EXHIBIT 10.3
SECOND AMENDED AND RESTATED JOINT VENTURE
AND SHAREHOLDERS AGREEMENT
FOR P.T. SMELTING CO.
between
MITSUBISHI MATERIALS CORPORATION,
P.T. FREEPORT INDONESIA COMPANY,
MITSUBISHI CORPORATION, and
NIPPON MINING & METALS COMPANY, LIMITED
as amended on December 11, 1996
TABLE OF CONTENTS
PAGE
ARTICLE 1. DEFINITIONS AND INTERPRETATION............................2
1.1 Definitions...............................................2
1.2 Construction..............................................8
ARTICLE 2. ESTABLISHMENT OF PROJECT COMPANY..........................8
2.1 Organization and Registration.............................8
2.2 Articles of Association...................................9
2.3 Ratification by PTSC......................................9
ARTICLE 3. CAPITAL, SHARES, AND SUBORDINATED LOANS...................9
3.1 Initial Authorized Capital/Shares/Par Value...............9
3.2 Subscription for Initial Issued Capital...................9
3.3 First Capital Increase...................................10
3.4 Initial Payment for First Capital Increase...............11
3.5 Payment of the Authorized Capital Subscription
Balance................................................11
3.6 Increase of Authorized Capital Amount Prior to
Production Date........................................11
3.7 Making of Subordinated Shareholder Loans.................12
3.8 Default in Payment of Subscription or Making of
Subordinated Shareholder Loans.........................13
ARTICLE 4. PREEMPTIVE RIGHTS........................................15
4.1 Increase in Authorized Capital After the Production
Date...................................................15
4.2 Preemptive Rights of Parties.............................15
4.3 Consequences of Failure to Subscribe for Full
Proportionate Share....................................15
ARTICLE 5. TRANSFER OF SHARES OR SUBORDINATED LOANS.................16
5.1 Approval Required for Transfer...........................16
5.2 Prohibition on Certain Transfers.........................17
5.3 Right of First Offer.....................................17
5.4 Consent to Certain Transfers by MMC......................18
5.5 Consent to Certain Transfers to Subsidiaries.............19
5.6 Consent to Share Pledges in Connection With the
Project Loans..........................................20
5.7 Party's Right to Assign Shareholder Rights and
Subordinated Shareholder Loans.........................20
5.8 Mandatory Participation by a Third Party in the
Share Capital of PTSC..................................20
5.9 New Shareholder to Become Bound by this Agreement........22
5.10 Obligations Continuing...................................22
ARTICLE 6. BOARD OF DIRECTORS; PRESIDENT DIRECTOR...................22
ARTICLE 7. BOARD OF COMMISSIONERS; PRESIDENT COMMISSIONER...........23
ARTICLE 8. GENERAL PROVISIONS RELATING TO DIRECTORS AND
COMMISSIONERS..........................................24
8.1 Dismissal................................................24
8.2 Vacancy..................................................24
ARTICLE 9. DIVIDEND POLICY..........................................24
ARTICLE 10. EXECUTION OF AGREEMENTS; PREINCORPORATION EXPENSES.......24
10.1 Execution of Agreements..................................24
10.2 Reimbursement of Organizational Expenses.................25
10.3 Reimbursement of Feasibility Study Expenses..............25
ARTICLE 11. FINANCING................................................25
11.1 Financial Plan...........................................25
11.2 Financing and Guarantees.................................25
11.3 Share and Subordinated Loan Transfers....................26
11.4 Repayment of Shareholder Support.........................26
ARTICLE 12. COVENANTS................................................28
12.1 General..................................................28
12.2 Governmental Approvals...................................28
12.3 Execution of Other Agreements............................28
12.4 Competition With PTSC....................................28
12.5 MMC Preferential Return..................................28
(a) Total Return of 13% or Less........................28
(b) Total Return Exceeding 13%.........................29
(c) Calculation of Target Return.......................29
12.6 Increase in Floor TC's and RC's..........................30
12.7 Subordination of Advisory Fee............................31
12.8 Subordination of MMC Smelter License Royalty.............31
12.8 Subordination of MMC Smelter License Royalty.............32
12.9 Subordination of Financial Disadvantage Payable
to MMC, MC or NMM......................................32
ARTICLE 13. TERM OF THIS AGREEMENT...................................32
ARTICLE 14. DEFAULT..................................................32
14.1 Default..................................................32
14.2 Effect of Default........................................33
14.3 Share Purchase Right.....................................33
14.4 Share Price..............................................34
14.5 Share and Subordinated Loan Transfer.....................34
ARTICLE 15. EFFECT OF TERMINATION AND DISSOLUTION....................35
ARTICLE 16. DISPUTE RESOLUTION.......................................36
16.1 Amicable Settlement......................................36
16.2 Arbitration Rules........................................36
16.3 Arbitrators..............................................36
16.4 Arbitration Award........................................37
16.5 Award to be Final and Conclusive.........................37
16.6 Performance of Obligations Pending Decision..............38
16.7 Waiver of Right to Terminate Board of Arbitration........38
ARTICLE 17. REPRESENTATIONS AND WARRANTIES...........................38
17.1 Corporate Power..........................................38
17.2 Statements True..........................................38
ARTICLE 18. CONFIDENTIALITY..........................................38
18.1 Confidential Treatment/Permitted Disclosures.............38
18.2 Implementation...........................................40
18.3 Treatment of Project Information by PTSC.................40
18.4 Obligations to Survive...................................40
Article 19. ASSIGNMENT...............................................40
Article 20. LAW AND INTERPRETATION...................................41
20.1 Governing Law............................................41
20.2 Governing Language of this Agreement.....................41
20.3 Headings.................................................41
Article 21. SEVERABILITY.............................................41
Article 22. NOTICES..................................................41
22.1 Manner of Delivery/Addresses.............................41
22.2 Change of Address........................................43
Article 23. FORCE MAJEURE............................................44
Article 24. ENTIRE AGREEMENT.........................................44
Article 25. AMENDMENTS...............................................44
Article 26. NO THIRD PARTY BENEFICIARIES.............................46
Article 27. NO CONFLICT WITH CREDIT DOCUMENTS........................46
Article 28. MISCELLANEOUS............................................46
SECOND AMENDED AND RESTATED JOINT VENTURE
AND SHAREHOLDERS' AGREEMENT
THIS SECOND AMENDED AND RESTATED JOINT VENTURE AND SHAREHOLDERS'
AGREEMENT is effective the 11th day of December 1996 between MITSUBISHI
MATERIALS CORPORATION ("MMC"), a corporation organized and existing under
the laws of Japan; P.T. FREEPORT INDONESIA COMPANY ("FI"), a limited
liability company established under the laws of the Republic of Indonesia
which is also domesticated in the State of Delaware, U.S.A.; MITSUBISHI
CORPORATION ("MC"), a corporation organized and existing under the laws
of Japan; and NIPPON MINING & METALS COMPANY, LIMITED ("NMM"), a
corporation organized and existing under the laws of Japan (sometimes
referred to individually as "Party" and together as the "Parties").
WHEREAS, MMC and FI are shareholders of P.T. Smelting Co., an
Indonesian limited liability company ("PTSC") formed to develop,
construct and operate a 200,000 metric ton per annum copper smelter and
refinery to be located at Gresik, East Java, Indonesia (the "Project");
WHEREAS, MMC, FI and Fluor Daniel Asia, Inc. entered into that
certain Joint Venture and Shareholders' Agreement dated October 25, 1995
concerning the development, construction, ownership and operation of the
Project, as amended in the First Amended and Restated Joint Venture and
Shareholders' Agreement ("First Amendment") dated May 24, 1996
(collectively, the "Shareholders Agreement");
WHEREAS, MMC has now agreed to sell, and MC has agreed to purchase
83,125 Shares and paid up subscription rights to an additional 53,200
Shares, constituting 9.5% of the total number of fully paid Shares and
subscription rights to Shares as of the date hereof;
WHEREAS, MMC has also agreed to transfer to MC, and MC has agreed to
assume from MMC, a portion of MMC's obligations as a shareholder of PTSC
and sponsor of the Project, whereupon MMC shall be released from such
obligations ot the extent transferred to MC;
WHEREAS, MMC has now agreed to sell, and NMM has agreed to purchase
43,750 Shares and paid up subscription rights to an additional 28,000
Shares, constituting 5.0% of the total number of fully paid Shares and
subscription rights to Shares as of the date hereof;
WHEREAS, MMC has also agreed to transfer to NMM, and NMM has agreed
to assume from MMC, a portion of MMC's obligations as a shareholder of
PTSC and sponsor of the Project, whereupon MMC shall be released from
such obligations to the extent transferred to NMM; and
WHEREAS, MMC and FI now desire to further amend the Shareholders
Agreement to reflect the above transactions, MC and NMM desire by
execution hereof to become Parties to the Shareholders Agreement, and
MMC, FI, MC and NMM desire to further amend the Shareholders Agreement to
reflect other matters approved by them;
NOW, THEREFORE, in consideration of the mutual promises and
covenants hereinafter set forth, the Parties hereby agree as follows:
ARTICLE 1. DEFINITIONS AND INTERPRETATION.
1.1 Definitions. Unless otherwise defined herein, all capitalized
terms used herein shall have the meaning as defined below:
"Affiliate" shall mean any entity which directly or indirectly,
through one or more intermediaries, controls, is controlled by or is
under common control with a party to this Agreement. Control shall be
presumed to exist whenever one person or entity holds, directly or
indirectly, through one or more intermediaries, twenty-five percent (25%)
or more of the outstanding voting shares or interests in another entity.
"Accepting Party" shall have the meaning set forth in Section
3.8(b).
"Auditor" means any independent firm of certified public accountants
of good international repute, appointed by PTSC and approved by a General
Meeting of Shareholders.
"Basic Share Proportion" means the proportion in which the Parties
own Shares as set forth in Sections 3.2 and 3.3, as the same may be
adjusted pursuant to Section 3.8 or 4.3.
"Basic Loan Proportion" means the proportion in which the Parties
make Subordinated Shareholder Loans as set forth in Section 3.7, as the
same may be adjusted pursuant to Section 3.8.
"BKPM" shall mean the Capital Investment Coordinating Board of
Indonesia.
"Commencement of Commercial Operations" shall mean the date of the
first charge of copper concentrates to the smelting furnace of PTSC's
smelter.
"Concentrate Purchase and Sale Agreement" means the agreement to be
entered into between PTSC and FI pursuant to which FI will sell copper
concentrates to PTSC, and any subsequent modifications, supplements or
amendments thereto.
"Copper Cathode Export Sale and Purchase Agreement" means the
agreement to be entered into between PTSC and MMC, MC and NMM pursuant to
which MMC, MC and NMM will offtake all of the copper cathode produced by
PTSC for export sale.
"Cost Overrun Support" shall have the meaning set forth in the
Credit Documents.
"Credit Documents" shall have the meaning set forth in the Loan
Agreement.
"Default" shall have the meaning set forth in Section 14.1.
"EPC Contracts" means the agreements dated May 31, 1996 between PTSC
and Chiyoda Corporation, a corporation organized and existing under the
laws of Japan, or one or more of its Affiliates, as the main contractor
for the engineering, procurement and construction of the Facilities, any
related agreements for the engineering, procurement and construction of
the Facilities for which Chiyoda or its Affiliates will act as project
manager or general contractor, and any subsequent modifications,
supplements or amendments thereto.
"Expatriate Consultant Recruitment Agreement" means the agreement to
be entered into between PTSC and a recruiting company pursuant to which
the recruiting company will recruit expatriate consultants for PTSC.
"Facilities" shall mean the copper smelter, refinery, sulfuric acid
plant, waste water treatment plant, jetty and associated facilities to be
constructed at the Project.
"Financial Plan" shall have the meaning set forth in Section 11.1.
"First Amendment" has the meaning set forth in the preliminary
statements.
"First Capital Increase" shall have the meaning set forth in Section
3.3.
"Floor TC's and RC's Support" shall have the same meaning as "Floor
Price Support" set forth in the Credit Documents.
"Government" shall mean any ROI ministry, department, political
subdivision, agency, or commission.
"Land Agreements" means, collectively, the agreements dated July 3,
1996 entered into between PTSC and PG pursuant to which PG will lease
land, provide use of PG facilities, and grant easements to PTSC as
required for the Facilities, and any subsequent modifications,
supplements or amendments thereto.
"Loan Agreement" shall mean that certain loan agreement dated as of
December 11, 1996 by and among PTSC, the lenders and guarantee providers
specified therein, Tokyo-Mitsubishi International (Singapore) Ltd., as
facility agent, Barclays de Zoete Wedd Limited, as technical agent, The
Industrial Bank of Japan Trust Company, as off-shore collateral agent,
and P.T. IBJ Indonesia Bank, as on-shore collateral agent, and their
respective successors and assigns.
"Major Contracts" means (i) the Offshore Marketing Services
Agreement, (ii) the Sulfuric Acid Sale and Purchase Agreement, (iii) the
Land Agreements, (iv) the Offshore Operation and Technical Assistance
Agreement, (v) the Smelter License Agreement, (vi) the Concentrate
Purchase and Sale Agreement, (vii) the EPC Contracts, (viii) the Utility
Supply Agreements, (ix) the Copper Cathode Export Sale and Purchase
Agreement, (x) the Precious Metal Slime Sale and Purchase Agreement (xi)
the Offshore Training Agreement, (xii) the Expatriate Consultant
Recruitment Agreement, (xiii) the Credit Documents, and (xiv) the
Subordinated Shareholder Loan agreements.
"Mitsubishi Continuous Copper Smelting and Converting Process" means
the method or process covered, in whole or in part, by the technical
information and/or the patents for the substantially continuous
production of anode copper from copper-bearing sulfide ore, copper scrap,
cement copper, copper matte or other copper-bearing materials by using a
series of furnaces which are mutually linked together through launders,
provided however that the battery limits of the process range from
concentrate dryer to anode furnace.
"MMC Warranty Support" means the warranty included in the Credit
Documents pursuant to which MMC shall provide up to US$20,000,000 in
assistance to PTSC if a certain copper loss recovery rate is exceeded in
PTSC's smelter.
"Non-Subscribing Party" shall have the meaning set forth in Section
4.3.
"Offshore Marketing Services Agreement" means the agreement to be
entered into between PTSC, MMC, MC and NMM pursuant to which MMC, MC and
NMM will provide marketing services from outside of Indonesia for certain
products produced by PTSC, and any subsequent modifications, supplements
or amendments thereto.
"Offshore Operation and Technical Assistance Agreement" means the
agreement to be entered into between PTSC and MMC pursuant to which MMC
will provide certain operations and technical assistance services from
outside of Indonesia to PTSC, and any subsequent modifications,
supplements or amendments thereto.
"Offshore Training Agreement" means the agreement to be entered into
between PTSC and MMC pursuant to which MMC will provide certain smelter
operation training services in Japan.
"Overdue Interest Rate" shall mean (i) with respect to amounts to be
paid by a Party or PTSC in Dollars, the Standard Dollar Interest Rate as
changed from time to time from the due date of the payment to (but
excluding) the date of payment, plus two percent (2%) (such rate to be
adjusted simultaneously with each change in the Standard Dollar Interest
Rate) and calculated on the basis of a three hundred sixth five (365) day
year and actual days elapsed; and (ii) with respect to amounts to be paid
by a Party or PTSC in Rupiah, the Standard Rupiah Interest Rate as
changed from time to time from the due date of the payment to (but
excluding) the date of payment, plus five percent (5%) (such rate to be
adjusted simultaneously with each change in the Standard Rupiah Interest
Rate) and calculated on the basis of a three hundred sixty five (365) day
year and actual days elapsed.
"Ownership Transfer Date" shall mean the date when, as a result of
the exercise by the Project Lenders of their rights under the Project
Loans, a third party (other than one or more of the Project Lenders or
their successors or an entity majority-owned or controlled by any of
them) becomes the owner of a majority (at least 50.1%) of the issued
Shares.
"PG" means P.T. Petrokimia Gresik (Persero), a State owned
Indonesian limited liability company.
"PMA Account" means the Indonesian bank account(s) established by
PTSC and into which shall be deposited all amounts contributed by each
Shareholder to PTSC for Shares, for subscription payments for Shares, or
for Subordinated Shareholder Loans made by such Shareholder to PTSC.
"Precious Metal Slime Sale and Purchase Agreement" means the
agreement to be entered into between PTSC and MC pursuant to which MC
will offtake all of the precious metal slime produced by PTSC.
"Production Date" means the date the first 1,200 MT of anodes
acceptable for refining by PTSC's refinery have been produced by PTSC's
smelter over a period of four (4) consecutive days.
"Project" has the meaning set forth in the preliminary statements.
"Project Information" has the meaning set forth in Section 18.1(a).
"Project Lenders" shall mean the agents and the lenders (other than
PTSC's shareholders), and that are party to the Project Loans, and their
successors and permitted assigns.
"Project Loans" shall mean the Loan Agreement (and related credit
and security documentation) to be entered into between PTSC and the
Project Lenders in regards to financing the construction and initial
working capital of the Project.
"Project Planning Agreement" means that certain Project Planning
Agreement dated May 12, 1995 entered into by MMC and FI concerning the
preparation of a feasibility study for the Project.
"Qualified Transferee" has the meaning set forth in Section 5.7.
"ROI" means the Republic of Indonesia.
"Share" or "Shares" means a share of common stock in PTSC.
"Shareholder" means a person who owns Shares.
"Shareholders Agreement" has the meaning set forth in the
preliminary statements.
"Shareholder Support" has the meaning set forth in the Credit
Documents.
"Smelter License Agreement" means the agreement to be entered into
between PTSC and MMC pursuant to which MMC will grant to PTSC a license
of the Mitsubishi Continuous Copper Smelting and Converting Process, and
any subsequent modifications, supplements or amendments thereto.
"Stage 2 Completion Date" shall have the meaning set forth in the
Loan Agreement.
"Standard Dollar Interest Rate" shall mean the published prime
commercial lending rate of The Chase Manhattan Bank or its successor.
"Standard Rupiah Interest Rate" shall mean the published prime
commercial lending rate of Bank Indonesia or its successor.
"Subordinated Shareholder Loan" means a loan made by any Shareholder
to PTSC which by its terms is expressly made subordinate to the Project
Loans.
"Subsidiary" means any entity in which a Party to this Agreement
holds, directly or indirectly, through one or more intermediaries,
beneficial ownership of fifty percent (50%) or more of the voting shares
or equity interests.
"Sulfuric Acid Sale and Purchase Agreement" means the agreement to
be entered into between PTSC and PG pursuant to which PG will purchase
from PTSC, and PTSC will sell to PG, PTSC's sulfuric acid output, and any
subsequent modifications, supplements or amendments thereto.
"Support Fee" shall have the meaning set forth in the Offshore
Operation and Technical Assistance Agreement.
"Termination Date" shall have the meaning set forth in the Loan
Agreement.
"Transfer" means any pledge, mortgage, hypothecation, encumbrance,
assignment, sale, conveyance or disposition, whether voluntarily, by
operation of law, at judicial sale or otherwise.
"Utility Supply Agreements" means the agreements to be entered into
between PTSC and suppliers of power, oxygen, low pressure steam, natural
gas, and industrial water pursuant to which such suppliers will provide
said utilities to PTSC, and any subsequent modifications, supplements or
amendments thereto.
"VAT Support" shall have the meaning set forth in the Credit
Documents.
"Voluntary Capital Contributions" shall have the meaning set forth
in the Credit Documents.
1.2 Construction
(a) In this Agreement, unless the context otherwise requires,
the singular shall include the plural and vice versa and reference to a
gender shall include any other gender.
(b) Any reference herein to a Section or Sections is a
reference to the referenced Section or Sections of this Agreement unless
otherwise specifically provided.
(c) Any reference herein to an agreement is a reference to
such agreement as amended, varied, added to, substituted, replaced,
renewed, or extended from time to time.
(d) Any reference herein to any law or statute shall be
construed as including all statutory provisions consolidating, amending,
or replacing the law or statute referred to.
ARTICLE 2. ESTABLISHMENT OF PTSC
2.1 Organization and Registration. PTSC has been established under
the laws of the Republic of Indonesia, and is domiciled in Jakarta at
Plaza 89, 6th Floor-S-602, J1. H.R. Rasuna Said Kav.X-7 No. 6 Jakarta
12940, Indonesia.
2.2 Articles of Association. The Articles of Association of PTSC
have been approved by the Minister of Justice of the Republic of
Indonesia by Decree No. C2-1648.HT.01.01.TH'96 dated 7th February 1996
and have been published in the State Gazette of ROI No. 26 dated 29 March
1996 Supplement No. 3183. The Parties acknowledge that the provisions of
this Agreement are more detailed in certain respects than the Articles of
Association and the Parties agree that in such cases the more detailed
provisions of this Agreement, as among the Parties, shall be applicable.
In the event of any conflict between the provisions of this Agreement and
the Articles of Association, this Agreement shall control and the Parties
shall to the extent permitted by applicable law amend the Articles of
Association to the extent of any such conflict, so as to be consistent
with the provisions of this Agreement.
2.3 Ratification by PTSC. By its execution hereof, PTSC hereby
ratifies and agrees to be bound by this Agreement as if it were a party
hereto, to carry out the management and administration and its businesses
in accordance with the terms and conditions of this Agreement, and to
perform all obligations intended under this Agreement to be undertaken or
performed by PTSC.
ARTICLE 3. CAPITAL, SHARES, AND SUBORDINATED LOANS.
3.1 Initial Authorized Capital/Shares/Par Value. PTSC was
incorporated with an initial authorized capital (the "Initial Authorized
Capital") of Rp 191,275,000,000 (One Hundred Ninety-One Billion, Two
Hundred Seventy-Five Million Rupiah) [US$87,500,000 (Eighty-Seven
Million, Five Hundred Thousand United States Dollars)], divided into
Shares of par value Rp218,600 (Two Hundred Eighteen Thousand, Six Hundred
Rupiah) [US$100 (One Hundred United States Dollars)] each.
3.2 Subscription for Initial Issued Capital. The initial issuance
of authorized capital (the "Initial Issued Capital") is Rp
191,275,000,000 (One Hundred Ninety-One Billion, Two Hundred Seventy-Five
Million Rupiah) [US$87,500,000 (Eighty-Seven Million, Five Hundred
Thousand United States Dollars)], represented by Eight Hundred Seventy-
Five Thousand (875,000) Shares. The Parties have subscribed for (or have
received Transfer of) the Shares of the Initial Issued Capital in the
following ratio:
Number of Subscription Basic Share
Party Shares Amount (US$) Proportion
- ------- --------- ------------ -----------
MMC 529,375 52,937,500 60.5%
FI 218,750 21,875,000 25.0%
MC 83,125 8,312,500 9.5%
NMM 43,750 4,375,000 5.0%
Total 875,000 $87,500,000 100.0%
3.3 First Capital Increase. The Parties agree to take all
necessary steps to amend the Articles of Association of PTSC to reflect
an increase in the authorized capital from Rp 191,275,000,000 (One
Hundred Ninety-One Billion, Two Hundred Seventy-Five Million Rupiah)
[US$87,500,000 (Eighty-Seven Million, Five Hundred Thousand United States
Dollars)], represented by Eight Hundred Seventy-Five Thousand (875,000)
Shares to reflect a revised authorized capital of Rp 327,900,000,000
(Three Hundred Twenty-Seven Billion Nine Hundred Million Rupiah), or such
other number of Rupiah as shall be specified by BKPM as the equivalent of
US$150,000,000 (One Hundred Fifty Million United States Dollars)
represented by One Million Five Hundred Thousand (1,500,000) Shares of
par value Rp218,600 (Two Hundred Eighteen Thousand, Six Hundred Rupiah),
or such other number of Rupiah as shall be specified by BKPM as the
equivalent of US$100 (One Hundred United States Dollars) each (the "First
Capital Increase"). In addition to subscribing for and/or receiving
Transfer of Shares of the Initial Issued Capital in the Basic Share
Proportion specified in Section 3.2, the Parties agree to subscribe for
and accept the additional Six Hundred Twenty Five Thousand (625,000)
Shares resulting from the First Capital Increase in the same Basic Share
Proportion as follows:
Number of Subscription Basic Share
Party Shares Amount (US$) Proportion
- ------ -------- ------------ -----------
MMC 378,125 37,812,500 60.5%
FI 156,250 15,625,000 25.0%
MC 59,375 5,937,500 9.5%
NMM 31,250 3,125,000 5.0%
Total 625,000 $62,500,000 100.0%
3.4 Initial Payment for First Capital Increase. Except as
otherwise agreed by the Parties or resolved by the Board of Directors
(subject to the approval of the General Meeting of the Shareholders),
each Party shall pay its Basic Share Proportion of the subscription price
for the additional Six Hundred Twenty Five Thousand (625,000) Shares
resulting from the First Capital Increase into the PMA Account by the
deadline required by the Indonesian Ministry of Justice in connection
with approving the amendment to the Articles of Association of PTSC
reflecting such increase in the authorized capital of PTSC. Payment
shall be made in cash in U.S. Dollars, in a lump sum into the PMA Account
without any right of set-off.
3.5 Payment of the Authorized Capital Subscription Balance. In
accordance with the Financial Plan and the provisions of this Agreement,
the Board of Directors may, subject to approval by the General Meeting of
Shareholders, call further payments by the Parties for the authorized
capital until the Shares subscribed to are fully paid-up. The Board of
Directors may call such payments, subject to approval by the General
Meeting of Shareholders, in U.S. Dollars at such times and in such
amounts as may be necessary to meet the expenditures of PTSC in
accordance with the Financial Plan. On each call for further payment,
each Party shall pay in cash in the amount due without any right of set-
off within thirty (30) days from the date of the notice into the PMA
Account without any right of setoff. All Shares subscribed for must be
fully paid up on or before the Commencement of Commercial Operations in
accordance with the Financial Plan.
3.6 Increase of Authorized Capital Amount Prior to Commencement of
Commercial Operations. To the fullest extent permitted by law,
notwithstanding the Articles of Association, prior to the Commencement of
Commercial Operations the Board of Directors may resolve, in accordance
with the Financial Plan and the provisions of this Agreement and subject
to approval by the General Meeting of Shareholders, that PTSC shall
increase its authorized capital amount at such times and in such amounts
as may be necessary to meet the expenditures of PTSC in accordance with
the Financial Plan. Upon approval by the General Meeting of
Shareholders, the Shares representing the increased authorized capital
amount shall be offered to and subscribed for by each of the Parties in
its Basic Share Proportion. Each Party shall pay the amount due, in
cash, in U.S. Dollars, without any right of set-off, into the PMA Account
by the deadline required by the Indonesian Ministry of Justice in
connection with the approval of the amendment to the Articles of
Association of PTSC reflecting such increase in the authorized capital of
PTSC.
3.7 Making of Subordinated Shareholder Loans. In addition to the
capital subscriptions set forth in Sections 3.2, 3.3 and 3.6, at such
time or times as set by the Board of Directors and approved by the
General Meeting of Shareholders in accordance with the Financial Plan and
the Project Loans, the Parties each agree to make (or purchase from
another Shareholder who has made) initial Subordinated Shareholder Loans
to PTSC in U.S. Dollars in the following aggregate principal amounts:
Basic Loan
Party Principal Amount (US$) Proportion
- ------- ---------------------- ----------
MMC 106,480,000 60.5%
FI 44,000,000 25.0%
MC 16,720,000 9.5%
NMM 8,800,000 5.0%
Total $176,000,000 100.0%
The terms of the Subordinated Shareholder Loans, including the Loan
period(s), the interest rate(s), repayment terms, subordination,
priority, etc. shall be determined by the Board of Directors in
accordance with the Financial Plan and the Project Loans, and approved by
the General Meeting of Shareholders. For the avoidance of doubt, at any
time prior to the Commencement of Commercial Operations the amount of
Subordinated Shareholder Loans may be increased or decreased in
accordance with the Financial Plan by resolution of the Board of
Directors, subject to approval by the General Meeting of Shareholders, in
a manner consistent with the Credit Documents. Upon approval by the
General Meeting of Shareholders, the additional Subordinated Shareholder
Loans shall (unless otherwise agreed by each of the Shareholders) be lent
by each of the Parties in its Basic Loan Proportion. Each Party shall
pay the principal amount of the Subordinated Shareholder Loan, in cash,
in U.S. Dollars, without any right of set-off, into the PMA Account by
the deadline set by the Board of Directors, which shall not, unless
otherwise approved by the General Meeting of Shareholders, be earlier
than fourteen (14) days after the approval by BKPM of the revised
investment plan reflecting such increase in Subordinated Shareholder
Loans.
3.8 Default in Payment of Subscription or Making of Subordinated
Shareholder Loans
(a) If any Party (in this Section, hereinafter called the
"Defaulting Party") fails to fulfill any of its obligations (i) to make
subscription payments for the Initial Authorized Capital, (ii) to make
subscription payments for additional Shares issued as a result of an
increase in authorized capital prior to the Commencement of Commercial
Operations, or (iii) to make a Subordinated Shareholder Loan when due,
PTSC or any non-defaulting Party may immediately serve notice on the
Defaulting Party, with copies to all other Parties, declaring the
Defaulting Party to be in default and requiring it to remedy such default
in full within ten (10) days of the date of the notice. Interest on
overdue amounts shall be payable by the Defaulting Party to PTSC at the
Overdue Interest Rate from the date payment was due until paid. All the
rights, but not the obligations, of the Defaulting Party as a
Shareholder, lender of Subordinated Shareholder Loans, and Party to this
Agreement shall be suspended for as long as such default is unremedied or
until the Defaulting Party ceases to be a Shareholder and/or lender of
Subordinated Shareholder Loans.
(b) Upon the expiration of the ten (10) day period described
in Section 3.8(a) without remedy of the default, each non-defaulting
Party shall have the right to acquire all or any portion of the Shares
held by the Defaulting Party and assume all or any portion of the
Subordinated Shareholder Loans held by the Defaulting Party by giving
notice thereof within thirty (30) days. If the total number of Shares or
total amount of Subordinated Shareholder Loans for which such notice has
been given exceeds the total number of Shares or Subordinated Shareholder
Loans held by the Defaulting Party then each Party giving notice (in this
Section, hereinafter called "Accepting Party") may acquire at least the
number of Shares and may assume at least the amount of Subordinated
Shareholder Loans that bears the same ratio to the total number of Shares
or Subordinated Shareholder Loans (as the case may be) of the Defaulting
Party that such Accepting Party's respective Basic Share Proportion and
Basic Loan Proportion bears to the aggregate Basic Share Proportions and
Basic Loan Proportions of all the Accepting Parties. The Defaulting
Party shall transfer the appropriate number of its Shares and assign the
appropriate amount of its Subordinated Shareholder Loans to each of the
Accepting Parties within ten (10) days of receipt of such notice from the
Accepting Party, and each Party's Basic Share Proportion and Basic Loan
Proportion shall be adjusted accordingly. The purchase price for the
Shares to be paid by the Accepting Party shall be fifty percent (50%) of
the aggregate amount paid up on such Shares by the Defaulting Party, or
the book value of such Shares as determined by the Auditor, whichever is
less. The Accepting Party shall also pay to PTSC the unpaid balance of
any Shares that are not fully paid. The purchase price for the
Subordinated Shareholder Loans shall be fifty percent (50%) of the
aggregate outstanding principal and interest then due on the Subordinated
Shareholder Loans to the Defaulting Party. In either case the purchase
price shall be paid on the date the Accepting Party receives the Shares
or the assignment of the Subordinated Shareholder Loans from the
Defaulting Party, or, in the case of the Shares, as soon thereafter as
the book value may be determined by the Auditor.
(c) If the total number of Shares or the total amount of the
Subordinated Shareholder Loans accepted or assumed by the Accepting
Parties is less than the total number of Shares owned or total amount of
outstanding Subordinated Shareholder Loans held by the Defaulting Party,
the Defaulting Party shall be required to sell any remaining Shares and
assign any remaining Subordinated Shareholder Loans to a third party,
designated by the Board of Directors and approved by a General Meeting of
Shareholders, for the same price and payment terms as provided in Section
3.8(b) in the case of Transfer to an Accepting Party. Upon Transfer of
the Shares and Subordinated Shareholder Loans to a third party, the Basic
Share Proportion and Basic Loan Proportion of each Party and the third
party shall be adjusted accordingly. The third party shall also pay to
PTSC the unpaid balance of any Shares that are not fully paid. For the
execution of such sale of Shares and assignment of Subordinated
Shareholder Loans to a third party, the Board of Directors shall be
empowered for and on behalf of the Defaulting Party to apply to, appear
before, submit information, obtain approval from the competent
authorities and to take any other action to accomplish the above Transfer
of Shares and Subordinated Shareholder Loans.
ARTICLE 4. PREEMPTIVE RIGHTS
4.1 Increase in Authorized Capital After the Commencement of
Commercial Operations. If, after the Commencement of Commercial
Operations, the Board of Directors shall determine that PTSC should
increase its authorized capital, the Board of Directors shall give notice
to the Shareholders and set a General Meeting of Shareholders for
approval of the authorized capital increase. If approved by the General
Meeting of Shareholders, the increase in the authorized capital of PTSC
shall take effect when the Articles of Association are duly amended and,
when necessary, any Government approvals have been obtained.
4.2 Preemptive Rights of Parties. Each Party shall be entitled to
subscribe for its Basic Share Proportion of any additional Shares issued
by PTSC as a result of an increase in the authorized capital as specified
in Section 4.1. Upon receipt of notice from the Board of Directors of
PTSC's intention to issue additional Shares, each Party shall notify PTSC
within thirty (30) days whether it intends to purchase its Basic Share
Proportion of the additional Shares to be issued. If the total number of
Shares for which the Parties have exercised such pre-emptive right
exceeds the total number of shares to be issued, then each Party
exercising such pre-emptive right may acquire at least the number of
Shares that bears the same ratio to the total number of Shares to be
issued that such Party's Basic Share Proportion bears to the aggregate
Basic Share Proportion of all Parties giving such notice.
4.3 Consequences of Failure to Subscribe for Full Proportionate
Share. Should any Party elect not to subscribe for its full Basic Share
Proportion of the Shares then being offered (a "Non-Subscribing Party"),
then such Non-Subscribing Party shall thereafter have no greater rights
than any person or entity not a Party to this Agreement to subscribe for
Shares later offered by PTSC. In the event any Party fails to notify the
Board of Directors in writing within such thirty (30) day period that it
will subscribe to its Basic Share Proportion of the new Shares to be
issued, or notifies the Board of Directors in writing that it will not
subscribe to such new Shares or will subscribe to fewer new Shares than
those to which it is entitled, then the Board of Directors shall first
offer such Shares (the "Non-Subscribing Party Shares") to the other
Parties. Each Party receiving such notice shall have thirty (30) days to
notify PTSC whether it desires to purchase its Basic Share Proportion of
the Non-Subscribing Party Shares. If the total number of Non-Subscribing
Party Shares desired by the other Parties exceeds the total number of
Non-Subscribing Party Shares to be issued, then each Party desiring Non-
Subscribing Party Shares may acquire at least the number of Non-
Subscribing Party Shares that bears the same ratio to the total number of
Non-Subscribing Party Shares to be issued that such Party's Basic Share
Proportion bears to the aggregate Basic Share Proportion of all Parties
giving such notice; provided that should any Party accept in writing less
than the number of Shares to which it would be entitled under the
foregoing, such Party shall be entitled only to the number of Shares it
has so accepted, and the remaining Shares shall be divided
proportionately as above among those Parties who have accepted more than
the number of Shares to which they would be entitled in accordance with
the foregoing. If the other Parties do not subscribe for Non-Subscribing
Party Shares within the time limits established above, then the Board of
Directors may offer such Shares to third parties, with the prior approval
of a General Meeting of Shareholders. Upon completion of the foregoing
transactions, the Basic Share Proportion of each Party and the third
party (if applicable) shall be adjusted in accordance with its ownership
percentage.
ARTICLE 5. TRANSFER OF SHARES OR SUBORDINATED LOANS
5.1 Approval Required for Transfer. Except as otherwise provided
herein, or except as may be approved by the Board of Directors (subject
to approval by the General Meeting of Shareholders), none of the Parties
nor any person acting by authority of or for any of the Parties shall
Transfer any or all of its right, title or interest in its respective
Shares or its Subordinated Shareholder Loans, all such right, title and
interest of each of the Parties being personal and non-transferable and
non-assignable except as otherwise specified in this Agreement.
5.2 Prohibition on Certain Transfers. Except as specifically
permitted by the Credit Documents and this Agreement, no Shareholder
shall Transfer any interest in its Shares or its Subordinated Shareholder
Loans prior to the Stage 2 Completion Date. Nor shall any Party, without
the written consent of the other Parties or except in the case of a
Transfer pursuant to Section 5.4, 5.7 or 5.8, make any Transfer of less
than all of its Shares to a single transferee as a result of which either
the transferring Party or its transferee shall own less than five percent
(5%) of all Shares of PTSC then issued.
5.3 Right of First Offer.
(a) No Party (a "Transferring Party") shall Transfer any of
its Shares or Subordinated Shareholder Loans to any third party, unless
it shall have first offered to sell such Shares and assign such
Subordinated Shareholder Loans by written notice to all the other Parties
and the Board of Directors. The written notice shall contain a
description of the number of Shares offered for sale and the amount and
terms of the subordinated Shareholder Loans offered for assignment, the
price sought by the Transferring Party, and any other material
information necessary for the other Parties to make an informed decision
whether to purchase the Shares and/or assume the Subordinated Shareholder
Loans.
(b) Within thirty (30) days following receipt of the notice
from the Transferring Party, each Party shall give written notice to all
other Parties and the Board of Directors of its decision whether to
purchase all or any portion of such Shares and/or assume all or any
portion of such Subordinated Shareholder Loans. If the total number of
Shares for which Parties have exercised such right exceeds the total
number of Shares offered, or the total amount of Subordinated Shareholder
Loans for which Parties have exercised such right exceeds the total
amount of Subordinated Shareholder Loans offered, then each Party
exercising such right may acquire at least the number of Shares and
assume at least the amount of Subordinated Shareholder Loans that bears
the same ratio to the total number of Shares or Subordinated Shareholder
Loans offered that such Party's Shares or Subordinated Shareholder Loans
bear to the total number of Shares or Subordinated Shareholder Loans of
all Parties exercising such right; provided that should any Party accept
less than the number of Shares or amount of Subordinated Shareholder
Loans to which it would be entitled under the foregoing, such Party shall
be entitled only to the number of Shares or amount of Subordinated
Shareholder Loans it has so accepted, and the remaining Shares and
Subordinated Shareholder Loans offered for Transfer shall be divided
proportionately as above among those Parties who have accepted more than
the number of Shares or amount of Subordinated Shareholder Loans to which
they would be entitled in accordance with the foregoing.
(c) Notwithstanding the right of first offer stated in Section
5.3(a) and (b), in the event that the total number of Shares or
Subordinated Shareholder Loans accepted in writing as provided in Section
5.3(b) is less than all of the Shares or Subordinated Shareholder Loans
offered for Transfer, the Transferring Party may:
(i) withdraw in whole or in part its offer to Transfer
the number of Shares and amount of Subordinated Shareholder Loans
offered; or
(ii) Transfer (A) all of the Shares and/or Subordinated
Shareholder Loans offered (including those accepted), or (B) if the
Transferring Party so determines, only Transfer those Shares or
Subordinated Shareholder Loans that were not accepted by the other
Parties. In either case, the Transfer shall be made only to a third
party who is financially responsible and of generally recognized
good business repute at terms no more favorable than offered to the
Parties, after the Transferring Party has notified the other Parties
of the identity of the proposed purchaser and the terms of the
proposed Transfer, and after the Transferring Party has received the
consent of the General Meeting of Shareholders, and any Government
approvals required for the proposed Transfer.
5.4 Consent to Certain Transfers by MMC, MC and NMM.
(a) Notwithstanding the provisions of Sections 5.1, 5.2 and
5.3 or the Articles of Association, MMC shall have the absolute right to
Transfer up to five and four-tenths percent (5.4%) in total of the issued
Shares and an equivalent amount of the Subordinated Shareholder Loans to
MC and/or NMM, and/or, subject to the transferee being of financial
standing acceptable to the other Parties, in their reasonable
determination, any other Japanese company(ies) engaging in the copper
smelting business or trading business, provided that the transferee
company(ies) agree to be bound to all of the terms and conditions hereof
and the Articles of Association. No guarantees or other support from MMC
shall be required to effectuate such Transfer of Shares and Subordinated
Shareholder Loans by MMC. Each Party agrees to vote in favor of such
Transfer at a General Meeting of Shareholders at the request of MMC.
(b) If PG does not exercise its option under the Land
Agreements to exchange its land for five percent (5%) of the Shares from
MMC, MMC shall thereafter be entitled to Transfer such five percent (5%)
of the Shares (or whatever portion of the five percent (5%) of Shares not
transferred to PG) to MC, NMM or another third party transferee as
authorized herein.
(c) Notwithstanding the provisions of Sections 5.1, 5.2 and
5.3 or the Articles of Association, MC and NMM shall have the absolute
right to Transfer their Shares and/or Subordinated Shareholder Loans to
MMC.
5.5 Consent to Certain Transfers to Subsidiaries. Notwithstanding
the provisions of Section 5.1, 5.2 and 5.3 or the Articles of
Association, any Party shall, subject to its obligations under the Credit
Documents, have the right to Transfer its Shares and Subordinated
Shareholder Loans to a Subsidiary, provided that either of the following
conditions are met:
(a) such Subsidiary shall be of financial standing acceptable
to the other Parties (which acceptance shall not be unreasonably
withheld); or
(b) the transferring Party shall remain jointly and severally
liable for its obligations assumed under this Agreement.
Notwithstanding the above:
(c) without the written consent of the other Parties or except
in the case of a Transfer pursuant to Section 5.4 or 5.8, no Party shall
make any Transfer as a result of which either the transferring Party or
its Subsidiary shall own less than five percent (5%) of all Shares of
PTSC then issued; and
(d) no such Subsidiary shall cease to be a fifty percent (50%)
or more owned Subsidiary of a Party without first transferring all of the
said Shares and Subordinated Shareholder Loans to the Party or to another
fifty percent (50%) or more owned Subsidiary of the Party.
5.6 Consent to Share Pledges in Connection With the Project Loans.
Notwithstanding the provisions of Section 5.1, 5.2 and 5.3 or the
Articles of Association, the Parties hereby consent to a hypothecation or
pledge of Shares if such hypothecation or pledge is required in
connection with the execution or performance of the Project Loans.
5.7 Party's Right to Assign Shareholder Rights and Subordinated
Shareholder Loans. Should applicable laws, regulations or decrees of the
ROI at any time limit the ability of any Party to fully exercise the
rights granted to it pursuant to this Agreement and the Articles of
Association, then such Party shall have the right to assign all of the
rights and privileges conferred upon it under this Agreement and the
Articles of Association to any other person or entity qualified to hold
its Shares and Subordinated Shareholder Loans (the "Qualified
Transferee") and such Qualified Transferee shall be entitled to all of
the privileges and to exercise all of the rights of such Party; provided,
however, that such Qualified Transferee shall agree to be bound to all of
the terms and conditions hereof.
5.8 Mandatory Participation by a Third Party in the Share Capital
of PTSC.
(a) If, in the sole discretion of the Board of Directors, it
becomes necessary in connection with the acquisition of the land for the
Project, in connection with obtaining financing for the Project, or in
order to comply with Indonesian laws, regulations and decrees, for a
third party to acquire an interest in the share capital of PTSC (the
"Third Party Shareholder"), the Parties agree that Shares and
Subordinated Shareholder Loans shall be tendered to the Third Party
Shareholder in accordance with the procedure set forth in this Section
5.8.
(b) If the Third Party Shareholder is PG and the Transfer is a
result of PG's exercise of its option under the Land Agreements to
exchange land for Shares, if so requested by the Board of Directors, MMC
shall first make an irrevocable tender in writing to Transfer to PG up to
five percent (5%) of the Shares and amount and type of Subordinated
Shareholder Loans specified by the Board of Directors at MMC's cost for
the Shares, plus the outstanding principal amount and accrued interest of
such Subordinated Shareholder Loans. If it is necessary to fulfill the
option given to PG in the Land Agreements to Transfer to PG more than
five percent (5%) of the Shares, FI shall then make an irrevocable tender
in writing to Transfer to PG the remainder of the Shares necessary to
fulfill the option given to PG in the Land Agreements and amount and type
of Subordinated Shareholder Loans specified by the Board of Directors at
FI's cost for the Shares, plus the outstanding principal amount and
accrued interest of such Subordinated Shareholder Loans.
(c) In all cases other than as described in subparagraph (b),
before PTSC shall issue new Shares to a Third Party Shareholder, if so
requested by the Board of Directors, FI shall make an irrevocable tender
in writing to Transfer to the Third Party Shareholder the number and type
of Shares and the amount and type of Subordinated Shareholder Loans
specified by the Board of Directors at the amount actually paid for the
Shares by FI plus the outstanding principal amount and accrued interest
of the corresponding portion of such Subordinated Shareholder Loans. FI
shall send a copy of the tender to the other Parties and the Board of
Directors. The tender shall be open for ninety (90) days from receipt by
the Third Party Shareholder and the Board of Directors. If accepted by
the Third Party Shareholder, FI shall promptly Transfer such Shares and
Subordinated Shareholder Loans to the Third Party Shareholder upon
receipt of payment therefor. In the event that FI is required to
Transfer Shares to a Third Party Shareholder in accordance with this
subsection (c) and if, as a result, FI retains ten percent (10%) or more
of the issued Shares, the other Parties agree to revise the Articles of
Association and any affected provisions of this Agreement as necessary
such that FI shall retain, despite such forced Transfer of Shares, the
shareholder veto rights it had prior to the Transfer pursuant to the
Articles of Association. Furthermore, in the case of a forced transfer
of Shares from FI to a Third Party Shareholder in accordance with this
subsection (c) where FI retains ten percent (10%) or more of the issued
Shares of the Company, pending formal amendment of the Articles of
Association and this Agreement, the Parties agree that FI shall continue
to have the same veto rights specified in the Articles of Association as
though it were an owner of twenty percent (20%) of the issued Shares.
(d) In the event of a forced Transfer in accordance with
Subsections 5.8(b) or (c), the transferring Party shall Transfer to the
Third Party Shareholder good and marketable title to the relevant Shares
and Subordinated Shareholder Loans, and shall, prior to the Transfer, be
responsible to satisfy in full any liens, pledges, or other encumbrances
on the Shares and Subordinated Shareholder Loans other than liens,
pledges or encumbrances arising in connection with the Project Loans.
5.9 New Shareholder to Become Bound by this Agreement. Any
transferor of Shares or Subordinated Shareholder Loans shall, before the
transfer is effected, cause the transferee (other than another Party) to
submit to all the other Parties a written confirmation and agreement in a
form reasonably satisfactory to all the Parties to the effect that the
transferee acknowledges all the provisions of this Agreement and (prior
to the earlier of the Ownership Transfer Date and the Termination Date)
the Credit Documents, and agrees to be bound by and to comply with all
the provisions applicable to the transferor as if the transferee were
originally a party to this Agreement and (prior to the earlier of the
Ownership Transfer Date and the Termination Date) the Credit Documents.
5.10 Obligations Continuing. In the event any Party ceases to own
Shares and hold Subordinated Shareholder Loans, such Party shall cease to
be a Party to this Agreement and shall thereafter not be entitled to any
rights or benefits under this Agreement. However, such Party shall not
be released from any outstanding obligations hereunder (including the
Party's duty of Confidentiality as stated in Article 18), in the Major
Contracts or under any guarantee unless the guarantee obligation is duly
assumed by the transferee and such Party is released with the written
consent of the other Parties.
ARTICLE 6. BOARD OF DIRECTORS; PRESIDENT DIRECTOR.
PTSC shall be managed by a Board of Directors to be elected at the
General Meeting of Shareholders. The Board of Directors shall consist of
not less than three (3) and not more than fourteen (14) Directors. The
initial number of Directors shall be three (3), but shall be increased
shortly after establishment of PTSC to eleven (11). Each Shareholder who
holds nine percent (9%) or more of the issued Shares shall have the right
to nominate one or more Directors. The number of Directors that each
such Shareholder shall have the right to nominate shall be calculated by
first dividing the Shareholder's percentage ownership of all issued and
outstanding Shares of PTSC by the number nine (9), then rounding any
resulting fraction up or down to the nearest whole integer (a resulting
fraction of one-half shall be rounded up). Each Party covenants and
agrees to vote as a Shareholder to elect as Directors the individuals
nominated by each Shareholder who is entitled to do so. Each nominating
Party shall cause its nominated individual(s) to abide by the terms and
conditions of this Agreement. MMC shall have the right to designate one
of the Directors it nominates to be the President Director.
ARTICLE 7. BOARD OF COMMISSIONERS; PRESIDENT COMMISSIONER.
PTSC shall have a Board of Commissioners to be elected at the
General Meeting of Shareholders. The Board of Commissioners shall
consist of not less than three (3) and not more than five (5)
Commissioners. The initial number of Commissioners shall be four (4).
Each Shareholder who holds twenty percent (20%) or more of the issued
Shares shall have the right to nominate one or more Commissioners. The
number of Commissioners that each such Shareholder shall have the right
to nominate shall be calculated by first dividing the Shareholder's
percentage ownership of all issued Shares of PTSC by the number twenty
(20), then rounding any resulting fraction up or down to the nearest
whole integer (a resulting fraction of one-half shall be rounded up).
Each Party covenants and agrees to vote as a Shareholder so as to elect
as Commissioners the individuals nominated by each Shareholder who is
entitled to do so. Each nominating Party shall cause its nominated
individual(s) to abide by the terms and conditions of this Agreement.
MMC shall have the right to designate one of the Commissioners it
nominates to be the President Commissioner.
ARTICLE 8. GENERAL PROVISIONS RELATING TO DIRECTORS AND COMMISSIONERS
8.1 Dismissal. Each nominating Party may at any time by advising
the other Shareholders request the dismissal of such Directors or
Commissioners as have been so nominated by it and request the replacement
of such discussed Directors of Commissioners by other nominated
individual(s). Each Party hereby covenants and agrees to vote as a
Shareholder to appoint the selected replacements and dismiss the selected
Directors or Commissioners as the case may be.
8.2 Vacancy. In the event that the office of a Director or
Commissioner becomes vacant by reason of death, resignation, removal or
otherwise, the Partners agree to cause the election of a successor from
nominees of that Party which originally nominated the Director or
Commissioner concerned.
ARTICLE 9. DIVIDEND POLICY
The PTSC shall declare and distribute by way of dividends all
profits legally available for that purpose and permitted by the Project
Loans after setting aside such reserves as may be required by law or by
the General Meeting of Shareholders as provided in the Articles of
Association.
ARTICLE 10. EXECUTION OF AGREEMENTS; PREINCORPORATION EXPENSES
10.1 Execution of Agreements. Upon approval by the Board of
Directors and, when applicable, by the General Meeting of Shareholders,
the Parties shall cause the PTSC to execute and deliver each of the
Major Contracts to which it is a party and concurrently each Party shall
execute and deliver each of the Major Contracts to which it is a party;
provided that in each case each such Party's obligation to enter into
such Major Contracts shall be subject to such documentation being in form
and substance satisfactory to it after negotiation in good faith in
accordance with the principles set forth in this Agreement.
10.2 Reimbursement of Organizational Expense. All costs and
expenses of PTSC approved by the Board of Directors and reasonably
incurred in connection with the incorporation and organization of PTSC
and the Major Contracts, including but not limited to legal and notarial
fees, shall be borne by PTSC. All other expenses incurred by any Party in
connection herewith or otherwise relating to the Project shall be borne
by the Party so incurring such expenses or shall be reimbursed by PTSC in
accordance with the Project Planning Agreement.
10.3 Reimbursement of Feasibility Study Expenses. Subject to the
availability of funds, PTSC shall reimburse any Party which has
subscribed and fully paid in cash for its proportionate number of Shares
in the capital of PTSC for all Feasibility Study Expenses actually paid
by such Party pursuant to the terms of the Project Planning Agreement.
ARTICLE 11. FINANCING.
11.1 Financial Plan. As soon as feasible after the execution of
this Agreement, the Parties shall cause PTSC to adopt a Financial Plan
(the "Financial Plan"), which shall have been approved in writing by all
of the Parties and which shall contain a detailed plan of the financial
requirements of the Project and the funding thereof for a period of three
(3) years. In addition, not later than November 1st of each year, the
Board of Directors shall prepare and provide to the Shareholders for
their approval an annual operating and capital budget. For reference
purposes only in relation to the annual budgets, the Board of Directors
shall also prepare a rolling three (3) year business plan. The rolling
three (3) year plan shall not require the approval of a General Meeting
of Shareholders.
11.2 Financing and Guarantees. The Parties confirm that PTSC shall
use its best efforts to procure on the basis of its own resources the
funds and financial facilities it requires in accordance with the
approved Financial Plan, by using its assets as security. Except as
otherwise expressly provided in the Credit Documents, Shareholder Support
shall be provided by the Parties severally, and not jointly, shall be
proportionate to their respective Basic Share Proportion and Basic Loan
Proportion at the time of provision of any such Shareholder Support, and
shall be upon such terms and conditions as approved by a General Meeting
of Shareholders. If any Party fails to fulfill any of its obligations to
provide Shareholder Support approved by a General Meeting of
Shareholders, then the Party failing to provide such Shareholder Support
shall be deemed to be a Defaulting Party within the meaning of Section
3.8 hereof and the provisions of such Section shall apply mutatis
mutandis with respect to such failure and such Defaulting Party.
11.3 Share and Subordinated Loan Transfers. In the event that any
Party Transfers its Shares and/or Subordinated Shareholder Loans, the
transferring Party shall (to the extent permitted by the terms of the
Credit Documents) arrange that its guarantee or loan obligations shall be
duly assumed by the transferee consistent with the percentage of the
Shares and amount of Subordinated Shareholder Loans Transferred, unless
such transferee is prohibited or precluded from providing any guarantee
or making such loans(s) under the laws, regulations and policies of the
ROI, in which chase the transferring Party shall continue to assume its
guarantee or loan obligations.
11.4 Repayment of Shareholder Support. If Shareholder Support is
provided by the Parties, regardless of the form in which it is
contributed to PTSC (whether as Subordinated Shareholder Loans or
otherwise), such Shareholder Support shall have priority over payment of
dividends in respect of Shares, payment of principal or interest in
respect of the $176,000,000 of Subordinated Shareholder Loans specified
in Section 3.6 of this Agreement or any additional Subordinated
Shareholder Loans made in the form of Voluntary Capital Contributions,
and shall be repaid by PTSC in the following orders of priority:
(a) First Priority:
(i) Repayment of Floor TC's and RC's Support by FI (in
the event that FI is required to increase its Floor TC's and RC's
price from 21 cents to 23 cents per pound for a period of time as
provided in Section 12.6 hereof);
(ii) Payment of subordinated Support Fees, in the event
that such Support Fees payable to MMC are subordinated for a period
of time as provided in Section 12.7 hereof; and
(iii)Repayment of subordinated Financial Disadvantage (as
defined in the Copper Cathode Export Sale and Purchase Agreement),
in the event that such Financial Disadvantage payments owed by FTSC
to MMC, MC, or NMM are subordinated for a period of time as provided
in Section 12.9 hereof;
with such payments to MMC, FI, MC and NMM being paid on a pro-rate basis
based on the amounts of such Shareholder Support provided by each.
(b) Second Priority:
Payment of subordinated smelter license royalties owed to MMC (in the
event that smelter license royalties owed to MMC pursuant to the Smelter
License Agreement are subordinated as provided in Section 12.8).
(c) Third Priority:
Repayment of amounts incurred or paid by MMC in respect of the MMC
Warranty Support (in the event that MMC Warranty Support is called upon).
(d) Fourth Priority:
Repayment of VAT Support (in the event that VAT Support is required in
accordance with the Credit Documents);
with such payments to MMC, FI, MC and NMM being paid on a pro-rata basis
based on the amounts of VAT Support provided by each.
(e) Fifth Priority:
Repayment of Coast Overrun Support (in the event that Cost Overrun
Support is required in accordance with the Credit Documents);
with such payments to MMC, FI, MC and NMM being paid on a pro-rata basis
based on the amounts of Cost Overrun Support provided by each.
ARTICLE 12. COVENANTS
12.1 General. Each of the Parties agrees and covenants that it will
work diligently on all major aspects of the Project including, but not
limited to, facility design, securing of financing, start-up and
operation of the Project.
12.2 Governmental Approvals. Each of the Parties agrees and
covenants that it shall during the term of this Agreement exert its best
efforts to procure all of the required government approvals and licenses
for the establishment and continuance of PTSC and the attainment of
PTSC's objectives, including but not limited to all authorizations
required under the Foreign Capital Investment law and regulations.
13.2 Execution of Other Agreements. Each of the Parties covenants
and agrees to enter into and execute such other documents as are
necessary to give full effect to the provisions of this Agreement.
12.4 Competition With PTSC. Each Party may, from time to time, be
engaged in businesses which are directly or indirectly in competition
with the business of PTSC. While the Parties intend that each Party
shall be free to compete with each other Party and with PTSC, the Parties
agree that none of the Project Information or other information which has
been obtained concerning the Project or PTSC shall be used by any Party
to the detriment of the other Parties or PTSC, or otherwise in
contravention of Article 18.
12.5 MMC Preferential Return.
(a) Total Return of 13% or Less. FI agrees, any transferee of
Shares and/or Subordinated Shareholder Loans from FI shall agree as a
condition to such Share Transfer being registered in PTSC's share
register or such Transfer of Subordinated Shareholder Loans being binding
on PTSC, that for so long as MMC, MC and NMM (or any authorized
transferee(s) of Shares and Subordinated Shareholder Loans held by MMC,
MC or NMM) do not receive an average annual simple return of thirteen
percent (13%) on their total capital contribution (other than for Cost
Overrun Support) to PTSC (the "Target Return") during the first twenty
(20) years after the Commencement of Commercial Operations (the "Return
Adjustment Period") then (a) FI assigns to MMC, MC, NMM, and their
transferee(s) up to one hundred percent (100%) of any dividends with
respect to Shares and interest with respect to Subordinated Shareholder
Loans that FI may be entitled to receive from PTSC (other than for Cost
Overrun Support) during the Return Adjustment Period until such time as
MMC, MC, NMM and their transferee(s) have achieved an average annual
simple return equal to the Target Return (it being agreed by FI that
during the Return Adjustment Period there shall be no repayment of
principal on Subordinated Shareholder Loans lent by FI for so long as
MMC, MC, NM, and their transferee(s) have not received the Target Return)
and (b) as a condition to FI transferring any Shares and/or Subordinated
Shareholder Loans, FI shall require its transferee to assign to MMC, MC,
NMM and their transferee(s) up to one hundred percent (100%) of any
dividends with respect to Shares and interest with respect to
Subordinated Shareholder Loans that FI's transferee may be entitled to
receive from PTSC (other than for Cost Overrun Support) during the Return
Adjustment Period on the same basis, with such assignment to be prorated
based on the percentage shareholding as between FI and such transferee.
If the Return Adjustment Period should expire without MMC, MC, NMM and
their transferee(s) receiving the Target Return for the Return Adjustment
Period, they shall have no obligation to return any amounts assigned by
FI or any FI transferee.
(b) Total Return Exceeding 13%. Notwithstanding Section
12.5(a), if MMC's, MC's, NMM's and any of their transferee(s)'s average
annual simple return shall at any time exceed the Target Return during
the Return Adjustment Period, then, for so long as and only to the extent
that their cumulative return from PTSC exceeds the Target Return during
the Return Adjustment Period, MMC, MC, NMM and/or their transferee(s), as
the case may be, shall assign such excess returns to FI and any such FI
transferee in the same ratio as amounts were assigned to it/them by FI
and any FI transferee until such time (irrespective of whether the Return
Adjustment Period has expired) as FI and any FI transferee have been
reimbursed for all amounts which FI and any such FI transferee previously
assigned to MMC, MC, NMM and their transferee(s).
(c) Calculation of Target Return. In determining whether
MMC's, MC's, NMM's and their transferee(s)'s actual return has equaled
the Target Return, the following rules shall apply:
(i) Calculation of the total capital contribution made by
any Shareholder shall include the amount of equity contributions and
the amount of Subordinated Shareholder Loans still outstanding made
by such Shareholder;
(ii) Calculation of the return received by MMC, MC, NMM
and their transferee(s) (A) shall include dividends with respect to
Shares and interest with respect to Subordinated Shareholder Loans
held by such Shareholder, (B) shall not include any return of
principal with respect to Subordinated Shareholder Loans made by
them, and (C) shall include all amounts received by way of
assignment from FI or any FI transferee pursuant to this Section
12.5;
(iii)Calculation of the return received by MMC, MC, and
NMM and their transferee(s) shall consist of the gross amount of
interest and dividends paid (before deducting applicable withholding
taxes), but in the event that MMC, MC, NMM or any transferee(s), as
the case may be, (A) notifies PTSC that it is unable to utilize all
or any part of the amount of any Indonesian taxes actually withheld
from payments made to it as a credit against its home country income
taxes, and (B) has provided appropriate documentation to PTSC
related thereto, then the assignment provisions of the preceding
paragraph shall apply such that the sum of (1) the amount of cash
actually received by MMC, MC, NMM or any transferee(s), as the case
may be, and (2) the tax benefits actually received by MMC, MC NMM or
any transferee(s), as the case may be against its home country
income taxes, equal the Target Return;
(iv) Notwithstanding any other provision of this Section
12.5, the Target Return shall not apply to Cost Overrun Support, but
shall apply to Voluntary Capital Contributions; and
(v) For reference purposes, a sample calculation of the
average annual simple return is attached hereto as Exhibit "A".
12.6 Increase in Floor TC's and RC's. In the event that (a) the
Indonesian government has not imposed an import tariff on copper cathodes
of three percent (3%) or greater by the Commencement of Commercial
Operations, and (b) PTSC is receiving treatment and refining charges for
the combined Part A and Part B tonnage sold by FI and purchased by PTSC
pursuant to the Concentrate Purchase and Sale Agreement of less than
twenty-three cents (US$0.23) per pound of Payable Copper, as defined in
the Concentrate Purchase and Sales Agreement, then FI and PTSC shall
amend the Concentrate Purchase and Sale Agreement to increase the Floor
TC's and RC's, as defined in the Concentrate Purchase and Sale Agreement
to twenty-three cents (US$0.23) per pound of Payable Copper,
retroactively to the very first shipment to PTSC. The higher Floor TC's
and RC's shall continue until the first to occur of (i) the date on which
the Indonesian Government imposes an import tariff on copper cathodes of
three percent (3%) or greater or (ii) the date which is five (5) years
following the Production Date. For the avoidance of doubt, no interest
shall accrue on the amounts received by PTSC as a result of the foregoing
increase in the Floor TC's and RC's, except from the date when PTSC fails
to repay the increased amounts received when due in accordance with
Section 11.4(a)(i).
12.7 Subordination of Support Fee. In the event that (a) the
Indonesian Government has not imposed an import tariff on copper cathodes
of three percent (3%) or greater by the Commencement of Commercial
Operations, and (b) FI and PTSC are required to amend the Concentrate
Purchase and Sale Agreement to increase the Floor TC's and RC's under the
Concentrate Purchase and Sale Agreement as provided in Section 12.6
above, then the full Support Fee shall be subordinated to debt service
and debt service reserve requirements under the Project Loans, such
subordination to be retroactive to the date of the very first shipment
made by FI under the Concentrate Purchase and Sale Agreement and to
continue until the first to occur of (i) the date on which the Indonesian
Government imposes an import tariff on copper cathodes of three percent
(3%) or greater or (ii) the date which is five (5) years following the
Production Date; and further provided that a Support Fee payment which is
deferred pursuant to the proviso immediately above shall not be deemed to
be a late payment subject to accrual of interest provided that, if
deferred, the deferred Support Fee is paid when no longer subordinated
pursuant to the Project Loans.
12.8 Subordination of Smelter License Royalty. As support for PTSC,
MMC agrees that each payment of the royalty due to MMC in accordance with
the Smelter License Agreement shall be subordinated in priority of
payment to (a) all operating expenses of PTSC, (b) all amounts payable by
PTSC under the Project Loans, including funds required to be deposited
into a debt service reserve fund, and (c) in the event that a tariff of
at least three percent (3%) is not imposed by the Indonesian Government
on the importation of copper cathode by the due date of the royalty
payment, and the absence of such tariff results in the payment by FI to
PTSC of increased treatment and refining charges pursuant to Section 12.6
and/or the deferral of payments by PTSC to MMC for Support Fees pursuant
to Section 12.7, then to the payment to (i) FI of such increased
treatment and refining charges and (ii) MMC of such deferred Support Fees
in accordance with Section 11.4; and further provided that a royalty
payment which is deferred pursuant to the proviso immediately above shall
not be deemed to be a later payment subject to accrual of interest in
accordance with Section 5.2 of the Smelter License Agreement provided
that, if deferred, the deferred royalty payment is paid when no longer
subordinated as provided herein.
12.9 Subordination of Financial Disadvantage Payable to MMC, MC or
NMM. As support for PTSC, MMC, MC and NMM agree that payment of
Financial Disadvantage (as defined in the Copper Cathode Export Sale and
Purchase Agreement) owed by PTSC to MMC, MC or NMM in accordance with the
Copper Cathode Export Sale and Purchase Agreement (and interest accrued
thereon) shall be subordinated to debt service under the Project Loans to
the extent provided in the Credit Documents.
ARTICLE 13. TERM OF THIS AGREEMENT
This Agreement shall remain in force and effect as long as PTSC
continues to exist, unless earlier terminated as provided for in this
Agreement.
ARTICLE 14. DEFAULT
14.1 Default. Any of the following will constitute a Default:
(a) If any of the Parties shall be declared insolvent or
bankrupt, or make an assignment or other arrangement for the benefit of
creditors;
(b) If any of the Parties shall be dissolved or liquidated; or
(c) If any of the Parties shall at any time be in default in
any material respect in the performance of any of its obligations under
this Agreement or otherwise commit any material breach of this Agreement,
and such default of breach shall continue for a period of sixty (60) days
after a written notice demanding rectification of such default or breach
has been given by PTSC or any other Party to the defaulting Party, and,
provided further, such default has been acknowledged by the defaulting
Party or confirmed by an arbitrator's judgment as provided in Article 16.
14.2 Effect of Default. Upon the occurrence of a Default, without
prejudice to any other rights and remedies of the non-defaulting Parties
or Party, the rights of the defaulting Party under this Agreement shall
be suspended pending sale of the defaulting Party's Shares as provided in
Section 14.3 or for so long as the default is unrectified.
14.3 Share Purchase Right. In the event of a default, each of the
non-defaulting Parties shall have the right to purchase all or any part
of the Shares and assume all or any part of the Subordinated Shareholder
Loans held by the defaulting Party, at the price determined in accordance
with Section 14.4, by giving notice ("an Exercise Notice") thereof to all
the Parties within sixty (60) days after the default occurs. If the
total number of Shares and amount of Subordinated Shareholder Loans for
which Parties have exercised such right exceeds the total number of
Shares and Subordinated Shareholder Loans of the defaulting Party, then
each Party exercising such right may acquire at least the number of
Shares and amount of Subordinated Shareholder Loans that bears the same
ratio to the total number of Shares and Subordinated Shareholder Loans
held by the defaulting Party that such non-defaulting Party's respective
Basic Share Proportion and Basic Loan Proportion bears to the aggregate
Basic Share Proportion and Basic Loan Proportion of all non-defaulting
Parties exercising such right; provided that should any Party accept in
writing less than the number of Shares and/or Subordinated Shareholder
Loans to which it would be entitled under the foregoing, such Party shall
be entitled only to the number of Shares and/or Subordinated Shareholder
Loans it has so accepted, and the remaining Shares and Subordinated
Shareholder Loans offered for sale or assignment shall be divided
proportionately as above among those Parties who have accepted more than
the number of Shares and/or Subordinated Shareholder Loans to which they
would be entitled in accordance with the foregoing. If the total number
of Shares or Subordinated Shareholder Loans for which Parties have
exercised such right is less than the total number of Shares or
Subordinated Shareholder Loans available, then the Board of Directors may
offer such Shares or Subordinated Shareholder Loans to third parties,
with the prior approval of a General Meeting of Shareholders. Upon
completion of the foregoing transactions, the Basic Share Proportion and
Basic Loan Proportion of each Party and the third party (if applicable)
shall be adjusted in accordance with its ownership percentage.
14.4 Share Price. For the purpose of the Transfer of the Shares and
Subordinated Shareholder Loans as stated in Section 14.3 above, the sale
and purchase price of the Shares and Subordinated Shareholder Loans shall
be at (i) the then book value of such Shares and the outstanding
principal and accrued interest of the Subordinated Shareholder Loans as
determined by the Auditor in the case of Subsections 14.1(a) through (b)
above, or (ii) seventy-five percent (75%) of the par value of such Shares
or seventy-five percent (75%) of the then book value of such Shares as
determined by the Auditor, whichever is less, and seventy-five percent
(75%) of the outstanding principal and accrued interest of the
Subordinated Shareholder Loans in the case of Subsection 14.1(c) above.
14.5 Share and Subordinated Loan Transfer. Within thirty (30) days
after the Share and Subordinated Shareholder Loans purchase price is
determined in accordance with Section 14.4:
(a) the defaulting Party shall:
(i) execute and deliver to the purchaser the relevant
documents required to transfer the Shares and assign the Subordinated
Shareholder Loans;
(ii) Transfer (consistent with the Credit Documents) to the
purchaser the share certificate(s) (if any) relating to the Shares and
loan and security documents relating to the Subordinated Shareholder
Loans;
(iii)deliver to the purchaser a letter of resignation from each
of the Director(s) and Commissioner(s) appointed or elected on its
nomination with a waiver of all claims for compensation for loss of
office;
(iv) deliver to the purchaser a bank check for one half of the
amount of any stamp or other transfer tax or duty payable in respect of
the Transfer of the Shares and Subordinated Shareholder Loans, failing
which the purchaser may deduct such sum from the purchase price of the
Shares and Subordinated Shareholder Loans;
(v) deliver to the purchaser all books and records of PTSC in
its possession or in the possession of Director(s) or Commissioner(s)
thereof elected or appointed on its nomination; and
(vi) co-operate with the purchaser in the orderly transfer of
the Shares and Subordinated Shareholder Loans and, where appropriate,
control and management of the business and affairs of PTSC to the
purchaser.
(b) The purchasing Party shall deliver to the defaulting Party
a bank check for the purchase price of the Shares and Subordinated
Shareholder Loans less any deduction in respect of stamp or other tax or
duty in accordance with subparagraph (a)(iv) of this Section 14.5.
ARTICLE 15. EFFECT OF TERMINATION AND DISSOLUTION
Termination of this Agreement for any cause shall not release the
Parties from any liability which at the time of termination has already
accrued or which thereafter may accrue in respect of any act or omission
prior to such termination. Further, any such termination hereof shall in
no way affect the survival of rights and obligations of the Parties which
are expressly stated elsewhere in this Agreement to survive termination
hereof or the obligations of the Parties under any of the Major
Contracts. To the extent necessary to give effect to the termination
provisions of this Agreement, the Parties hereby waive the provisions of
Article 1266 of the Indonesian Civil Code to the extent they require
judicial approval of the termination of contracts.
ARTICLE 16. DISPUTE RESOLUTION
16.1 Amicable Settlement. Any dispute arising out of or in
connection with this Agreement or its performance, including the
validity, scope, meaning, construction, interpretation, application,
breach or termination hereof, shall to the extent possible be settled
amicably by negotiation and discussion between the Parties. Any Party
wishing to invoke the right to conduct such settlement negotiations shall
give written notice to the other Parties of the substance of the dispute
and propose a schedule of conferences to resolve the matter.
16.2 Arbitration Rules. Any such dispute not settled by amicable
agreement within sixty (60) days of receipt of the written notice
described in Section 16.1 (or such other period as may be agreed by all
Parties in writing in any specific case) shall be finally settled by
arbitration in Singapore as an international arbitration under the
auspices of the Singapore International Arbitration Centre and applying
the ICC Arbitration Rules. In the event of a conflict between the ICC
Arbitration Rules and the terms of this Agreement, the terms of this
Agreement shall govern. Documents may be submitted in either English or
Japanese without the need for translation.
16.3 Arbitrators. Any arbitration hereunder shall be conducted in
the English and/or Japanese languages before a panel of three
arbitrators. Each arbitrator shall preferably be fluent in both English
and Japanese, but if fluent in only one of such language, an interpreter
shall be retained and paid for by the Parties equally. The arbitrators
shall be appointed in accordance with the following provisions:
(a) where only two Parties are involved in the dispute, each
Party shall appoint one arbitrator and the two arbitrators so appointed
shall select the third arbitrator (who shall not be a resident or
national of the same country as either of the Parties involved in the
dispute). The third arbitrator shall act as the presiding arbitrator;
(b) if within a period of 30 days from the date of the notice
of arbitration, a Party has failed to appoint an arbitrator, or, the two
appointed arbitrators have failed to select the third arbitrator within
30 days after both arbitrators have been appointed, the Chairman of the
Singapore International Arbitration Centre shall appoint such arbitrator
or arbitrators as have not been appointed; and
(c) where more than two Parties are involved in the dispute,
the Chairman of the Singapore International Arbitration Centre shall
appoint each of the three arbitrators, and select one as the presiding
arbitrator.
16.4 Arbitration Award. The award rendered in any arbitration
commenced hereunder shall apportion the costs of the arbitration.
16.5 Award to be Final and Conclusive. The award rendered in any
arbitration commenced hereunder shall be final and conclusive, and
judgment thereon may be entered in any court having jurisdiction for its
enforcement. The Parties expressly agree to waive Article 641 of the
Indonesian Code of Civil Procedure and Articles 15 and 108 of Law No. 1
of 1950 (Supreme Court Rules), and accordingly there shall be no appeal
to any court from the decision of the panel of arbitrators. No Party
shall be entitled to commence or maintain any action in a court of law
upon any matter in dispute until such matter shall have been submitted
and decided as herein provided and then only for the enforcement of the
board of arbitration's award.
16.6 Performance of Obligations Pending Decision. Pending
submission to the board of arbitration and thereafter until the board of
arbitration gives its award, the Parties hereto agree that they will
continue to perform all their respective obligations under this Agreement
without prejudice to the final judgment in accordance with the said
award.
16.7 Waive of Right to Terminate Board of Arbitration. The Parties
hereto expressly agree to waive the applicability of Article 650.2 of the
Indonesian Commercial Code, so that the appointment of the board of
arbitration shall not terminate as of the sixth month from the date of
its appointment. The mandate of the board of arbitration reconstituted
in accordance with the terms hereof shall remain in effect until a final
arbitral award has been issued by the board of arbitration.
Article 17. REPRESENTATIONS AND WARRANTIES
17.1 Corporate Power. Each Party warrants that it has full
corporate power 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.
17.2 Statements True. Each party warrants 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 18. CONFIDENTIALITY
18.1 Confidential Treatment/Permitted Disclosures. Each of the
Parties covenants and agrees not to
(a) use for any commercial purpose other than in connection
with the Project any of the proprietary or confidential information
concerning the Project, including but not limited to proprietary and
confidential technical information such as drawings, documents,
specifications and non-public data and procedures, furnished by any Party
or its Affiliates or developed for purposes of the Project (collectively,
the "Project Information"), or
(b) divulge any Project Information to third parties without
the consent of the other Parties; except that (i) any party may disclose
Project Information to such of its directors, officers, employees,
consultants and advisors (including financial and legal advisors) as have
a reasonable need to know such Project Information in connection with the
Project Loans and its equity participation in the Project (in each case
pursuant to a written agreement whereby the recipient agrees to keep such
Project Information confidential); (ii) FI shall have the right to
disclose such Project Information to the Government in furtherance of its
obligations under the Contract of Work with the ROI; and (iii) each other
Party may disclose Project Information as required in accordance with
applicable laws and for the due enforcement of its rights hereunder and
under the Major Contracts.
Notwithstanding the above, no Party shall be under any obligation of
confidentiality and restricted use as to any Project Information and
knowledge based thereon, which, as evidenced by documents,
(c) was in the lawful possession of the receiving Party prior
to the disclosure thereof by the disclosing Party and which was not
obtained by the receiving Party either directly or indirectly from the
disclosing Party or another Party, or
(d) is, after disclosure by the disclosing Party, lawfully
disclosed to the receiving Party by a third party having no obligation of
secrecy to the disclosing party as to the said information, or
(e) is or at any time becomes available to the public through
no act, failure to act or other legal fault of receiving Party.
Specific information disclosed to a receiving Party shall not be deemed
to be within the foregoing exceptions merely because such information is
embraced by more general information in the public domain or is in the
possession of the receiving Party. In addition, any combination of
features shall not be deemed to be within the foregoing exceptions merely
because individual features are in the public domain or in the possession
of the receiving Party, but only if the combination itself and its
principles of operation are in the public domain or in the possession of
receiving Party.
18.2 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
Project 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.
18.3 Treatment of Project Information by PTSC. Each Party further
agrees that PTSC shall treat all Project Information as confidential and
shall not disclose all or any part of it to any third party or otherwise
seek to exploit all or any part of it without the prior written consent
of the Party(ies) from which it was derived; provided that Project
Information may be disclosed by PTSC (a) if required to be disclosed
under any applicable law or regulation and (b) to its consultants, actual
or prospective financiers or transferees thereof (or any of their legal
counsel or consultants), the independent engineer appointed pursuant to
the Project Loans or sub-consultants as reasonably necessary for their
services to PTSC or their participation in the Project, such disclosure
to be pursuant to a written agreement whereby the recipient agrees to
keep such Project Information confidential.
18.4 Obligations to Survive. The obligations contained in this
Article 18 shall bind the Parties during the term of this Agreement and
shall continue to bind the Parties after this Agreement is terminated
(for whatever cause) or expires for a period of five (5) years
thereafter.
Article 19. ASSIGNMENT
Except as provided herein concerning the authorized Transfer of
Shares or Subordinated Shareholder Loans, no Party may assign any of its
rights or obligations under this Agreement without the prior written
consent of the other Parties. 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 execute an appropriate document or documents as necessary
to become a Party to this Agreement.
Article 20. LAW AND INTERPRETATION
20.1 Governing Law. The provisions of this Agreement shall be
governed in all respects by and construed in accordance with the laws of
Japan.
20.2 Governing Language of this Agreement. This Agreement is
executed in the English language which shall be the governing language
despite translation into any other language(s).
20.3 Headings. The headings of the Articles and Sections in this
Agreement and table of contents shall not form part of this Agreement and
shall be disregarded in interpreting and construing this Agreement.
Article 21. 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 the other Party(ies) 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 as written in this Agreement.
Article 22. NOTICES
22.1 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, mail or facsimile
from one Party to the other Party(ies) at their respective addresses as
follows:
FI: P.T. Freeport Indonesia Company
Plaza 89, 5th Floor
Jl. H.R. Rasuna Said Kav. X-7 No. 6
Jakarta 12940 Indonesia
Attention: President Director
Fax Number: 62-21-850-6736
with a copy to:
P.T. Freeport Indonesia Company
1615 Poydras Street
New Orleans, LA 70112 U.S.A.
Attention: Legal Department
Fax Number: 1-504-585-3513
MMC: Mitsubishi Materials Corporation
1-5-1 Marunouchi
Chiyoda-ku
Tokyo 100, Japan
Attention: General Manager, Metals Division
Fax Number: 81-3-5252-5426
MC: Mitsubishi Corporation
2-6-3, Marunouchi
Chiyoda-ku
Tokyo 100-86, Japan
Attention: General Manager,
Base Metals Business Department
Fax Number: 81-3-3210-8186
NMM: Nippon Mining & Metals Company, Limited
2-10-1, Toranomon
Minato-ku
Tokyo 105, Japan
Attention: General Manager
Planning & Coordination Department
Copper & Chemical Division
Fax Number: 81-3-5573-7595
PTSC: P.T. Smelting Co.
Plaza 89, 6th Floor-S-602
Jl. H.R. Rasuna Said
Kav.X-7 No.6
Jakarta, 12940
Indonesia
Attention: President Director
Fax Number: 62-21-522-9615
Subject to any express provisions contained in this Agreement to the
contrary, the notices and other communications shall be deemed delivered
when sent in the case of facsimile transmissions or personal delivery,
and ten (10) days after sending in the case of mail.
22.2 Change of Address. Any Party hereto may at any time change its
address by written notice to the other Parties of such change.
Article 23. FORCE MAJEURE
No Party shall be liable for any delay or failure in the performance
of any of its obligations under this Agreement to the extent that such
delay or failure is caused by Force Majeure, provided that the Party
whose performance is prevented or delayed by such Force Majeure shall
make every good faith effort to overcome or dispel the event of Force
Majeure, and further provided that Force Majeure shall not excuse a
failure to pay money when due. For the purposes of this Agreement,
"Force Majeure" shall mean events or circumstances beyond the reasonable
control of a Party such as lightning, fire, explosion, storm, wind,
flood, tidal wave, earthquake, tempest or other natural disasters of
overwhelming proportions or acts of God; civil commotion, rebellion, war,
sabotage, riot, strike, lock out or industrial unrest; or the enactment
of any law or regulation not existing or not applicable on the date of
this Agreement by the Government which renders the Project economically
impracticable, or the nationalization, expropriation or compulsory
acquisition of the Project or any part thereof by the Government.
Article 24. ENTIRE AGREEMENT
This Agreement and the Credit Documents constitute the entire
agreement between the Parties with respect to the subject matter hereof
and, with the exception of the project Planning Agreement, supersedes all
prior agreements, understandings and negotiations, both written and oral,
between the Parties with respect to the subject matter of this Agreement.
Insofar as possible this Agreement shall be interpreted to be consistent
with the Project Planning Agreement, provided, however, that in the event
of a direct inconsistency, this Agreement shall take precedence. No
representation, inducement, promise, understanding, condition or warranty
not set forth herein has been made or relied upon by any Party hereto.
Article 25. AMENDMENTS
This Agreement may not be modified or amended except in writing and
with the unanimous agreement of the Parties hereto.
Article 26. NO THIRD PARTY BENEFICIARIES
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.
Article 27. NO CONFLICT WITH CREDIT DOCUMENTS
Each Party acknowledges (and upon any Transfer of Shares or
Subordinated Shareholder Loans, each such transferee shall be deemed to
have acknowledged) that it has read and is familiar with the terms and
conditions of the Credit Documents and agrees that, prior to the earlier
of the Termination Date and the Ownership Transfer Date, notwithstanding
any provision in this Agreement to the contrary, such Party shall not
take or permit to be taken any action pursuant hereto, or fail to take
any action required hereunder, which shall conflict with any of its
obligations under any of the Credit Documents or cause PTSC to conflict
with any of its obligations under the Loan Agreement.
Article 28. MISCELLANEOUS
The Parties agree to amend the Articles of Association of PTSC as
necessary to comply with this Agreement. This Agreement may be executed
in any number of counterparts, all of which when taken together shall
constitute one and the same instrument and any of the parties hereto may
execute this Agreement by signing any such counterpart.
****
IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed
by their duly authorized representatives on the date and year and place
first written above.
MITSUBISHI MATERIALS CORPORATION
By: /s/Teesuo Kumana
-------------------------------
Teesuo Kumana
Title: Managing Director, Metals Division
P.T. FREEPORT INDONESIA COMPANY
By: /s/ Robert M. Wohleber
--------------------------------
Robert M. Wohleber
Title: Vice President
MITSUBISHI CORPORATION
By: /s/ Fukuda, Isamu
-------------------------------
Fukuda, Isamu
Title: Director, General Manager Non-Ferrous
Metals Div.
NIPPON MINING & METALS COMPANY, LIMITED
By: /s/ Matuo Ide
------------------------------
Matuo Ide
Title: Managing Director
RATIFICATION
PTSC hereby ratifies and agrees to be bound by this Agreement as if it
were a party hereto, to carry out the management and administration of
its business in accordance with the terms and conditions of this
Agreement, and to perform all obligations intended under this Agreement
to be undertaken or performed by it.
P.T. Smelting Co.
By: /s/Shunichi Ajima
--------------------------
Shunichi Ajima
Title: President Director
EXHIBIT "A"
SAMPLE CALCULATION OF MMC/MC/NMM'S RECEIPT OF 13% SIMPLE RETURN
ON CONTRIBUTED CAPITAL
Return Amounts Refer to Gross Distributions
(i.e., Distribution Including Application
Withholding Tax)
Year 1(*1) Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10
---------- ------ ------ ------ ------ ------ ------ ------ ------ -------
Cash Available for Interest
on Shareholder Loans 0 25,000 33,000 20,000 18,000 15,000 15,000 14,000 12,500 11,500
Cash Available for Dividend 0 0 0 0 28,000 35,000 15,000 45,000 50,000 54,542
Cash Available for Principal
Repayment on Shareholder
Loans 0 0 0 15,000 10,000 12,500 15,000 10,000 10,000 10,000
Total Cash Available for
Shareholder 0 25,000 33,000 35,000 56,000 62,500 45,000 69,000 72,500 76,042
MMC/MC/NMM
MMC/MC/NMM Pro-Rata Return
Interest on Shareholder
Loan (*2) 0 17,291 22,824 13,307 11,613 9,244 8,620 7,581 6,284 5,254
Common Stock Dividends 0 0 0 0 21,000 26,250 11,250 33,750 37,500 40,097
Return Assigned from FI 0 7,709 10,176 6,693 13,387 14,506 10,130 0 0 0
Return Reimbursed to FI 0 0 0 0 0 0 0 16,076 21,424 4,119
Annual Return 0 25,000 33,000 20,000 46,000 50,000 30,000 25,255 22,360 42,042
Cumulative Return 0 25,000 58,000 78,000 124,000 174,000 204,000 229,255 251,615 293,657
Average Balance-Shareholder
Loan 132,000 132,000 132,000 117,000 107,000 94,500 79,500 69,500 59,500 49,500
Average Balance-Common
Equity 112,500 112,500 112,500 112,500 112,500 112,500 112,500 112,500 112,500 112,500
Average Balance-Capital
Contributions 244,500 244,500 244,500 229,500 219,500 207,000 192,000 182,000 172,000 162,000
Cumulative Average Balance 244,500 489,000 733,500 963,000 1,182,500 1,389,500 1,581,500 1,763,500 1,935,500 2,097,500
Average Annual Simple
Return to MC/MC/NMM(*3) 0.0% 5.1% 7.9% 8.1% 10.5% 12.5% 12.9% 13.0% 13.0% 14.0%
(CUMULATIVE RETURN/SUM OF
AVERAGE CAPITAL)
FI
FI Return
Interest on Shareholder
Loan (*2) 0 7,709 10,176 6,693 6,387 5,756 6,380 6,419 6,216 6,246
Common Stock Dividends 0 0 0 0 7,000 8,750 3,750 11,250 12,500 13,636
Return Assigned to MMC/
MC/NMM 0 7,709 10,176 6,693 13,387 14,506 10,130 0 0 0
Return Reimbursed from
MMC/MC/NMM 0 0 0 0 0 0 0 16,076 21,424 4,119
FI Arrearage (*4) 0 8,333 19,333 26,000 41,333 58,000 68,000 42,673 9,987 0
Average Balance-
Shareholder Loan 44,000 44,000 44,000 44,000 44,000 44,000 44,000 44,000 44,000 44,000
Average Balance-Common
Equity 37,500 37,500 37,500 37,500 37,500 37,500 37,500 37,500 37,500 37,500
*1 Years refer to fiscal years following commencement of commercial
operations.
*2 Interest is assumed to be calculated according to the terms of the
Subordinated Loan Agreements.
*3 Average annual simple return is equal to the sum of gross interest
and dividends paid to MMC/MC/NMM to date divided by the cumulative
average capital balance (based on actual days outstanding) from
the commencement of commercial operations to date. Total debt and
equity contributed by all Sponsors are assumed to total $326
million as of commencement of commercial operations. MMC/MC/NMM's
capital contribution is assumed to total $244.5 million.
*4 FI's arrearage amount equals the amount by which gross interest
and dividends received by FI on its subordinate debt and equity
investments fall short of or exceeds the pro-rata share of gross
interest and dividends received by MMC/MC/NMM on their subordinate
debt and equity investments. In the above example, FI holds $44
million of subordinated debt and $37.5 million of common equity
subject to dividend assignment obligations, and is therefore
entitled to receive 33.3% (i.e., 25%/75%) of the gross interest
and dividends received by MMC/MC/NMM.