EXECUTION COPY
Exhibit 10.1
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MASTER PARTICIPATION AGREEMENT
among
SOCIEDAD MINERA CERRO VERDE S.A.A.,
as Borrower,
JAPAN BANK FOR INTERNATIONAL COOPERATION,
as a Senior Facility Lender,
SUMITOMO MITSUI BANKING CORPORATION,
as a Lead JBIC Arranger and Global Coordinator,
THE BANK OF TOKYO-MITSUBISHI, LTD.,
as a Lead JBIC Arranger,
KfW,
as a Senior Facility Lender,
CALYON NEW YORK BRANCH,
as a Senior Facility Lender, Lead Arranger and Global Coordinator,
THE ROYAL BANK OF SCOTLAND PLC,
as a Senior Facility Lender and Lead Arranger,
THE BANK OF NOVA SCOTIA,
as a Senior Facility Lender and Lead Arranger,
MIZUHO CORPORATE BANK, LTD.,
as a Senior Facility Lender and Lead Arranger,
and
CALYON NEW YORK BRANCH,
as Administrative Agent
Dated as of September 30, 2005
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Table of Contents
Page
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ARTICLE I DEFINITIONS AND INTERPRETATION.............................. 4
1.01 Definitions.............................................. 4
1.02 Interpretation........................................... 4
ARTICLE II FINANCING PLAN.............................................. 5
2.01 Senior Facility Lenders' Commitment to Lend.............. 5
2.02 Issuance of the Peruvian Bonds........................... 5
2.03 Termination or Reduction of Commitments.................. 7
2.04 Timing of Advances....................................... 8
2.05 Base Advances Specific Disbursement Mechanics............ 8
2.06 Stand-By Advances Specific Disbursement Mechanics........ 10
2.07 Several Obligations...................................... 10
2.08 Promissory Notes......................................... 11
2.09 Senior Facility Lender's Failure to Fund................. 12
ARTICLE III COMMON LENDING ARRANGEMENTS................................. 13
3.01 Repayment of the Advances................................ 13
3.02 Interest................................................. 13
3.03 Senior Facility Loans Pari Passu......................... 14
3.04 Pro Rata Payments........................................ 14
3.05 Voluntary Prepayment..................................... 14
3.06 Mandatory Prepayment..................................... 15
3.07 Partial Payments......................................... 17
3.08 Application of Prepayments Other Than Prepayments in
Full.................................................. 17
3.09 Taxes.................................................... 17
3.10 Single Senior Lender Suspension or Termination........... 19
3.10A. Single Lender Acceleration............................... 20
3.11 Funding Losses........................................... 21
3.12 Illegality............................................... 22
ARTICLE IV FEES........................................................ 22
4.01 Commitment Fee........................................... 22
4.02 Other Fees............................................... 22
ARTICLE V CONDITIONS PRECEDENT........................................ 23
5.01 Conditions Precedent to Initial Disbursements of Base
Advances.............................................. 23
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5.02 Conditions Precedent to Initial Disbursements of Stand-By
Advances and to Subsequent Advances................... 29
5.03 Satisfaction of Conditions Precedent..................... 29
ARTICLE VI REPRESENTATIONS AND WARRANTIES.............................. 29
6.01 Organization, Authority, Binding Effect.................. 30
6.02 Capitalization........................................... 30
6.03 Compliance with Other Instruments and Laws............... 30
6.04 Environmental Matters.................................... 31
6.05 Taxes.................................................... 31
6.06 Labor Matters............................................ 32
6.07 Legal Proceedings........................................ 32
6.08 Consents, etc............................................ 32
6.09 Financial Statements..................................... 33
6.10 No Broker................................................ 33
6.11 Absence of Undisclosed Liabilities....................... 33
6.12 Absence of Certain Changes and Events.................... 33
6.13 Mining and Beneficiation Concessions and Other Rights.... 33
6.14 Related Party Transactions and Commitments............... 34
6.15 Project Information...................................... 34
6.16 Ranking.................................................. 35
6.17 No MPA Event of Default or MPA Default................... 35
6.18 Copies of Documents...................................... 35
6.19 Property and Assets...................................... 35
6.20 No Immunity.............................................. 35
6.21 Stability Agreement...................................... 35
6.22 Description of the Sulfide Project....................... 35
6.23 Water Rights, etc........................................ 35
6.24 Tax Liability............................................ 36
ARTICLE VII COVENANTS................................................... 36
7.01 Maintenance of Existence................................. 36
7.02 Books, Records and Accounts.............................. 36
7.03 Principal Place of Business.............................. 36
7.04 Use of Proceeds.......................................... 36
7.05 Information.............................................. 37
7.06 Confirmation of Progress of Construction................. 39
7.07 Preservation of Assets................................... 39
7.08 Mining Concessions....................................... 40
7.09 Minimum Production....................................... 40
7.10 Offtake Agreements....................................... 40
7.11 Sale of Concentrate and Cathodes......................... 41
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7.12 Project Documents........................................ 41
7.13 Power Generation Facility................................ 42
7.14 Taxes.................................................... 42
7.15 Sulfide Project, Capital Expenditures.................... 43
7.16 Limitation on Debt....................................... 43
7.17 Limitation on Liens...................................... 44
7.18 Drawdowns of Senior Loans................................ 45
7.19 Notice of MPA Defaults; Extraordinary Notices............ 45
7.20 Restricted Payments...................................... 46
7.21 Compliance with Law...................................... 47
7.22 Transactions with Affiliates............................. 47
7.23 Environmental Compliance................................. 48
7.24 Permitted Xxxxxx......................................... 49
7.25 Ordinary Course Transactions............................. 49
7.26 Determination of Extraordinary Major Maintenance Reserve
Amount................................................ 49
7.27 Determination of Tax Contingency Reserve Amount.......... 49
7.28 Further Assurances....................................... 50
7.29 No Modifications of By-Laws.............................. 50
7.30 Business................................................. 50
7.31 Access................................................... 51
7.32 Operation of Business.................................... 51
7.33 No Merger or Consolidation............................... 51
7.34 No Subsidiaries; no Acquisitions......................... 51
7.35 Construction of Project.................................. 51
7.36 Operator................................................. 51
7.37 Limitation on Loans...................................... 52
7.38 Request for Completion Loans............................. 52
7.39 Limitation on Share Issuance............................. 52
7.40 Ethical Business Practices............................... 52
ARTICLE VIII INSURANCE................................................... 52
8.01 Maintenance of Insurance................................. 52
8.02 Insurance Consultant..................................... 52
ARTICLE IX MPA EVENTS OF DEFAULT AND REMEDIES.......................... 53
9.01 MPA Events of Default.................................... 53
9.02 Declaration of MPA Event of Default...................... 59
9.03 Cessation of MPA Event of Default........................ 60
9.04 Abandonment.............................................. 60
ARTICLE X SENIOR FACILITY LENDERS ARRANGEMENTS........................ 60
10.01 Senior Facility Lenders Actions.......................... 60
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10.02 Sharing of Information................................... 64
10.03 General Consultation..................................... 64
10.04 Sharing of Non-Pro Rata Payments......................... 65
10.05 Termination of Senior Debt Commitments................... 66
10.06 Global Coordinator....................................... 66
ARTICLE XI POLITICAL EVENTS OF FORCE MAJEURE........................... 66
11.01 Declaration of Event of Political Force Majeure.......... 66
11.02 Notices by Administrative Agent.......................... 66
11.03 Arbitration.............................................. 66
ARTICLE XII MISCELLANEOUS............................................... 67
12.01 Service Providers........................................ 67
12.02 Accession................................................ 68
12.03 Effectiveness............................................ 68
12.04 Termination.............................................. 68
12.05 Stability Agreement...................................... 68
12.06 Currency Equivalents..................................... 68
12.07 Governing Law............................................ 69
12.08 Severability............................................. 69
12.09 Entire Agreement......................................... 69
12.10 Confidentiality.......................................... 69
12.11 Notices.................................................. 70
12.12 Benefits of Agreement.................................... 72
12.13 Successors and Assigns................................... 72
12.14 Remedies................................................. 73
12.15 Execution in Counterparts................................ 74
12.16 Consent to Jurisdiction.................................. 74
12.17 Arbitration.............................................. 75
12.18 No Trial by Jury......................................... 76
12.19 Amendments and Waivers................................... 76
12.20 Senior Facility Lenders' Credit Decisions................ 77
12.21 Payment of Expenses...................................... 77
12.22 Conflicts................................................ 79
12.23 No Partnership........................................... 79
12.24 No Immunity.............................................. 79
12.25 Reinstatement............................................ 79
Schedule A Committed Amounts
Schedule B Repayment Schedule
Schedule C Drawdown Schedule
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Schedule D Description of the Sulfide Project
Schedule E Tax Certification
Schedule F Tax Matters
Schedule 6.02 Borrower Capitalization
Schedule 6.03(c) Compliance with Other Instruments and Laws
Schedule 6.03(d) Core Peruvian Governmental Approvals
Schedule 6.04 Environmental Matters
Schedule 6.05 Taxes
Schedule 6.06 Labor Matters
Schedule 6.07 Legal Proceedings
Schedule 6.08 Consents
Schedule 6.09 Financial Statements
Schedule 6.12 Absence of Certain Changes and Events
Schedule 6.13 Title to Assets, Mining and Beneficiation Concessions and
Other Rights
Schedule 6.14 Related Party Transactions and Commitments
Schedule 6.24 Tax Liability
Exhibit A JBIC Loan Agreement
Exhibit B KfW Loan Agreement
Exhibit C Commercial Banks Loan Agreement
Exhibit D Form of Peruvian Bonds Indenture
Exhibit E Form of Debt Service Coverage Ratio Certificate
Exhibit F Form of Transferee Accession Agreement
Exhibit G-1 Form of New Party Accession Agreement (Replacement Lender)
Exhibit G-2 Form of New Party Accession Agreement (Bridge Loan Provider)
Exhibit H-1 Form of Consent to Assignment (Operator's Agreement)
Exhibit H-2 Form of Consent to Assignment (Engineering Agreement
and Construction Agreement)
Exhibit H-3 Form of Consent to Assignment (Shareholders Agreement)
Exhibit I Form of Consent of Assignment (Peruvian law agreement)
Exhibit J Form of Notice of Conditional Assignment
Appendix I-1 Form of Opinion of Xxxxxxx, Xxxxx & Xxxxxxx, Abogados
(Borrower Opinion on Share Pledge on behalf of Cyprus and
Sumitomo Participants)
Appendix I-2 Form of Opinion of Debevoise & Xxxxxxxx LLP on behalf of PDC,
the PD Buyer, the PD Participant, Borrower, Operator,
PD Buyer and BVN
Appendix I-3 Form of Opinion of Estudio Xxxx Echecopar Xxxxxx, Special
Peruvian Counsel to the Senior Facility Lenders
Appendix I-4 Form of Opinion of Milbank, Tweed, Xxxxxx & XxXxxx LLP
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Appendix I-5 Form of Opinion of Xxxxx, Xxxxxx & Xxxxxx, LLP, Special New
York Counsel to the Trustee
Appendix I-6 Form of Opinion of Xxxxxxx, Xxxxx & Xxxxxxx, Abogados
(Operator Opinion)
Appendix I-7 Form of Opinion of Xxxxxxx, Xxxxx & Xxxxxxx, Abogados
(ElectroPeru S.A. Opinion)
Appendix I-8 Form of Opinion of Xxxxxxx, Xxxxx & Xxxxxxx, Abogados
(EGASA Opinion)
Appendix I-9 Form of Opinion of Xxxxxxxx & Xxxxxxxx LLP on behalf of SMM,
SC, SGM and the Sumitomo Participant (Financing Documents)
Appendix I-10 Form of Opinion of Xxxxxxxx & Xxxxxxxx LLP on behalf of SMM
(Offtake Agreements)
Appendix I-11 Form of Opinion of Sakai & Nimura on behalf of SMM
(Offtake Agreements)
Appendix I-12 Form of Opinion of Sakai & Nimura on behalf of SMM, SC and
SGM (Financing Documents)
Appendix I-13 Form of Opinion of Xxxxx & Overy LLP on behalf of the
Sumitomo Participant
Appendix I-14 Form of Opinion of Estudio Xxxxxxx Xxxxxx Xxxxx, Abogados on
behalf of BVN
Appendix II Insurance
Appendix III Form of Annual Budget
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MASTER PARTICIPATION AGREEMENT
MASTER PARTICIPATION AGREEMENT, dated as of September 30, 2005 (the
"Agreement" or "MPA") is made by and among:
SOCIEDAD MINERA CERRO VERDE S.A.A., a sociedad anonima abierta listed on
the Lima Stock Exchange and organized under the laws of Peru (the "Borrower");
JAPAN BANK FOR INTERNATIONAL COOPERATION, a Japanese government financial
institution organized under the laws of Japan ("JBIC"), in its capacity as a
Senior Facility Lender;
SUMITOMO MITSUI BANKING CORPORATION, a stock corporation organized under
the laws of Japan, as lead JBIC arranger and Global Coordinator ("SMBC", and, in
its capacity as Global Coordinator, the "Global Coordinator");
THE BANK OF TOKYO-MITSUBISHI, LTD., a banking institution organized under
the laws of Japan, as lead JBIC arranger ("BOT-M" and together with SMBC, in
their capacity as lead JBIC arrangers, the "Lead JBIC Arrangers");
KfW, a public corporation formed under the laws of the Federal Republic of
Germany ("KfW"), in its capacity as a Senior Facility Lender;
CALYON New York Branch, a licensed branch of a banking corporation
organized and existing under the laws of the French Republic ("Calyon"), in its
capacity as a Senior Facility Lender, Lead Arranger and Global Coordinator;
THE ROYAL BANK OF SCOTLAND PLC, a public limited company incorporated under
the laws of Scotland ("RBS"), in its capacity as a Senior Facility Lender and
Lead Arranger;
THE BANK OF NOVA SCOTIA, a Canadian chartered bank, organized under the
laws of Canada ("Scotia Capital"), in its capacity as a Senior Facility Lender
and Lead Arranger;
MIZUHO CORPORATE BANK, LTD., a banking institution organized under the laws
of Japan ("Mizuho"), in its capacity as a Senior Facility Lender and Lead
Arranger; and
CALYON New York Branch, a licensed branch of a banking corporation
organized and existing under the laws of the French Republic, as Administrative
Agent for the Senior Lenders (in such capacity, the "Administrative Agent").
RECITALS
A. The Borrower owns the Cerro Verde copper mine, including a copper
leaching and solution extraction/electrowinning (SX/EW) operation, located in
the District of Uchumayo and Yarabamba, Province of Arequipa, Republic of Peru
(the "Current Operations");
B. The board of directors of the Borrower has approved the development of a
primary sulfide portion of the ore body beneath the oxide portion of the ore
body currently in production (the "Sulfide Project");
C. In connection with the Sulfide Project, Sumitomo Metal Mining Co., Ltd.,
a Japanese corporation ("SMM"), Sumitomo Corporation, a Japanese corporation
("SC"), Summit Global Management II B.V., formerly known as Summit Global
Management B.V., a Dutch corporation ("SGM"), Xxxxxx Dodge Corporation, a New
York corporation ("PDC"), Cyprus Amax Minerals Company, a Delaware corporation
("ACMC"), Cyprus Metals Company, a Delaware corporation ("CMC"), Cyprus Climax
Metals Company, a Delaware corporation ("CCMC"), Compania de Minas Buenaventura
S.A.A., a sociedad anonima abierta organized under the laws of the Republic of
Peru ("BVN"), and the Borrower have entered into a Participation Agreement,
dated as of March 16, 2005 (as amended by the Joinder to the Participation
Agreement, among SMM Cerro Verde Netherlands B.V., a Dutch corporation (the
"Sumitomo Participant" and collectively with SMM, SC, and SGM, the "Sumitomo
Parties"), SMM, SC, SGM, BVN, PDC, CAMC, CMC, CCMC and the Borrower, dated as of
May 5, 2005, and as further amended by the Amendment to the Participation
Agreement, among the Sumitomo Participant, SMM, SC, SGM, BVN, PDC, CAMC, CMC,
CCMC and the Borrower, dated as of May 24, 2005, the "Participation Agreement"),
pursuant to which the Sumitomo Participant and BVN acquired shares of Common
Stock of the Borrower on June 1, 2005;
D. PDC, CCMC, the Sumitomo Parties, BVN and the Borrower have entered into
a Shareholders Agreement, dated as of June 1, 2005 (the "Shareholders
Agreement"), which sets forth certain matters relating to the governance and
ownership of the shares of the Borrower;
E. The Borrower and SMM have entered into a Concentrate Sales Agreement
dated June 1, 2005, as amended through the date hereof, pursuant to which the
Borrower has agreed to sell and SMM has agreed to purchase 50% of the Borrower's
annual projected copper Concentrate production up to December 31, 2016 pursuant
to the terms set forth therein (the "SMM Concentrate Sales Agreement");
F. The Borrower and Xxxxxx Dodge Sales Company Incorporated ("PD Sales
Company") have entered into a Concentrate Sales Agreement dated as of the date
hereof, pursuant to which the Borrower has agreed to sell, and PD Sales Company
has agreed to purchase, 20% (which percentage shall in certain circumstances be
increased) of the
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Borrower's annual projected copper Concentrate production up to December 31,
2015 (the "PD Concentrate Sales Agreement," and together with the SMM
Concentrate Sales Agreement, the "Concentrate Sales Agreements");
G. The Borrower and PD Sales Company have entered into a Cathodes Sales
Agreement dated as of the date hereof, pursuant to which the Borrower has agreed
to sell, and PD Sales Company has agreed to purchase 70% (which percentage shall
in certain circumstances be increased) of the Borrower's annual actual
production of Cathodes up to December 31, 2015 (the "PD Cathodes Sales
Agreement"), and PDC has entered into a Parent Company Guarantee for the benefit
of the Borrower, pursuant to which PDC has agreed to guarantee the obligations
of PD Sales Company under the PD Concentrate Sales Agreement and PD Cathodes
Sales Agreement (the "PDC Guarantee");
H. The Borrower and Xxxxxx Xxxxxx Dodge Del Peru S.A.C., a Peruvian
sociedad anonima cerrada (the "Operator"), have entered into an Operator's
Agreement, dated as of June 1, 2005 (the "Operator's Agreement"), pursuant to
which the Operator shall provide to the Borrower certain managerial, design,
engineering, development, construction and operation services;
I. The Borrower proposes to incur senior loans for the purpose of financing
the Sulfide Project;
J. The Borrower proposes to enter into a Master Security Agreement, that
sets forth certain provisions regarding the management of the cash standing to
the credit of certain accounts identified therein and certain arrangements
common to the Senior Lenders with respect to the exercise of remedies against
the Borrower; and
K. To induce the Senior Facility Lenders to enter into this Agreement, the
Borrower has agreed to grant to the Onshore Collateral Agent and the Offshore
Collateral Agent, for the benefit of the Senior Lenders, a first priority
security interest in the collateral described in the Security Documents;
NOW, THEREFORE, in consideration of the agreements hereinafter set forth,
and for other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the Borrower, each of the Lead JBIC Arrangers,
each of the Senior Facility Lenders and the Administrative Agent (each an "MPA
Party" and collectively, the "MPA Parties", which term shall include any
Replacement Lender or Bridge Loan Provider after such Replacement Lender or
Bridge Loan Provider has become a party to this Agreement in accordance with
Section 12.02) hereby agree as follows:
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ARTICLE I
DEFINITIONS AND INTERPRETATION
1.01 Definitions. Unless the context shall otherwise require, or unless
otherwise defined herein, capitalized terms used herein shall have the meanings
assigned to them in Schedule Z to the Master Security Agreement among the
Borrower, the Senior Lenders, the Lead JBIC Arrangers, the Global Coordinators,
the Lead Arrangers, the Administrative Agent, the Trustee, the Offshore
Collateral Agent and the Onshore Collateral Agent dated as of the date hereof.
1.02 Interpretation. In this Agreement and in the Appendices hereto, except
to the extent that the context otherwise requires:
(a) the Table of Contents, Articles and Section headings are for
convenience of reference only and shall not affect the interpretation of
this Agreement;
(b) unless otherwise specified, references to Articles, Sections,
clauses, Exhibits, Schedules and Appendices are references to Articles,
Sections, clauses, Exhibits and Schedules of, and Appendices to, this
Agreement;
(c) references to any document or agreement, including this Agreement,
shall be deemed to include references to such document or agreement as
amended, supplemented or replaced and in effect from time to time in
accordance with its terms and subject to compliance with the requirements
set forth herein and therein;
(d) references to any party to this Agreement or any other document or
agreement or to any other Person shall include its successors and permitted
assigns;
(e) when used in this Agreement, the words "including", "includes" and
"include" shall be deemed to be followed in each instance by the words
"without limitation";
(f) when used in this Agreement, the words "herein", "hereby",
"hereunder", "hereof", "hereto", "hereinbefore", and "hereinafter", and
words of similar import, shall refer to this Agreement in its entirety and
not to any particular section, subsection, paragraph, sub-paragraph, clause
or other subdivision, exhibit, schedule or appendix of this Agreement; and
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(g) when used herein, the singular shall include the plural, the
plural shall include the singular and the use of any gender shall include
all genders, unless the context requires otherwise.
ARTICLE II
FINANCING PLAN
2.01 Senior Facility Lenders' Commitment to Lend.
(a) On the date hereof, JBIC shall enter into the JBIC Loan Agreement with
the Borrower (the "JBIC Loan Agreement"), KfW shall enter into the KfW Loan
Agreement with the Borrower (the "KfW Loan Agreement") and the Commercial Banks
shall enter into the Commercial Banks Loan Agreement with the Borrower (the
"Commercial Banks Loan Agreement"), in the forms attached respectively as
Exhibits A, B and C (each, a "Senior Facility Loan Agreement"). Each Senior
Facility Loan Agreement shall reflect, among other terms, the commitment of each
Senior Facility Lender that is a party thereto to make from time to time
advances (each an "Advance") to the Borrower in an amount up to its Aggregate
Committed Amount and shall reflect the Borrower's agreement to repay such
Advances with interest.
(b) The obligations of each Senior Facility Lender and of the Borrower with
respect to the making and the repayment of such Advances shall be as set forth
in the Senior Facility Loan Agreement to which such Senior Facility Lender is a
party and in this Agreement.
2.02 Issuance of the Peruvian Bonds.
(a) The Senior Facility Lenders acknowledge and agree that after the date
hereof, the Borrower shall have the right to issue bonds (the "Peruvian Bonds")
through a program (the "Peruvian Bonds Program") performed under (i) an
indenture substantially in the form attached as Exhibit D (or with such changes
(x) as may be requested by CONASEV during its review of the Peruvian Bonds
Program so long as such changes (i) are not material changes to the financial
terms of the Peruvian Bonds and (ii) are not changes that materially improve the
rights of the Peruvian Bondholders or impose materially greater obligations on
the Borrower for the benefit of the Peruvian Bondholders except if Borrower
gives equivalent rights to the Senior Facility Lenders or (y) that are notified
in writing by the Borrower to the Administrative Agent so long as the
Administrative Agent acting upon instructions from the Majority Facility Lenders
does not object in writing to such form within 15 Business Days of receipt of
such notice) (the "Peruvian Bonds Indenture") and (ii) supplementary indentures
to be entered into in connection with each specific issue of Peruvian Bonds
under the Peruvian Bonds Program. The Borrower may issue the Peruvian Bonds with
such rate of interest as may be determined by the Borrower in its sole
discretion and with an
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aggregate principal amount which, shall not exceed (a) the sum of (i) U.S.$100
million and (ii) the amount of accrued and unpaid interest on the Stand-By
Advances of the Commercial Banks to be prepaid with the proceeds of such
issuance, if any, or (b) such greater amount as may be notified in writing by
the Borrower to the Administrative Agent, so long as the Administrative Agent,
acting upon instructions from each Senior Facility Lender, does not object in
writing to such amount within 15 Business Days of receipt of such notice (the
greater of (a) and (b), the "Peruvian Bonds Cap"), provided that (x) principal
and interest shall be paid on the Peruvian Bonds on the same dates as principal
and interest shall be paid on the Senior Facility Loans, (y) the Peruvian Bonds
shall mature no earlier than the Final Maturity Date and (if amortizing) shall
amortize at a rate no faster than the Senior Facility Lenders and (z) the
interest rate payable on the Peruvian Bonds shall not exceed, in the case of a
floating rate issuance, LIBOR plus 3% p.a., or in the case of a fixed rate
issuance, a fixed rate equal to LIBOR plus 3% p.a. at the time of issuance. The
Borrower shall give the Administrative Agent no less than five Business Days'
advance written notice of the anticipated date of the closing of the issuance of
the Peruvian Bonds (each, a "Bond Issuance Notice").
(b) On the date of the closing of the first issuance of Peruvian Bonds by
the Borrower (the "Bonds Closing Date"):
(i) the Common Representative shall become a party to the Completion
Guarantee by entering into, in its capacity as Common Representative, a New
Party Accession Agreement (substantially in the form of Exhibit G) and
thereupon the Peruvian Bondholders, acting through the Common
Representative, shall collectively have all of the rights and obligations
of a Senior Lender; and
(ii) the Common Representative shall become a party to the Master
Security Agreement by entering into, in its capacity as Common
Representative, a New Party Accession Agreement and thereupon the Common
Representative and the Peruvian Bondholders shall have all the rights and
obligations of, respectively, the Common Representative and the Peruvian
Bondholders under the Master Security Agreement.
(c) On each date of issuance of Peruvian Bonds by the Borrower under the
Peruvian Bonds Program (including the Bonds Closing Date):
(i) the Stand-By Committed Amount of the Commercial Banks will be
automatically reduced (but not below zero) by an amount equal to the
difference between (x) the principal amount of Peruvian Bonds issued on
such date (with the aggregate reduction to be allocated to each Commercial
Bank's Stand-By Committed Amount based on their respective Stand-By
Committed Amounts) and (y) the proceeds of such issuance used to pay
accrued and unpaid
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interest on the Stand-By Advances of the Commercial Banks prepaid with the
proceeds of such issuance, if any;
(ii) the Borrower shall instruct the placement agent to, and the
placement agent shall, deposit to the Proceeds Account the proceeds of the
issuance of the Peruvian Bonds on the date of issuance or immediately
thereafter; and
(iii) the Borrower and the Common Representative shall take all other
actions required to be taken on such date pursuant to the documents related
to the issuance of such Peruvian Bonds.
(d) Subject to the provisions of this Section 2.02, the Borrower shall have
the right to issue the Peruvian Bonds as and when the Borrower deems
appropriate.
2.03 Termination or Reduction of Commitments.
(a) The Borrower shall have the right, upon not less than 15 Business Days'
notice to the Administrative Agent, (i) to terminate entirely all of the
Commitments or (ii) from time to time to reduce the Aggregate Committed Amount
of each of the Senior Facility Lenders, so long as the Completion Guarantee
remains in full force and effect and there is no material breach thereunder
which has occurred and is Continuing. Any such reduction shall (x) reduce
permanently the Aggregate Committed Amount of each of the Senior Facility
Lenders and (y) be required to be made pro rata among the Senior Facility
Lenders in accordance with their respective Commitment Percentages. The Borrower
shall have the right, at its discretion, to allocate the reduction to the
Aggregate Committed Amount of the Commercial Banks between their respective Base
Committed Amounts and Stand-By Committed Amounts, provided that the same
allocation shall be made for each Commercial Bank. Upon any such reduction in
the Aggregate Committed Amount of the Senior Facility Lenders, the Borrower
shall promptly provide to the Senior Facility Lenders a funding plan which shall
show in the Borrower's good faith judgment that it has sufficient resources to
pay for the remainder of construction costs for the Sulfide Project, provided,
that such funding plan shall be provided for informational purposes only and
shall not bind, constitute a condition precedent, or otherwise limit the
Borrower's discretion to terminate the Commitments or reduce the Aggregate
Committed Amount of the Senior Facility Lenders in any way.
(b) On the Availability Period End Date, the Commitment of the Senior
Facility Lenders shall terminate and thereafter no Senior Facility Lender shall
be required to make any further Advances.
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2.04 Timing of Advances.
(a) Subject to and upon the terms and conditions set forth herein and in
each Senior Facility Loan Agreement, the Borrower shall have the right to
request Advances from the Senior Facility Lenders in accordance with the
Drawdown Schedule attached as Schedule C, provided that the Borrower may change
actual timing of utilization without consent from the Senior Facility Lenders so
long as in each Notice of Borrowing the Borrower certifies that it expects to
use the proceeds from the disbursements to fund Project Costs expected to become
due and payable within the next 90 days and provided further that:
(i) the Borrower shall first request Advances (a "Base Advance") from
the Senior Facility Lenders on a Pro Rata Basis up to their respective Base
Committed Amounts; and
(ii) after the Senior Facility Lenders have made Base Advances in an
amount equal to their respective Base Committed Amount, the Borrower may
request any subsequent Advances (a "Stand-By Advance") from the Commercial
Banks up to their respective Stand-By Committed Amount (as may be reduced
in accordance with Section 2.03(a)).
(b) The failure of one or more Senior Facility Lenders to disburse the
proceeds of a Senior Facility Loan on a Disbursement Date upon receipt of a
Notice of Borrowing properly given and for which no Senior Facility Lender
Negative CP Notice exists and has not been withdrawn pursuant to a Senior
Facility Lender Withdrawal Notice shall not excuse any other Senior Facility
Lenders from its own obligation to disburse the proceeds of a Senior Facility
Loan on such Disbursement Date.
2.05 Base Advances Specific Disbursement Mechanics.
(a) Each request for a Base Advance shall be made concurrently under each
of the Senior Facility Loan Agreements and on a Pro Rata Basis with respect to
each of the Senior Facility Lenders by delivery by the Borrower of concurrent
Notices of Borrowing (i) in the case of an Advance under the JBIC Loan
Agreement, to JBIC and the JBIC Agent, with a copy thereof to the Administrative
Agent, (ii) in the case of an Advance under the KfW Loan Agreement, to KfW, with
a copy thereof to the Administrative Agent and (iii) in the case of an Advance
under the Commercial Banks Loan Agreement, to the Administrative Agent. The
Notices of Borrowing delivered as contemplated above shall direct that the
proceeds of each Base Advance be deposited into the Onshore Dollars Account, in
accordance with the Master Security Agreement. Each such Notice of Borrowing
shall be delivered at least fifteen (15) Business Days before the proposed
Disbursement Date, which Disbursement Date shall be a Business Day; provided
that, except in the event that any Notice of Borrowing delivered in any calendar
month is deemed cancelled pursuant to Section 2.05(b), the Borrower shall not
8
deliver more than one Notice of Borrowing in respect of each Senior Facility
Loan in any calendar month.
