Exhibit 10.2
(XXXXXX DODGE LETTERHEAD)
Xxx Xxxxx Xxxxxxx Xxxxxx, Xxxxxxx, XX 00000 - (000) 000-0000
March 16, 2005
Sumitomo Metal Mining Co., Xxx.
00-0, 0-Xxxxx, Xxxxxxxxx
Xxxxxx-xx, Xxxxx 000
Xxxxx
Sumitomo Corporation
0-0-00, Xxxxxx
Xxxx-xx, Xxxxx 000-0000
Xxxxx
Ladies and Gentlemen:
Reference is made to the Participation Agreement, dated as of March 16,
2005 (as amended, modified or supplemented from time to time, the "Participation
Agreement"), among SUMITOMO METAL MINING CO., LTD., a Japanese corporation
("SMM"), SUMITOMO CORPORATION, a Japanese corporation ("SC"), SUMMIT GLOBAL
MANAGEMENT B.V., a Dutch corporation ("SGM," and together with SMM and SC, the
"Sumitomo Parties"), COMPANIA DE MINAS BUENAVENTURA S.A.A., a Peruvian sociedad
anonima abierta ("BVN"), XXXXXX DODGE CORPORATION, a New York corporation
("PDC"), CYPRUS AMAX MINERALS COMPANY, a Delaware corporation ("CAMC"), CYPRUS
METALS COMPANY, a Delaware corporation ("CMC"), CYPRUS CLIMAX METALS COMPANY, a
Delaware corporation (the "PD Participant"), and the SOCIEDAD MINERA CERRO VERDE
S.A.A., a Peruvian sociedad anonima abierta (the "Company"). Capitalized terms
used and not defined herein shall have the meanings ascribed to them in the
Participation Agreement.
Pursuant to the Participation Agreement, (i) the Sumitomo Participant has
agreed, among other things, to subscribe for at least 73,511,763 Capital
Increase Shares in the General Capital Increase and (ii) the Company has agreed,
among other things, to return promptly (x) in United States dollars and without
deduction for Taxes the aggregate amount of consideration paid by the Sumitomo
Participant to subscribe for Capital Increase Shares and to purchase
Unsubscribed Shares (the "Aggregate Sumitomo Subscription Price") plus (y)
interest, calculated at a rate per annum equal to the Six Month LIBOR Rate, on
the Aggregate Sumitomo Subscription Price for the period commencing on June 30,
2005 and ending on the day before such Aggregate Sumitomo
Subscription Price is returned if: (i) the Sumitomo Participant delivers written
notice to the Board on the Final Closing Date in its good faith and reasonable
judgment stating that the Capital Increase Closing Conditions have not been
satisfied or waived as of such date, (ii) the Board determines on or prior to
the Final Closing Date that the conditions set forth in section 7.2 of the
Participation Agreement (the "PD Closing Conditions") have not been satisfied or
waived as of such date or (iii) unless otherwise agreed by the Sumitomo
Participant, the Final Closing shall not have occurred by September 30, 2005.
1. GUARANTEE. In order to induce the Sumitomo Parties to enter into the
Participation Agreement and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, PDC hereby irrevocably
and unconditionally guarantees to SC, SMM and their respective successors and
assigns that the Company will perform all of its obligations to return promptly
(x) the Aggregate Sumitomo Subscription Price to the Sumitomo Participant plus
(y) interest, calculated at a rate per annum equal to the Six Month LIBOR Rate,
on the Aggregate Sumitomo Subscription Price for the period commencing on June
30, 2005 and ending on the day before such Aggregate Sumitomo Subscription Price
is returned if: (i) the Sumitomo Participant delivers written notice to the
Board on the Final Closing Date in its good faith and reasonable judgment
stating that the Capital Increase Closing Conditions have not been satisfied or
waived as of such date, (ii) the Board determines on or prior to the Final
Closing Date that the PD Closing Conditions have not been satisfied or waived as
of such date or (iii) unless otherwise agreed by the Sumitomo Participant, the
Final Closing shall not have occurred by September 30, 2005 (the "Repayment
Obligation").
2. NATURE OF GUARANTEE. PDC's obligations under this guarantee letter
(this "Guarantee") shall not be affected by the validity or enforceability of
the Participation Agreement, the insolvency or bankruptcy of the Company or any
other circumstance relating to the Repayment Obligation, in each case that might
otherwise constitute a legal or equitable discharge or defense of a guarantor or
surety other than a breach of Section 3.2 of the Participation Agreement by the
Sumitomo Participant. The obligations of PDC under this Guarantee are absolute
and unconditional, and shall remain in full force and effect notwithstanding any
amendment of the Participation Agreement or any extension of time or other
indulgence or concession granted to the Company or any delay or failure by the
parties hereto or the Sumitomo Participant in pursuing any other remedies
available against the Company. No party hereto nor the Sumitomo Participant need
take any action against the Company, any other guarantor or any other person,
firm or corporation or resort to any security held by it at any time before
proceeding against PDC hereunder. PDC hereby expressly waives diligence,
presentment, demand of payment, filing of any claims relating to the Repayment
Obligation in the event that the Company becomes subject to a bankruptcy,
reorganization or similar proceeding, protest, notice and all demands
whatsoever, and, to the extent permitted by law, the benefit of all principles
or provisions of law, statutory or otherwise, which are or might be in conflict
with the terms hereof.
