Exhibit 10.7
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 Xxxxxx, 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 Xxxxxx.
"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 prmptly (A) determine whether the
objections speccified by FCX can be remedied and the
condiions set forth in thiiss ppaaragraph 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 an 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 amout xxxx 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
CX, (B) expose any offcer 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) Ths 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 Xxxxxx Xxxxxxxx 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 threaten
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) Hazzardous Materials have not been transported
from the Properties, nor have Hazardous Materils 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 theeeqquest of the
Security Agent, give such furthher 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
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
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 succh subrogation,
FCX shall remain secured by the collateral referred to in
the ffirst sentence of this paragraph (f).
SECTION 12. Sccessors 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) acknnoowwlledges that it annd 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 0000 Xxxxxxx Xxxxxx,
Xxx Xxxxxxx, Xxxxxxxxx 00000, Attention of the
Treasurer (Telecopy No. (000) 000-0000); and
(ii) if to the Security Agent, to it at One
Chase Xxxxxxxxx Xxxxx, 0xx Xxxxx, Xxx Xxxx, Xxx
Xxxx 00000, Attention of Xxxxx X. Xxxxxx (Telecopy
No. (000) 000-0000).
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 & Xxxxx, 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
Indemnitee 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 000 Xxxx Xxxxxx, Xxx Xxxx,
X.X. 00000, 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
Name: Signed
Title:
THE CHASE MANHATTAN BANK, as Security
Agent,
by
Name: Signed
Title:
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
Name:
Title:
PT NUSANTARA AMPERA BAKTI,
Name:
Title:
PT MAPINDO PARAMA,
by
Name:
