined as the
spouse and natural or adopted children or grandchildren of the
optionee and their spouses.
Any attempted assignment, transfer, pledge, hypothecation or other
disposition of Options, or levy of attachment or similar process upon
Options not specifically permitted herein, shall be null and void and
without effect.
ARTICLE IX
EXERCISE OF OPTIONS
SECTION 1. Each Option shall terminate 10 years after the date
on which it was granted.
SECTION 2. Except in cases provided for in Article X hereof,
each Option may be exercised by the holder thereof only while the
optionee to whom such Option was granted is an Eligible Director.
SECTION 3. Each Option shall provide that the Option or any
portion thereof may be exercised only during an Election Period. Each
Option shall provide, however, that in the event of a Change in Control,
the Election Period exercise requirement is waived.
SECTION 4. A person electing to exercise an Option or any
portion thereof then exercisable shall give written notice to the Company
of such election and of the number of Shares such person has elected to
purchase, and shall at the time of purchase tender the full purchase
price of such Shares, which tender shall be made in cash or cash
equivalent (which may be such person's personal check) or in Shares
already owned by such person (which Shares shall be valued for such
purpose on the basis of their Fair Market Value on the date of exercise),
or in any combination thereof. The Company shall have no obligation to
deliver Shares pursuant to the exercise of any Option, in whole or in
part, until such payment in full of the purchase price of such Shares is
received by the Company. No optionee, or legal representative, legatee,
distributee, or assignee of such optionee shall be or be deemed to be a
holder of any Shares subject to such Option or entitled to any rights of
a stockholder of the Company in respect of any Shares covered by such
Option distributable in connection therewith until such Shares have been
paid for in full and certificates for such Shares have been issued or
delivered by the Company.
SECTION 5. Each Option shall be subject to the requirement that
if at any time the Board shall be advised by counsel that the listing,
registration or qualification of the Shares subject to such Option upon
any securities exchange or under any state or federal law, or the consent
or approval of any governmental regulatory body, is necessary or
desirable as a condition of, or in connection with, the granting of such
Option or the issue or purchase of Shares thereunder, such Option may not
be exercised in whole or in part unless such listing, registration,
qualification, consent or approval shall have been effected or obtained
free from any conditions not reasonably acceptable to such counsel for
the Board.
SECTION 6. The Company may establish appropriate procedures to
provide for payment or withholding of such income or other taxes as may
be required by law to be paid or withheld in connection with the exercise
of Options, and to ensure that the Company receives prompt advice
concerning the occurrence of any event which may create, or affect the
timing or amount of, any obligation to pay or withhold any such taxes or
which may make available to the Company any tax deduction resulting from
the occurrence of such event.
ARTICLE X
TERMINATION OF SERVICE
AS AN ELIGIBLE DIRECTOR
SECTION 1. If and when an optionee shall cease to be an Eligible
Director for any reason other than death or retirement from the Board,
all of the Options granted to such optionee shall be terminated except
that any Option, to the extent then exercisable, may be exercised by the
holder thereof within three months after such optionee ceases to be an
Eligible Director, but not later than the termination date of the Option.
SECTION 2. If and when an optionee shall cease to be an Eligible
Director by reason of the optionee's retirement from the Board, all of
the Options granted to such optionee shall be terminated except that any
Option, to the extent then exercisable or exercisable within one year
thereafter, may be exercised by the holder thereof within three years
after such retirement, but not later than the termination date of the
Option.
SECTION 3. Should an optionee die while serving as an Eligible
Director, all the Options granted to such optionee shall be terminated,
except that any Option to the extent exercisable by the holder thereof
at the time of such death, together with the unmatured installment (if
any) of such Option which at that time is next scheduled to become
exercisable, may be exercised within one year after the date of such
death, but not later than the termination date of the Option, by the
holder thereof, the optionee's estate, or the person designated in the
optionee's last will and testament, as appropriate.
SECTION 4. Should an optionee die after ceasing to be an
Eligible Director, all of the Options granted to such optionee shall be
terminated, except that any Option, to the extent exercisable by the
holder thereof at the time of such death, may be exercised within one
year after the date of such death, but not later than the termination
date of the Option, by the holder thereof, the optionee's estate, or the
person designated in the optionee's last will and testament, as
appropriate.
ARTICLE XI
AMENDMENTS TO PLAN AND OPTIONS
The Board may at any time terminate or from time to time amend,
modify or suspend this Plan; provided, however, that no such amendment
or modification without the approval of the stockholders shall:
(a) except pursuant to Section 3 of Article IV, increase
the maximum number (determined as provided in this Plan) of
Shares which may be purchased pursuant to Options, either
individually or in aggregate;
(b) permit the granting of any Option at a purchase price
other than 100% of the Fair Market Value of the Shares at the
time such Option is granted, subject to adjustment pursuant to
Section 3 of Article IV;
(c) permit the exercise of an Option unless the full
purchase price of the Shares as to which the Option is exercised
is paid at the time of exercise;
(d) extend beyond May 1, 2004 the period during which
Options may be granted;
(e) modify in any respect the class of individuals who
constitute Eligible Directors; or
(f) materially increase the benefits accruing to
participants hereunder.
Exhibit 11.1
FREEPORT-McMoRan COPPER & GOLD INC.
COMPUTATION OF NET INCOME PER COMMON AND
COMMON EQUIVALENT SHARE
Three Months Ended
March 31,
------------------------
1997 1996
---------- ----------
(In Thousands, Except
Per Share Amounts)
Primary:
Net income applicable to common stock $ 62,451 $ 22,450
========== ==========
Average common shares outstanding 201,334 196,438
Common stock equivalents:
Stock options 1,713 2,092
---------- ----------
Common and common equivalent shares 203,047 198,530
========== ==========
Net income per common and common
equivalent share $.31 $.11
==== ====
Fully diluted: (1)
Net income applicable to common stock :
Net Income $ 62,451 $ 22,450
Plus preferred dividends 5,250 9,168
---------- ----------
Net Income applicable to common stock $ 67,701 $ 31,618
========== ==========
Average common shares outstanding 201,334 196,438
Common stock equivalents:
Stock options 1,713 2,298
Convertible securities:
Preferred stock 11,690 20,834
---------- ----------
Common and common equivalent shares 214,737 219,570
========== ==========
Net income per common and common
equivalent share $.32 $.14
===== ====
(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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<NAME> FREEPORT-MCMORAN COPPER & GOLD INC.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> MAR-31-1997
<CASH> 25,064
<SECURITIES> 0
<RECEIVABLES> 194,752
<ALLOWANCES> 0
<INVENTORY> 350,204
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<DEPRECIATION> 933,576
<TOTAL-ASSETS> 3,995,994
<CURRENT-LIABILITIES> 562,443
<BONDS> 1,663,328
500,007
349,990
<COMMON> 21,816
<OTHER-SE> 269,729
<TOTAL-LIABILITY-AND-EQUITY> 3,995,994
<SALES> 523,780
<TOTAL-REVENUES> 523,780
<CGS> 296,742
<TOTAL-COSTS> 296,742
<OTHER-EXPENSES> 2,728
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 33,148
<INCOME-PRETAX> 166,458
<INCOME-TAX> 78,605
<INCOME-CONTINUING> 71,821
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<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 71,821
<EPS-PRIMARY> .31
<EPS-DILUTED> .31
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