2
3. PAYMENTS FREE AND CLEAR OF TAXES, ETC. Any and all payments made by PDC
under this Guarantee shall be made without deduction for any present or future
taxes, withholding taxes, levies, imposts, duties or similar charges imposed by
the Republic of Peru or any local taxing authority therein ("Taxes"). If PDC
shall be required by law to deduct any Taxes from or in respect of any payment
hereunder, (i) such payment shall be increased so that after all required
deductions for Taxes have been made, such payment shall be equal to the amount
that would have been paid by PDC had no such deductions for Taxes been required
and made, (ii) PDC shall make such deductions and (iii) PDC shall pay the full
amount deducted to the relevant taxing authority or other authority in
accordance with applicable law.
4. EXPENSES. PDC agrees to pay on demand all fees and out-of-pocket
expenses (including the reasonable fees and expenses of the legal counsel to SC
and SMM) relating to the enforcement of the rights of SC and SMM under this
Guarantee; provided, that PDC shall not be liable for any expenses of SC or SMM
if no payment under this Guarantee is due.
5. SUBROGATION. PDC shall be subrogated to all of the rights of the
Sumitomo Participant, SC and SMM and their successors and assigns against the
Company and its assets and properties in respect of any amounts paid by PDC
under this Guarantee; provided, that PDC shall not be entitled to exercise any
such subrogation rights or other rights against the Company arising out of, or
based upon, its performance of this Guarantee until all of the obligations,
together with any other amounts due by PDC pursuant to Paragraph 4 hereof, have
been paid in full. Upon payment in full of the Repayment Obligation, SC and SMM
agree to take at PDC's expense such steps as PDC may reasonably request to
implement any rights of subrogation.
6. NO WAIVER; CUMULATIVE RIGHTS. No failure on the part of SC or SMM to
exercise, and no delay in exercising, any right, remedy or power hereunder shall
operate as a waiver thereof, nor shall any single or partial exercise by SC or
SMM of any right, remedy or power hereunder preclude any other or future
exercise of any right, remedy or power. Each and every right and remedy hereby
granted to SC or SMM or allowed to either SC or SMM by law shall be cumulative
and not exclusive of any other, and may be exercised by SC or SMM at any time or
from time to time.
7. ASSIGNMENT. Neither this Guarantee nor any rights, interests or
obligations hereunder may be assigned to any other person (except by operation
of law) without the prior written consent of PDC, SC and SMM; provided, that SC
and SMM may, without the consent of PDC, transfer or assign their rights and
interests under this Guarantee to any of their respective affiliates including
SMM Cerro Verde Netherlands B.V.
8. CONTINUING GUARANTEE. This Guarantee shall become and remain in full
force and effect and shall be a continuing guarantee and binding on PDC, its
successors
3
and assigns until the Repayment Obligation has been satisfied in full or
consummation of the Final Closing.
9. GOVERNING LAW. This letter agreement shall in all respects be governed
by, and construed and enforced in accordance with, the laws of the State of New
York, without giving effect to the conflict of laws rules thereof to the extent
they are not mandatorily applicable by statute and would require or permit the
application of the laws of another jurisdiction.
10. CONSENT TO JURISDICTION. PDC consents to the non-exclusive
jurisdiction of any court of the State of New York or any United States federal
court sitting in the Borough of Xxxxxxxxx, Xxx Xxxx Xxxx, Xxx Xxxx, Xxxxxx
Xxxxxx, and any appellate court from any thereof, and waives any immunity from
the jurisdiction of such courts over any suit, action, or proceeding that may be
brought in connection with this Guarantee. PDC irrevocably waives, to the
fullest extent permitted by law, any objection to any suit, action, or
proceeding that may be brought in connection with this Guarantee in such courts
whether on the grounds of venue, residence, or domicile or on the ground that
any such suit, action, or proceeding has been brought in an inconvenient forum.
PDC agrees that final non-appealable judgment in any such suit, action, or
proceeding brought in such court shall be conclusive and binding upon PDC and
may be enforced in any court of the jurisdiction of which PDC is subject by a
suit upon such judgment.
11. AMENDMENTS. No term or provision of this Guarantee shall be amended or
modified except in a writing signed by PDC, SC and SMM.
12. SEVERABILITY. If any provision of this Guarantee or the application of
any provision hereof to any party hereto or set of circumstances is held
invalid, the remainder of this Guarantee and the application of such provision
to any other party or set of circumstances shall not be affected unless the
provisions held to be invalid shall substantially impair the benefits of the
remaining portions of this Guarantee.
13. ENTIRE AGREEMENT. This Guarantee constitutes the entire agreement
among the parties hereto with respect to the subject matter hereof and
supersedes all prior oral and written discussions, representations and
understandings.
14. COUNTERPARTS. This letter agreement may be executed in any number of
counterparts, each of which shall be deemed an original and all of which taken
together shall constitute one and the same instrument.
[Remainder of page intentionally left blank.]
4
If you are in agreement with the matters set forth above, please sign this
Guarantee in the space indicated below and return it to the undersigned.
Very truly yours,
XXXXXX DODGE CORPORATION
By: /s/ Xxxxxxx X. Xxxxxx
--------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: President and Chief Operating
Officer
By: /s/ Xxxxxxx X. Xxxxxxxxxxx
--------------------------------
Name: Xxxxxxx X. Xxxxxxxxxxx
Title: Senior Vice President
5
Acknowledged and agreed as of the date first above written.
SUMITOMO METAL MINING CO., LTD.
By: /s/ Xxxxxx Xxx
------------------------------
Name: Xxxxxx Xxx
Title: Executive Officer, General Manager of Mineral Resources Division
SUMITOMO CORPORATION
By: /s/ Xxxxxxxxx Xxxxxx
------------------------------
Name: Xxxxxxxxx Xxxxxx
Title: Corporate Officer, General Manager, Mineral Resources Division
6