(b) In connection with the delivery of any Notice of Borrowing with respect
to a Base Advance, if JBIC, KfW or any Commercial Bank determines that any
condition precedent to such Senior Facility Lender's obligation to make an
Advance set forth in Section 5.01 or 5.02, as the case may be, will not be
satisfied or waived, the JBIC Agent on behalf of JBIC or the Administrative
Agent on behalf of KfW and the Commercial Banks (as the case may be) shall
notify the Borrower and each other Senior Facility Lender no later than six (6)
Business Days prior to the Disbursement Date requested by the Borrower in such
Notice of Borrowing of such determination in a notice identifying with
particularity the condition(s) not satisfied or waived (a "Senior Facility
Lender Negative CP Notice"), in which case all such Notices of Borrowing shall
be deemed canceled for all purposes of this Agreement. The failure of the JBIC
Agent on behalf of JBIC or the Administrative Agent on behalf of KfW and the
Commercial Banks to provide such notice shall not waive any right of such Senior
Facility Lender not to make an Advance on the Disbursement Date requested by the
Borrower if any such condition precedent has not been satisfied or waived as of
such date. Notwithstanding anything else herein, neither the JBIC Agent on
behalf of JBIC nor the Administrative Agent on behalf of any Senior Facility
Lender shall have the right to deliver a Senior Facility Lender Negative CP
Notice with respect to a Base Advance (other than the initial Base Advance), (i)
in the case of a failure to satisfy any conditions precedent set forth in
Section 5.01(q) subclauses (ii) and (iii), Section 5.01(r) and Section 5.01(s),
unless the failure to satisfy such condition precedent has been approved by
Senior Facility Lenders pursuant to a Supermajority Facility Vote and (ii) in
the case of a failure to satisfy any other conditions precedent to subsequent
Base Advance, if such condition has been waived by the Administrative Agent
acting pursuant to instructions from each Senior Facility Lender.
(c) Upon delivery of a Senior Facility Lender Negative CP Notice, the
Senior Facility Lenders shall have no obligation to make the Advance requested
in the applicable Notice of Borrowing; provided, however, that the Senior
Facility Lenders' obligation to make the requested Advance shall be reinstated
if the JBIC Agent (in the case of a Senior Facility Lender Negative CP Notice
delivered by the JBIC Agent) or the Administrative Agent (in the case of a
Senior Facility Lender Negative CP Notice delivered by the Administrative Agent)
informs the JBIC Agent on behalf of JBIC, the Administrative Agent, the Borrower
and each other Senior Facility Lender in writing that each condition precedent
identified in the applicable Senior Facility Lender Negative CP Notice has
either been satisfied or waived (a "Senior Facility Lender Withdrawal Notice").
Upon the receipt of a Senior Facility Lender Withdrawal Notice, the Borrower may
re-deliver the Notices of Borrowing dated the date such Notices are redelivered,
in which it shall propose the new requested Disbursement Date for the Advance
requested in such Notice of Borrowing; provided, that such new requested
9
Disbursement Date shall be no earlier than six (6) Business Days after receipt
by the parties referred to above of such Senior Facility Lender Withdrawal
Notice, and provided, further, that the issuance of any Senior Facility Lender
Withdrawal Notice, shall not waive any right of any Senior Facility Lender not
to make an Advance on such requested Disbursement Date if any condition
precedent has not been satisfied or waived as of such date.
(d) Subject to the satisfaction of the foregoing and of the conditions
precedent set forth in Section 5.01 or 5.02, as the case may be, on the relevant
Disbursement Date, no later than 1:00 P.M. (New York City time) on each
requested Disbursement Date for a Base Advance, the JBIC Agent shall transfer
the proceeds of the Senior Facility Loans to be provided under the JBIC Loan
Agreement, KfW shall transfer the proceeds of the Senior Facility Loans to be
provided by KfW and the Administrative Agent shall transfer the proceeds of the
Senior Facility Loans to be provided by the Commercial Banks, in each case, to
the Borrower for deposit in the Onshore Dollars Account.
2.06 Stand-By Advances Specific Disbursement Mechanics.
(a) Each request for a Stand-By Advance shall be made under the Commercial
Banks Loan Agreement and on a Pro Rata Basis with respect to each of the
Commercial Banks by delivery by the Borrower of a Notice of Borrowing to the
Administrative Agent. The Notices of Borrowing delivered as contemplated above
shall direct that the proceeds of each Stand-By Advance be deposited into the
Onshore Dollars Account, in accordance with the Master Security Agreement. Each
such Notice of Borrowing shall be delivered at least 10 New York Business Days
before the relevant Disbursement Date, which Disbursement Date shall be a New
York Business Day.
(b) Subject to the satisfaction of the foregoing and of the conditions
precedent set forth in Section 5.02 on the relevant Disbursement Date, no later
than 1:00 P.M. (New York City time) on each requested Disbursement Date for a
Stand-By Advance, the Administrative Agent shall transfer the proceeds of the
Senior Facility Loans to be provided by the Commercial Banks to the Borrower for
deposit in the Onshore Dollars Account.
2.07 Several Obligations. The obligations of each Senior Facility Lender
hereunder shall be several not joint. No Senior Facility Lender shall have any
obligation to any MPA Party for the failure by any other Senior Lender to make
any Senior Loans required to be made by such Senior Lender or to comply with any
other obligation of such Senior Lender hereunder or under any other Financing
Document to which it is a party.
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2.08 Promissory Notes.
(a) On each Disbursement Date (including on the Closing Date), the Borrower
shall deliver to each Senior Facility Lender duly executed promissory notes
(pagares) (each, a "Promissory Note") in Spanish together with an English
translation thereof, substantially in the forms attached to the respective
Senior Facility Loan Agreement, issued in favor of, respectively, each Senior
Facility Lender making an Advance on such date, with blanks appropriately
completed in conformity herewith and the respective Senior Facility Loan
Agreement, which shall (i) be payable to the order of such Senior Facility
Lender, (ii) be in the principal amount equal to the Advance made by such Senior
Facility Lender on such Disbursement Date, (iii) be payable in installments and
mature on the Final Maturity Date, (iv) bear interest as provided in Section
3.02, and (v) be dated on such Disbursement Date.
(b) On the first Payment Date following the Completion Release Date, the
Borrower shall (i) cancel all Promissory Notes previously issued to a given
Senior Facility Lender and (ii) replace such Promissory Notes by a single
Promissory Note which shall be (x) issued for a principal amount equal to the
aggregate amount of all Advances made by such Senior Facility Lender minus all
principal repayments made to such Senior Facility Lender up to (and including)
the date of replacement and (y) issued on identical terms and conditions as the
Promissory Notes being replaced by such single Promissory Note except that (1)
in the case of the Promissory Notes issued in favor of the Commercial Banks, the
Margin shall be adjusted to reflect the Margin (as defined in the Commercial
Banks Loan Agreement) applicable in the periods following the Completion Release
Date and (2) in the case of the Promissory Notes issued in favor of JBIC, the
interest (as described in Section 5.01 of the JBIC Loan Agreement) shall be
adjusted to reflect the interest applicable in the period following the
Completion Release Date. Notwithstanding the foregoing, in the case of a Senior
Facility Lender that is a Commercial Bank, one Promissory Note shall be issued
for its Base Advances and one separate Promissory Note shall be issued for its
Stand-By Advances and in the case of JBIC, one Promissory Note shall be issued
for its Tranche A Advances and one separate Promissory Note shall be issued for
its Tranche B Advances. Borrower shall also cancel and replace the Promissory
Notes issued to KfW in connection with an exercise by Borrower of its right to
convert Floating Rate Loans into Fixed Rate Loans as such terms are defined in
the KfW Loan Agreement.
(c) The execution and delivery by the Borrower of the Promissory Notes
described above shall not affect in any way whatsoever the rights or obligations
of the Borrower under this Agreement, and the rights and claims of the Senior
Facility Lenders under the Promissory Notes shall not replace or supersede the
rights and claims of the Senior Facility Lenders hereunder, provided that
payment of any part of principal of any Promissory Note shall, to the extent
that such payment if made hereunder would discharge Senior Facility Loans
Obligations in respect of the payment of principal of the
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Senior Facility Loan evidenced by such Promissory Note, discharge such
obligation pro tanto, and the payment of any principal of a Senior Facility Loan
in accordance with the terms hereof shall discharge the obligations of the
Borrower under the Promissory Note evidencing such Senior Facility Loan pro
tanto.
(d) Upon an assignment by a Senior Facility Lender of any of its interest
hereunder as permitted under Section 12.13, the Promissory Note of the assignor
may be cancelled, in which case the Borrower shall, upon the written request of
the assignor, issue new Promissory Notes to the assignor (to the extent the
assignor continues to maintain certain interest hereunder after such assignment)
and the assignee.
(e) Upon discharge of all Senior Facility Loans Obligations under this
Agreement, each Senior Facility Lender shall cancel and return each Promissory
Note to the Borrower.
(f) The Promissory Notes shall be non negotiable but may be transferred by
assignment together with the assignment of an Advance that is permitted in
accordance with Section 12.13(c) hereof.
2.09 Senior Facility Lender's Failure to Fund.
(a) Unless the Administrative Agent shall have been notified by any Senior
Facility Lender (each, a "Payor") prior to the date on which the Payor is to
make payment pursuant to Section 2.05(d) to the Borrower or the Administrative
Agent of the proceeds of an Advance to be made by such Payor hereunder (such
payment being herein called the "Required Payment"), which notice shall be
effective upon receipt, that the Payor does not intend to make the Required
Payment to the Administrative Agent, the Administrative Agent may assume that
the Required Payment has been made and may, in reliance upon such assumption
(but shall not be required to), make the amount thereof available to the
Borrower.
(b) If the Payor has not in fact made the Required Payment to the
Administrative Agent, then (without limiting the claim any Person may have on
account of non-receipt of the Required Payment), the Payor shall pay to the
Administrative Agent, on demand, such amount with interest thereon at a rate
equal to the daily average cost of funding of the Administrative Agent for the
period from and including the date on which the Required Payment was required to
be made to the date the Payor makes such amount immediately available to the
Administrative Agent.
(c) The Administrative Agent shall promptly notify each Senior Facility
Lender and the Borrower of any receipt of notice by the Administrative Agent
from a Senior Facility Lender that such Senior Facility Lender does not intend
to make payment to the Administrative Agent of the proceeds of an Advance.
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ARTICLE III
COMMON LENDING ARRANGEMENTS
3.01 Repayment of the Advances.
(a) Each Senior Facility Loan Agreement shall provide that, on each Payment
Date on or prior to the Final Maturity Date (subject to the timing and location
provisions specified in each Senior Facility Loan Agreement), the Borrower shall
repay to or for the account of each Senior Facility Lender that is a party to
such Senior Facility Loan Agreement an amount equal to the product of (i) the
aggregate amount of all Advances of such Senior Facility Lender, and (ii) the
Scheduled Repayment Percentage as set forth in the Repayment Schedule attached
hereto as Schedule B applicable to such Payment Date.
(b) The Peruvian Bonds Indenture shall provide that, on each Payment Date
on or prior to the Final Maturity Date, the Borrower shall repay to the Common
Representative for the account of the Peruvian Bondholders, an amount equal to
the product of (i) the principal amount of Peruvian Bonds issued by the Borrower
and (ii) the Scheduled Repayment Percentage applicable to such Payment Date.
3.02 Interest.
(a) Each Senior Facility Loan Agreement shall provide that, on each
Interest Payment Date on or prior to the Final Maturity Date, the Borrower shall
pay to or for the account of each Senior Facility Lender that is a party to such
Senior Facility Loan Agreement, interest on such Senior Facility Lender's
Outstanding Base Amount, accrued during the Interest Period ending on the day
immediately preceding such Interest Payment Date (and pro rated with respect to
amounts advanced after the beginning of such Interest Period), at the interest
rate set forth in such Senior Facility Loan Agreement.
(b) The Commercial Banks Loan Agreement shall provide that, on each
Interest Payment Date on or prior to the Final Maturity Date, the Borrower shall
pay to or for the account of each Commercial Bank, interest on such Commercial
Bank's Outstanding Stand-By Amount, accrued during the Interest Period ending on
the day immediately preceding such Interest Payment Date (and pro rated with
respect to amounts advanced after the beginning of such Interest Period), at the
interest rate set forth in the Commercial Banks Loan Agreement.
(c) The Peruvian Bonds Indenture shall provide that, on each Interest
Payment Date on or prior to the Final Maturity Date, the Borrower shall pay to
the Common Representative for the account of the Peruvian Bondholders, interest
on the Outstanding Bond Amount accrued during the Interest Period ending on the
day
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immediately preceding such Interest Payment Date (and pro rated with respect to
debt issued since the beginning of such Interest Period), at the rate set forth
in such Peruvian Bonds Indenture.
(d) Each Senior Facility Loan Agreement and the Peruvian Bonds Indenture
shall provide that accrued interest for each Interest Period on each Senior Loan
shall be payable on the Interest Payment Date at the end of such Interest
Period, or upon any earlier payment or prepayment thereof (but only on the
principal amount so paid or prepaid).
3.03 Senior Facility Loans Pari Passu. All Senior Facility Loans shall rank
pari passu without any preference among Senior Facility Loans by reason of date
of incurrence, currency of repayment or otherwise.
3.04 Pro Rata Payments.
(a) After giving effect to any incremental payment for Indemnified Tax
withholding, if any, and except for payment of Funding Losses and mandatory
prepayment contemplated in Sections 3.11 and 3.12, each payment or prepayment
made by the Borrower to a Senior Facility Lender in respect of the Senior Loans
Obligations shall be a Pro Rata Payment, except that:
(i) The Borrower shall have the right to use the proceeds of the
issuance of the Peruvian Bonds to prepay the Outstanding Stand-By Amount of
the Commercial Banks without prepaying any other Senior Loans; and
(ii) The Borrower shall have the right to prepay the Outstanding
Advance Amounts of the Senior Facility Lenders without prepaying the
Outstanding Bond Amounts of the Peruvian Bondholders.
(b) The Borrower shall not prepay any of the Peruvian Bonds before the
Final Maturity Date, unless the Borrower concurrently makes a pro rata
prepayment of the Senior Facility Loans (based on the then Outstanding Advance
Amount of the Senior Lenders).
3.05 Voluntary Prepayment. Subject to Section 3.04, the Borrower shall have
the right to prepay the Outstanding Advance Amount of the Senior Facility
Lenders, so long as the aggregate amount of any such prepayment equals at least
US$10 million and subject to payment of the premium set forth in the relevant
Senior Loan Document, if any, in whole or in part on any Payment Date upon at
least 60 days' prior notice.
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3.06 Mandatory Prepayment.
(a) Upon each receipt by the Borrower of claim proceeds with respect to a
Total Loss of the Sulfide Project or the Current Operations, the Borrower shall
within 30 days after such receipt apply the proceeds so received to prepay the
Outstanding Advance Amounts of the Senior Facility Lenders.
(b) Upon each receipt by the Borrower of the proceeds of property Insurance
for physical loss or damage (which shall not include any sum paid in settlement
of a liability to a third party nor any sum representing the proceeds of
business interruption Insurance), the Borrower shall promptly deposit all such
proceeds into the Proceeds Account and:
(i) Subject to paragraph (f) below, if the proceeds so received are in
excess of US$10 million but not more than US$100 million, the Borrower
shall within 60 days after receipt of such proceeds apply the proceeds so
received to prepay the Outstanding Advance Amounts of the Senior Facility
Lenders, unless the Borrower (x) intends to use such proceeds for the
repair, reconstruction or replacement of the lost or damaged property, or
to replenish the Proceeds Account to the extent of any such repair,
reconstruction or replacement expenses actually paid with funds credited to
the Proceeds Account and (y) notifies to the Administrative Agent in
writing within 30 days after receipt of such proceeds its plans for the
repair, reconstruction or replacement of the lost or damaged property or
the status of implementation of such plans if already started; and
(ii) If the proceeds so received are in excess of US$100 million, the
Borrower shall within 60 days after receipt of such proceeds apply the
proceeds so received to prepay the Outstanding Advance Amounts of the
Senior Facility Lenders, unless the Borrower submits a plan for the use of
such proceeds to the Administrative Agent and the Independent Engineer
within 30 days of receipt and such plan is approved by the Administrative
Agent (acting upon instructions from the Majority Facility Lenders, taking
into consideration the nature of the loss, the reasonableness of the
Borrower's plan and the Outstanding Advance Amount and the ability to pay
the Senior Facility Loans Obligations as and when they become due),
provided that such approval shall be deemed given in the absence of a
response from the Administrative Agent within 30 days from receipt of the
Borrower's request for approval.
(c) Upon each receipt by Borrower of expropriation proceeds in connection
with an expropriation by the Peruvian government of any of its asset or assets,
the Borrower shall promptly deposit all such expropriation proceeds into the
Proceeds Account and:
15
(i) Subject to paragraph (f) below, if the proceeds so received are in
excess of US$10 million but below US$100 million, except if such proceeds
related to an expropriation of Non-Replaceable Property, the Borrower shall
within 60 days after receipt of such proceeds apply the proceeds so
received to prepay the Outstanding Advance Amounts of the Senior Facility
Lenders, unless the Borrower (x) intends to use such proceeds for the
replacement of the expropriated property or to replenish the Proceeds
Account to the extent of any replacement expenses actually paid with funds
credited to the Proceeds Account and (y) notifies to the Administrative
Agent in writing within 30 days after receipt of such proceeds its plans
for the replacement of the expropriated property or the status of
implementation of such plans if already started; and
(ii) If the proceeds so received are in excess of US$100 million or in
excess of US$10 million but relate to an expropriation of Non-Replaceable
Property, the Borrower shall within 60 days after receipt of such proceeds
apply the proceeds so received to prepay the Outstanding Advance Amounts of
the Senior Facility Lenders, unless the Borrower submits a plan for the use
of such proceeds to the Administrative Agent and the Independent Engineer
within 30 days of receipt and such plan is approved by the Administrative
Agent (acting upon instructions from the Majority Facility Lenders, taking
into consideration the nature of the loss, the reasonableness of the
Borrower's plan and the Outstanding Advance Amount and the ability to pay
the Senior Facility Loans Obligations as and when they become due),
provided that such approval shall be deemed given in the absence of a
response from the Administrative Agent within 30 days from receipt of the
Borrower's request for approval.
(d) If 90 days after the making of the Advance made on or immediately prior
to the Availability Period End Date, proceeds thereof have not been fully
applied to the payment of Project Costs, the Borrower shall, within 30 days,
apply such remaining proceeds to prepay the Outstanding Advance Amounts of the
Senior Facility Lenders.
(e) The Borrower may also be required to prepay the Outstanding Advance
Amounts of one or several Senior Facility Lenders as and when contemplated in
Section 3.12.
(f) During the Continuance of a Borrower Event of Default, but prior to
delivery of an Enforcement Direction, the application of the proceeds in clauses
(b)(i) and (c)(i) of this Section 3.06 shall be subject to the delivery by the
Borrower, and approval by the Administrative Agent, of a plan for the use of
such proceeds as provided in clauses (b)(ii) and (c)(ii), as applicable, of this
Section 3.06; provided, however, that upon delivery of a Borrower Enforcement
Direction the direction contained therein shall apply.
(g) On the Debt Buy-Down Closing Date, the Borrower shall prepay the
Outstanding Advance Amounts of the Senior Facility Lenders in an amount equal to
the
16
difference between the Retired Principal Senior Loan Amount and the aggregate
portion of the Purchased Principal Senior Loan Amount purchased and paid for by
all Parent Companies.
3.07 Partial Payments. If at any time at which any Senior Loans Obligations
are payable to a Senior Facility Lender such Senior Facility Lender receives
insufficient funds to pay in full all Senior Loans Obligations payable to such
Senior Facility Lender at such time pursuant to its Senior Loan Document or the
other Financing Documents, the funds so received by such Senior Facility Lender
at such time shall be deemed to be applied in order of priority for purposes of
computations hereunder and under the Senior Loan Document and the other
Financing Documents, as follows: first, to fees, commissions, indemnities,
expenses and all amounts (other than principal of and interest on the Senior
Loans) payable to such Senior Facility Lender; second, to interest (including
post-default interest) on the Senior Loans held by such Senior Facility Lender;
and third, to principal of the Senior Loans held by such Senior Facility Lender,
applied to reduce each outstanding principal installment ratably; provided that
if a Senior Loans Obligation has been accelerated, funds may be applied in any
order of priority as any Senior Facility Lenders holding such accelerated Senior
Loans Obligation may determine.
3.08 Application of Prepayments Other Than Prepayments in Full. Each
prepayment of principal made to a Senior Facility Lender on account of Senior
Loans shall (unless such prepayment repays in full the Senior Loans held by such
Senior Facility Lender) be applied to prepay each outstanding installment of
principal of Senior Loans under such Senior Facility Lender's Senior Loan
Document ratably.
3.09 Taxes.
(a) Any and all payments made by or on account of the Borrower to a Senior
Facility Lender in respect of any obligation hereunder or under the Financing
Documents (including, without limitation, all payments of principal, interest,
premium and fees) shall be made free and clear of, and without deduction or
withholding for or on account of, any and all present or future Taxes (excluding
(i) Taxes imposed on or measured by the net income, profits, or capital of a
Senior Facility Lender by the jurisdiction under the laws of which such Senior
Facility Lender was incorporated or organized, (ii) Taxes which would not have
been imposed on a Senior Facility Lender but for a change by such Senior
Facility Lender of its lending office, (iii) Taxes which would not have been
imposed on a Senior Facility Lender but for the transfer by such Senior Facility
Lender of an interest in its Advances or (iv) Taxes which would not have been
imposed on a Senior Facility Lender but for such Senior Facility Lender's having
a place of business in the jurisdiction imposing the Tax (other than a place of
business arising from the transactions contemplated by the Financing Documents
or from having executed, delivered, performed its obligations or received a
payment under, or enforced any of the Financing Documents)), Taxes described in
the immediately preceding
17
clauses (i) through (iv) being referred to herein as the "Excluded Taxes" and
Taxes, other than the Excluded Taxes being referred to herein as "Indemnified
Taxes", now or hereafter imposed, levied, collected, withheld or assessed by any
Governmental Authority of Peru, unless such deduction or withholding is required
by applicable Government Rule, in which case paragraph (b) below shall apply.
(b) If the Borrower shall be required by law to deduct any Indemnified
Taxes now or hereafter imposed, levied or collected, withheld or assessed by any
Governmental Authority of Peru from or in respect of any sum payable hereunder
or under the Senior Facility Loan Agreements, the Borrower shall, at its option,
either (i) pay to the Senior Facility Lender in respect of which such deduction
or withholding is required to be made, such additional amount (the "Additional
Tax Amount") as may be necessary so that after all required deductions and
withholdings (including, without limitation, deductions and withholdings
applicable to additional sums payable under this Section 3.09(b)), such Senior
Facility Lender receives on the due date thereof an amount equal to the sum it
would have received, had no such deduction or withholding been made, or (ii)
assume the payment of the Indemnified Tax and pay directly the full amount to
the tax administration when due in accordance with Article 47 of the Peruvian
Income Tax Act, so that the amount paid to the Senior Facility Lender equals the
amount it would have received if the Borrower had not been required by law to
deduct such Indemnified Tax.
(c) The Borrower shall pay any and all present or future stamp duty,
documentary, registration, excise, recording, notary, value added or similar
Taxes imposed by any Governmental Authority by reason of the preparation,
execution, issuance, delivery, registration, notarization, filing, recording,
amendment, supplement, waiver, modification, performance or enforcement of this
Agreement or any other Financing Document ("Other Taxes").
(d) Without duplication of Section 12.21(c), the Borrower will indemnify
the Administrative Agent and each Senior Facility Lender against, and reimburse
the Administrative Agent and each Lender on demand for, any Indemnified Taxes
paid directly by the recipient of the payment with respect to which such
Indemnified Tax is levied in circumstances where the Borrower has failed to
comply with its obligation to pay Additional Tax Amount as contemplated in
Section 3.09(b) and any loss, liability, claim or expense, including interest,
penalties, judgments, costs or disbursements and reasonable and documented legal
fees, which the Administrative Agent or any Senior Facility Lender may incur at
any time arising out of or in connection with any failure of the Borrower to
make any payment of such Indemnified Taxes when due.
(e) Each Senior Facility Lender shall, from time to time, following receipt
of a written request therefor by the Borrower, furnish to the Borrower any form
or certificate and other assistance reasonably requested that may be necessary
to establish
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any available exemption from, or reduction in the amount of, Indemnified Taxes,
including:
(i) A certification as to the fact that such Senior Facility Lender is
"unrelated" to the Borrower, in the form set forth in Schedule E, and any
other certification as may be necessary under Peruvian law to qualify for
the reduced rate of withholding tax; and
(ii) In the case of Senior Loans from JBIC and KfW and at the cost of
the Borrower, affidavits or certifications issued by Authorized Officers of
JBIC and KfW (and duly certified by a Public Notary in the jurisdiction
where they are issued and by a Peruvian consul) confirming the matters set
forth in Schedule F.
(f) The Borrower shall provide to the Senior Facility Lenders receipt or
other evidence of payment received by the Borrower from the applicable
Governmental Authority of Peru in connection with the payment by Borrower of any
Indemnified Tax required to be withheld or assessed in respect of any sum
payable hereunder or under the Senior Facility Loan Agreements.
(g) The agreements in this Section 3.09 shall survive the termination of
this Agreement.
3.10 Single Senior Lender Suspension or Termination.
(a) If JBIC or KfW shall have suspended, cancelled or terminated its
Commitment (a "Suspending Lender"), in whole or in part, in accordance with the
terms of Section 10.02 of the JBIC Loan Agreement or Section 12.03 of the KfW
Loan Agreement, as the case may be, by a notice delivered to the Borrower and
the Administrative Agent, each other Senior Facility Lender shall be entitled to
suspend its obligation to make additional Advances, provided that (i) such
suspension shall terminate (and each Senior Facility Lender shall no longer be
entitled to suspend its obligation to make additional Advances solely by reason
of such suspension) if the Suspending Lender rescinds the actions described in
such notice or if a Replacement Loan Agreement is entered into for the entire
amount of the Suspending Lender's undrawn Base Committed Amount and (ii) such
suspension shall not be effective with respect to a given requested Advance (and
each Senior Facility Lender shall no longer be entitled to suspend its
obligation to make a given requested Advance solely by reason of such
suspension) if a Bridge Loan Agreement is entered into for an amount at least
equal to the Suspending Lender's pro rata share of such requested Advance.
(b) During a period of 180 days following the date on which the Suspending
Lender shall have first given to the Borrower notice of such suspension,
cancellation, or termination:
19
(i) The Borrower shall have the right to enter into a Replacement Loan
Agreement with one or several of the Parent Companies or their Affiliates
or any third parties (which third party shall be an Investment Grade
Entity) (a "Replacement Lender"), which shall enter into a New Party
Accession Agreement to become a party, as a Senior Facility Lender, to this
Agreement, the Completion Guarantee, the Master Security Agreement and the
Transfer Restrictions Agreement, pursuant to which such Replacement Lender
shall undertake to make Advances to the Borrower in an amount equal to the
undrawn portion of the Suspending Lender's Base Committed Amount.
(ii) The Borrower shall have the right to request the Suspending
Lender in writing to, and within 10 days of receipt of such written request
the Suspending Lender shall (subject, if KfW is the Suspending Lender, to
receipt of any necessary German Governmental Approvals), assign all Base
Advances made by the Suspending Lender to the Replacement Lender for an
amount (payable in cash at the closing of such assignment) equal to the
Suspending Lender's Outstanding Base Amount plus accrued and unpaid
interest to the date of the closing of such assignment.
(iii) The Borrower shall have the right to enter into a Bridge Loan
Agreement with one or several of the Parent Companies or their Affiliates
or any third parties (which third party shall be an Investment Grade
Entity) (a "Bridge Loan Provider"). The provider of such bridge loan shall
enter into a New Party Accession Agreement to become a party, as a Senior
Facility Lender, to this Agreement, the Completion Guarantee, the Master
Security Agreement and the Transfer Restrictions Agreement. Such Bridge
Loan Agreement may (without any consent from the Senior Facility Lenders)
(x) subsequently be assigned to a Replacement Lender or to the Suspending
Lender or (y) subsequently be prepaid (regardless as to whether or not
other Senior Facility Loans are also prepaid) out of the proceeds of a
Replacement Loan Agreement.
(c) If, by the end such 180-day period, (i) the Suspending Lender shall not
have rescinded the action described in such notice or (ii) the Borrower shall
not have entered into a Replacement Loan Agreement with a Replacement Lender as
contemplated under Section 3.10(b)(i), each other Senior Facility Lender shall
have the right to terminate its Commitment.
3.10A. Single Lender Acceleration.
(a) If JBIC shall have accelerated its Outstanding Base Amount, pursuant to
the terms of Section 10.02 of the JBIC Loan Agreement, by a notice delivered to
Borrower and the Administrative Agent, each other Senior Facility Lender shall
be entitled to suspend its obligation to make additional Advances, provided that
such suspension shall terminate (and each Senior Facility Lender shall no longer
be entitled
20
to suspend its obligation to make additional Advances solely by reason of such
suspension) if (i) JBIC rescinds the actions described in such notice or (ii)
the Borrower pays to JBIC the accelerated amount of the JBIC Outstanding Base
Amount with the proceeds of a Replacement Loan entered into with one or several
of the Parent Companies or their Affiliates or any third parties in an amount
equal to the accelerated amount of the JBIC Outstanding Base Amount.
(b) If, 180 days after the date of acceleration by JBIC of its Outstanding
Base Amount, (i) JBIC has not rescinded the action described in such notice and
(ii) the Borrower has failed to pay JBIC as contemplated under clause (ii) of
clause (a) of this Section 3.10A, each other Senior Facility Lender by written
notice to the Borrower shall have the right:
(i) To declare its Commitment to be cancelled and terminated whereupon
the same shall be immediately cancelled and terminated; and/or
(ii) To declare all Senior Loans Obligations payable to such Senior
Facility Lender to be immediately due and payable, whereupon the same shall
become immediately due and payable, without further notice and without
presentment, demand, protest or other notice of any kind, all of which are
hereby expressly waived by the Borrower.
In addition, for the purpose of the exercise of remedies under the Master
Security Agreement, an MPA Event of Default shall be deemed to have occurred on
the date of acceleration by JBIC of its Outstanding Base Amount.
(c) If JBIC shall have both suspended, cancelled or terminated its
Commitment and accelerated its Outstanding Base Amount, each other Senior
Facility Lender and the Borrower shall have the rights set forth in Section 3.10
(with respect to the suspension, cancellation or termination of JBIC's
Commitment) and Section 3.10A (with respect to the acceleration of the JBIC
Outstanding Base Amount).
3.11 Funding Losses. The Borrower agrees to indemnify each Senior Facility
Lender and to hold such Senior Facility Lender harmless from any documented
loss, expense, liability or cost ("Funding Losses") which such Senior Facility
Lender may reasonably sustain or incur as a consequence of (i) any payment or
prepayment by the Borrower of principal of or interest on such Senior Facility
Lender's Outstanding Advance Amount for any reason (including, upon acceleration
in accordance with the Master Security Agreement or voluntary prepayment made
pursuant to Section 3.05) on any date other than an Interest Payment Date or
Payment Date, as the case may be, (ii) failure of the Borrower to pay any
principal of or interest on such Senior Facility Lender's Outstanding Advance
Amount, or any fee or other amount due hereunder when due (whether at the stated
maturity, by acceleration or otherwise) or (iii) after delivery of a Notice of
Borrowing, failure by the Borrower, for any reason, to satisfy any conditions
21
precedent in Article V hereof. The amount of any Funding Losses of each Senior
Facility Lender and a reasonably detailed description of the manner in which
such amount was determined shall be set forth in certificates from such Senior
Facility Lender, which certificates shall accompany a notice under this Section.
Each Senior Facility Lender shall deliver such notice and certificates to the
Borrower as promptly as practicable after such Senior Facility Lender becomes
aware of the Funding Losses described therein.
3.12 Illegality.
(a) Notwithstanding any other provision herein, if the adoption of or any
change in any Government Rule or in the interpretation or application thereof by
any Governmental Authority shall make it unlawful for any Senior Facility Lender
to make or maintain an Advance as contemplated by this Agreement, the obligation
of such Senior Facility Lender hereunder to make Advances shall terminate, and
such Senior Facility Lender shall have the right, subject to paragraph (b)
below, to declare its Outstanding Advance Amount (if any) together with interest
thereon, immediately due and payable.
(b) Such Senior Facility Lender shall take all commercially reasonable
steps to change the lending office for its Commitment or Advances or assign such
portion of its Commitment or such Advance and transfer all of its rights and
obligations hereunder and under all other Financing Documents to which it is a
party, to a financial institution willing to purchase such assignment if such
assignment will avoid the need for the required repayment contemplated by
Section 3.12(a), provided that such Senior Facility Lender shall not be required
to take any step that, in its sole discretion, would result in any material cost
or that would otherwise be disadvantageous to such Senior Facility Lender.
ARTICLE IV
FEES
4.01 Commitment Fee. Each Senior Facility Loan Agreement shall contemplate
that for the period from the date hereof to and including the Availability
Period End Date, the Borrower shall pay to the Senior Facility Lenders that are
parties to such Senior Facility Loan Agreement a commitment fee which shall
start accruing on the date hereof and shall be payable in accordance with the
terms of the applicable Senior Facility Loan Agreement.
4.02 Other Fees. The Borrower shall timely pay to each Senior Facility
Lender all other amounts due pursuant to the Senior Facility Loan Agreement to
which such Senior Facility Lender is a party.
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ARTICLE V
CONDITIONS PRECEDENT
5.01 Conditions Precedent to Initial Disbursements of Base Advances. The
obligation of each Senior Facility Lender to make the initial disbursement of a
Base Advance shall be subject to the satisfaction, or waiver by the
Administrative Agent, with the prior consent of each Senior Facility Lender, on
or prior to the Closing Date, of the following conditions precedent and to the
receipt by the Administrative Agent of the following documents, each of which
shall be satisfactory to each Senior Facility Lender in form and substance:
(a) Authorizations, etc.
(i) The Administrative Agent shall have received certified copies of
the organizational deeds of the Borrower and of the actions of the board of
directors or other governing body of the Borrower taken to authorize the
execution, delivery and performance of this Agreement, each other Closing
Document to which it is a party, and the performance by it of its
obligations hereunder and thereunder.
(ii) The Administrative Agent shall have received certified copies of
the organizational deeds of each Shareholder and Parent Company and of the
actions of the board of directors or other governing body of such
Shareholder and Parent Company taken to authorize the execution, delivery
and performance by such Shareholder and Parent Company of each Closing
Document to which it is a party, and the performance by it of its
obligations thereunder.
(b) Incumbency and Signatures.
(i) The Administrative Agent shall have received certificates of the
Borrower in respect of the authority and incumbency, and containing a
specimen signature, of each Person who has signed or will sign on its
behalf any Closing Document to which it is a party, or who will, until
replaced by another Person or Persons duly authorized for that purpose,
otherwise act as representative for the purposes of signing documents in
connection with this Agreement, the other Closing Documents to which it is
a party and the transactions contemplated hereby and thereby.
(ii) The Administrative Agent shall have received certificates of each
Shareholder and Parent Company in respect of the authority and incumbency,
and containing a specimen signature, of each Person who has signed or will
sign on its behalf any Financing Document to which it is a party, or who
will, until replaced by another Person or Persons duly authorized for that
purpose, otherwise act as
23
representative for the purposes of signing documents in connection with
this Agreement, the other Financing Documents to which it is a party and
the transactions contemplated hereby and thereby.
(c) Execution and Delivery. This Agreement and each other Closing Document
(other than the Security Documents) shall have been duly executed and delivered
by each of the parties named as a proposed signatory hereto and thereto and
shall be in full force and effect, and any copies of such agreements or
documents delivered shall be accompanied by a certification from the Borrower
that it is a true, correct and complete copy of any such agreement or document.
(d) Security Documents. Each Security Document shall have been duly
executed and delivered by the party required to execute or grant the same, shall
be in full force and effect, and all actions required to be taken thereunder to
perfect the security interest created thereunder shall have been taken.
(e) Consents to Assignment. Each counterparty under the following
agreements shall have delivered to the Administrative Agent consents (i) to the
assignment by the Borrower of its rights under, respectively, the Operator's
Agreement, the Construction Agreements and the Shareholders Agreement, in the
forms attached hereto as Exhibit X-0, X-0 xxx X-0, (xx) to the assignment by the
Borrower of its rights and obligations under the Transportation Agreements, in
the forms attached as Exhibit I and (iii) the Borrower shall have provided a
notarized copy of the notice delivered to the counterparty to each of the Power
Supply Agreements, the Transportation Agreements and Port Services Agreement
identifying each of the Secured Parties and informing them of the assignment by
the Borrower of all of its rights and obligations (cesion de posicion
contractual) in the forms attached as Exhibit J.
(f) Governmental Approvals. Each Core Peruvian Governmental Approval listed
in Part I of Schedule 6.03(c) as a Core Peruvian Governmental Approval that
needs to be made or obtained prior to the Closing Date shall have been made or
obtained to the satisfaction of the Senior Facility Lenders (and a copy thereof
certified by a notary shall have been delivered to the Administrative Agent),
and shall be in full force and effect.
(g) Legal Opinions. The following legal opinions, each dated the Closing
Date, in the English language addressed to the Administrative Agent and each
Senior Facility Lender shall have been delivered:
(i) the opinion of Xxxxxxx, Xxxxx & Xxxxxxx, Abogados, special
Peruvian counsel to the Borrower, substantially in the form attached as
Appendix I-1;
24
(ii) the opinion of Debevoise & Xxxxxxxx LLP, special New York counsel
to the Borrower, substantially in the form attached as Appendix I-2;
(iii) the opinion of Estudio Xxxx Echecopar Xxxxxx, special Peruvian
counsel to the Senior Facility Lenders, substantially in the form attached
as Appendix I-3;
(iv) the opinion of Milbank, Tweed, Xxxxxx & XxXxxx LLP, special New
York counsel to the Senior Facility Lenders, substantially in the form
attached as Appendix I-4;
(v) the opinion of Xxxxx, Xxxxxx & Xxxxxx, LLP, special New York
counsel to the Trustee, substantially in the form attached as Appendix I-5;
(vi) the opinion of Xxxxxxx, Xxxxx & Xxxxxxx, Abogados, on behalf of
the Operator, substantially in the form attached as Appendix I-6;
(vii) the opinion of Xxxxxxx, Xxxxx & Xxxxxxx, Abogados, in connection
with the Power Supply Agreement (110 MW) dated December 31, 2004, between
the Borrower and ElectroPeru S.A. and the Power Supply Agreement (46 MW),
dated December 31, 2004, between the Borrower and ElectroPeru S.A.,
substantially in the form attached as Appendix I-7;
(viii) the opinion of Xxxxxxx, Xxxxx & Xxxxxxx, Abogados, in
connection with the Power Supply Agreement, dated December 29, 2004,
between the Borrower and Empresa de Generacion Electrica de Arequipa S.A. -
EGASA, substantially in the form attached as Appendix I-8;
(ix) opinion of Xxxxxxxx & Xxxxxxxx LLP, special New York counsel to
SC and SMM, substantially in the form attached as Appendix I-9;
(x) the opinion of Xxxxxxxx & Xxxxxxxx LLP, special New York counsel
to SMM, substantially in the form attached as Appendix I-10;
(xi) the opinion of Sakai & Nimura, special Japanese counsel to SMM,
substantially in the form attached as Appendix I-11;
(xii) the opinion of Sakai & Nimura, special Japanese counsel to SC
and SMM, substantially in the form attached as Appendix I-12;
(xiii) the opinion of Xxxxx & Overy LLP, special Dutch counsel to the
Sumitomo Participant, substantially in the form attached as Appendix I-13;
(xiv) the opinion of Estudio Xxxxxxx Xxxxxx Xxxxx Abogados,
substantially in the form attached as Appendix I-14.
25
(h) Closing of New Equity Contributions. The capital increase contemplated
in Section 2 of the Participation Agreement shall have been completed and shall
have resulted in funds of no less than U.S.$442.7 million (less transactional
expenses) being contributed to the Borrower as equity and no more than
U.S.$147,172,896.61 being paid out as a dividend to Shareholders since January
1, 2005, as evidenced by (i) a copy certified by a Peruvian notary of the
minutes of the Board of Directors of the Borrower of June 1, 2005, which
declared the relevant conditions precedent satisfied and the capital increase
contemplated in Section 2 of the Participation Agreement perfected, and (ii) a
copy certified by a Peruvian notary (testimonio) of the public deed of the
capital increase contemplated in Section 2 of the Participation Agreement.
(i) Opening of Accounts. The Trustee and the Borrower shall have
established each of the Accounts contemplated under Section 4.01 of the MSA.
(j) Insurance. The Borrower shall have delivered to the Administrative
Agent and the Insurance Consultant such evidence of insurance required pursuant
to Section C(5) of Appendix II and brokers' reports as required pursuant to
Section C(6) of Appendix II which reports shall be dated not earlier than 20
Business Days prior to the Closing Date. The Insurance policies then required to
be in effect pursuant to Appendix II shall each be in full force and effect and
shall have been endorsed in accordance with the requirements thereof, and the
Insurance Consultant shall have issued a report confirming the insurance
coverage (including reinsurance coverage) obtained by the Borrower complies with
the requirements of Appendix II and covering such other matters as the Senior
Facility Lenders may reasonably request. Notwithstanding anything to the
contrary herein, this condition shall not need to be satisfied more than 7
Business Days prior to the Closing Date.
(k) Representations and Warranties. The representations and warranties of
the Borrower set forth in Article VI, the representations and warranties of the
Parent Companies set forth in Article VI of the Completion Guarantee and the
representations and warranties of the Shareholders and the Parents in Section
3.01 of the Transfer Restrictions Agreement shall be true and correct in all
material respects as of the Closing Date (other than representations and
warranties which by their terms are expressly limited to the date of this
Agreement or any other particular date, which shall be true and correct in all
material respects as of such date).
(l) No Material Dispute. There shall be no material dispute that is
reasonably likely to impair the ability of the Borrower to repay the Senior
Loans or construct or operate the Business at the production volumes and cost
levels and in the manner contemplated by the current Mine Plan with respect to
the mining rights, rights of way, easements or surface interests relating to the
mining property, water rights or other material rights necessary for the
construction and development of the Sulfide Project or for the operation of the
Business until the Final Maturity Date (it being understood that an assertion or
determination that certain benefits of the Stability Agreement do not
26
apply to parts of the operations of the Borrower will not be treated as a
material dispute that could cause this condition not to be satisfied).
(m) No Judgment, Decree, Order, Action or Proceeding. There are no actions,
suits or proceedings pending, or, to the knowledge of the Borrower, threatened,
against or affecting the Borrower or any of its assets or properties in any
court, before or by any governmental department, board, agency, administrator or
instrumentality or before any arbitrator, and no existing default by the
Borrower under any applicable order, writ, injunction or decree or other
decision of any court, governmental department, board, agency, administrator or
instrumentality or any arbitrator, in each case that could reasonably be
expected to have a Material Adverse Effect, other than as disclosed in writing
to the Senior Facility Lenders on or prior to the date hereof.
(n) Officer Certificates. The Administrative Agent shall have received a
certificate from an Authorized Officer of the Borrower as to the matters set
forth in paragraphs (f), (j) (as to the insurance policies required in Appendix
II being in full force and effect), (k), (l), (m), (o), (p), (q), (r) and (s).
(o) Use of Proceeds. The Borrower shall certify that the proceeds of such
disbursement shall be used solely for financing Project Costs expected by the
Borrower to become due and payable within 90 days after the date of such
disbursement.
(p) Completion Guarantee. The Completion Guarantee shall remain in full
force and effect on the date of such disbursement.
(q) No Completion Guarantee Acceleration Event.
(i) No Completion Guarantee Acceleration Event shall have occurred
with respect to PDC, or, if such a Completion Guarantee Acceleration Event
has occurred, a company, whose long term unsecured debt obligations are
rated at least BBB+ by Standard & Poor's or Baa1 by Xxxxx'x and whose Net
Worth is at least equal to U.S.$1,500,000,000 and which, in the reasonable
judgment of the Majority Facility Lenders, is a mining company of
recognized international standing capable of operating the Business (an
"Acceptable PD Replacement"), has (i) assumed the management obligations of
Operator pursuant to the Operator's Agreement, (ii) assumed the financial
obligations of PDC pursuant to the Completion Guarantee, and (iii) assumed
the obligations to purchase Borrower's production of Concentrate and
Cathodes pursuant to the terms of the PD Concentrate Sales Agreement and
the PD Cathodes Sales Agreement, in a manner and pursuant to documentation
reasonably acceptable to the Majority Facility Lenders;
(ii) No Completion Guarantee Acceleration Event shall have occurred
with respect to any of the Sumitomo Parent Companies or, if such a
Completion
27
Guarantee Acceleration Event has occurred, the Non-Accelerated Parent
Companies (not including any of the Sumitomo Parent Companies) shall have
increased their exposure under the Completion Guarantee (with PDC
participating in such increase at least on a pro rata basis) or the Senior
Facility Lenders shall have otherwise been provided with one or several
Acceptable Credit Support Instruments (which may be provided on a several
basis), in each case, to cover the Accelerated Parent Company's financial
obligations pursuant to the Completion Guarantee that relate to Advances
made subsequent to the occurrence of the Completion Guarantee Acceleration
Event; and
(iii) No Completion Guarantee Acceleration Event shall have occurred
with respect to BVN or, if such a Completion Guarantee Acceleration Event
has occurred, either (i) the Non-Accelerated Parent Companies have
increased their exposure under the Completion Guarantee (with PDC
participating in such increase at least on a pro rata basis) or the Senior
Facility Lenders shall have otherwise been provided with one or several
Acceptable Credit Support Instruments (which may be provided on a several
basis), in each case, to cover BVN's obligations under the Completion
Guarantee that relate to both past and future Advances (without giving
effect to the acceleration of BVN's obligations under the Completion
Guarantee as a result of the Completion Guarantee Acceleration Event), (ii)
BVN has paid all of its accelerated obligations under the Completion
Guarantee, (iii) Full Completion is achieved, or (iv) following the
occurrence of such a Completion Guarantee Acceleration Event as defined in
clause (ii) of the definition thereof, a determination is made by a
reputable independent public accountant of international standing that the
Net Worth of BVN exceeds U.S.$660 million.
(r) No Borrower Default. No unremedied MPA Default or MPA Event of Default
shall have occurred and be Continuing on the date of such disbursement.
(s) No Political Force Majeure. No Event of Political Force Majeure has
been declared either by the Parent Companies in accordance with Section 5.01 of
the Completion Guarantee or by the applicable Senior Facility Lenders in
accordance with Section 11.01, and in each case is Continuing on the date of
such disbursement.
(t) Payment of All Fees and Expenses. The Borrower shall have paid to each
Senior Facility Lender and the Appointed Parties all reasonable fees and
expenses that are due and payable prior to or on the Closing Date pursuant to
the terms of this Agreement or the Senior Facility Loan Agreement to which such
Senior Facility Lender is a party.
(u) Delivery of Notices of Borrowing. The Borrower shall have delivered a
Notice of Borrowing as contemplated in Sections 2.04 and 2.05.
28
(v) Acceptance of Appointment of Agent for Service. CT Corporation shall
have accepted its appointment as agent for service of process in accordance with
Section 12.16(b).
(w) Hermes Guarantee. The Hermes Guarantee shall have been issued.
(x) Completion. The Parent Companies shall not have declared, in accordance
with Section 3.01 of the Completion Guarantee, that it is commercially
unreasonable to cause the Borrower to attempt to achieve Partial Completion.
(y) Pagares. The Borrower shall have complied with its obligations under
Section 2.08(a) above.
5.02 Conditions Precedent to Initial Disbursements of Stand-By Advances and
to Subsequent Advances. The obligation of each Senior Facility Lender to make
the initial disbursement of a Stand-By Advance, any disbursement of a Base
Advance (other than the initial disbursement thereof) and any subsequent
disbursement of a Stand-By Advance from time to time is subject to satisfaction,
or waiver by the Administrative Agent (acting pursuant to instructions from each
Senior Facility Lender), immediately prior to the making of such disbursement,
of the following conditions precedent:
(a) The conditions precedent set forth in Section 5.01(o), Section
5.01(p), Section 5.01(q), Section 5.01(r), Section 5.01(s), Section 5.01(x)
and Section 5.01(y).
(b) With respect to, and only with respect to, the initial
disbursement of a Stand-By Advance, the Borrower shall have drawn Base
Advances from the Senior Facility Lenders up to their respective Base
Committed Amounts.
5.03 Satisfaction of Conditions Precedent. With respect to the initial
disbursement of a Stand-By Advance, any disbursement of a Base Advance (other
than the initial disbursement thereof) and any subsequent disbursement of a
Stand-By Advance, for the purpose of Section 5.02(a) the conditions precedent
set forth in Section 5.01(q) subclauses (ii) and (iii), Section 5.01(r) and
Section 5.01(s) shall be satisfied unless the Administrative Agent acting
pursuant to a Supermajority Facility Vote notifies the Borrower in writing that
any such condition is not satisfied on or prior to the Disbursement Date for the
disbursement of such Advance.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants to each Senior Facility Lender, as of
the date hereof and as of the Closing Date (other than representations and
warranties which
29
by their terms are expressly limited to the date of this Agreement or any other
particular date, which shall be true and correct as of such date), that:
6.01 Organization, Authority, Binding Effect. The Borrower is a sociedad
anonima abierta duly incorporated, validly existing and in good standing under
the laws of the Republic of Peru. The Borrower has the corporate power and
authority to enter into and perform this Agreement and each other Closing
Document and to carry out the transactions contemplated hereby and thereby; the
execution and delivery of this Agreement and each other Closing Document and the
consummation of the transactions contemplated hereby and thereby have been or
will have been duly authorized by all necessary corporate action on the part of
the Borrower; this Agreement has been, and, on the Closing Date, each other
Closing Document will have been, duly executed and delivered by a duly
authorized officer of Borrower; and this Agreement constitutes, and, on the
Closing Date, each other Closing Document will constitute, the valid, legal and
binding obligation of the Borrower, in each case enforceable in accordance with
their respective terms, except that such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium and similar laws
affecting the rights and remedies of creditors or parties to executory contracts
generally and by equitable principles of general applicability.
6.02 Capitalization. At the date hereof, the authorized, issued and
outstanding capital stock of the Borrower consists solely of 350,056,012 duly
authorized, validly issued, fully paid and nonassessable shares of Common Stock,
divided as set forth in Schedule 6.02. Except as contemplated by Peruvian law or
the Shareholders Agreement or the Security Documents, (i) there will not be any
shares of capital stock or other securities of the Borrower subject to any
outstanding subscriptions, options, warrants, calls, rights, convertible
securities or other agreements or other instruments outstanding or in effect
giving any Person the right to acquire from the Borrower any shares of capital
stock or other securities of the Borrower and (ii) the Borrower will not have
outstanding any bonds, debentures, notes or other obligations the holders of
which have the right to vote (or convertible into or exercisable for securities
having the right to vote) with the shareholders of the Borrower on any matter.
6.03 Compliance with Other Instruments and Laws.
(a) Neither the execution and delivery of this Agreement or any of the
Closing Documents, nor the consummation of the transactions contemplated hereby
or thereby, will result in any violation of or be in conflict with, constitute a
default under, or result in the creation of any lien, charge or encumbrance upon
any property of the Borrower pursuant to any provision of the organizational
documents of the Borrower.
(b) Neither the execution and delivery of this Agreement or any of the
Closing Documents, nor the consummation of the transactions contemplated hereby
or thereby, will result in any material violation of or be in material conflict
with, constitute a
30
material default under, or result in the creation of any lien, charge or
encumbrance upon any material property of the Borrower pursuant to any provision
of any agreement, instrument, judgment, decree, order, law or regulation
applicable to the Borrower or any of its properties.
(c) Except as disclosed in Schedule 6.03(c), the Borrower is in material
compliance with all such provisions, agreements, instruments, judgments,
decrees, orders, laws or regulations applicable to the Borrower or any of its
properties except for any that the Borrower is disputing in good faith by
appropriate proceedings and for which the Borrower has set aside adequate
accounting reserves in accordance with United States GAAP.
(d) Schedule 6.03(d) sets forth each Peruvian Governmental Approval which
is necessary under applicable laws and regulations in connection with the
transactions contemplated by the Financing Documents and the Project Documents,
including any environmental regulatory permits and approvals necessary to
commence and conduct construction and to operate the Sulfide Project and the
Current Operations, but excepting routine and non-material approvals and
authorizations (each, a "Core Peruvian Governmental Approval").
(e) (i) The Borrower has obtained, and is in compliance with all of the
terms and requirements of, each Core Peruvian Governmental Approval listed as
having been made or obtained on Schedule 6.03(d) and (ii) all such Core Peruvian
Governmental Approvals are in full force and effect.
(f) Except as set forth in Schedule 6.03(d), the Borrower has no current
reason to believe that any Core Peruvian Governmental Approval listed in Part II
of Schedule 6.03(d) which has not been made or obtained will not be timely made
or obtained in order to complete construction of the Sulfide Project.
6.04 Environmental Matters. Except as disclosed in Schedule 6.04, (x) the
Borrower is in compliance in all material respects with all Applicable
Environmental Laws, (y) there is no action, suit, judicial or administrative
proceeding or investigation pending or, to the best knowledge of the Borrower,
threatened against or affecting the Borrower or its assets due to, or related
to, the Borrower's failure to comply with any Applicable Environmental Laws and
(z) the Borrower is not currently subject to any outstanding and unpaid fines or
sanctions related to non-compliance with Environmental Laws.
6.05 Taxes. Except as disclosed in Schedule 6.05 and except for taxes being
contested in good faith by appropriate proceedings and for which the Borrower
has set aside adequate accounting reserves in accordance with United States
GAAP, the Borrower has filed or caused to be filed all tax returns required to
be filed by it, and has paid all taxes shown to be due and payable on such
returns, or on any assessments made
31
against it or any of its properties by written notice, and all other taxes,
assessments, fees, liabilities or other charges imposed on it or on its
properties by applicable laws or regulations, except where such failure to file
or pay, in any case or in the aggregate, would not reasonably be expected to
result in a Material Adverse Effect.
6.06 Labor Matters. Except as disclosed in Schedule 6.06, the Borrower is
in material compliance with all applicable laws and regulations relating to
labor, industrial relations and the employment of its employees.
6.07 Legal Proceedings.
(a) There is no action, suit, proceeding or investigation, at law or in
equity, or before any Governmental Authority or other Person, pending or, to the
best knowledge of the Borrower, threatened, against or affecting the Borrower or
its assets that (i) questions the validity of any of the Closing Documents or
any action taken or to be taken pursuant hereto or thereto, or (ii) in any case
or in the aggregate would reasonably be expected to result in a Material Adverse
Effect.
(b) Except as set forth on Schedule 6.07, (i) as of the date hereof there
is and, as of the Closing Date, there will be no actions, suits, proceedings or
investigations, at law or in equity, or before any Governmental Authority or
other Person, pending or, to the best knowledge of the Borrower, threatened, in
which the Borrower's claim to the Concessions is or would be challenged, (ii) as
of the date hereof there is and, as of the Closing Date, there will be no
actions, suits or proceedings, at law or in equity, initiated by the Borrower
relating to the Concessions, and (iii) to the best knowledge of the Borrower, as
of the date hereof there is and, as of the Closing Date, there will be no
competing existing claims to the Concessions reported in El Peruano within the
twelve month period immediately preceding the date of this Agreement or
registered in the Book of Mining Rights of the Public Records Office, except, in
the case of any such actions, suits, proceedings, investigations or competing
existing claims that relate to a Concession that is not a Core Mining
Concession, for any such actions, suits, proceedings, investigations or
competing existing claims that individually or in the aggregate would not
reasonably be expected to result in a Material Adverse Effect.
6.08 Consents, etc. Except as set forth on Schedule 6.08, neither the
execution or delivery by the Borrower of this Agreement or any of the Closing
Documents nor the consummation or performance by the Borrower of the
transactions provided for hereby or thereby is subject to any requirement that
the Borrower obtain any consent, approval or authorization of, or make any
declaration or filing with, any third party that is not a Governmental
Authority, except where the failure to obtain such consent, approval or
authorization or to make such declaration or filing, would not reasonably be
expected to materially impair the consummation or performance of the
transactions contemplated by the Transaction Documents.
32
6.09 Financial Statements.
(a) Attached as Schedule 6.09 to this Agreement are the audited financial
statements for the twelve months ended December 31, 2004 of the Borrower (the
"Financial Statements"). The Financial Statements fairly present, in all
material respects, the financial condition of the Borrower and the results of
operations and changes in financial position as of that date and for the
twelve-month period ended December 31, 2004 and have been prepared according to
Peruvian GAAP, consistently applied throughout the periods reported on therein.
There are no material off-balance sheet transactions, arrangements, obligations
or relationships attributable to the Borrower's business or to which the
Borrower is a party.
(b) The financial statements of the Borrower for the period ended June 30,
2005 are true, complete and correct and fairly present in all material respects
the financial condition of the Borrower as of the date thereof, all in
accordance with CONASEV requirements (subject to normal year-end adjustments).
Except as otherwise disclosed to the Senior Facility Lenders in writing prior to
the date hereof, since the date of such financial statements there has been no
material adverse change in the Borrower's financial condition.
6.10 No Broker. Except for Citigroup Global Markets Inc., no broker,
finder, agent or other intermediary has been engaged by the Borrower in
connection with the negotiation of any of the Financing Documents or the
consummation of the transactions contemplated herein or therein.
6.11 Absence of Undisclosed Liabilities. The Borrower has not incurred any
liabilities or obligations that would be required to be reflected or reserved
against in a balance sheet prepared in accordance with Peruvian GAAP in a manner
consistent with the Financial Statements except for (i) liabilities or
obligations reflected or reserved against in the Financial Statements or in the
financial statements of Borrower referred to in Section 6.09(b) or (ii)
liabilities, including liabilities incurred in the ordinary course of business
since December 31, 2004 that, in any case or in the aggregate, would not
reasonably be expected to result in a Material Adverse Effect.
6.12 Absence of Certain Changes and Events. Except for the Special
Dividend, the Capital Increase and the actions contemplated in this Agreement,
and except as set forth in Schedule 6.12, since December 31, 2004 (x) the
Borrower has conducted its business in the ordinary course, including the
actions contemplated in the Feasibility Study, and has not suffered any Material
Adverse Effect, and (y) to the best knowledge of the Borrower, no event or
condition is threatened that, individually or in the aggregate, has had or would
reasonably be expected to have, a Material Adverse Effect.
6.13 Mining and Beneficiation Concessions and Other Rights. Except as set
forth in Schedule 6.13 or as would not, in any case or in the aggregate,
reasonably be
33
expected to result in a Material Adverse Effect, the Borrower has full and
sufficient rights to use the Core Mining Concessions, water rights and surface
lands necessary for the Business as currently conducted and, with respect to the
Sulfide Project, as described in Schedule D. Except as would not, in any case or
in the aggregate, reasonably be expected to result in a Material Adverse Effect,
or as disclosed in Schedule 6.13, the real property not owned by Borrower is
currently subject to all easements, rights of way and utilities services that
are necessary for the operation of the Business as currently conducted thereon
and with respect to the Sulfide Project, anticipated to be conducted by the
Feasibility Study.
6.14 Related Party Transactions and Commitments. Schedule 6.14 sets forth a
true, complete and correct list as of the date hereof of all related party
transactions, contracts and commitments between the Borrower and its Affiliates
involving continuing liabilities and obligations in excess of U.S.$50,000 per
year, including an indication of which transactions, contracts and commitments
will continue following the Closing Date.
6.15 Project Information.
(a) There are no facts or circumstances known to the Borrower which,
individually or in the aggregate, could reasonably be expected to have a
Material Adverse Effect and which have not been disclosed to the Senior Facility
Lenders.
(b) The financial projections contained in the Information Memorandum,
dated April 7, 2005 taken as a whole, have been prepared in good faith based on
assumptions that the Borrower believed to be reasonable at the time such
projections were made (it being understood by the MPA Parties that such
projections are subject to significant uncertainties and contingencies, many of
which are beyond the control of the Borrower, and that no assurances can be
given that such projections will be realized).
(c) There are no facts known to the Borrower that cause it to believe that
the conclusions regarding reserve estimates contained in Section 3 of the
Feasibility Study are inaccurate in any materially adverse way. There are no
facts known to the Borrower that cause it to believe that the procedures used to
determine the minable reserve estimates contained in Section 3 of the
Feasibility Study were not conducted in accordance with established engineering
principles and practices.
(d) No representation or warranty is or shall be deemed made in this
Section as to what the dates of Start-up of Commercial Production or the
Completion Release Date, final capital costs, actual operating costs of the
Sulfide Project, copper or other metal prices, exchange or interest rates, rates
of inflation, transportation, the Sulfide Project's actual rate of production or
the actual cash flows or actual financial results to be achieved by the Sulfide
Project will turn out to be.
34
(e) The representations and warranties in this Section 6.15(b), (c) and (d)
are made only as of the date of this Agreement and are not made at any other
time.
6.16 Ranking. The obligations of the Borrower under each Senior Facility
Loan Agreement, the Senior Facility Loans made thereunder and any Promissory
Notes evidencing such Senior Facility Loans and, if and when issued, the
Peruvian Bonds, will at all times rank in right of payment and of collateral
security (i) pari passu with the Borrower's obligations under each other Senior
Loan Agreement, the Senior Loans made thereunder and any Promissory Notes
evidencing such Senior Loans, (ii) senior to the obligations of the Borrower in
respect of the Subordinated Debt and (iii) pari passu in right of payment with
or senior in right of payment to, and senior in right of collateral security
(other than Permitted Liens) to, all other obligations of the Borrower other
than those which have priority under applicable Peruvian law.
6.17 No MPA Event of Default or MPA Default. No MPA Event of Default or MPA
Default has occurred and is Continuing.
6.18 Copies of Documents. The copies of the Senior Facility Loan
Agreements, Security Documents and Project Documents and of any amendments to
any of the foregoing provided or to be provided by the Borrower to each Senior
Facility Lender prior to or on the Closing Date are, or when delivered will be,
true and complete copies of such agreements.
6.19 Property and Assets. The Borrower owns no property or asset of a
material value that is not used for, related to, or incidental to the Current
Operations or the Sulfide Project.
6.20 No Immunity. Neither the Borrower nor any of the Project Property has
any immunity from jurisdiction of any court or from any legal process (whether
through service, notice, attachment prior to judgment, attachment in aid of
execution, execution or otherwise).
6.21 Stability Agreement. The Stability Agreement is in full force and
effect.
6.22 Description of the Sulfide Project. At the date hereof and the Closing
Date, the description of the Sulfide Project in Schedule D conforms in all
material respects to the Borrower's current plans for construction of the
Sulfide Project.
6.23 Water Rights, etc. The Borrower has obtained, or has no current reason
to believe that it will not timely obtain as and when necessary for construction
and operation of the Sulfide Project, all water rights, easements, leases,
rights of way and other real property, licenses or rights that are materially
necessary in order to conduct the Current Operations and construct and operate
the Sulfide Project.
35
6.24 Tax Liability. Except as set forth on Schedule 6.24 and to the best
knowledge of the Borrower, amounts payable by the Borrower to any Senior
Facility Lender in respect of any obligation under the Financing Documents will
not be subject by any Governmental Authority of Peru to any Tax.
ARTICLE VII
COVENANTS
7.01 Maintenance of Existence. The Borrower shall do all things necessary
to maintain the Borrower in existence as a sociedad anonima abierta under the
laws of Peru.
7.02 Books, Records and Accounts.
(a) The Borrower shall:
(i) keep proper books of record and account in which entries will be
made of transactions of or in relation to the Business; and
(ii) keep accounts and financial and cost records in accordance with
United States GAAP (or, alternatively, prepared in accordance with Peruvian
GAAP and containing a reconciliation to United States GAAP), provided that
the Borrower may also keep, for purposes other than compliance with this
Agreement, accounts and records in accordance with Peruvian GAAP or as
otherwise required by applicable law.
(b) The Borrower shall (i) within 90 days from the Closing Date close all
accounts other than the Accounts and shall not open any account other than the
Accounts and (ii) promptly after the Closing Date and in any event within 90
days from the Closing Date, instruct all Buyers to make payments owed to
Borrower to the Accounts in the manner contemplated under the Master Security
Agreement.
7.03 Principal Place of Business. The Borrower shall not change its
jurisdiction of incorporation, shall have its principal place of business and
chief executive office solely in Peru and shall maintain in such place originals
or copies of the principal books and records relating to its business. Other
books and records relating to the Sulfide Project and the Current Operations
shall be maintained at the offices of the Operator in Peru.
7.04 Use of Proceeds. The Borrower shall use the proceeds of the Senior
Loans solely for the payment of Project Costs, provided that the Borrower may
use the proceeds of the issuance of the Peruvian Bonds (if any) to prepay the
Stand-By Advances of the Commercial Banks.
36
7.05 Information. The Borrower shall furnish to the Administrative Agent
(in hard copy or by electronic means):
(a) Construction Progress Reports. As soon as available but in no
event more than 30 days after the end of each calendar quarter ending prior
to the Completion Release Date, a summary of construction of the Sulfide
Project during such quarter, which shall contain the following information:
(i) construction during such quarter, including physical progress and
expenditure, (ii) cumulative expenditure through the end of such quarter,
(iii) material variations of such physical progress and cumulative
expenditures from those set forth in the budget, (iv) the Borrower's then
current estimate of the aggregate costs required to achieve Full Completion
and the anticipated date of Start-Up of Commercial Production, (v) the
Borrower's then current estimates of the material variations of such costs
and timing from those set forth in the budget, (vi) description of
"critical path" items for the then current quarter, (vii) any staff
employed variation for such quarter and (viii) a safety report setting
forth the accident rate and safety training for such quarter;
(b) Annual Budget. An annual budget and operating plan (approved by
the Borrower's board of directors) having substantially the same scope and
detail as in the form attached as Appendix III, provided that any major
changes from the form shall be explained in a footnote to the plan (the
"Annual Budget"), promptly upon approval by the Borrower's board of
directors but in any event prior to the commencement of each fiscal year to
which it relates. Each Annual Budget shall include estimates of revenues
and costs (stating separately Operating Costs and payments of Senior Loans
Obligations) for each month of such fiscal year and the Borrower's
statement of budgeted cash flows. Each Annual Budget (including any
amendment or material change thereto) shall be based upon and fairly
reflect the Mining Plan then in effect. The Borrower may amend the Annual
Budget at any time and from time to time without consent or approval by any
Senior Lender or the Administrative Agent. The Borrower shall promptly
furnish to the Administrative Agent (for delivery to each Senior Lender)
any revisions to the Annual Budget when made;
(c) Operating Reports. Not later than 45 days after the end of each
calendar quarter with respect to fiscal quarters ending after the
Completion Release Date, a summary of operations during such quarter,
including information in reasonable detail concerning (i) Operating Costs
during such quarter as compared to the Annual Budget last delivered to
Senior Facility Lenders, (ii) capital expenditures during such quarter as
compared to the Annual Budget last delivered to Senior Facility Lenders,
(iii) production from the Current Operations and the Sulfide Project and
inventory during such quarter and (iv) any material developments during
such quarter in the operations of the Business;
37
(d) Quarterly/Semi-Annual Financial Statements. As soon as available
but in no event more than 45 days after the end of each of the first three
fiscal quarters of each fiscal year of the Borrower, financial statements
of the Borrower consisting of an unaudited balance sheet of the Borrower as
of the close of such quarter and unaudited statements of income and expense
and changes in financial position from the beginning of the then-current
fiscal year to the close of such quarter, prepared in accordance with
United States GAAP (or, alternatively, prepared in accordance with Peruvian
GAAP and containing a reconciliation to United States GAAP), certified by
an Authorized Officer of the Borrower;
(e) Annual Financial Statements. As soon as available but in no event
more than 120 days after the end of each fiscal year of the Borrower,
audited financial statements of the Borrower consisting of a balance sheet
as of the end of such fiscal year and a statement of income and expense and
changes in financial position for such fiscal year, prepared in accordance
with United States GAAP (or, alternatively, prepared in accordance with
Peruvian GAAP and containing a reconciliation to United States GAAP)
certified by the Independent Public Accountants;
(f) Debt Service Coverage Ratio. No later than 45 days after the end
of each Calculation Period occurring on and after the first Payment Date, a
certificate from an Authorized Officer of the Borrower, substantially in
the form attached hereto as Exhibit E, certifying the calculation, set
forth in reasonable detail, of the Debt Service Coverage Ratio with respect
to such Calculation Period;
(g) Other Events. As soon as practical, a report pertaining to: (i)
any other development, event or circumstance relating to the Current
Operations or in the construction or operation of the Sulfide Project which
could reasonably be expected to materially and adversely affect the Current
Operations or the Borrower's rights in the Sulfide Project, or the
Borrower's rights in the Project Property, taken as a whole, security
interests granted or purported to be granted by or pursuant to any Security
Document, taken as a whole, the ability of the Borrower to achieve Full
Completion or Partial Completion by the Target Completion Date or to pay
Senior Facility Loans Obligations when due; or (ii) any other event that
could reasonably be expected to materially increase the total capital cost
of the Sulfide Project or have a Material Adverse Project Effect, in each
case describing the nature thereof and the action the Borrower proposes to
take with respect thereto;
(h) Reporting to the Peruvian Bondholders. Borrower shall provide the
Administrative Agent with a copy of all information provided to the
Peruvian Bondholders pursuant to the Indenture (which shall not include
information that
38
qualifies as "reserved information" and is disclosed as such to CONASEV) at
the same time as such information is provided to the Common Representative;
and
(i) Monthly Construction Reports. If the Parent Companies declare, in
accordance with Section 3.01 of the Completion Guarantee that it is
commercially unreasonable to cause the Borrower to attempt to achieve
Partial Completion, then the Borrower shall be required to provide the
Administrative Agent with copies of each monthly construction report
received by Borrower under the Construction Agreement since the date hereof
and to be received after the date of such declaration.
7.06 Confirmation of Progress of Construction. Prior to the Completion
Release Date, once every calendar year as well as in connection with the
Completion Release Date, the Administrative Agent (acting upon instructions from
the Majority Facility Lenders) shall have the right to request the Independent
Engineer at the cost and expense of the Borrower to confirm the progress of
construction of the Sulfide Project and the Borrower shall permit the
Independent Engineer to visit and inspect the Sulfide Project for such purpose;
provided that the provisions of Section 12.10 hereof shall apply to all
information acquired pursuant to this Section 7.06. The Borrower shall offer all
reasonable assistance to the Independent Engineer in connection with any such
visit and inspection.
7.07 Preservation of Assets.
(a) The Borrower shall maintain the facilities necessary for the operation
of the Sulfide Project and its Current Operations in good repair in accordance
with good industry mining practice and as required to maintain production in
accordance with Section 7.09.
(b) The Borrower shall not sell, transfer or otherwise dispose of Project
Property except for (i) disposition of production, (ii) disposition of assets in
the ordinary course of business, (iii) disposition of obsolete assets, (iv)
disposition of assets in compliance with any order from a Governmental
Authority, (v) disposition of assets no longer used for the Business, (vi)
disposition of assets replaced or that are being replaced within 60 days of
disposition with similar productive property, (vii) disposition of assets not
contemplated in subparagraphs (i) to (vi) the fair value of which, individually
or in the aggregate within a given calendar year, does not exceed US$10 million
or (viii) any other disposition of assets unless the Administrative Agent acting
upon instructions from the Majority Facility Lenders objects to such disposition
in writing within 15 Business Days of receipt of written notice from the
Borrower specifying the assets proposed to be sold or transferred, the value
thereof and the rationale for such sale or transfer; provided, however, that in
no event shall the Borrower sell or transfer Non-Replaceable Property.
39
7.08 Mining Concessions.
(a) The Borrower shall keep the Core Mining Concessions in full force and
effect, shall pay all fees and other payments payable in connection with the
continuation therewith, and shall defend its right, title and interest in, to
and under the Core Mining Concessions against any adverse or competing claim.
(b) The Borrower shall keep the Mining Concessions that are not Core Mining
Concessions in full force and effect, shall pay all fees and other payments
payable in connection with the continuation therewith, and shall defend its
right, title and interest in, to and under such Mining Concessions against any
adverse or competing claim, except to the extent that the failure of such Mining
Concession to be in full force and effect or the failure of the Borrower to
defend its right, title and interest in, to and under such Mining Concessions
against any adverse or competing claim would not be reasonably likely to have a
Material Adverse Effect.
7.09 Minimum Production. Following the Completion Release Date, the
Borrower will undertake to use best efforts to produce annually until the
then-scheduled final maturity of the Senior Loans (i) 410,000 Dry Metric Tonnes
of Concentrate, and (ii) up to (and including) the year 2014, 108.5 million
pounds of Cathodes, provided, in each case, that:
(a) upon exercise by the Parent Companies of the Debt Buy-Down Option,
such production targets will be reduced to such amounts, which taking into
account the reduced debt amount, would result in a minimum Annual DSCR
equal to 1.0X (calculated pursuant to the methodology set forth in the
first five bullets of Schedule A to the Completion Guarantee);
(b) the Borrower shall have the right to suspend or curtail production
due to engineering maintenance, similar technical reasons or Labor Unrest;
and
(c) to satisfy the above covenant, the Borrower shall not be required
to expand the design capacity of the mine and related facilities or make
capital expenditures other than those for capital spares, maintenance and
replacements.
7.10 Offtake Agreements.
(a) The Borrower (i) shall not breach, (ii) shall maintain in full force
and effect to the extent within its power to do so, and (iii) shall comply, in
all material respects with, its obligations under the Offtake Agreements, in
each case, until the Final Maturity Date.
(b) The Borrower shall promptly (and in any event within 5 Business Days of
the same) notify the Administrative Agent of (i) the termination of any of the
Offtake
40
Agreements prior to the Final Maturity Date, (ii) any material default by any of
the counterparties thereunder, (iii) any party thereto failing to perform any
material obligation thereunder that it would have been obligated to perform but
for the occurrence of Force Majeure, to the extent that Force Majeure excuses
performance thereunder, (iv) a failure, upon any periodic renegotiation of
pricing provisions, payment and calculation provisions, to establish a price or
payment and calculation provisions in accordance with the applicable Offtake
Agreement, (v) a suspension by any buyer of its obligations thereunder, (vi) the
annual pricing provisions, payment and calculation provisions, to the extent
such provisions vary in any material respect from the corresponding provisions
in effect with respect to the prior year and (vii) in the case of year in which
buyer's obligations are suspended, the terms for sale to alternate purchasers,
if any.
(c) Following the termination of any Offtake Agreement for any reason
whatsoever, the Borrower shall use commercially reasonable efforts to promptly
enter into a replacement contract at then current market price and for similar
quantities and duration with a counterparty that qualifies as an Acceptable
Guarantor or with a Parent Company or an Affiliate of a Parent Company within 90
days of the effective date of termination of such Offtake Agreement.
7.11 Sale of Concentrate and Cathodes. The Borrower shall sell (i) the
volumes of Concentrate and Cathodes, as the case may be, covered in the Offtake
Agreements at the prices stipulated therein, and (ii) the balance of its
production of Concentrate and Cathodes in U.S.$ at market prices, and shall
cause all proceeds arising from the Offtake Agreements or from other sales of
Concentrate or Cathodes to be paid directly to the Trustee for deposit to the
Proceeds Account or, in the case of Domestic Sales, to the Borrower for deposit
to the Onshore Dollars Account.
7.12 Project Documents.
(a) Except with the prior approval of the Administrative Agent (acting
pursuant to a Supermajority Facility Vote), the Borrower shall not assign,
revise, amend, modify, replace or terminate (x) any material Project Document in
circumstances where such assignment, revision, amendment, modification,
replacement or termination is reasonably likely to have a Material Adverse
Lender Effect; or (y) any Identified Material Project Document in circumstances
where such assignment, revision, amendment, modification, replacement or
termination is reasonably likely to have a Material Adverse Project Effect.
(b) The Borrower shall deliver to the Administrative Agent a copy of any
Project Document that is entered into after the Closing Date and of any
amendment to a Project Document or an Identified Material Project Document, in
each case within 15 Business Days after it becomes effective.
41
7.13 Power Generation Facility.
(a) If, at any time, the Borrower has secured Adequate Power Supply
Commitments that in the aggregate are sufficient for the Borrower to operate its
Business for the years 2011 to 2015 ("Sufficient Power Supply Commitments"), the
Borrower shall provide the Senior Facility Lenders with copies of such Adequate
Power Supply Commitments together with a report prepared by the Borrower
describing how such aggregate commitments satisfy power needs for the Business
for such period.
(b) If, prior to December 15, 2007, the Borrower has not secured Sufficient
Power Supply Commitments:
(i) the Borrower shall, on or prior to December 31, 2007, prepare a
budget for work and expenditures required to construct the Power Generation
Facility (such budget, as updated from time to time in accordance with
clause (c) below, the "Power Generator Construction Budget"), which shall
be submitted by the Borrower for review by the Independent Engineer;
(ii) the Borrower shall initiate, during the year 2008, the activities
(including placing orders for long lead-time equipment), which, in its
reasonable judgment, are appropriate to enable the construction of the
Power Generation Facility during the years 2009 and 2010, so that the Power
Generation Facility may be completed and operational by the end of the year
2010.
(c) In the event that by December 31, 2008 the Borrower has not secured
Sufficient Power Supply Commitments, the Borrower will use commercially
reasonable efforts to (or cause a third party contractor to) construct the Power
Generation Facility in compliance with the covenant on environmental compliance
set forth in Section 7.23.
(d) After December 31, 2007, the Borrower shall update from time to time
the Power Generator Construction Budget so that such budget reflects at all
times the remaining amounts to be spent for work and expenditures required to
construct the Power Generation Facility, taking into account the then current
market prices for such work and expenditures and all progress of construction.
(e) The Borrower shall be released from its obligations under this Section
7.13 as soon as the Borrower shall have secured Sufficient Power Supply
Commitments to operate its Business.
7.14 Taxes. The Borrower shall pay and discharge, before the same shall
become delinquent, all Taxes, assessments and governmental charges or levies
lawfully imposed on it or its Property (including interest and penalties) unless
such Taxes, assessments, charges or levies shall be contested in good faith and
by appropriate
42
proceedings and adequate accounting reserves are established in accordance with
United States GAAP with respect thereto.
7.15 Sulfide Project, Capital Expenditures. The Borrower shall not incur or
expend Incremental Capital Expenditures or Ancillary Capital Expenditures,
unless in its judgment such Incremental Capital Expenditures ("Permitted
Incremental Capital Expenditures") or Ancillary Capital Expenditures ("Permitted
Ancillary Capital Expenditures"), as the case may be, will not have a Material
Adverse Effect.
7.16 Limitation on Debt. The Borrower shall not create, incur, assume or
suffer to exist any Indebtedness other than the following Indebtedness
(collectively, "Permitted Indebtedness"):
(a) Senior Loans, including Senior Facility Loans incurred under
Replacement Loan Agreements in the circumstances contemplated in Section
3.10(b);
(b) Subordinated Loans provided and held by the Parent Companies or
their respective Affiliates that are unsecured and pledged at all times to
secure the Senior Loans;
(c) Working Capital Debt in an amount not to exceed, at any time,
U.S.$75,000,000 or its Equivalent;
(d) reimbursement obligations with respect to unsecured import letters
of credit in favor of sellers of equipment necessary for the Business or
constituting Sustaining Capital Costs or Incremental Capital Expenditures
which by their terms expire not more than 18 months following the issuance
thereof;
(e) trade accounts payable arising in the ordinary course of business
which are payable less than 181 days after the date the respective goods
are delivered or the respective services are rendered;
(f) Replacement Debt in connection with a prepayment in full of all
outstanding Senior Facility Loans;
(g) Permitted Xxxxxx; and
(h) financial assurances, including surety bonds or reimbursement
obligations in respect of letters of credit, which are required by the
Closure Law and which do not exceed in the aggregate U.S.$50,000,000 or its
Equivalent.
Nothing in this Section 7.16 or elsewhere in this Agreement or any other
Financing Document shall be deemed to prohibit the exercise by the Borrower of
any right under any Sales Agreement to elect to receive payment for the products
sold
43
thereunder in advance of the time at which payment is otherwise required to be
made thereunder, which advance payment may require payment (or deduction) of a
finance charge, so long as (i) products sold under such arrangements are sold
not more than 3 months in advance of shipment and represent not more than 30% of
Borrower's annual production of such products and (ii) the proceeds of such
arrangements are used for working capital purposes.
7.17 Limitation on Liens. The Borrower shall not create, assume or suffer
to exist any Lien upon any of its Property, assets or contractual rights in each
case whether now owned or hereafter acquired, except for the following Liens
(collectively, "Permitted Liens"):
(a) Liens imposed by any Governmental Authority for taxes not yet due
or which are being contested in good faith and by appropriate proceedings
(and against which adequate accounting reserves are being maintained in
accordance with United States GAAP);
(b) Liens for customs duties, relating to imported assets, owed by the
Borrower that have been deferred in accordance with Peruvian law;
(c) deposits or pledges to secure the Borrower's obligations under
workmen's compensation, social security or similar laws, or under
unemployment insurance;
(d) deposits or pledges to secure bids, tenders, contracts (other than
contracts for the payment of money), leases, statutory obligations, surety
and appeal bonds, and other obligations of like nature arising in the
ordinary course of business;
(e) bankers' liens arising in the ordinary course of the Borrower's
activities with commercial banks;
(f) mechanic's, workmen's, materialmen's or other like liens arising
in the ordinary course of business with respect to obligations which are
not due or which are being contested in good faith and by appropriate
proceedings (and against which adequate reserves are being maintained);
(g) the rights of a buyer of identified goods of the Borrower pursuant
to Section 2-501 of the Uniform Commercial Code as in effect from time to
time in the State of New York or any other similar provision of applicable
law;
(h) easements (including easements for electric transmission lines)
and minor imperfections of title on real estate and Concessions (other than
the Core
44
Mining Concessions), provided that such imperfections and easements do not
render title unusable for purposes of the Business;
(i) Liens on any Property of the Borrower to which the Borrower has
not consented and which are being contested by the Borrower in good faith
and by appropriate proceedings or liens imposed by law (and against which
adequate accounting reserves are being maintained in accordance with United
States GAAP); and
(j) Liens created pursuant to the Security Documents or otherwise for
the benefit of the Senior Lenders, the Onshore Collateral Agent and the
Offshore Collateral Agent.
7.18 Drawdowns of Senior Loans. The Borrower shall promptly but in any
event within 5 Business Days notify the Administrative Agent if a request for an
Advance is not honored.
7.19 Notice of MPA Defaults; Extraordinary Notices. The Borrower shall
promptly but in any event within three Business Days in the case of clauses (i)
and (iii) and with 30 days in all other cases, notify the Administrative Agent
upon its discovery of the occurrence of:
(i) any MPA Default or MPA Event of Default;
(ii) any material default by any party under, or termination of, any
Project Document;
(iii) any Event of Political Force Majeure;
(iv) any litigation, arbitration or governmental proceeding that is
instituted or threatened against the Borrower or, until the Guarantee
Release Date, the Sponsors, that is reasonably likely to have a Material
Adverse Effect;
(v) any material environmental accidents or spill relating to the
Borrower or its property or operations, or any other condition, event or
circumstance that results or is reasonably likely to result in material
non-compliance by the Borrower with any Environmental Laws;
(vi) notices from Governmental Authorities in respect of any claim
that could materially affect the Core Mining Concessions;
(vii) any event or development (other than events or developments that
are not specific to the Current Operations or the Sulfide Project) known to
the Borrower that could reasonably be expected to have a Material Adverse
Effect;
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(viii) any event of Force Majeure declared by the Borrower or the
relevant counterparty under any Project Document; and
(ix) the acquisition by the Borrower of any Peruvian mining
concessions necessary to operate the Current Operation or the Sulfide
Project,
in each case describing the nature thereof and the action the Borrower proposes
to take with respect thereto.
7.20 Restricted Payments.
(a) Subject to clauses (b) and (c) below, the Borrower shall not make any
Restricted Payment (x) except by directing the Trustee to make a transfer from
the Restricted Payment Sub-Account and (y) unless on the date such Restricted
Payment is proposed to be made:
(i) there is, and immediately following the making thereof would be,
no Continuing MPA Default or MPA Event of Default;
(ii) there is, and immediately following the making thereof would be,
no Continuing Event of Political Force Majeure;
(iii) after giving effect to the Restricted Payment, there is no
Senior Debt Service Reserve Deficiency, Extraordinary Major Maintenance
Reserve Deficiency and Power Generator Reserve Deficiency and the credit
balance of the Senior Debt Accumulation Sub-Account is not less than the
then applicable Required Senior Debt Accumulation Amount;
(iv) either (x) the Borrower has not received a Royalty Tax Claim or
(y) the Borrower is not required in accordance with United States GAAP to
establish an accounting reserve with respect to such claim, or (z) after
giving effect to the Restricted Payment, there is no Tax Contingency
Reserve Deficiency;
(v) after giving effect to the Restricted Payment, the Borrower has
sufficient cash in the Proceeds Account (excluding funds credited to the
Senior Debt Reserve Sub-Account and the Senior Debt Accumulation
Sub-Account and insurance proceeds credited thereto that are subject to
Section 3.06(b)), the Onshore Dollars Account and the Onshore Nuevos Soles
Account to pay Operating Costs for a period of 30 days;
(vi) the Debt Service Coverage Ratio as of the end of the most recent
Calculation Period exceeds 1.25X; and
46
(vii) the Guarantee Release Date has occurred and the first scheduled
repayment of principal with respect to Senior Loans has been made.
(b) If each condition set forth in clause (a) above has been satisfied, or
if each condition set forth in subclauses (a)(i), (a)(ii) and (a)(vii) has been
satisfied and the Parent Companies have furnished the Trustee with an Acceptable
Credit Support Instrument in the amount of such Restricted Payment, and the
Borrower wishes to make a Restricted Payment, the Borrower may at any time
instruct the Trustee to transfer the amount of such payment from the Restricted
Payment Sub-Account to the recipients designated by the Borrower in the
certificate described in clause (c) below, and the Senior Facility Lenders shall
so instruct the Trustee.
(c) At least ten NY Business Days prior to the date on which a Restricted
Payment is proposed to be made, (i) the Borrower shall have delivered to the
Trustee with copy to the Administrative Agent a certificate (a "Restricted
Payment Certificate") of an Authorized Officer of the Borrower stating (x) the
amount and recipient of each such proposed Restricted Payment and (y) that each
condition set forth in subclauses (a)(i) through (a)(vii) above has been
satisfied (setting forth, where applicable, the information and computations
demonstrating compliance with such conditions of paragraph (a) and, in addition,
if subclause (a)(iv) is satisfied by reason of subclause (y) thereof, stating
that the determination that such subclause (y) is satisfied has been made after
consultation with the Borrower's independent auditors) or (ii) the Borrower
shall have delivered to the Trustee and the Administrative Agent a certificate
of an Authorized Officer (a "Partial Restricted Payment Certificate") stating
(x) the amount and recipient of each such proposed Restricted Payment and (y)
that each condition set forth in subclauses (a)(i), (a)(ii) and (a)(vii) has
been satisfied and the Borrower shall have delivered to the Trustee an
Acceptable Credit Support Instrument in the amount of such Restricted Payment.
7.21 Compliance with Law. The Borrower shall comply in all material
respects with all applicable laws, including required Governmental Approvals,
rules, regulations and orders of Peru and each other applicable jurisdiction,
unless the necessity of compliance therewith is contested in good faith by
appropriate proceedings, and with respect to which adequate accounting reserves
have been established and maintained by the Borrower in accordance with United
States GAAP with respect thereto.
7.22 Transactions with Affiliates. All transactions between the Borrower
and any of its Affiliates shall be on commercially reasonable terms that are at
least as favorable to the Borrower as those which might be obtained in an
arm's-length transaction with a Person that is not an Affiliate, provided that
the Senior Facility Lenders agree that all Closing Project Documents between the
Borrower and any of its Affiliates (excluding changes thereto or negotiation of
variable provisions thereunder after the date hereof) shall be deemed to meet
the standard in this Section 7.22.
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7.23 Environmental Compliance.
(a) The Borrower shall, and shall cause all other persons occupying the
site of its Business to, in all material respects perform its obligations and
operate its Business in accordance with all Applicable Environmental Laws.
(b) The Borrower shall provide to the Administrative Agent (i) annually
within 30 days from the anniversary date hereof a report as to environmental
compliance, and (ii) from time to time copies of material documents submitted to
environmental authorities.
(c) The Borrower shall prepare and submit to the Ministry of Energy and
Mines of the Republic of Peru or to such other relevant Governmental Authority,
as the case may be, no later than December 15, 2005, the Environmental Impact
Assessment Addendum, the Environmental Impact Assessment for the Transmission
Line, and Environmental and Social Management Plan (ESMP), and shall promptly
provide the Administrative Agent a copy of the final documents so submitted as
well as upon receipt of the Governmental Approvals delivered to the Borrower
with respect thereto.
(d) The Borrower shall, in accordance with all applicable Equator
Principles:
(i) comply, in all material respects, with its ESMP in the
construction of the Sulfide Project and in the operation of the Current
Operations and the Sulfide Project;
(ii) provide annual reports, prepared by in house staff or third
parties, on the status of compliance with the ESMP; and
(iii) where applicable, decommission the facilities in accordance with
an agreed Closure Plan.
(e) The Borrower shall:
(i) generate, use, treat, store, release or dispose of, or permit the
generation, use, treatment, storage, release, or disposal of Hazardous
Materials on or in the Project Property; and
(ii) conduct any investigation, study, sampling and testing and
undertake any clean-up, removal, remedial or other action necessary to
remove and clean-up all Hazardous Materials from the Project Property,
in each case in accordance with the requirements of all Applicable Environmental
Laws relating to the treatment, handling and disposal of Hazardous Materials,
except as previously disclosed to the Senior Lenders in writing.
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(f) The Borrower shall provide access to the site of the Sulfide Project
and the Current Operations to the Senior Facility Lenders for the purpose of
monitoring compliance with the Equator Principles as contemplated in Section
7.31.
(g) If any material issue arises as to compliance by the Borrower with its
obligations hereunder, the Borrower and the Administrative Agent shall engage in
discussions in good faith to resolve such issues, provided that if any specific
issue remains unresolved after three months from receipt by the Borrower of
notice from the Administrative Agent, the Administrative Agent (acting upon
instructions from the Majority Facility Lenders) shall have the right to engage
the Independent Engineer to provide a report with respect to such issue.
7.24 Permitted Xxxxxx. The Borrower shall not enter into any Hedge
Agreements other than Hedge Agreements to hedge against prices and costs arising
in the ordinary course of the Borrower's business and not for speculation
("Permitted Xxxxxx").
7.25 Ordinary Course Transactions. The Borrower shall not enter into any
material transactions except in the ordinary course of business, on ordinary
commercial terms and on the basis of arms' length arrangements, provided that
neither this covenant nor Section 7.07 shall limit the Borrower's ability to
transfer (including, without limitation, by way of donation) its co-ownership
interest in the Pillones Dam to any third party so long as the water rights of
the Borrower for the Current Operations and the Sulfide Project are unaffected
by such transfer and provided further that the Senior Facility Lenders agree
that transactions undertaken pursuant to any Identified Material Project
Document with a Parent Company shall be deemed to meet the standard in this
Section 7.25.
7.26 Determination of Extraordinary Major Maintenance Reserve Amount. At
the next meeting of the board of directors of the Borrower following the date of
Start-up of Commercial Production and thereafter annually in connection with the
preparation of the Annual Budget, the board of directors of the Borrower shall
exercise its discretion, acting in a reasonable manner, taking into account all
future anticipated revenues of the Borrower, and subject to their fiduciary
duties, to determine the amount of cash that needs to be reserved in the
Extraordinary Major Maintenance Reserve Sub-Account, if any, to enable the
Borrower to pay anticipated Extraordinary Major Maintenance Expenditures with
respect to the year covered by such Annual Budget (or with respect to the year
during which Start-up of Commercial Production occurs) as and when the same
shall become due and payable (the "Extraordinary Major Maintenance Reserve
Amount").
7.27 Determination of Tax Contingency Reserve Amount. If the Borrower has
at any time received a claim (a "Royalty Tax Claim") from the Peruvian
authorities asserting that a Royalty Tax is payable with respect to all or part
of its revenues and if the Borrower contests such Royalty Tax Claim, the
Borrower shall, starting on the date of
49
Start-up of Commercial Production, in connection with the preparation of its
quarterly financial statements (i) determine, after consultation with its
independent auditors, whether or not it is required in accordance with United
States GAAP to establish an accounting reserve with respect to such claim, and
(ii) if it so determines, further determine the amount to be reserved in
accordance with United States GAAP on account of such claim. After a final
determination is made, or a settlement is reached, regarding the Royalty Tax
Claim, any Royalty Tax that the Borrower shall be required to pay with respect
to future revenues, in accordance with such determination or settlement, shall
be paid as part of its Operating Costs and the Borrower shall not be required to
reserve such future Royalty Tax.
7.28 Further Assurances. Subject to the terms and conditions herein
provided, the Borrower agrees to do all things reasonably necessary, proper or
advisable under applicable laws and regulations to consummate and make
effective, as soon as reasonably practicable, the transactions contemplated by,
and to carry out the purposes of each Financing Document and each Project
Document, including, but not limited to, obtaining and maintaining all Core
Peruvian Governmental Approvals required in connection therewith.
7.29 No Modifications of By-Laws. The Borrower shall not take any action to
amend or modify its Bylaws in circumstances where such amendment or
modification, could reasonably be expected to have a Material Adverse Effect.
7.30 Business.
(a) The Borrower shall not conduct any business other than any business
related to or incidental to the Current Operations and the Sulfide Project and
any activity contemplated in the Financing Documents, provided that the Borrower
shall have the right to conduct any other mining activity so long as (i) such
activity is conducted in the Concessions area, (ii) such activity does not have
a Material Adverse Effect, (iii) the Borrower observes its affirmative covenants
(including, without limitation, with respect to insurance) in relation to such
activity, (iv) the Senior Lenders are given a first priority security interest
in the assets of Borrower related to such activity, and (v) such activity is
undertaken after the Completion Release Date. Subject to Section 7.22, this
provision shall not prevent Borrower from entering into agreements or other
arrangements, with PDC or any of its Affiliates regarding any copper concentrate
leaching facilities constructed, owned or operated by PDC or such Affiliate of
PDC.
(b) The Borrower shall not establish a place of business in the United
States unless Borrower (i) notifies in writing, at least 30 days in advance, the
Administrative Agent of its intention to do so and the Administrative Agent
(acting upon instructions of the Majority Facility Lenders) does not object in
writing within 30 days of such notification and (ii) has taken all steps then
required pursuant to the MSA to ensure the
50
maintenance and perfection of the security interests created or purported to be
created pursuant to the Security Documents.
7.31 Access. In addition to the rights set forth under Section 7.06, upon
request from the Administrative Agent (acting upon instructions of the Majority
Facility Lenders), the Borrower shall permit any Person designated by the
Majority Facility Lenders and not reasonably objected to by the Borrower, at the
expense and risk of the Senior Facility Lenders (provided that the reasonable
costs and expenses incurred by the Senior Facility Lenders pursuant to and in
connection with any site visits that are reasonably necessary for (i) review of
any proposed Incremental Capital Expenditures, or (ii) review of any request by
the Borrower for an amendment, waiver or modification of or supplement to any
Financing Document or (iii) review of any other matter relating to the
Borrower's non-compliance with the terms of any Financing Document (as
determined by the Majority Facility Lenders in their reasonable judgment) shall
be at the expense of the Borrower) and subject to the confidentiality provisions
set forth in Section 12.10, to visit and inspect the site of the Sulfide Project
and the Current Operations (so long as they adhere to the Company's safety and
health related procedures and regulations) and to discuss the business and
finances of the Borrower with officers of the Borrower, in each case during
normal business hours (but not more than once every calendar year if Borrower is
requested to reimburse the Senior Facility Lenders for their costs and expenses)
and in a manner that does not unreasonably disrupt the operation of the
Business. The Borrower shall offer all reasonable assistance to such Persons in
connection with any such visit.
7.32 Operation of Business. The Borrower shall operate the Sulfide Project
in accordance with applicable good industry mining practice.
7.33 No Merger or Consolidation. The Borrower shall not enter into any
merger or consolidation with any other entity.
7.34 No Subsidiaries; no Acquisitions. Without the consent of the
Administrative Agent (acting pursuant to a Supermajority Facility Vote), the
Borrower shall not acquire any other Person (including by way of purchase of
stock or any other equity or ownership interest, or by way of a purchase of all
or substantially all of the assets of such Person, but excluding, for this
purpose, its indirect interest in the Pillones Dam, if applicable) and shall not
form any subsidiaries.
7.35 Construction of Project. The Borrower shall construct and complete the
Sulfide Project in all material respects in accordance with the description of
the Sulfide Project set forth in Schedule D on or prior to the Target Completion
Date.
7.36 Operator. The Borrower shall not exercise any right it may have to
terminate the Operator's Agreement, unless the Administrative Agent (acting
pursuant to a Supermajority Facility Vote) has consented to such termination and
the Borrower shall
51
not appoint any successor Operator without the consent of the Administrative
Agent (acting pursuant to a Supermajority Facility Vote), provided that this
covenant shall not limit the ability of the Borrower to replace the Operator by
any other Affiliate of PDC the obligations of which are guaranteed by PDC.
7.37 Limitation on Loans. The Borrower shall not make any loan or advance
to any Person except for (i) Permitted Investments, (ii) down payments and
prepayments to suppliers, (iii) loans and advances to its employees and loans to
employees of the Operator for travel, moving and household expenses of such
employees and for the purchase of land and the construction and purchase of
housing for such employees, in the ordinary course of business and in an
aggregate amount not exceeding U.S.$5,000,000 (or its Equivalent) at any one
time outstanding and (iv) other loans and advances in connection with the
Business in an aggregate amount not exceeding U.S.$10,000,000 (or its
Equivalent) at any one time outstanding.
7.38 Request for Completion Loans. In case of a Confirmed Cash Shortfall,
the Borrower shall timely request Completion Loans from the Parent Companies in
accordance with the Completion Guarantee, if any, so as to enable Borrower to
timely meet all its financial obligations.
7.39 Limitation on Share Issuance. The Borrower shall not issue any Common
Stock or other securities convertible into Common Stock if the issuance of such
Common Stock would cause the equity ownership of any of the Shareholders to fall
below its Minimum Required Equity Ownership, without the consent of the
Administrative Agent (acting pursuant to a Supermajority Facility vote).
7.40 Ethical Business Practices. The Borrower shall comply in all material
respects with all applicable laws regarding corrupt practices.
ARTICLE VIII
INSURANCE
8.01 Maintenance of Insurance. The Borrower shall at all times (either
directly or indirectly through one or several global insurance policies
maintained by PDC or any of its Affiliates) maintain such property and casualty
insurance coverage and comply with all such other requirements as specified in
Appendix II.
8.02 Insurance Consultant. The Borrower shall pay the Senior Facility
Lenders for the reasonable fees and expenses of the Insurance Consultant
appointed to advise the Senior Facility Lenders with respect to (i) the issuance
of the report contemplated in Section 5.01(j) and (ii) the issuance of a report
confirming the insurance coverage (including reinsurance coverage) obtained by
the Borrower complies with the
52
requirements of Article VIII at the time of achievement of Full Completion or
satisfaction of Partial Completion.
ARTICLE IX
MPA EVENTS OF DEFAULT AND REMEDIES
9.01 MPA Events of Default. Subject to Section 9.02, each of the following
events shall be a "MPA Event of Default":
(a) Payment Default. (i) The Borrower has defaulted in the payment of any
Senior Loans Obligation (other than a Senior Loans Obligation resulting from an
acceleration of JBIC's Outstanding Base Amount in accordance with Section 10.02
of the JBIC Loan Agreement) when and as such payment shall be due and payable
(whether at scheduled maturity, by mandatory prepayment, by acceleration or
otherwise) and such failure shall continue for (A) in the case of payment of
principal, interest or fees on Senior Loans Obligations, 1 Business Day from the
due date of such payment; and (B) in the case of payment of any other Senior
Loans Obligations, 3 Business Days from the date notice of such failure to pay
was received by the Borrower;
(ii) The Borrower has defaulted in the payment of a Senior Loans
Obligation resulting from an acceleration of JBIC's Outstanding Base Amount
in accordance with Section 10.02 of the JBIC Loan Agreement and 180 days
after the date of acceleration by JBIC of its Outstanding Base Amount, (i)
JBIC has not rescinded the acceleration of such acceleration and (ii) the
Borrower has failed to pay such Senior Loans Obligation as contemplated
under clause (ii) of Section 3.10A(a).
(b) Breach of Representation or Warranty. A representation or warranty made
by the Borrower hereunder shall prove to have been false when made in any
material respect and such breach of representation or warranty could in the
reasonable judgment of the Majority Facility Lenders have a Material Adverse
Effect and is not corrected or cured within 10 Business Days after the notice
from the Administrative Agent (acting upon instructions from Majority Facility
Lenders) specifying such breach and requiring that it be remedied;
(c) Breach of Covenant. The Borrower shall fail to observe or perform any
material obligation to be observed or performed by it hereunder (except for the
obligations set forth in Section 7.10(c) which are addressed under clause
(f)(iii) below and in Section 7.12 which are addressed in clause (f)(i) below)
or under any other Financing Document (other than those covenants that could
result in a JBIC Event of Default) or Project Document to which it is a party,
which failure could in the reasonable judgment of the Majority Facility Lenders
have a Material Adverse Effect and such failure shall continue unremedied for:
53
(i) with respect to the covenant set forth in Sections 7.19 (Notice of
MPA Defaults; Extraordinary Notices), 15 days from the date the
Administrative Agent (acting upon instructions from the Majority Facility
Lenders) gives the Borrower written notice of the breach of such covenant;
(ii) (A) with respect to any of the covenants set forth in Sections
7.04 (Use of Proceeds), 7.06 (Confirmation of Progress of Construction),
7.07 (Preservation of Assets), 7.08 (Mining Concessions), except as
provided under clause (B) below, 7.09 (Minimum Production), 7.10(a) and (b)
(Offtake Agreements), 7.11(ii) (Sales of Concentrates and Cathodes), 7.16
(Limitation on Debt), 7.17 (Limitation on Liens), 7.27 (Determination of
Tax Contingency Reserve Amount), 7.29 (No Modifications of By-Laws), 7.30
(Business), 7.31 (Access), 7.34 (No Subsidiaries; No Acquisitions), 7.37
(Limitation on Loans), and 7.40 (Ethical Business Practices), 30 days from
the date the Administrative Agent (acting upon instructions from the
Majority Facility Lenders) gives the Borrower written notice of the breach
of such covenant and (B) with respect to any of the covenants set forth in
Sections 7.01 (Maintenance of Existence) and 7.08(a) (Mining Concessions),
but only as it relates to the covenant to keep the Core Mining Concessions
in full force and effect, 30 days from the date of the occurrence of the
breach of covenant;
(iii) with respect to any covenant under any Security Document, 45
days from the date the Administrative Agent (acting upon instructions from
the Majority Facility Lenders) gives the Borrower written notice of the
breach of such covenant; and
(iv) with respect to any of the covenants set forth in Sections 7.02
(Book, Records and Accounts), 7.03 (Principal Place of Business), 7.05
(Information), 7.11(i) (Sales of Concentrates and Cathodes), 7.13 (Power
Generation Facility), 7.14 (Taxes), 7.15 (Sulfide Project, Capital
Expenditures), 7.18 (Drawdowns of Senior Loans), 7.21 (Compliance with
Law), 7.22 (Transactions with Affiliates), 7.23 (Environmental Compliance),
7.24 (Permitted Xxxxxx), 7.25 (Ordinary Course Transactions), 7.26
(Determination of Extraordinary Major Maintenance Reserve Amount), 7.28
(Further Assurance), 7.32 (Operation of Business), 7.35 (Construction of
Project), 7.38 (Request for Completion Loans) and any other obligation of
the Borrower under the Financing Documents, and the insurance related
covenants set forth in Appendix II, 90 days from the date the
Administrative Agent (acting upon instructions from the Majority Facility
Lenders) gives the Borrower written notice of the breach of such covenant,
provided that a breach of the covenants set forth in Sections 7.20 (Restricted
Payments), 7.33 (No Merger or Consolidation), 7.36 (Operator) and 7.39
(Limitation on Share
54
Issuance) shall be an MPA Event of Default, unless cured prior to receipt of the
declaration required pursuant to Section 9.02(a);
(d) Bankruptcy. The Borrower commences a proceeding under any applicable
bankruptcy, reorganization, arrangement, readjustment of debt, relief of
debtors, dissolution, insolvency, liquidation or similar law (whether now or
hereafter in effect) relating to itself, or is declared bankrupt, is dissolved
by reason of insolvency or makes a general assignment for the benefit of
creditors, or any action is taken by it for the purpose of effecting any of the
foregoing or by a receiver, custodian or trustee or other officer or
representative of a court or of creditors; or there is commenced against it any
such proceeding which remains undismissed for 60 days from the date the Borrower
receives such notification from the court where such proceeding has been filed;
(e) Cross Default. Any Indebtedness of the Borrower (other than the Senior
Loans and Subordinated Loans) that is due and payable (it being understood that
Indebtedness other than for borrowed money shall not be deemed to be due and
payable if there is a good faith dispute as to the amount of such Indebtedness)
in a principal amount in excess of U.S.$10,000,000 or its Equivalent is not paid
when due (and any grace period relating thereto has expired) or becomes or is
declared to be due and payable prior to the stated maturity thereof and such
Indebtedness shall remain unpaid for 30 days from its due date or from the due
date of such acceleration;
(f) Project Documents.
(i) Project Documents (Other Than Governmental Approvals and Offtake
Agreements). (i) There has been an uncured breach or termination, or an
assignment, revision, amendment, modification or replacement, of a material
Project Document (other than a Governmental Approval and an Offtake
Agreement) that is reasonably likely to have a Material Adverse Lender
Effect and the Borrower fails to cure (in the case of an assignment,
revision, amendment, modification or replacement) or to enter into a
replacement contract (in the case of an uncured breach or termination) on
similar terms and conditions within 90 days after notice from the
Administrative Agent (acting upon instructions from the Majority Facility
Lenders) of the occurrence of such breach or termination or (ii) there has
been an uncured breach or termination, or an assignment, revision,
amendment, modification or replacement, of an Identified Material Project
Document (other than a Governmental Approval and an Offtake Agreement) that
is reasonably likely to have a Material Adverse Project Effect and the
Borrower fails to cure (in the case of an assignment, revision, amendment,
modification or replacement) or to enter into a replacement contract (in
the case of an uncured breach or termination) on similar terms and
conditions within 180 days after notice from the Administrative Agent
(acting upon instructions from the Majority Facility Lenders) of the
occurrence of such breach or termination;
55
(ii) Governmental Approvals. The Borrower shall fail to obtain,
maintain or renew any Core Peruvian Governmental Approval and (i) such
failure is reasonably likely to have a Material Adverse Effect and the
Borrower fails to obtain a replacement Core Peruvian Governmental Approval
within 90 days after the occurrence of such failure to obtain, maintain or
renew such Core Peruvian Governmental Approval or (ii) in the case of a
Core Peruvian Governmental Approval that is an Identified Material Project
Document, such failure is reasonably likely to have a Material Adverse
Project Effect and the Borrower fails to obtain a replacement Core Peruvian
Governmental Approval within 180 days after the occurrence of such failure
to obtain, maintain or renew such Core Peruvian Governmental Approval; and
(iii) Offtake Agreements. There has been a termination of an Offtake
Agreement and the Borrower fails to enter into a replacement contract with
a counterparty that qualifies as an Acceptable Guarantor or with a Parent
Company or an Affiliate of a Parent Company at then current market price
and for similar quantities and duration within 90 days after the occurrence
of such breach or termination.
(g) Material Collateral.
(i) Security interests purported to be created by or under the
Security Documents in (w) the Accounts or Common Stock of the Borrower, or
Subordinated Debt (x) the Borrower's rights under the Identified Material
Project Agreements, (y) the Core Mining Concessions or (z) other material
Project Property with respect to which a security interest is contemplated
to be created in the MSA shall fail or cease to be (and, except in the case
of Project Property covered by subclause (w), so remain for at least 45
days after written notice from the Administrative Agent acting upon
instructions from the Majority Facility Lenders) validly perfected first
priority security interests and valid assignments of rights, as applicable,
in favor of the Senior Lenders (other than to the extent noted in legal
opinions of counsel to the Borrower delivered on or prior to the Closing
Date in satisfaction of Section 5.01(g)).
(ii) A Person other than the Offshore Collateral Agent, the Onshore
Collateral Agent or a Senior Lender shall have attached, (a) Collateral
consisting of tangible Project Property having a book value equal to or
greater than 5% of the total book value of all tangible Project Property
(as shown on the balance sheets of the Borrower as of the immediately
preceding month-end) or (b) all or any material part of the other
Collateral, and in either such case, any attachment of or any judgment Lien
against any of such Collateral (x) shall remain unlifted, unstayed or
undischarged for a period of 180 days or (y) shall be upheld in a final
nonappealable judgment by a court of competent jurisdiction.
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(h) PDC Completion Guarantee Acceleration Event. The Administrative Agent
(acting upon instructions from the Majority Facility Lenders) has notified the
Borrower in writing that a Completion Guarantee Acceleration Event has occurred
with respect to PDC and either (i) one year has elapsed since the date of such
notice or (ii) the Non-Accelerated Parent Companies fail to work in good faith
(and, upon request from the Administrative Agent pursuant to instructions from
any Senior Facility Lender, to confirm that they are so doing) to develop a
proposal to identify an Acceptable PD Replacement that would (x) succeed to the
management obligations of the Operator pursuant to the Operator's Agreement, (y)
succeed to the financial obligations of PDC pursuant to the Completion
Guarantee, and (z) assume the obligations to purchase the Borrower's production
of Concentrate and Cathodes pursuant to the terms of the PD Concentrate Sales
Agreement and the PD Cathodes Sales Agreement.
(i) BVN Completion Guarantee Acceleration Event. The Administrative Agent
(acting upon instructions from the Majority Facility Lenders) has notified the
Borrower in writing that a Completion Guarantee Acceleration Event has occurred
with respect to BVN and one year has passed since the date of such notice
without any of the following events occurring: (i) the Non-Accelerated Parent
Companies have increased their exposure under the Completion Guarantee (with PDC
participating in such increase at least on a pro rata basis) or the Senior
Facility Lenders have otherwise been provided with one or several Acceptable
Credit Support Instruments (which may be provided on a several basis), in each
case, to cover BVN's obligations under the Completion Guarantee that relate to
both past and future Advances (without giving effect to the acceleration of
BVN's obligations as a result of the Completion Guarantee Acceleration Event),
(ii) BVN has paid all of its accelerated obligations under the Completion
Guarantee, (iii) Full Completion is achieved, or (iv) following the occurrence
of such a Completion Guarantee Acceleration Event, a determination is made by a
reputable independent public accountant of international standing that the Net
Worth of BVN exceeds U.S.$660 million.
(j) Event of Political Force Majeure. An Event of Political Force Majeure
shall have been declared in accordance with Section 11.01 or by a Parent
Company, and such Event of Political Force Majeure shall be Continuing for a
period of 360 days following such declaration.
(k) Termination of the Completion Guarantee.
(i) A Parent Company shall have terminated its obligations under the
Completion Guarantee for any reason, including following the occurrence of
an Event of Political Force Majeure pursuant to Article V of the Completion
Guarantee;
(ii) the Completion Guarantee is declared in a final non-appealable
judgment to be unenforceable against a Parent Company; and
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(iii) the Completion Guarantee is terminated prior to the Guarantee
Release Date.
(l) Abandonment, Total Loss. Abandonment or Total Loss of the Sulfide
Project or Current Operations shall have occurred.
(m) Completion.
(i) Neither Full Completion nor Partial Completion is achieved by the
Target Completion Date; or
(ii) Partial Completion is achieved by the Target Completion Date but
the Debt Buy-Down Release Date does not occur within twelve (12) months
following the Target Completion Date,
provided that (i) the Debt Buy Down Closing shall only be deemed to have
occurred in the circumstances contemplated in Section 3.03(d) of the Completion
Guarantee, and (ii) during the pendency of a Completion Arbitration and until
the expiration of the additional period of time allowed under the Completion
Guarantee to replace the Completion Certificate or exercise the Debt Buy-Down
Option following such Completion Arbitration, Borrower shall not be deemed to be
in Default under this provision, notwithstanding the fact that, pursuant to the
Completion Guarantee, Full Completion or Partial Completion, as the case may be,
shall be deemed not to have occurred, so long as the Parent Companies are in
compliance with clauses (ii) and (iii) of Section 2.03(c) of the Completion
Guarantee.
(n) Unsatisfied Judgments. Final judgment or judgments for the payment of
money in excess of U.S.$10,000,000 in the aggregate or its Equivalent shall be
rendered by a court or courts against the Borrower and shall remain unpaid,
unstayed on appeal, undischarged, unbonded or undismissed for a period of 60
days from the date of entry thereof.
(o) Breach of Transfer Restrictions Agreement. Any of the Shareholders or
the Parents breaches its share transfer restrictions set forth in Article II of
the Transfer Restrictions Agreement.
(p) Unenforceability or Repudiation of Financing Document.
(i) Any of the Financing Documents is declared in a final
non-appealable judgment (in a proceeding where the Borrower, the Parent
Companies, the Shareholders or any of their respective Affiliates have
claimed unenforceability) to be unenforceable against the Borrower, the
Parent Companies or the Shareholders, or any such party shall have
expressly repudiated its obligations thereunder and ceased to perform such
obligations.
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(ii) Any of the Financing Documents is declared in a final
non-appealable judgment (other than any such judgment resulting from a
proceeding in which the Borrower, the Parent Companies, the Shareholders or
any of their respective Affiliates have claimed unenforceability) to be
unenforceable against the Borrower, the Parent Companies or the
Shareholders, and such unenforceability is not remedied within 120 days or
such agreement is not replaced within 120 days; provided that no default
shall occur if any such Financing Document shall be replaced on terms
reasonably acceptable to the Senior Facility Lenders acting in accordance
with Section 10.01. For the purpose of this provision, a statement or
dispute regarding the scope or nature regarding a parties' rights and
obligations under any such agreement, and a failure to perform any
particular obligation thereunder, shall not by itself be deemed to be a
repudiation thereof.
(q) Improper Transfers. An Authorized Officer of the Borrower delivers to
the Trustee (i) instructions (other than good faith errors or mistakes) to make
transfers from the Proceeds Account that constitute a breach of the MSA or (ii)
certificates pursuant to which the Trustee is expected to make transfers from
the Proceeds Account that include representations that are known by the Borrower
to be inaccurate.
(r) Permanent Mine Closure. Borrower voluntarily implements, or is ordered
pursuant to a final nonappealable judgment (or a final determination by any
Governmental Authority that Borrower has not challenged or has ceased to
challenge) to implement, a permanent closure of all or substantially all of the
Mines, in each case, in circumstances requiring the Borrower to implement the
Closure Plan, provided that the foregoing shall not apply to partial or
temporary closures of the Mines for any reason.
9.02 Declaration of MPA Event of Default.
(a) Upon receipt by the Administrative Agent of a certificate from any
Senior Facility Lender stating that an MPA Event of Default described in Section
9.01(a), Section 9.01(l) or 9.01(m) has occurred and remains uncured, the
Administrative Agent (subject to Section 9.03 hereof), by written notice to the
Borrower and each Senior Facility Lender in accordance with Section 12.11, shall
declare that an "MPA Event of Default" has occurred.
(b) An "MPA Event of Default" shall also occur without such declaration or
other notice, upon the occurrence of the MPA Event of Default referred to in
Section 9.01(d) hereof with respect to the Borrower.
(c) Upon receipt by the Administrative Agent of a certificate approved by
the Majority Facility Lenders stating that an MPA Event of Default (other than
an MPA Event of Default referred to in Section 9.02(a) or 9.02(b)) has occurred
and remains uncured, the Administrative Agent (subject to Section 9.03 hereof),
by written notice to
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the Borrower and each Senior Facility Lender in accordance with Section 12.11,
shall declare that an "MPA Event of Default" has occurred.
9.03 Cessation of MPA Event of Default. Any Senior Facility Lender that has
given, or approved, a certificate or declared an MPA Event of Default, pursuant
to Section 9.02 hereof, agrees promptly to notify the Administrative Agent upon
the cessation of the MPA Event of Default to which such certificate related and
of which such Senior Facility Lender has knowledge. Any notice given pursuant to
this Section 9.03 is an "MPA Cessation Notice". The Administrative Agent shall
promptly forward such MPA Cessation Notice to the Borrower in accordance with
Section 12.11. An MPA Cessation Notice shall be effective, (i) if it relates to
an MPA Event of Default described in Section 9.01(a), upon receipt by the
Borrower, if it is approved by the Senior Facility Lender that has declared such
MPA Event of Default or (so long as such MPA Event of Default shall have been
fully cured) the Majority Facility Lenders, and (ii) otherwise, upon receipt by
the Borrower, if it is approved by the Majority Facility Lenders.
9.04 Abandonment. If the Borrower voluntarily ceases all or substantially
all construction or production activities of the Sulfide Project or the Current
Operations and such cessation continues without interruption for 90 days, the
Administrative Agent (acting pursuant to instructions from any Senior Facility
Lender) shall have the right to deliver to the Borrower a notice requesting a
certificate to the effect that the Borrower intends to cause all or
substantially all such construction or production activities to resume as soon
as is commercially practicable. If (i) within 30 days following delivery of such
notice, the certificate is not delivered or the Borrower does not resume all or
substantially all such activities, (ii) the Borrower timely delivers such
certificate but does not resume all or substantially all such activities within
30 days following such delivery, or (iii) the Borrower timely delivers such
certificate and resumes such activities but does not maintain such activities
for at least 120 days during the 180-day period following timely delivery of
such certificate, then the Administrative Agent (acting pursuant to instructions
from any Senior Facility Lender) shall have the right to declare that
Abandonment has occurred (such declaration being herein referred to as
"Abandonment"). For purposes of this provision, the Borrower shall not be deemed
to have voluntarily ceased construction or production activities of the Sulfide
Project or the Current Operations if the cessation of construction or production
activities is caused by an Event of Political Force Majeure or results from the
depletion of the ore resources for the Current Operations, which is expected to
occur prior to the Final Maturity Date.
ARTICLE X
SENIOR FACILITY LENDERS ARRANGEMENTS
10.01 Senior Facility Lenders Actions. Except as otherwise provided herein,
any Senior Facility Lenders Action shall be made or taken only by the
Administrative Agent and only in accordance with the provisions of this Section
10.01:
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(a) The following Senior Facility Lenders Action shall be taken by the
Administrative Agent pursuant to (and only pursuant to) written instructions
from each Senior Facility Lender:
(i) To approve an increase in the Peruvian Bonds Cap as contemplated
in Section 2.02(a);
(ii) To enter into any Material Financing Document Amendment with
respect to any of the Senior Facility Lender Financing Documents;
(iii) To waive any condition precedent to the initial disbursement of
a Base Advance;
(iv) To waive any condition precedent to the subsequent disbursement
of a Base Advance or the disbursement of a Stand-By Advance set forth in
Section 5.01(o), (p), (q) subclause (i), (x) and (y), as referred to in
Section 5.02; and
(v) To consent to an assignment or transfer by the Borrower of rights
and obligations pursuant to Section 12.13.
(b) The following Senior Facility Lenders Actions shall be taken by the
Administrative Agent acting upon written instructions from the Supermajority
Facility Lenders:
(i) To notify the Borrower that a condition precedent is not satisfied
in accordance with Section 5.03;
(ii) To consent to the amendments by the Borrower of Project Documents
pursuant to Section 7.12(a);
(iii) To consent to creation of subsidiaries and acquisitions by the
Borrower pursuant to Section 7.34;
(iv) To consent to the termination of the Operator's Agreement or to
the appointment of any successor Operator pursuant to Section 7.36;
(v) To consent to the issuance of Common Stock or other securities
convertible to Common Stock pursuant to Section 7.39;
(vi) To declare the occurrence of an Event of Political Force Majeure
pursuant to Section 11.01;
(vii) To consent to the amendment of the schedule of minimum insurance
requirements set forth in Appendix II pursuant to Article VIII;
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(viii) To create, accept and execute any Senior Facility Lenders
Financing Document and any amendment, modification, change, supplement or
waiver of any of the Senior Facility Lenders Financing Documents, that is
not a condition precedent to an Advance and is not a Material Financing
Document Amendment; and
(ix) To approve a Transfer of Restricted Common Stock or Subordinated
Loans in accordance with Section 2.02 of the TRA.
(c) The following Senior Facility Lenders Actions shall be taken by the
Administrative Agent acting upon instructions from the Majority Facility
Lenders:
(i) To object under Section 2.02 with respect to an issuance of
Peruvian Bonds;
(ii) To object to the Borrower's proposed plan for use of insurance
proceeds pursuant to Sections 3.06(b) and 3.06(c);
(iii) [intentionally omitted];
(iv) To determine whether a Person is an Acceptable PD Replacement
pursuant to Section 5.01(q);
(v) To request the Independent Engineer to confirm the progress of
project construction pursuant to Section 7.06;
(vi) To object to the Borrower's proposal for disposal of Project
Property pursuant to Section 7.07(b);
(vii) To engage the Independent Engineer to provide reports with
respect to the Borrower's environmental compliance pursuant to Section
7.23(g);
(viii) To request access to the Site of the Sulfide Project and the
Current Operations pursuant to Section 7.31;
(ix) To give notice regarding insurance coverage to the Borrower
pursuant to Article VIII and Appendix II;
(x) To request information from the Borrower pursuant to Article VIII
and Appendix II;
(xi) To notify the Borrower with respect to a breach of a
representation or warranty pursuant to Section 9.01(b) or of a breach of
covenant pursuant to Section 9.01(c);
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(xii) To notify the Borrower with respect to a breach or termination
of a Project Document pursuant to Section 9.01(f);
(xiii) To notify the Borrower in writing that a Completion Guarantee
Acceleration Event has occurred with respect to PDC or BVN pursuant to
Section 9.01(h) or Section 9.01(i), respectively;
(xiv) To declare an MPA Event of Default pursuant to Section 9.02(b);
(xv) To declare the cessation of an Event of Political Force Majeure
pursuant to Section 11.02(b);
(xvi) To object to the Borrower's proposal for the replacement of the
Independent Public Accountant pursuant to Section 12.01(a);
(xvii) To replace the Independent Engineer or the Insurance Consultant
pursuant to Section 12.01(b);
(xviii) To appoint an arbitrator pursuant to Section 12.17(b); and
(xix) Any other Senior Facility Lenders Action that is not otherwise
described in this Section 10.01 or with respect to which no specific
approval requirement has been set forth in any other Sections of this
Agreement.
(d) The following Senior Facility Lender Actions shall be taken by the
Administrative Agent upon instructions from any Senior Facility Lenders:
(i) To declare an MPA Event of Default pursuant to Section 9.02(a);
(ii) To give notice to the Borrower requesting its resumption of
construction or production activity or to declare abandonment pursuant to
Section 9.04; and
(iii) To request confirmation that non-accelerated Parent Companies
are working in good faith to develop a proposal to identify an Acceptable
PD Replacement pursuant to Section 9.01(h).
(e) The Administrative Agent may take any Senior Facility Lender Action
that is a Routine Matter without seeking prior approval from the Senior Facility
Lenders, provided that the Administrative Agent may elect to seek approval by
the Majority Facility Lenders.
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10.02 Sharing of Information.
(a) Each Senior Facility Lender shall use reasonable efforts promptly to
make available to the Administrative Agent any material information it receives
regarding (i) the construction or operation of the Sulfide Project, the
prospects for the timely occurrence of the Completion Release Date, or the
financial condition or business of the Borrower, (ii) the Borrower's ability to
pay Senior Debt Obligations when due, (iii) the security interests granted by or
pursuant to this Agreement and the Security Documents, (iv) the Parent
Companies' ability to comply with their respective obligations under the
Completion Guarantee and Transfer Restrictions Agreement, (v) the occurrence of
an MPA Event of Default or a PC Event of Default or (vi) any other matter
regarding the Borrower, the Parent Companies or the Senior Facility Loans which
such Senior Facility Lender considers to be of common interest to Senior
Facility Lenders; provided that (i) this Section shall not require any Senior
Facility Lender to make available to any other Senior Facility Lender
information which, in such Senior Facility Lender's reasonable judgment, is not
of common interest to the other Senior Facility Lenders or which information is
subject to confidentiality restrictions which prohibit such disclosure and (ii)
no Senior Facility Lender shall have any liability for any failure to make
available to other Senior Facility Lenders such information or for any
inaccuracy or incompleteness of any such information made available by it in
good faith.
(b) Each Senior Facility Lender shall notify the Administrative Agent of
any payment received in respect of Senior Loans Obligations in excess of its Pro
Rata Payment then due (other than payments excluded under Section 3.04).
(c) The Administrative Agent shall promptly communicate to each other
Senior Facility Lender any information received by it from a Senior Facility
Lender or from the Borrower pursuant to this Agreement or any PC Agreement.
10.03 General Consultation.
(a) Without prejudice to the rights and claims of each Senior Facility
Lender or Senior Facility Lenders Group hereunder and under their respective
Senior Facility Loan Agreements or the number of Senior Facility Lenders Groups
required to take action hereunder, each Senior Facility Lender acknowledges
that, in view of the common undivided interest of Senior Facility Lenders in the
Collateral, actions by any one Senior Facility Lender with respect thereto will
have a direct effect on the economic interests of the other Senior Facility
Lenders.
(b) Each Senior Facility Lender agrees that (i) to the extent practicable
in the circumstances, it shall endeavor to afford each other a reasonable
opportunity to exchange views before taking any action that could affect the
Borrower, the Sulfide Project, the Collateral or the Senior Loans Obligations of
other Senior Facility Lenders, and (ii) at the request of any Senior Facility
Lender, it shall exchange views with the
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other Senior Facility Lenders on any substantial and adverse change in the
financial condition or business of the Borrower, in the security interests
created by or pursuant to the Security Documents, in the progress or cost of the
Sulfide Project, in the ability of the Parent Companies to comply with their
obligations under the Completion Guarantee, in the ability of any party thereto
to comply with its obligations under the Transfer Restrictions Agreement, in the
prospects for the timely occurrence of the Completion Release Date or in the
prospects for timely repayment of Senior Loans Obligations.
(c) It is the intention of each Senior Facility Lender that, in connection
with any action or decision requiring a determination by more than one Senior
Facility Lender, all Senior Facility Lenders are to be afforded the opportunity
to express their views, and to vote, on the matter subject to such
determination.
10.04 Sharing of Non-Pro Rata Payments.
(a) Each Senior Facility Lender agrees that in the event any Senior
Facility Lender shall, after giving effect to any incremental payment for
Indemnified Tax withholding, obtain payment of any amounts due to it on or in
respect of Senior Loans Obligations, whether through exercise of a right of
set-off, banker's lien or counterclaim or from any security or from any
realization (whether through attachment, foreclosure or otherwise) of assets of
the Borrower or the Parent Companies or otherwise, and such payment is not a Pro
Rata Payment, then, except in connection with (i) a prepayment of all or part of
the outstanding Stand-By Amount of the Commercial Banks with the proceeds of the
issuance of the Peruvian Bonds, (ii) payment of Funding Losses and (iii)
mandatory prepayment contemplated in Section 3.12, such Senior Facility Lender
shall promptly remit to the Administrative Agent for distribution to the other
Senior Facility Lenders the amount of such payment necessary to ensure that each
Senior Facility Lender shall have received a Pro Rata Payment.
(b) The Borrower consents and agrees to the foregoing arrangement, and
agrees that any provision to the contrary notwithstanding:
(i) any Senior Facility Lender that has received a payment that is not
a Pro Rata Payment and has remitted the amount of such payment to the
Administrative Agent pursuant to this Section shall be deemed to have
received payment only of the amount received by such Senior Facility Lender
after redistribution by the Administrative Agent to other Senior Facility
Lenders, and any Senior Facility Lender that has received a payment
pursuant to this Section from the Administrative Agent shall be deemed to
have been paid such amount by the Borrower; and,
(ii) if any sharing of payments pursuant to this Section shall (with
the consent of all Senior Facility Lenders) have been accomplished by the
purchase by any Senior Facility Lender of participations in Senior Loan
Facility
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Obligations owed to another Senior Facility Lender, such purchasing Senior
Facility Lender shall have and may exercise all legal and equitable rights
and remedies (including rights of set-off but excluding voting rights) with
respect to such participation as fully as if such Senior Facility Lender
were the holder of a direct Senior Loan Facility Obligation in the amount
of such participation.
10.05 Termination of Senior Debt Commitments. In the event the Commitment
of a Senior Facility Lender is terminated prior to disbursement of any Advance
by such Senior Facility Lender, such Senior Facility Lender shall cease to be a
party to this Agreement, the Completion Guarantee, the Transfer Restrictions
Agreement and the Security Documents.
10.06 Global Coordinator. The Global Coordinator shall coordinate globally
the lending arrangements among the Senior Facility Lenders. The Global
Coordinator shall not be entitled to receive any compensation for such role.
ARTICLE XI
POLITICAL EVENTS OF FORCE MAJEURE
11.01 Declaration of Event of Political Force Majeure. Upon the Continuance
of an Event of Political Force Majeure, the Administrative Agent (acting
pursuant to a Supermajority Facility Vote) shall have the right, by written
notice delivered in accordance with Section 11.02, to declare that an Event of
Political Force Majeure has occurred and is Continuing.
11.02 Notices by Administrative Agent.
(a) In order for the Administrative Agent to declare that an Event of
Political Force Majeure has occurred pursuant to Section 11.01, the
Administrative Agent shall deliver a certificate to the Borrower, setting forth
in reasonable detail, as applicable, (i) the events, conditions, circumstances
or occurrences that constitute an Event of Political Force Majeure, (ii) the
type of Event of Political Force Majeure which has occurred, and (iii) the date
as of which such Event of Political Force Majeure has occurred.
(b) If an Event of Political Force Majeure declared under Section 11.01 has
ceased, the Administrative Agent (acting upon instructions from the Majority
Facility Lenders) shall deliver a notice to the Borrower declaring that such
Event of Political Force Majeure has ceased.
11.03 Arbitration. The Borrower shall have 30 days after receipt of a
certificate delivered under Section 11.02 (a) to deliver a notice to the Senior
Facility Lenders to the effect that the Borrower (A) disagrees that an Event of
Political Force Majeure has
66
occurred and is Continuing and (B) intends to commence arbitration proceedings
under Section 12.17, within 45 days of such notice. Each such notice shall state
in reasonable detail the bases for the Borrower's disagreement. If the Borrower
does not timely deliver a notice under this Section or if such arbitration is
not timely commenced by the Borrower, a certificate delivered under Section
11.02 shall be considered determinative of the items addressed therein. Pending
resolution of the arbitration proceedings, the certificate delivered under
Section 11.02 shall be given effect, except that, if an arbitration commenced
pursuant to this Section 11.03 is pending when the time periods set forth in
Section 9.01(j) to declare an MPA Event of Default expires and the
Administrative Agent has declared such MPA Event of Default in accordance with
Section 9.02, such MPA Event of Default shall not become effective until the
conclusion of such arbitration (and then only if arbitrators rule the
declaration of an MPA Event of Default was permitted under this Agreement).
ARTICLE XII
MISCELLANEOUS
12.01 Service Providers.
(a) The Borrower shall have the right from time to time to appoint any
independent public accountant selected by the Borrower to replace the
Independent Public Accountants, so long as (i) the Borrower has given no less
than 15 Business Days advance written notice to the Administrative Agent and
(ii) the Borrower has not, within such period, received written objections from
the Administrative Agent (acting upon instructions from the Majority Facility
Lenders) to such appointment.
(b) The Administrative Agent (acting upon instructions from the Majority
Facility Lenders) may remove the Independent Engineer or the Insurance
Consultant with the prior written consent (not to be unreasonably withheld) of
the Borrower or, in the event that such Independent Engineer or the Insurance
Consultant, as the case may be, (i) ceases to be a consulting engineering firm
or an insurance consultant of recognized international standing, (ii) has become
an Affiliate of the Borrower or any of the Parent Companies, (iii) has developed
a conflict of interest that reasonably calls into question such firm's capacity
to exercise independent judgment or (iv) has failed to satisfactorily perform
its duties in its capacity as a Service Provider hereunder. If the Independent
Engineer or the Insurance Consultant is removed or resigns and thereby ceases to
act as Independent Engineer or the Insurance Consultant, as the case may be, for
purposes of this Agreement, (x) if no Borrower Event of Default has occurred and
is Continuing, the Administrative Agent (acting upon instructions from the
Majority Facility Lenders) shall, within 30 days of such removal and in any case
no later than 30 days after receipt of written request from the Borrower,
present to the Borrower a list of not less than four consulting engineering
firms or insurance consultants, as the case may be, from which the Borrower
shall select the replacement Independent Engineer or
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Insurance Consultant, as the case may be and (y) if a Borrower Event of Default
has occurred and is Continuing, the Administrative Agent (acting upon
instructions from the Majority Facility Lenders) shall select the replacement
Independent Engineer or Insurance Consultant, as the case may be.
12.02 Accession. A Replacement Lender or a Bridge Loan Provider, as the
case may be, may become a party to this Agreement by entering into a New Party
Accession Agreement and thereupon such Replacement Lender or Bridge Loan
Provider, as the case may be, shall have all the rights and obligations of the
applicable Suspending Lender.
12.03 Effectiveness. This Agreement shall come into full force and effect
upon its execution and delivery by each of the parties named on the signature
pages hereof.
12.04 Termination. (a) This Agreement shall terminate upon the full payment
of all Senior Facility Loans Obligations owed to the Senior Facility Lenders.
Notwithstanding the termination of this Agreement as provided above in this
clause (a), the Borrower's obligations which are expressly provided in this
Agreement to survive shall survive.
(b) Borrower may elect to terminate this Agreement by written notice to the
Administrative Agent thirty days after the date hereof (or such later date as
the Borrower and the other MPA Parties may agree) unless Borrower receives
evidence that the Hermes Guarantee has been issued and is in full force and
effect. Upon such election (i) the Borrower shall provide notice thereof to each
Senior Facility Lender, (ii) termination shall become effective 15 Business Days
from such notice and (iii) the costs and expenses section of the commitment
letters between the Borrower and the Senior Facility Lenders shall be
reinstated.
12.05 Stability Agreement. Each of the Senior Facility Lenders hereby
acknowledges that a copy of the Stability Agreement has been made available to
it and that it has had adequate opportunity to review the Stability Agreement.
Each of the Senior Facility Lenders hereby accepts and acknowledges that the
Borrower does not intend to seek any new or amended stability agreement or other
agreement of a similar nature with respect to the Sulfide Project.
12.06 Currency Equivalents. Calculation of currency equivalents (for any
amount, its "Equivalent") on any day shall be based on the foreign exchange spot
mid-rates for such day reported in The Wall Street Journal, Eastern Edition, or,
if not so reported, on the mid-market foreign exchange spot closing rates for
such day reported in the Financial Times, or, if not so reported, on spot
foreign exchange mid-market rates for trading among banks in amounts of
U.S.$1,000,000 and more as quoted by or to the Trustee.
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12.07 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York.
12.08 Severability. If any provision of this Agreement shall be invalid,
illegal or unenforceable, the MPA Parties agree to the fullest extent they may
effectively do so that the validity, legality and enforceability of the
remaining provisions hereof shall not in any way be affected or impaired
thereby; and the invalidity of a particular provision in a particular
jurisdiction shall not invalidate such provision in any other jurisdiction.
12.09 Entire Agreement. This Agreement and the other Financing Documents
constitute the entire agreement and understanding, and supersede all prior
agreements and understandings (both written and oral), between the Borrower and
the Senior Facility Lenders with respect to the financing by the Senior Facility
Lenders of the Sulfide Project and there are no warranties, representations or
other agreements between such parties in connection with the subject matter
hereof except as specifically set forth herein and therein.
12.10 Confidentiality.
(a) The Administrative Agent and each Senior Facility Lender shall maintain
the confidentiality of all information disclosed to it concerning the Current
Operations, the Sulfide Project, the assets and businesses of the Borrower and
the Financing Documents and shall, unless otherwise required by law, not
voluntarily disclose it without the prior written consent of the Borrower to
anyone other than to the directors, officers, employees, accountants,
consultants, counsel and representatives of the Administrative Agent or such
Senior Facility Lender, or any provider of political risk insurance or guarantee
to such Senior Facility Lender or any proposed transferee of Senior Facility
Loans with a reasonable need to know such information (provided, in the case of
such a proposed transferee or participant, that such transfer is permissible
under this Agreement and provided further, in the case of a provider of
political risk insurance or guarantee or a proposed transferee or participant,
that such provider of political risk insurance or guarantee or proposed
transferee or participant, as the case may be, first agrees in writing to be
subject to this Section 12.10), except that this provision shall not prevent the
Administrative Agent or a Senior Facility Lender from disclosing information
that (i) becomes generally available to the public other than as a result of a
disclosure by such Person or its representatives in violation of this Agreement,
(ii) is or becomes available to such Person on a non-confidential basis from a
source other than the Borrower when such source is entitled to make such
disclosure or (iii) subject to paragraph (c) below, is required to be disclosed
in accordance with any applicable Governmental Rule.
(b) If such information is so disclosed to any Person, the disclosing party
agrees to instruct such Person to keep such information confidential.
69
(c) If such information is required to be disclosed in accordance with any
applicable Governmental Rule, unless specifically prohibited by applicable law
or court order, the disclosing party shall, prior to disclosure thereof, use its
best efforts to notify the Borrower of any request for disclosure of any such
information (i) by any Governmental Authority (other than any such request in
connection with an examination of the financial condition of any Senior Facility
Lender) or (ii) pursuant to any legal process, so that in each case the Borrower
may seek an appropriate protective order to maintain the confidentiality of such
information.
(d) The agreements in this Section 12.10 shall survive the termination of
this Agreement.
12.11 Notices. Any notice, request, demand, consent, designation,
direction, instruction, certificate, report or other communication to be given
hereunder shall be given in the English language and will be duly given when
delivered in writing or sent by electronic mail confirmed by facsimile
transmission (with written confirmation of receipt, which confirmation may be by
facsimile transmission) (provided that a notice sent by electronic mail shall be
duly given only at the time the facsimile transmission confirming the same is
sent) or facsimile transmission (with written confirmation of receipt, which
confirmation may be by facsimile transmission) to a party at its address and
facsimile transmission numbers as indicated below or to such other address as
may be furnished for this purpose by such party (any such communication that is
not in writing shall be confirmed in writing):
If to the Borrower, at
c/o Asiento Xxxxxx Cerro Verde
Uchumayo (Arequipa/Peru), Casilla Postal #299
Shipping: Xx. Xxxxxxx Xxxxxx #000
Xxxxxxx, Xxxxxxxx, Xxxxxxxx of Peru
Attention: General Manager
Telephone: (054) 283-363
Facsimile: (054) 283-376
with a copy to PDC, at:
Xxxxxx Dodge Tower
0 Xxxxx Xxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxx 00000
X.X.X.
Attention: Treasurer
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
70
If to JBIC, at
Japan Bank for International Cooperation
0-0, Xxxxxxxxx 0-Xxxxx
Xxxxxxx-xx
Xxxxx 000-0000 Xxxxx
Attention: Director, Division 3, Energy and Natural Resources Finance
Department
Telephone: x00-0-0000-0000
Facsimile: x00-0-0000-0000
If to SMBC, at
0-0, Xxxxxxxxx 0-xxxxx,
Xxxxxxx-xx,
Xxxxx,
Xxxxx (Zip: 100-0006)
Attention: Corporate Banking, Division No. 3
Telephone: x00-0-0000-0000
Facsimile: x00-0-0000-0000
If to BOT-M, at
0-0-0, Xxxxxxxxxx, Xxxxxxx-Xx
Xxxxx 000-0000
Xxxxx
Attention: Structured Finance Division, Project Finance Group
Telephone: x00-0-0000-0000
Facsimile: x00-0-0000-0000
If to KfW, at
Department X1a1 - Export and Project Finance (Natural Resources)
Xxxxxxxxxxxxxxxxxxx 0-0
00000 Xxxxxxxxx xx Xxxx
Xxxxxxx
Attention: Xxxxxxx Xxxxxxxx
Telephone: x00-00-0000-0000
Facsimile: x00-00-0000-0000
71
If to any other Senior Facility Lender, to the Administrative Agent
CALYON New York Branch
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxx Xxxxxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
If to the Administrative Agent, at
CALYON New York Branch
1301 Avenue of the Americas
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxx Xxxxxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
12.12 Benefits of Agreement. Nothing in this Agreement, express or implied,
shall give to any Person, other than the MPA Parties and their successors and
permitted assigns, any benefit or any legal or equitable right or remedy under
this Agreement.
12.13 Successors and Assigns.
(a) This Agreement shall be binding upon and inure to the benefit of the
Borrower, the Administrative Agent and the Senior Facility Lenders and their
respective successors and assigns, except that the Borrower may not assign or
transfer any of its rights or obligations under this Agreement without the prior
written consent of the Administrative Agent (acting upon instructions from all
Senior Facility Lenders).
(b) Except with the prior written consent of the Borrower, which shall be
deemed given unless the Borrower objects (in writing) within 15 days of receipt
of notice, no Senior Facility Lender may assign any portion of its Commitment;
provided that no Borrower consent shall be required during the Continuance of a
Borrower Event of Default, and provided further that no Borrower consent shall
be required in the case of an assignment by a Commercial Bank to another Senior
Facility Lender.
(c) Except with the prior written consent of the Borrower, which shall be
deemed given unless the Borrower either (x) reasonably objects (in writing)
within 15 days of its receipt of notice or (y) objects without reasons and makes
available an alternate purchaser prepared to acquire, on the same terms and
conditions, the portion of the Advance intended to be sold, no Senior Facility
Lender may assign all or any portion of any Advance made by such Senior Facility
Lender to any other lender, unless such assignee is (x) an Affiliate of such
assignor, (y) a provider of political risk insurance to such assignor or (z)
another Senior Facility Lender, provided that no Borrower consent shall be
required during the Continuance of a Borrower Event of Default.
72
(d) In circumstances where Borrower's consent to the assignment of a
Commitment or an Advance is granted or where such transfer is allowed, (i) the
assignee (if not a Senior Facility Lender) shall first enter into an accession
agreement (a "Transferee Accession Agreement") substantially in the form of
Exhibit F pursuant to which such assignee shall become a party to this
Agreement, the Master Security Agreement, the Completion Guarantee and the
Transfer Restriction Agreement, (ii) the Borrower shall not be required to
assume any obligations or costs under the Financing Documents, including for any
Indemnified Taxes or Other Taxes or any withholding tax liability, with respect
to the assignee in excess of such obligations or costs Borrower is required to
assume under the Financing Documents with respect to the assignor, (iii) the
assignor shall not assign any interest in a Commitment or an Advance in an
amount that is less than U.S.$5 million and (iv) the assignee shall be entitled
to the same rights and subject to the same restrictions as are set forth in this
Section 12.13 with respect to subsequent assignments by such assignee. Upon the
assignment by a Senior Facility Lender of the entirety of its undrawn
Commitments and of its interest in all outstanding Senior Facility Loans made by
such Senior Facility Lender, the assignor shall cease to be a Senior Facility
Lender under this Agreement, except that the assignor shall continue to enjoy
all rights of indemnification provided for hereunder that have occurred prior to
the assignment.
(e) Each Senior Facility Lender may grant participations in all or any
portion of its Commitment or of any Advance made by such Senior Facility Lender
to any non-voting participant.
12.14 Remedies.
(a) Other than as stated expressly herein, no remedy herein conferred upon
the Senior Facility Lenders is intended to be exclusive of any other remedy and
each and every such remedy shall be cumulative and shall be in addition to every
other remedy given hereunder, under the other Financing Documents, or now or
hereafter existing at law or in equity or by statute or otherwise.
(b) No failure on the part of any Senior Facility Lender to exercise and no
delay in exercising, and no course of dealing with respect to, any right, power,
or privilege under this Agreement or any other Financing Document shall operate
as a waiver thereof nor shall any single or partial exercise of any right, power
or privilege under any such document preclude any other or further exercise
thereof or the exercise of any other right, power or privilege. No Senior
Facility Lender shall be responsible for the failure of any other Senior
Facility Lender to perform its obligations hereunder or under any Senior
Facility Loan Agreement.
(c) In case any Senior Facility Lender shall have proceeded to enforce any
right, remedy or power under this Agreement or any other Financing Document and
the proceeding for the enforcement thereof shall have been discontinued or
abandoned for
73
any reason or shall have been determined adversely to such Senior Facility
Lender, then and in every such case the Borrower and the Senior Facility Lenders
shall, subject to any effect of or determination in such proceeding, severally
and respectively be restored to their former positions and rights hereunder and
under such other Financing Document.
12.15 Execution in Counterparts. This Agreement may be executed in any
number of counterparts and by the different MPA Parties on separate
counterparts, each of which when so executed and delivered shall be an original,
but all the counterparts shall together constitute one and the same instrument.
12.16 Consent to Jurisdiction.
(a) The Borrower hereby irrevocably consents and agrees, for the benefit of
the Administrative Agent and each Senior Facility Lender, that, except as
contemplated in Section 12.17, any legal action, suit or proceeding against it
with respect to its obligations, liabilities or any other matter under or
arising out of or in connection with this Agreement or the Senior Facility Loans
Obligations may be brought in any Federal or State court located in New York
County in the City of New York and hereby irrevocably accepts and submits to the
non-exclusive jurisdiction of such court with respect to any such action, suit
or proceeding. The Borrower hereby waives any objection which it may now or
hereafter have to the laying of venue of any of the aforesaid actions, suits or
proceedings, brought in any such court and hereby further waives and agrees not
to plead or claim in any such court that any such action, suit or proceeding
brought therein has been brought in an inconvenient forum.
(b) The Borrower hereby irrevocably appoints CT Corporation, with offices
at the date of this Agreement at 000 Xxxxxx Xxxxxx, Xxx Xxxx, XX, as its
authorized agent on which any and all legal process may be served in any such
action, suit or proceeding brought in any Federal or State court located in New
York County in the City of New York. The Borrower agrees that service of process
in respect of it upon such agent, together with written notice of such service
given to it in the manner provided in Section 12.11 hereof, shall be deemed to
be effective service of process upon it in any such action, suit or proceeding.
The Borrower agrees that the failure of such agent to give notice to it of any
such service shall not impair or affect the validity of such service or any
judgment rendered in any action, suit or proceeding based thereon. If for any
reason such agent shall cease to be available to act as such, the Borrower
agrees to designate a new agent in New York County in the City of New York, on
the terms and for the purposes of this Section 12.16. Nothing herein shall be
deemed to limit the ability of the Administrative Agent or any Senior Facility
Lender to serve any such legal process in any other manner permitted by
applicable law or to obtain jurisdiction over the Borrower or bring actions,
suits or proceedings against them in such other jurisdictions, and in such
manner, as may be permitted by applicable law.
74
12.17 Arbitration.
(a) Notwithstanding Section 12.16, any dispute regarding (i) the occurrence
of an Event of Political Force Majeure or (ii) the modification of the minimum
insurance requirements set forth in Appendix II shall be determined by
arbitration between the Borrower, on the one hand, and Senior Facility Lenders
on the other hand, in accordance with the UNCITRAL Arbitration Rules in effect
on the date the arbitration is commenced. Such arbitration shall be the
exclusive method for resolution of the dispute, and the determination of the
arbitrators shall be final and binding (except to the extent there exist grounds
for modification, vacatur, remand, nonenforcement or similar judicial action
respecting an award under the applicable laws governing the recognition or
enforcement of arbitral awards) on the Borrower and all Senior Facility Lenders.
The MPA Parties agree that, subject to those laws, they will give conclusive
effect to the arbitrators' determination and award and that judgment thereon may
be entered by any court having jurisdiction. The arbitral tribunal's authority,
if any, to determine its own jurisdiction does not affect the competent court's
power to review the arbitration award (including as to matters of the arbitral
tribunal's assertion of jurisdiction); nor shall such authority by the arbitral
tribunal deprive an enforcement court of the authority to review the arbitral
tribunal's assertion of jurisdiction. Each MPA Party shall bear its own costs in
any such arbitration, provided that, if the arbitral tribunal concludes that any
MPA Party shall have acted unreasonably it may, in its discretion, award costs
against such MPA Party.
(b) The number of arbitrators shall be three, each of whom shall be
disinterested in the dispute or controversy and shall be impartial with respect
to all parties hereto and independent thereof. Within 30 days of the initiation
of the arbitration, the Borrower and the Administrative Agent (acting upon
instructions from the Majority Facility Lenders) shall each appoint one
arbitrator and the third arbitrator, who shall serve as the chair of the
arbitral tribunal, shall be appointed in accordance with the UNCITRAL
Arbitration Rules in effect on the date the arbitration is commenced. Should the
services of an appointing authority be necessary, the appointing authority shall
be the American Arbitration Association.
(c) The place of arbitration shall be New York, New York, United States of
America. The arbitration shall be conducted in the English language and any
documents or portions thereof presented at such arbitration in a language other
than English shall be accompanied by an English translation thereof. The
arbitrators shall give effect insofar as possible to the desire of the parties
hereto that the dispute or controversy be resolved in accordance with good
commercial practice. The arbitrators shall decide such dispute in accordance
with the law of the State of New York, without regard to the conflicts of law
principles thereof, provided that the arbitration and this arbitration agreement
shall be governed by Title 9 (Arbitration) of the United States Code.
75
(d) The MPA Parties agree that it is of paramount importance that disputes
subject to this agreement to arbitrate be resolved expeditiously, and they
therefore charge the arbitral tribunal to schedule submissions and otherwise
conduct the proceedings in a manner designed to reach a final award as quickly
as possible consistent with the opportunity for the tribunal to fully inform
itself and the right of the MPA Parties to be fully heard.
(e) If a Lead Arbitration proceeding is commenced under clause (a) of this
Section with respect to a dispute regarding the occurrence, continuance or
cessation of a given Event of Political Force Majeure, and if, at any time,
there shall also be pending a Parallel Arbitration with respect to a dispute
regarding the occurrence, continuance or cessation of the same Event of
Political Force Majeure, the Lead Arbitration shall have priority and the
parties shall take (and shall take all steps within their control to cause the
parties to the Parallel Arbitration to take) all reasonable steps to obtain a
stay of the Parallel Arbitration, which stay shall remain in effect pending the
issuance of any award or awards in the Lead Arbitration and, further, pending
conclusion of any judicial proceedings to enforce, vacate, modify, or remand any
award or awards as provided by law. Subject to the conclusion of those judicial
proceedings, if any, and the rights of the parties to the Lead Arbitration to
contest any arbitral award or its enforcement as provided by law, any arbitral
award entered in the Lead Arbitration shall be dispositive of any dispute
regarding the occurrence, continuance or cessation of the Event of Political
Force Majeure that was the subject of the Parallel Arbitration and the tribunal
in the Parallel Arbitration shall enter into an award determinative between the
MPA Parties in accord with the determination in the Lead Arbitration.
12.18 No Trial by Jury. Each party hereto hereby waives, to the fullest
extent permitted by applicable law, any and all right to trial by jury in any
legal proceeding arising out of or relating to this Agreement or the
transactions contemplated hereby.
12.19 Amendments and Waivers.
(a) Neither this Agreement nor any terms hereof may be amended,
supplemented or modified other than pursuant to a written instrument executed by
(i) Borrower, (ii) the Administrative Agent, acting in accordance with Section
10.01 and (iii) with respect to any amendment, supplement or modification that
modifies any provision of this Agreement in a manner that adversely affects any
rights of the Administrative Agent hereunder or enlarges its duties hereunder,
the Administrative Agent.
(b) No waiver by any party hereto of any of its rights, powers and
privileges under this Agreement shall be effective other than pursuant to a
written instrument executed by the Party waiving such right, power or privilege,
except that a waiver of rights, powers and privileges by the Senior Facility
Lenders can be executed by the Administrative Agent acting in accordance with
Section 10.01.
76
12.20 Senior Facility Lenders' Credit Decisions.
(a) Each Senior Facility Lender acknowledges that it has, independently and
without reliance upon the Administrative Agent or any other Senior Facility
Lender and based on such documents and information as it has deemed appropriate,
made its own credit analysis and decision to enter into this Agreement. Each
Senior Facility Lender also acknowledges that it shall, independently and
without reliance upon the Administrative Agent or any other Senior Facility
Lender based on such documents and information as it shall deem appropriate at
the time, continue to make its own credit decisions in taking or not taking
action under any Financing Document.
(b) No implied representation, warranty or covenant of the Borrower shall
be read into this Agreement other than as expressly set forth herein.
12.21 Payment of Expenses.
(a) The Borrower shall on the Closing Date reimburse to the Senior Facility
Lenders all the expenses set forth in their respective Senior Facility Loan
Agreement.
(b) Without limiting the obligations of the Borrower under clause (a)
above, the Borrower agrees (i) to pay or reimburse each Senior Facility Lender
for all of its reasonable out-of-pocket costs and expenses incurred in
connection with the negotiation, preparation, execution, delivery, waiver or
modification of this Agreement and any other Financing Document and any other
documents prepared in connection herewith or therewith, and the consummation and
administration of the transactions contemplated hereby and thereby, including,
without limitation, any documentary taxes and the reasonable fees, disbursements
and other charges of external counsel to such Senior Facility Lender, the
Independent Engineer and the Insurance Consultant, and (ii) to pay or reimburse
each Senior Facility Lender for all its reasonable costs and expenses incurred
in connection with any amendment, supplement or modification to, or waiver in
respect of this Agreement or any other Financing Document, or its costs and
expenses incurred in connection with the enforcement or preservation of any
rights under this Agreement and any such other Financing Documents, including,
without limitation, the reasonable fees, disbursements and other charges of
external counsel, provided in each case that such Senior Facility Lender shall
first have provided the Borrower with a receipt and supporting documentation
certifying the amount of such out-of-pocket costs and expenses and that the
relevant amounts shall be due and payable 30 days thereafter. The agreements in
this Section shall survive the termination of this Agreement, provided that no
claims shall be made by any Senior Facility Lender under this clause (b) after
the first anniversary of the termination of this Agreement and repayment of the
Advances and all other amounts payable hereunder. Notwithstanding the foregoing,
the Borrower shall have no obligation to indemnify any Senior Facility Lender
against any losses, liabilities, obligations, damages, penalties, actions,
judgments, suits, costs, disbursements, or expenses arising out of the failure
of such
77
Senior Facility Lender upon satisfaction of all conditions set forth herein to
the Lenders' obligation to lend, to disburse the amount required to be disbursed
hereunder.
(c) The Borrower shall indemnify the Administrative Agent and each Senior
Facility Lender, and each Related Party of any of the foregoing Persons (each an
"Indemnitee") from, and hold each Indemnitee harmless against, any and all
losses, claims, damages, liabilities and related expenses (other than Excluded
Taxes), including the reasonable and documented fees, charges and disbursements
of any counsel for any Indemnitee, incurred by or asserted against any
Indemnitee arising out of, in connection with, or as a result of (i) the
execution or delivery of the Financing Documents, the performance by the parties
hereto or thereto of their respective obligations hereunder or thereunder or the
consummation of the transactions contemplated hereby or thereby, (ii) any Senior
Facility Loans or the use of the proceeds therefrom or (iii) any claim,
litigation, investigation or proceeding relating to any of the foregoing,
regardless of whether any Indemnitee is a party thereto; provided that such
indemnity shall not, as to any Indemnitee, be available to the extent that such
losses, claims, damages, liabilities or related expenses are incurred by reason
of the negligence or willful misconduct of such Indemnitee and, provided further
that the Borrower shall have no obligation to indemnify any Senior Facility
Lender for payment of any premiums or standby fees for insurance coverage under
the Hermes guarantee under the KfW Loan Agreement or under any guarantee
provided by JBIC related to the Senior Facility Loans made under the JBIC Loan
Agreement or for any other amount that results from the default, action or
inaction of any Senior Facility Lender or otherwise pursuant to the section of
such guarantees that imposes exclusions or reductions in coverage for actions or
failure to act by one or more Senior Facility Lenders. The agreements in the
foregoing clause shall survive the termination of this Agreement.
(d) Without limiting the generality of the foregoing, the Borrower will
indemnify each Indemnitee from, and hold each of them harmless against, any
losses, liabilities, claims, damages or expenses described in the preceding
sentence (excluding any loss, liability, claim, damage or expense incurred by
reason of the gross negligence or willful misconduct of the Person to be
indemnified) arising under any Environmental Law as a result of the past,
present or future operations of the Borrower (or any predecessor in interest to
the Borrower) or the environmental contamination of any site or facility owned,
operated or leased at any time by the Borrower (or any such predecessor in
interest) in connection with the Business, or any Release or threatened Release
of any Hazardous Materials by the Borrower (or any such predecessor in interest)
at or from any such site or facility, excluding any such loss, liability, claim,
damage or expense arising as a result of operations, environmental contamination
or any Release or threatened Release that shall occur during any period when the
Indemnitee or other representative of the Senior Facility Lenders shall be in
possession of or controlling any such site or facility following the exercise by
the Appointed Parties or any Senior Facility Lender or other representative of
the Senior Facility Lenders of any
78
of its rights and remedies hereunder or under any of the Financing Documents,
but including any such loss, liability, claim, damage or expense arising as a
result of operations, environmental contamination or any such Release or
threatened Release occurring during such period that is caused by, is a
continuation of or constitutes conditions previously in existence, or of
practices employed by the Borrower, at such site or facility. The agreements in
the foregoing clause shall survive the termination of this Agreement.
(e) Borrower shall have no obligation to pay any and all fees payable to
any Senior Facility Lender under any Senior Facility Lender Financing Document
and any related fee letter unless and until the Borrower has received evidence
that the Hermes Guarantee has been issued.
12.22 Conflicts. In case of any conflict or inconsistency between this
Agreement and any other Senior Facility Lenders Financing Document or any other
letter agreement between Borrower and any Senior Facility Lender, this Agreement
shall control.
12.23 No Partnership. Nothing contained in this Agreement and no action by
any of the parties hereto is intended to constitute or shall be deemed to
constitute among such parties a partnership, association, joint venture or other
entity.
12.24 No Immunity. To the extent that any MPA Party has or hereafter may
acquire any immunity (sovereign or otherwise), from any legal action, suit or
proceedings, from jurisdiction of any court or from set-off or any legal process
(whether service or notice, attachment prior to judgment, attachment in aid of
execution of judgment, execution of judgment or otherwise) with respect to
itself or any of its property, such MPA Party hereby irrevocably waives and
agrees not to plead or claim such immunity in respect of its obligations under
this Agreement or any other Financing Documents or the subject matter hereof or
thereof (including, without limitation, any obligation for the payment of
money). The MPA Parties hereby agree that the waivers set forth in this Section
12.24 shall have the fullest effect permitted under the Foreign Sovereign
Immunities Act of 1976 of the United States, as amended, and are intended to be
irrevocable and not subject to withdrawal for purposes of such Act. The
foregoing waiver shall constitute a present waiver of immunity at any time that
any action is initiated against such MPA Party with respect to this Agreement.
12.25 Reinstatement. This Agreement shall automatically be reinstated if
and to the extent that for any reason any payment by or on behalf of the
Borrower in respect of the Senior Facility Loans Obligations is rescinded or
must otherwise be restored to Borrower or the Person that made such payment on
the Borrower's behalf by any holder of the Senior Facility Loans Obligations,
whether as a result of any proceedings in bankruptcy or reorganization or
otherwise, and, without duplication of any other indemnification under any
Financing Document, the Borrower shall indemnify the
79
Administrative Agent and each Senior Facility Lender on demand for all
reasonable and documented costs and expenses (including reasonable and
documented fees of counsel) incurred by the Administrative Agent or such Senior
Facility Lender in connection with such rescission or restoration.
[Remainder of page intentionally left blank]
80
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed.
SOCIEDAD MINERA CERRO VERDE S.A.A.
By: /s/ Xxxxxxxx Xxxxx
------------------------------------
Name: Xxxxxxxx Xxxxx
Title: Attorney in Fact
JAPAN BANK FOR INTERNATIONAL COOPERATION
By: /s/ Xxxxx Xxxxx
------------------------------------
Name: Xxxxx Xxxxx
Title: Director General
Energy and Natural Resources
Finance Department
SUMITOMO MITSUI BANKING CORPORATION
By: /s/ Xxxxxxx Xxxxxxxxx
------------------------------------
Name: Xxxxxxx Xxxxxxxxx
Title: Joint General Manager
Structured Finance Department
THE BANK OF TOKYO-MITSUBISHI, LTD.
By: /s/ Xxxxxxx Xxxxxx
------------------------------------
Name: Xxxxxxx Xxxxxx
Title: Senior Manager
Structured Finance Division
81
KfW
By: /s/ Xxxxxxxx Xxxxxx
------------------------------------
Name: Xxxxxxxx Xxxxxx
Title: First Vice President
By: /s/ Xxxxxxx Xxxxxxxx
------------------------------------
Name: Xxxxxxx Xxxxxxxx
Title: Senior Project Manager
CALYON NEW YORK BRANCH
By: /s/ Xxxxxxx Xxxxxx
------------------------------------
Name: Xxxxxxx Xxxxxx
Title: Managing Director
By: /s/ Xxxxxx Xxxxxxx
------------------------------------
Name: Xxxxxx Xxxxxxx
Title: Director
THE ROYAL BANK OF SCOTLAND PLC
By: /s/ Xxxxxx Xxxxxxxx
------------------------------------
Name: Xxxxxx Xxxxxxxx
Title: Associate Director
THE BANK OF NOVA SCOTIA
By: /s/ Xxxxxxx X. Xxxx
------------------------------------
Name: Xxxxxxx X. Xxxx
Title: Director-Mining
By: /s/ Xxxxxxxxx Xxxxxxxxxxx
------------------------------------
Name: Xxxxxxxxx Xxxxxxxxxxx
Title: Associate
82
MIZUHO CORPORATE BANK, LTD.
By: /s/ Xxxxxxxxx Xxx
------------------------------------
Name: Xxxxxxxxx Xxx
Title: Senior Vice President
THE ADMINISTRATIVE AGENT
CALYON NEW YORK BRANCH,
as Administrative Agent
By: /s/ Xxxxxx Xxxxxxx
------------------------------------
Name: Xxxxxx Xxxxxxx
Title: Director
By: /s/ Xxx Xxxxxxxxx
------------------------------------
Name: Xxx Xxxxxxxxx
Title: Managing Director
83
Schedule A
Committed Amounts
Stand-By Committed Aggregate Committed
Base Committed Amount Amount Amount
--------------------- ------------------- --------------------
JBIC Tranche A U.S.$173.250 million 0 U.S.$173.250 million
JBIC Tranche B U.S.$ 74.250 million 0 U.S.$ 74.250 million
KfW U.S.$ 22.500 million 0 U.S.$ 22.500 million
CALYON U.S.$ 22.500 million U.S.$22.500 million U.S.$ 45.000 million
RBS U.S.$ 22.500 million U.S.$22.500 million U.S.$ 45.000 million
SC U.S.$ 22.500 million U.S.$22.500 million U.S.$ 45.000 million
MIZUHO U.S.$ 22.500 million U.S.$22.500 million U.S.$ 45.000 million
Schedule B
Repayment Schedule
Scheduled Repayment
Payment Dates Percentage
------------- -------------------
First Payment Date 6.25%
Second Payment Date 6.25%
Third Payment Date 6.25%
Fourth Payment Date 6.25%
Fifth Payment Date 6.25%
Sixth Payment Date 6.25%
Seventh Payment Date 6.25%
Eighth Payment Date 6.25%
Ninth Payment Date 6.25%
Tenth Payment Date 6.25%
Eleventh Payment Date 6.25%
Twelfth Payment Date 6.25%
Thirteenth Payment Date 6.25%
Fourteenth Payment Date 6.25%
Fifteenth Payment Date 6.25%
Sixteenth Payment Date 6.25%
Schedule C
Drawdown Schedule
Drawdown Schedule
DRAWDOWN AMOUNT
---------------
November 2005 25.0
December 2005
January 2006
February 2006
March 2006 112.5
April 2006
May 2006
June 2006 87.5
July 2006
August 2006
September 2006 112.5
October 2006
November 2006
December 2006
January 2007 112.5
February 2007
March 2007
Schedule D
Description of Sulfide Project
The project consists of an expansion of the current open pit mine, new
primary sulfide mill and concentrator, new tailing storage facility and
ancillary facilities to mine and process the primary sulfide ore and produce
copper and molybdenum concentrates. The process facilities include three stage
crushing, ball mill comminution, rougher flotation, and two stages of cleaner
flotation to produce bulk copper-molybdenum concentrate. Differential flotation
of the bulk concentrate produces separate copper and molybdenum concentrates,
both of which are dewatered by thickening and filtration. The copper and
molybdenum concentrates are loaded onto ships for shipment (or alternatively
loaded onto trucks for transport) to smelting and molybdenum processing
facilities. The process tailing remaining after flotation are separated to
produce suitable material for construction of an embankment for the retention of
the balance of the tailing material. Major operating units are expected to be
substantially as set forth below or with such substitutions as deemed
substantially equivalent by the Borrower:
A. MINE
Mining is accomplished by conventional open-pit methods and consists of an
expansion of the xxxxx mining operation. The equipment fleet for the xxxxx
operations has been augmented to meet the demands of both the leaching and
sulfide operations. The fleet consists of shovels, diesel rotary blasthole
drills, haul trucks, and support equipment to mine approximately 280,000
tonnes-per-day to sustain both primary sulfide milling and oxide & secondary
sulfide xxxxx operations.
B. PROCESS PLANT
The process facilities treat about an average of 108,000 tonnes-per-day of
primary sulfide ore to produce separate copper and molybdenum concentrates by
milling and differential flotation.
The major operating units are as follows:
- primary crushing
- secondary cone crushing, tertiary HPGR crushing
- ball mill grinding
- rougher-scavenger flotation
- concentrate regrind
- cleaner flotation
- concentrate thickening
- molybdenum recovery by multi-stage differential flotation
- molybdenum concentrate filtration and drying
- copper concentrate thickening
- copper concentrate filtration
- tailing thickening
C. RECLAIM AND FRESH WATER SUPPLY
The water management system consists of the following items:
- A tailing water reclaim system consisting of barge mounted pumps to
return water from the tailing impoundment to the concentrator for
reuse.
- A sump located downstream of the tailing impoundment to collect water
deposited from the tailing underflow and any seepage and return this
water to the tailing impoundment.
- A fresh water pumping and piping system designed to supply water to
the concentrator and leaching operations.
D. TAILINGS MANAGEMENT
- The tailing storage facility consists of a rock fill starter dam
capable of being raised in multiple lifts to an ultimate embankment
height of about 260 meters. A tailing distribution system consisting
of a gravity pipeline, cyclone station and distribution pipelines.
E. POWER SUPPLY
Power for the new plant is provided via a new 220 kV feeder from the
existing Socabaya substation connected by a transmission line of approximately
9.6 km to the main plant site substation.
2
Schedule E
Tax Certification
_______________________, 2005
Messrs.
SOCIEDAD MINERA CERRO VERDE S.A.A.
ATN.: (BORROWER'S LEGAL REPRESENTATIVE)
(BORROWER'S ADDRESS)
Peru
"AFFIDAVIT"
Dear Sirs,
We hereby represent that _________________________, a Bank incorporated under
the laws of ___________________, acting in its capacity of ________________, has
made available to SOCIEDAD MINERA CERRO VERDE S.A.A. a loan facility with the
following characteristics:
BORROWER: SOCIEDAD MINERA CERRO VERDE S.A.A.
--------- ----------------------------------
AGENT:
PURPOSE:
FACILITY TYPE:
AVAILABILITY:
ADVANCE TERM:
AMOUNT:
INTEREST:
INTEREST PERIOD:
SECURITY:
INSTALLMENTS /PAYMENT SCHEDULE:
To our knowledge, this transaction is not hiding a loan between economically
related parties.
This certification is being issued by an authorized officer of [Bank's name] and
upon request by Sociedad Minera Cerro Verde S.A.A.
Sincerely yours,
-------------------------------------
(SIGNATURE)
(BANK'S NAME)
(NAME OF LEGAL REPRESENTATIVE)
Schedule F
Tax Matters
Certifications issued by Authorized Officers of JBIC shall confirm the
following:
- JBIC is a governmental financial institution of Japan which has among its
objectives providing overseas investment loans to companies in developing
countries in which Japanese companies invest; and
- JBIC has agreed, in accordance with the Japan Bank for International
Cooperation Law and institutional objectives, to provide a credit facility
to the Borrower, which is invested in by Japanese companies and exports a
certain portion of its mining products to Japan, for purposes of developing
and promoting mining activities in Peru to be carried out by the Borrower.
Certifications issued by Authorized Officers of KfW shall confirm the following:
- KfW is majority-owned by the German government and has among its objectives
granting developing loans to companies in developing countries; and
- KfW has agreed, in accordance with its Bylaws and institutional objectives,
to grant a credit facility to the Borrower for purposes of developing and
promoting mining activities in Peru to be carried out by the Borrower.
DISCLOSURE SCHEDULES TO THE
MASTER PARTICIPATION AGREEMENT
1
SCHEDULE 6.02
BORROWER CAPITALIZATION
The capital stock of the borrower is divided as follows:
SHAREHOLDER STOCK PARTICIPATION
----------- ----------- -------------
Buenaventura 63,833,717 18.24%
Sumitomo 73,511,763 21.00%
Cyprus Climax 187,500,306 53.56%
Others 25,210,226 7.2%
TOTAL 350,056,012 100.00%
2
SCHEDULE 6.03(C)
COMPLIANCE WITH OTHER INSTRUMENTS AND LAWS
See Schedule 6.06 ("Labor Matters").
3
SCHEDULE 6.03(D)
CORE PERUVIAN GOVERNMENTAL APPROVALS
PART I - OBTAINED CORE PERUVIAN GOVERNMENTAL APPROVALS
- Environmental Impact Study Approval was approved by the General Director of
Environmental Affairs by the Directorial Resolution No. 438-2004-MEM/DGAAM
dated September 27, 2004.
- Approval of Beneficiation Concession Expansion and Construction permit by
the Mining Promotion Director on October 26, 2004. This three-phase-permit
allows the expansion of the beneficiation concession, and authorizes the
construction of the concentrator and its ancillary facilities.
- Supreme Decree 003-2004-AG that reserves water rights in favor of the
Borrower dated January 28, 2004.
- Permit by the District Municipality of Yarabamba granting Fluor's
contractor the right to extract materials to produce concrete and other
construction materials in connection with the construction of the Sulfide
Project from the Cantera San Xxxx. This permit was granted by
Municipality's agreement No. 039-2005-MDVY.
- Approval by the Hydrocarbons General Management of the Ministry of Mines of
liquid fuel usage permits to allow Fluor to use and store liquid fuels for
the construction of the Sulfide Project. This permit was granted to Fluor
on September 1, 2005, and resulted in the issuance of the Registration
number 0009-CDMV-04-2005.
- Approval by the General Management of Control of Security Services, Arms
Control, Munitions and Civil Use of Explosives of the Interior Ministry
(DICSCAMEC) of the temporary use of explosives by G&M (Fluor's contractor)
in connection with the construction of the Sulfide Project. This permit was
granted through Resolution No. 004958 dated August 16, 2005. This
authorization is valid through October 19, 2005.
- Authorization granted to the Borrower to change and construct a minor
modification to the Department's road that leads to the Mine. This permit
was issued by the Regional Manager of the Regional Government of Arequipa
through official Communication No 787-2005-GRA-pr/GGR dated July 20, 2005.
4
- Contract signed between the Borrower and the Regional Government of
Arequipa for the construction of the Tiabaya - Uchumayo Bridge on May 18,
2005. The Regional Government is responsible for building the bridge,
obtaining all permits and licenses. The Borrower has agreed to contribute
material and services.
PART II - NOT YET OBTAINED CORE PERUVIAN GOVERNMENTAL APPROVALS
- Operation Permit, to be obtained once the construction is finished. This
permit is the third phase of the approval of the beneficiation concession
expansion and the construction permit, and can be granted by the Ministry
of Energy and Mines after completion of the construction and inspection
process.
- Approval of the Closure Plan for the Mines and the Sulfide Project by the
Ministry of Energy and Mines. Current legislation requires the submission
of the Closure Plan by August 14, 2006.
- Approval of the Agriculture Department and Regional Direction of
Agriculture in Arequipa for the Borrower's plan to expand the capacity of
its water supply infrastructure in connection with the Sulfide Project. A
construction permit from the Municipality of Uchumayo may also be required.
- Issuance of Water License by the Technical Administration of the River
Chili District granting the Borrower additional water rights necessary for
the Sulfide Project. This license can be issued once Pillones dam and the
Operation Plan of the Chili River System is finished, according to the
terms of Supreme Decree No 003-2004-AG dated January 28, 2004.
- Approval of the Environmental Impact Study for the 220 KV line by the
Ministry of Energy and Mines.
- Approval by the Electrical Direction of the Ministry of Energy and Mines of
the concession for the 220 KV Transmission Line.
- License by the Municipality of Socabaya for the construction of the
sub-station of the 220 KV Transmission Line and the Transmission Line
itself located inside the boundaries of the district might be required.
5
- Recognition of the easements related to the 220 KV Transmission Line by the
Electrical General Direction of the Ministry of Energy and Mines.(1)
- Approval of modifications to the Mining Operation Certificate issued by the
General Mining Director of the Ministry of Energy and Mines to authorize
increased use of explosives by the Borrower in connection with the
operation of the Sulfide Project.
- Approval by the General Management of Control of Security Services, Arms
Control, Munitions and Civil Use of Explosives of the Interior Ministry
(DICSCAMEC) for the increased use of explosives in connection with the
operation of the Sulfide Project.
- Approval by the Hydrocarbons General Management of the Ministry of Energy
and Mines of the modification of the current liquid fuel usage permit to
allow the Borrower to use and store liquid fuels for the operation of the
Sulfide Project.
- License from the Ministry of Transportation and Communications for the
Borrower's use of radio frequencies in connection with the Sulfide Project.
- Permit from the Ministry of Transportation and Communications for the
Borrower to upgrade the road that connects the mine site with the
Panamericana road (that eventually connects with the road to Matarani
Port).
- Permit from the Regional Health Direction of the Health Ministry in
Arequipa for the operation of a new first aid center for the Sulfide
Project.
- Approval by the Mining Environmental Direction of the Ministry of Energy
and Mines of an amendment to the Environmental Impact Study for the Sulfide
Project regarding the bimodal transport of concentrates to the Matarani
port. In the event that additional modifications to the Sulfide Project are
made, corresponding modifications to the Environmental Impact Study may be
required.
- License from the General Direction of Environmental Health under Ministry
of Health (DIGESA) regarding the new potable (drinking) water system
required for the operations.
----------
(1) SMCV is aware of precedents where the recognition of easements by the
appropriate Peruvian Governmental Authorities has been delayed by months
or, in certain circumstances, years. The delay in the recognition of such
easement should not, however, prevent the construction or operation of the
Transmission Line.
6
- License from the General Direction of Environmental Health for the
operation of waste water system (septic tank) for the administrative
offices required for the construction and operation of the project.
- Approval of the Environmental Impact Study presented by TISUR before the
Ministry of Transportation regarding the new facilities in the Matarani
Port.
7
SCHEDULE 6.04
ENVIRONMENTAL MATTERS
- WASTE WATER TREATMENT SYSTEM. On December 17, 2004, the Borrower received a
notice from the Health General Direction (DIGESA) requesting that the
Borrower modify its waste water treatment system to comply with the water
quality standards set forth in Executive Order No 17552 and corresponding
administrative regulations. DIGESA then suggested that the Borrower should
apply for a "recycling water authorization". The purpose of asking for a
"recycling water authorization", even though the Borrower does not recycle,
is to allow DIGESA to inspect the facilities and to verify that the Mine
does not have any waste water discharge. This is the only procedure DIGESA
has to certify that there is no waste water discharge.
- FREDICON. FREDICON, a community association, filed two criminal claims
against the Borrower for failure to water trees planted by FREDICON on the
Borrower's property and for failure to plant additional trees on its
property. The first criminal claim was dismissed as unfounded by the Second
Crime Prevention Prosecutor, but nevertheless forwarded to the Penal
Prosecutor. The second criminal claim is still pending.
- XX. XXXXXXXX XXXXXXXX FILED A CIVIL CLAIM (ACCION XX XXXXXX) AGAINST THE
BORROWER BEFORE THE 5TH CIVIL COURT OF AREQUIPA, asking the judge to stop
the works for the change of the pipeline done in the zone near the tunnel
on the way to the mine. The hearing took place on August 26, 2005.
Resolution is still pending.
- CLAIM FROM XXXXXXXX XXXXXXXX AGAINST THE BORROWER - Appeal of July 13, 2005
by Xxxxxxxx Xxxxxxxx Xxxxxxx of a prosecutor's decision that Borrower does
not violate law by failure to water trees (Reg. No 2970).
- CLAIM FROM XXXXXXXX XXXXXXXX AGAINST THE BORROWER- Appeal of July 13, 2005
by Xxxxxxxx Xxxxxxxx Xxxxxxx of a prosecutor's decision that Borrower does
not violate law by performing work on its water pipeline (Reg. 2911).
- PAMA. The Borrower received a notice from the Ministry of Energy and Mines
that the "Programa de Adecuacion y Manejo Ambiental" ("PAMA") would need to
be updated in order for it to built a new leaching facility to lixiviate
the mineral for the cathode production ("Pad 5"). The construction for Pad
5 was originally planned for 2005 but has been postponed until 2008. The
Borrower has appealed the notice and has now been informed verbally that
PAMA does not need to be
8
amended, but that the Environmental Management Plan to be filed for the
project will need to include Pad 5. The Borrower is planning to withdraw
its appeal."
9
SCHEDULE 6.05
TAXES
None.
10
SCHEDULE 6.06
LABOR MATTERS
Law No 27942 and related administrative regulations, approved by Supreme
Decree No 010-2003-MIMDES, required employers to implement procedures to
protect employees from sexual harassment by March 2004. The Borrower did not
timely implement the procedures required under these regulation.
11
SCHEDULE 6.07
LEGAL PROCEEDINGS
XXXX XXXXXXX XXXXXXX (387-04 AND 383-04) AND OTHERS. On Xxxxxxxx 0, 0000, Xxxx
Xxxxxxx Xxxxxxx and a group of approximately 20 farmers submitted an application
with the Special Land Titulation Project (XXXX) to purchase approximately
105,000 hectares of land located in the Tiabaya 67 mining concession. Under
Peruvian law, XXXX is authorized to sell available land, provided that such sale
will not interfere with any third party rights. The Borrower was granted title
to the Tiabaya 67 mining concession in 2000 and this mining concession is
recorded with INACC. XXXX has ruled in favor of the Borrower. Despite this, the
farmers have now asked the Borrower through a mediator to pay approximately
US$25,000 in return for vacating the land. Tiabaya 67 is located at the edge of
the Borrower's concessions in the district of Yarabamba.
12
SCHEDULE 6.08
CONSENTS
1. Consent by Fluor Xxxxxx Sucursal del Peru for the collateral assignment of
the Xxxxxxxxxxxx Xxxxxxxxx Xx. XX00000 signed by and between Fluor Xxxxxx
Sucursal del Peru and Sociedad Minera Cerro Verde S.A.A., effective as of
December 14, 2004.
2. Consent by Fluor Canada Ltd. for the collateral assignment of the
Engineering Agreement No. CV 12913, dated as of December 14, 2004, between
the Borrower and Fluor Canada Ltd.
3. Consent by Terminal Internacional del Sur S.A. (TISUR) for the collateral
assignment of the contract between TISUR and Sociedad Minera Cerro Verde
S.A.A. dated December 31, 2004.
4. Consent by PERURAIL S.A. for the collateral assignment of the contract
signed by and between PERURAIL S.A. and Sociedad Minera Cerro Verde S.A.A
on June 11, 2005.
5. Consent by Transaltisa S.A for the collateral assignment of the Contrato de
Servicios de Transporte de Catodos de Cobre, Mercaderias y Acido Sulfurico
between the Borrower and Transaltisa S.A. dated as of June 2, 2003.
6. Consent by Electroperu for the collateral assignment of the contract signed
by and between Electroperu and Sociedad Minera Cerro Verde S.A.A. for the
supply of 46 MW, dated December 31, 2004.
7. Consent by Electroperu for the collateral assignment of the contract signed
by and between Electroperu and Sociedad Minera Cerro Verde S.A.A. for the
supply of 110 MW, dated December 31, 2004.
8. Consent by Empresa de generacion de Arequipa S.A. (EGASA) for the
collateral assignment of the contract signed by EGASA and Sociedad Minera
Cerro Verde S.A.A. dated December 31, 2004.
9. Consent by the Shareholders for the collateral assignment of the
Shareholders Agreement among SMM Cerro Verde Netherlands B.V., Sumitomo
Metal Mining Co., LTD., Sumitomo Corporation, Summit Global Management II
B.V., Compania de Minas Buenaventura S.A.A., Xxxxxx Dodge Corporation,
Cyprus
13
Climax Metals Company, and Sociedad Minera Cerro Verde S.A.A. dated as of
June 1, 2005.
10. Consent by Xxxxxx Xxxxxx Dodge del Peru for the collateral assignment of
the Operator's Agreement signed by and between Xxxxxx Xxxxxx Dodge del Peru
and Sociedad Minera Cerro Verde S.A.A. dated June 1, 2005.
11. Consent by Xxxxxx Dodge Sales Company for the collateral assignment of the
Supply Agreement by and between Xxxxxx Dodge Sales Company and the Borrower
effective as of January 1, 2005.
12. Consent by Sumitomo Metal Mining Co., Ltd. for the collateral assignment of
the Concentrate Sales Agreement between Sumitomo Metal Mining, Co., Ltd.
and the Borrower dated as of June 1, 2005, as amended by Amendment No.1
thereto dated as of September 30, 2005.
13. Consent by Xxxxxx Dodge Sales Company for the collateral assignment of the
Concentrate Sales Agreement between Xxxxxx Dodge Sales Company and the
Borrower dated as of September 30, 2005.
14. Consent by Xxxxxx Dodge Sales Company for the collateral assignment of the
Cathodes Sales Agreement between Xxxxxx Dodge Sales Company and the
Borrower dated as of September 30, 2005.
15. Consent by Xxxxxx Dodge Corporation for the collateral assignment of the
Parent Guarantee for the Offtake Agreements between Xxxxxx Dodge
Corporation and the Borrower dated as of September 30, 2005.
16. Consent by Xxxxxx Dodge Corporation for the collateral assignment of the
Parent Guarantee for the Operator's Agreement between Xxxxxx Dodge
Corporation and the Borrower dated as of September 30, 2005.
14
SCHEDULE 6.09
FINANCIAL STATEMENTS
15
SOCIEDAD MINERA CERRO VERDE S.A.A.
ESTADOS FINANCIEROS
31 XX XXXXXXXXX XXX 0000 X 00 XX XXXXXXXXX DEL 2003
16
SOCIEDAD MINERA XXXXX XXXXX X.X.X.
XXXXXXX XXXXXXXXXXX
00 XX XXXXXXXXX XXX 0000 Y 31 DE DICIEMBRE DEL 2003
CONTENIDO
Dictamen de los auditores independientes
Balance general
Estado de ganancias y perdidas
Estado de cambios en el patrimonio neto
Estado de flujos de efectivo
Notas a los estados financieros
S/. = Nuevo sol
US$ = Dolar estadounidense
17
(PRICEWATERHOUSECOOPERS LOGO) (80 ANOS EN EL PERU LOGO)
XXXXX-XXXXX GAVEGLIO Y ASOCIADOS
SOCIEDAD CIVIL
FIRMA MIEMBRO DE PRICEWATERHOUSECOOPERS
Xx. Xxxxxxx x Xxxxxxx 000
Xxxx 00, Xxxx
Apartado 1434-2869
Telfs.:(000)000-0000 000-0000
Fax:(000)000-0000 000-0000
DICTAMEN DE LOS AUDITORES INDEPENDIENTES
2 de febrero del 2005
A los senores Accionistas
Sociedad Minera Cerro Verde S.A.A.
Hemos auditado los balances generales adjuntos de Sociedad Minera Cerro Verde
S.A.A al 31 de diciembre del 2004 y al 00 xx xxxxxxxxx xxx 0000 x xxx
xxxxxxxxxxxxxxxx xxxxxxx de ganancias y perdidas, de cambios en el patrimonio
neto y de flujos de efectivo por los anos terminados en esas fechas, expresados
en dolares estadounidenses. La preparacion de dichos estados financieros es
responsabilidad de la Gerencia de la Compania. Nuestra responsabilidad consiste
en emitir una opinion sobre estos estados financieros basada en las auditorfas
que efectuamos.
Nuestras auditorfas fueron efectuadas de acuerdo con normas de auditorfa
generalmente aceptadas en el Peru. Tales normas requieren que planifiquemos y
realicemos nuestro trabajo con la finalidad de obtener una seguridad razonable
de que los estados financieros no contienen errores importantes. Una auditoria
comprende el examen, basado en comprobaciones selectivas, de las evidencias que
respaldan los importes y las divulgaciones expuestas en los estados financieros.
Una auditoria tambien comprende la evaluacion de los pincipios de contabilidad
aplicados y de las estimaciones significativas efectuadas por la Gerencia de la
Compania, asi como una evaluacion de la presentacion general de los estados
financieros. Consideramos gue las auditorias efectuadas constituyen una base
razonable para fundamentar nuestra opinion.
En nuestra opinion, los estados financieros antes indicados presentan
razonablemente, en todos sus aspectos significativos, la situacion financiera de
SOCIEDAD MINERA CERRO VERDE S.A.A. al 31 de diciembre del 2004 y al 00 xx
xxxxxxxxx xxx 0000, xxx xxxxxxxxxx xx sus operaciones y sus flujos de efectivo
por los anos terminados en esas fechas, de acuerdo con principios de
contabilidad generalmente aceptados en el Peru.
XXXXX-XXXXX GAVEGLIO Y ASOCIADOS
Refrendado por
/s/ Xxxx X. Xxxxxxx
-------------------------------------(socio)
Xxxx X. Xxxxxxx
Contador Publico Colegiado
Matricula No. 17729
Inscrita en Xx Xxxxxxx No. 11028527
Registro de Personas Juridicas de Lima
Capital pagado S/. 1,035,000.00
18
SOCIEDAD MINERA CERRO VERDE S.A.A.
BALANCE GENERAL (NOTAS 1 Y, 2)
ACTIVO
AL 31 DE DICIEMBRE DEL
----------------------
2004 2003
------- -------
US$000 US$000
ACTIVO CORRIENTE
Caja y bancos 8,628 28,670
------- -------
Inversiones disponibles para la venta (Nota 3) 148,544 --
------- -------
Cuentas por cobrar comerciales:
Empresas afiliadas (Nota 4) 8,848 10,546
Terceros 175 131
------- -------
9,023 10,677
Credito fiscal por recuperar 431 278
Diversas 326 378
------- -------
9,780 11,333
------- -------
Existencias (Nota 5) 25,344 21,642
------- -------
Gastos pagados por anticipado 100 259
------- -------
Total del activo corriente 192,396 61,904
EXISTENCIAS (NOTA 5) 3,570 3,175
INMUEBLES, MAQUINARIA Y
EQUIPO, NETO (NOTA 6) 149,805 153,943
GASTOS DE DESARROLLO
DE MINA (NOTA 7) 16,186 17,942
OTROS ACTIVOS 2,086 1,983
------- -------
364,043 238,947
======= =======
PASIVO Y PATRIMONIO NETO
AL 31 DE DICIEMBRE DEL
----------------------
2004 2003
------- -------
US$000 US$000
PASIVO CORRIENTE
Cuentas por pagar comerciales 13,565 6,402
Empresas afiliadas (Nota 4) 806 357
Tributos por pagar 30,128 7
Remuneraciones y beneficios
sociales por pagar 8,226 1,270
Cuentas por pagar diversas 1,514 547
------- -------
Total del pasivo corriente 54,239 8,583
------- -------
OTROS PASIVOS A LARGO PLAZO
Provision para remediacion y cierre de mina 4,681 4,014
Impuesto a la renta y participacion de los
trabajadores diferidos (Nota 8) 38,480 32,127
------- -------
43,161 36,141
------- -------
INGRESOS DIFERIDOS 1,032 1,275
------- -------
PATRIMONIO NETO (NOTA 10)
Capital social 122,747 122,747
Capital adicional 194 194
Reserva legal 9,056 4,728
Resultados acumulados 133,614 65,279
------- -------
265,611 192,948
------- -------
SITUACION TRIBUTARIA (NOTA 11)
------- -------
364,043 238,947
======= =======
Las notas que se acompanan xxxxxx parte de los estados financieros.
19
SOCIEDAD MINERA CERRO VERDE S.A.A.
ESTADO DE GANANCIAS Y PERDIDAS (NOTAS 1 Y 2)
POR EL ANO TERMINADO
EL 31 DE DICIEMBRE DEL
----------------------
2004 2003
-------- --------
US$000 US$000
Ventas netas 260,782 156,724
Costo de ventas (Nota 12) (119,482) (103,962)
-------- --------
Utilidad bruta 141,300 52,762
-------- --------
Gastos de ventas (1,089) (601)
-------- --------
Utilidad de operacion 140,211 52,161
-------- --------
Otros (gastos) ingresos:
Gastos financieros, neto (Nota 13) (827) (2,151)
Gastos de exploracion -- (75)
Varios, neto (31) 6,939
-------- --------
(858) 4,713
-------- --------
Utilidad antes de participacion de los trabajadores e
impuesto a la renta 139,353 56,874
Participacion de los trabajadores:
- Corriente (Nota 9) (10,075) --
- Diferido (Nota 8) (1,427) (2,726)
Impuesto a la renta:
- Corriente (Nota 11-b) (35,262) (1,795)
- Diferido (Nota 8) (4,926) (9,078)
-------- --------
Utilidad xxxx del ano 87,663 43,275
======== ========
Utilidad por accion (Nota 14) US$0.386 US$0.190
======== ========
Las notas que se acompanan xxxxxx parte de los estados financieros.
20
SOCIEDAD MINERA CERRO VERDE
S.A.A.
ESTADO DE CAMBIOS EN EL PATRIMONIO NETO (NOTA 10)
POR LOS ANOS XXXXXXXXXX XX 00 XX XXXXXXXXX XXX 0000
Y EL 31 DE DICIEMBRE DEL 2003
CAPITAL CAPITAL RESERVA RESULTADOS
SOCIAL ADICIONAL LEGAL ACUMULADOS TOTAL
-------- --------- ------- ---------- -------
US$000 US$000 US$000 US$000 US$000
Saldos al 1 de enero del 2003 122,941 -- 3,213 22,839 148,993
Transferencia al capital adicional (194) 194 -- -- --
Transferencia a la reserva legal -- -- 1,515 (1,515) --
Ajuste por remediacion y cierre de mina -- -- -- 92 92
Cancelacion del contrato de cobertura de
intereses, neto de su efecto tributario -- -- 588 588
Utilidad xxxx del ano -- -- -- 43,275 43,275
------- --- ----- ------- -------
Saldos al 31 de diciembre del 2003 122,747 194 4,728 65,279 192,948
Transferencia a la reserva legal -- -- 4,328 (4,328) --
Distribucion de dividendos -- -- -- (15,000) (15,000)
Utilidad xxxx del ano -- -- -- 87,663 87,663
------- --- ----- ------- -------
Saldos al 31 de diciembre del 2004 122,747 194 9,056 133,614 265,611
======= === ===== ======= =======
Las notas que se acompanan xxxxxx parte de los estados financieros.
21
SOCIEDAD MINERA CERRO VERDE S.A.A.
ESTADO DE FLUJOS DE EFECTIVO (NOTAS 2 Y 16)
POR EL ANO TERMINADO
EL 31 DE DICIEMBRE DEL
----------------------
2004 2003
------- -------
US$000 US$000
FLUJOS DE EFECTIVO DE LAS ACTIVIDADES DE OPERACION
Utilidad xxxx del ano 87,663 43,275
Ajustes al resultado neto que no afectan los
flujos de efectivo de las actividades de operacion:
Depreciacion 20,824 18,503
Amortizacion de gastos de desarrollo de mina 1,756 1,733
Provision para remediacion y cierre de mina 379 501
Amortizacion de otros activos 185 --
Ajuste por remediacion y cierre de mina -- 1,983
Impuesto a la renta y participacion de los trabajadores diferidos 6,353 11,804
Aumento (disminucion) en el flujo de operaciones por variaciones netas
en activos y pasivos:
Cuentas por cobrar comerciales 1,654 (2,864)
Otras cuentas por cobrar (101) 830
Existencias (4,097) (10,017)
Gastos pagados por anticipado y otros activos 159 (1,141)
Cuentas por pagar comerciales 7,163 1,316
Tributos por pagar 30,121 (7)
Remuneraciones y beneficios sociales 6,956 236
Cuentas por pagar diversas 1,416 (536)
Ingresos diferidos (243) (243)
------- -------
Efectivo neto provisto por las actividades de operacion 160,188 65,373
------- -------
FLUJOS DE EFECTIVO DE LAS ACTIVIDADES DE INVERSION
Inversiones en obras en curso (16,772) (5,146)
Ingresos por venta de maquinaria y equipo y/o ajustes 86 --
------- -------
Efectivo neto aplicado a las actividades de inversion (16,686) (5,146)
------- -------
FLUJOS DE EFECTIVO DE LAS ACTIVIDADES DE FINANCIAMIENTO
Prestamos bancarios, neto -- (33,000)
Pago de dividendos (15,000) --
------- -------
Efectivo neto aplicado a las actividades de financiamiento (15,000) (33,000)
------- -------
Aumento neto del efectivo y equivalente de efectivo 128,502 27,227
Saldo del efectivo y equivalente de efectivo al inicio del ano 28,670 1,443
------- -------
Saldo del efectivo y equivalente de efectivo al final del ano 157,172 28,670
======= =======
Las notas que se acompanan xxxxxx parte de los estados financieros.
22
SOCIEDAD MINERA CERRO VERDE S.A.A.
NOTAS A LOS ESTADOS FINANCIEROS
31 DE DICIEMBRE DEL 2004 Y 31 DE DICIEMBRE DEL 2003
1 ACTIVIDAD ECONOMICA
SOCIEDAD MINERA CERRO VERDE S.A.A. (en adelante la Compania), subsidiaria
de Cyprus Climax Metals Co. (Cyprus) propietaria del 82.48% de las acciones
representativas de su capital social, se constituyo en el Peru el 20 xx
xxxxxx de 1993 como resultado de la division de Empresa Minera del Peru
(Xxxxxx Peru) encontrandose sus actividades reguladas por xx Xxx General de
Mineria. Su domicilio legal es Av. Xxxxxxx Xxxxxx No.304 - Arequipa. Su
actividad principal es la extraccion, produccion y comercializacion de
cobre en sus yacimientos ubicados al suroeste de la ciudad de Arequipa. La
Compania cotiza sus acciones en la Bolsa de Valores de Lima.
El personal empleado por la Compania para desarrollar sus actividades al 31
de diciembre del 2004 ascendio a 665 funcionarios y empleados (603 al 00 xx
xxxxxxxxx xxx 0000).
Xxx xxxxxxx financieros al 31 de diciembre del 2004 seran presentados a
consideracion de la Junta General de Accionistas en los plazos establecidos
por ley. En opinion de la Gerencia y el Directorio de la Compania, estos
estados financieros seran aprobados sin modificaciones. Los estados
financieros al 31 de diciembre del 2003 fueron aprobados por la Junta
General de Xxxxxxxxxxx xxx 00 xx xxxxx xxx 0000.
PLANTA DE SULFUROS
El 27 de setiembre del 2004, a traves de la Resolucion Directoral
438-2004-MEM/AAM emitida por el Ministerio de Energia y Minas, se aprobo el
Estudio de Impacto Ambiental del Proyecto Sulfuros Primarios. El 6 de
octubre del 2004 el Directorio xx Xxxxxx Dodge Corporation, principal
accionista de Cyprus, aprobo la construccion de la Planta de Sulfuros
Primarios. Xx 00 xx xxxxxxx xxx 0000 xx Xxxxxxxx recibio la notificacion
del Ministerio de Energia aprobando el proyecto.
La inversion en este proyecto se estima en US$850 millones y sera
financiado con recursos propios y con financiamiento de terceros. Se estima
que la construccion de la Planta se llevara a cabo en dos anos, y se espera
alcanzar los maximos niveles de produccion en el primer semestre del 2007.
La produccion de cobre fino en promedio alcanza 90,000 TM al ano, y se
estima que la inversion en este proyecto incrementara la produccion a
260,000 TM por ano.
Al 31 de diciembre del 2004, la Compania ha suscrito compromisos con
proveedores de equipos y de servicios por un monto de aproximadamente US$40
millones.
23
Pagina 2
2 PRINCIPIOS Y PRACTICAS CONTABLES
Los estados financieros se preparan de acuerdo con las disposiciones
legales sobre la materia y los principios de contabilidad generalmente
aceptados en el Peru. Los principios de contabilidad comprenden
sustancialmente a las Normas Internacionales de Informacion Financiera
(NIIF) las que incorporan a las Normas Internacionales de Contabilidad
(NIC) oficializadas a traves de resoluciones emitidas por el Consejo
Normativo de Contabilidad. A la fecha de los estados financieros, el
Consejo Normativo de Contabilidad ha oficializado la aplicacion de las NIC
de la 1 a la 41 y los pronunciamientos del 1 al 33 del Comite de
Interpretaciones (SIC).
Los principios y practicas contables mas importantes que han sido aplicados
en el registro de las operaciones y la preparacion de los estados
financieros son los siguientes:
a) Preparacion de estados financieros -
De acuerdo con lo permitido por el Articulo 87 degrees del Codigo
Tributario los registros contables de la Compania son mantenidos en dolares
estadounidenses, que corresponde a su moneda de medicion, dado que la
mayoria de sus transacciones son pactadas, cobradas y pagadas en esa
moneda. Las transacciones efectuadas en nuevos soles son expresadas al tipo
de cambio vigente de la fecha en que se realizan.
b) Uso de estimaciones contables -
El proceso de preparacion de los estados financieros requiere que la
Gerencia de la Compania lleve a cabo estimaciones y supuestos para la
determinacion de los saldos de los activos y pasivos, el monto de las
contingencias y el reconocimiento de los ingresos y gastos. En el caso que
estas estimaciones y supuestos variaran como resultado de cambios en las
premisas en las que se sustentaron, los correspondientes saldos de los
estados financieros se corrigen en la fecha en la que el cambio en las
estimaciones y supuestos se produce. Las principales estimaciones
relacionadas con los estados financieros se refieren a la depreciacion de
los bienes del activo fijo, la amortizacion de los gastos de desarrollo de
mina, provisiones para obsolescencia de materiales y suministros, para
remediacion y cierre de mina y el impuesto a la renta y la participacion de
los trabajadores (corrientes y diferidos).
c) Instrumentos financieros -
Los instrumentos financieros corresponden a los contratos que xxx xxxxx,
simultaneamente, a un activo financiero en una empresa y a un pasivo
financiero o a un instrumento de capital en otra empresa. En el caso de la
Compania, los instrumentos financieros corresponden a los depositos en
entidades financieras, inversiones, cuentas por cobrar, cuentas por pagar,
y hasta el 2003, a instrumentos derivados que corresponden a contratos de
cobertura de tasas de interes.
Las inversiones que se mantendran por un periodo de tiempo indefinido, que
pueden ser vendidas por necesidades de liquidez o cambios en las tasas de
interes, se clasifican como
24
Pagina 3
disponibles para la venta; estas inversiones se muestran como activos no
corrientes a menos que la Gerencia tenga intencion expresa de mantener la
inversion por menos de 12 meses contados desde la fecha del balance general
o a menos que sea necesario venderlas para aumentar el capital operativo de
la Compania, en cuyo caso se mostraran como activos corrientes. La Gerencia
determina la clasificacion de sus inversiones en la fecha de su compra y
evalua tal clasificacion periodicamente.
Las compras y ventas de inversiones se reconocen en la fecha de la
negociacion, que corresponde a la fecha en la que la Compania se compromete
a comprar o vender el activo. El costo de adquisicion incluye los costos
inherentes de la transaccion. Las inversiones disponibles para la venta son
subsecuentemente registradas a su valor razonable. Las ganancias y perdidas
realizadas y no realizadas que surgen de cambios en el valor razonable de
inversiones disponibles para la venta se incluyen en los resultados del
periodo en el que se originan.
El valor razonable es el monto por el que un activo puede ser intercambiado
entre un comprador y un vendedor debidamente informados, o puede ser
cancelada una obligacion, entre un deudor y un acreedor con suficiente
informacion, bajo los terminos de una transaccion de libre competencia. En
este sentido, en opinion de la Gerencia, los valores en libros de los
instrumentos financieros al 31 de diciembre del 2004 y al 31 de diciembre
del 2003 no difieren significativamente de sus valores razonables. Las
politicas contables sobre el reconocimiento y valuacion de estas partidas
se revelan en las respectivas politicas contables descritas en esta Nota.
d) Cuentas por cobrar comerciales -
Los saldos de las cuentas por cobrar comerciales se registran a su valor
nominal, neto del estimado de cuentas incobrables determinado sobre la base
de la revision periodica de los saldos pendientes de cobro que considera,
entre otros factores, la antiguedad de los saldos por cobrar y la
viabilidad de su cobranza. Las cuentas incobrables se castigan cuando se
identifican como tales.
e) Existencias -
Las existencias se valorizan al costo de produccion o adquisicion o a su
valor neto de realizacion, el que resulte menor. La valuacion de las
existencias se determina a traves de los metodos de ultimas entradas -
primeras salidas (productos terminados y en proceso) y promedio (materiales
y suministros). El costo de extraccion de mineral que incluye materiales,
mano de obra, otros costos directos y gastos generales de produccion y
excluye los gastos de financiamiento, es asignado a los productos
terminados (catodos de cobre) y a los productos en proceso.
El valor neto de realizacion de las existencias es el precio de venta
estimado en el curso normal de las operaciones del negocio, menos los
costos necesarios para terminar su produccion y los gastos de ventas. El
costo de las existencias por recibir ha sido determinado segun el metodo de
identificacion especifica.
25
Pagina 4
f) Inmuebles, maquinaria y equipo -
Los inmuebles, maquinaria y equipo se registran al costo, excepto por los
activos adquiridos por Cyprus que se registran a su valor de transferencia
menos una provision registrada para reducir su valor en libros a su valor
recuperable estimado.
Los gastos de mantenimiento y reparacion son cargados al costo de
produccion cuando se incurren y las renovaciones y mejoras se capitalizan.
Cuando el valor en libros es mayor que su valor recuperable estimado es
inmediatamente reducido a su valor recuperable. El costo y la depreciacion
acumulada de los activos vendidos o retirados se eliminan de sus
respectivas cuentas y la utilidad o perdida relacionados con activos
permanentes se afecta xx xxxxx de la depreciacion acumulada y los
relacionados con activos moviles se afecta a resultados.
La depreciacion de los inmuebles, maquinaria y equipo se calcula por el
metodo de unidades producidas en funcion de la vida util de la mina en el
caso de los activos permanentes y por el metodo de linea recta en el caso
de los activos moviles. Las tasas anuales de depreciacion utilizadas para
los activos moviles fluctuan entre 5% y 33%.
g) Gastos de desarrollo de mina -
Los gastos de desarrollo de los asientos mineros que, de acuerdo con
estimaciones de la Gerencia, se estima beneficiaran la produccion en el
futuro se capitalizan. Los gastos de exploracion de proyectos cuyos
resultados en el futuro son inciertos xx xxxxxx a los resultados cuando se
incurren. Los costos de desbroce incurridos hasta el 31 de diciembre de
1999 en la preparacion de la mina se muestran en el rubro gastos de
preparacion de mina del balance general y se amortizan en funcion del
mineral extraido. Los costos de desbroce incurridos a partir del ano 2000
xx xxxxxx xx xxxxx de produccion.
h) Deterioro de activos -
En el caso de ocurrencia de eventos o cambios economicos que indiquen que
el valor en libros de los activos de vida util prolongada se ha
deteriorado, la Compania estima su valor recuperable y si es necesario
reconoce una perdida por deterioro con cargo a los resultados del
ejercicio. Esta perdida es el monto en el que el valor en libros del activo
es reducido a su valor recuperable. El valor recuperable de los activos
corresponde al mayor valor entre el monto neto que se obtendria de su venta
y su valor en uso. El valor de venta neto corresponde xx xxxxx que se
obtendria de la venta del activo en una transaccion cerrada entre partes no
relacionadas, el precio de referencia en un xxxxxxx activo o el de
transacciones similares recientes. El valor en uso corresponde al valor
presente de los flujos futuros estimados que se obtendrian del uso continuo
del activo y de su disposicion final al termino de su vida util.
Los supuestos en que xx xxxxx los estimados de flujos futuros estan sujetos
a riesgos e incertidumbres. Cualquier diferencia entre los supuestos y las
condiciones xx xxxxxxx y/o el
26
Pagina 5
desempeno de la Compania podrian tener un efecto importante en la situacion
financiera y los resultados de sus operaciones.
i) Impuesto a la renta -
El impuesto a la corriente se registra de acuerdo con la legislacion
vigente (Nota 11).
El impuesto a la renta diferido se registra por el metodo del pasivo
reconociendo el efecto de las diferencias temporales que surgen entre la
base tributaria de los activos y pasivos y su saldo en los estados
financieros, aplicando la legislacion y la tasa de impuesto promulgadas o
sustancialmente promulgadas. Las principales diferencias temporales se
resumen en la Nota 8.
Impuestos diferidos activos solo se reconocen en la medida que sea probable
que se dispondra de utilidades gravables futuras contra las que se pueda
utilizar estos beneficios tributarios.
j) Provisiones -
Las provisiones se reconocen cuando la Compania tiene una obligacion
presente legal o asumida como resultado de hechos pasados, es probable que
se requiera de la aplicacion de recursos para cancelar xx xxxxxxxxxx y es
posible estimar xx xxxxx confiablemente.
La Compania estima el valor presente de xx xxxxxxxxxx futura por
remediacion y cierre de mina (pasivo por remediacion o "PPR"), e incrementa
el valor en libros del activo (activo por remediacion o "APR") a retirarse
en el futuro, el mismo que se muestra en el rubro Otros activos en el
balance general. Posteriormente, el APR se atribuye a los resultados en el
plazo de vida util de los activos que le dieron origen y es ajustado para
reflejar los cambios que pudieran resultar por el paso del tiempo y de
revisiones de, ya sea, la fecha de ocurrencia o el monto del valor presente
originalmente estimados.
k) Creditos tributarios por programas de reinversion -
El beneficio tributario por programas de reinversion (Nota 11-c) se
reconoce en el ejercicio en el que se restringen las utilidades, como una
reduccion del impuesto a la renta a pagar.
l) Reconocimiento de ingresos por venta -
Los ingresos por venta de mineral se reconocen en el momento de entrega del
mineral al transportista designado por el cliente, momento en el que se
transfieren al cliente los riesgos y beneficios inherentes a la propiedad
del mineral.
27
Pagina 6
m) Contingencias -
Los pasivos contingentes no se reconocen en los estados financieros y se
exponen en notas a los estados financieros a menos que su ocurrencia sea
remota. Los activos contingentes no se reconocen en los estados financieros
y se revelan solo si es probable su realizacion.
n) Efectivo y equivalentes de efectivo -
Para propositos del estado de flujos de efectivo, el efectivo y
equivalentes de efectivo comprenden el efectivo disponible, depositos a la
vista en bancos y otras inversiones altamente liquidas de corto plazo.
o) Nuevos pronunciamientos contables -
A la fecha el Comite de Normas Internacionales de Contabilidad (IASB por
sus siglas en ingles) ha completado el proceso de revision de las Normas
Internacionales de Contabilidad, proceso que se conoce como el "Proyecto de
Mejora" y ha emitido nuevas normas contables. Todas las revisiones de las
NIC existentes y las nuevas NIIF emitidas (seis) tienen vigencia a nivel
internacional a partir del 1 de enero de 2005; con excepcion de la NIIF 6
cuya vigencia es a partir del 1 de enero del 2006. A la fecha estas normas
no han sido aprobadas en el Peru por el Consejo Normativo de Contabilidad.
La Gerencia esta evaluando el impacto que significara la adopcion de las
NIC revisadas y las nuevas NIIF emitidas en los estados financieros de la
Compania.
Como parte del proyecto de mejora de las NIC llevado a cabo, quince NIC
fueron revisadas con el objetivo de reducir o eliminar procedimientos
alternativos, redundancias y conflictos entre las normas, para tratar con
ciertos aspectos de convergencia, sustancialmente con las normas
norteamericanas, e introducir otras mejoras.
Las NIC modificadas por el proyecto se detallan a continuacion:
- NIC 1 (revisada en el 2003) afecta la presentacion del interes
minoritario y otras revelaciones.
- NIC 2 (revisada en el 2003) elimina el metodo de valuacion de ultimas
entradas - primeras salidas.
- NIC 8, 10, 16, 17, 21, 24, 27, 28, 31, 32, 33, y 40 (revisadas en el
2003) y la NIC 39 (revisada en el 2004) no contienen cambios
importantes.
En adicion como parte de la revision de las normas relativas a
combinaciones de negocios, que resulto en la emision del NIIF 3, las NIC 36
y 38 tambien fueron revisadas.
28
Pagina 7
Las NIIF emitidas se detallan a continuacion:
NIIF 2 - Pagos en Base a Acciones; NIIF 3 - Combinacion de Negocios; NIIF 4
- Contratos de Seguro; NIIF 5 - Activos no Corrientes Mantenidos para la
Venta y Operaciones Discontinuas y la NIIF 6 - Exploracion y Evaluacion de
Recursos Minerales
3 INVERSIONES DISPONIBLES PARA LA VENTA
Al 31 de diciembre del 2004 este rubro comprende inversiones en Bonos del
Tesoro Norteamericano que devengan un interes anual a una tasa variable.
Estas inversiones se mantendran por tiempo indefinido y pueden ser vendidas
cuando lo requiera la Compania. Estas inversiones se clasifican como
activos corrientes dado que la Gerencia estima venderlas para aumentar el
capital operativo de la Compania. El valor en libros de estas inversiones
corresponde a su valor razonable a la fecha de los estados financieros.
Estos bonos han devengado intereses por US$591,000 que se incluyen en la
cuenta de gastos financieros, neto en el estado de ganancias y perdidas.
4 EMPRESAS AFILIADAS
El movimiento de las cuentas por cobrar y por pagar con empresas afiliadas
por el ano 2004, es el siguiente:
SALDO SALDO
INICIAL ADICIONES DEDUCCIONES FINAL
US$000 US$000 US$000 US$000
------- --------- ----------- ------
Por cobrar -
Xxxxxx Dodge Sales Company (PDSC) 10,546 161,383 (163,081) 8,848
====== ======= ======== =====
Por pagar -
Xxxxxx Dodge Corporation 306 3,796 (3,333) 769
Xxxxxx Dodge Sales Company 34 137 (138) 33
Sociedad Minera El Abra S.A -- 16 (12) 4
Compania Contractual Xxxxxx Xxxxxxxxxx 17 -- (17) --
Xxxxxx Dodge Mining Services -- 626 (626) --
------ ------- -------- -----
357 4,575 (4,126) 806
====== ======= ======== =====
Las cuentas por cobrar estan referidas a ventas de catodos de cobre. Estos
saldos son considerados de vencimiento corriente, no devengan intereses y no
tienen garantias especificas.
En el ano 2004, la Compania vendio catodos de cobre a PDSC por aproximadamente
US$161,383,000 (US$115,347,000 en el 2003) y le pago comisiones por US$137,000
(US$158,000 en el 2003).
29
Pagina 8
Las cuentas por pagar se originan por operaciones relacionadas
principalmente con la prestacion de servicios y reembolsos de gastos. Estos
saldos son de vencimiento corriente, no devengan intereses y no tienen
garantias especificas.
5 EXISTENCIAS
Al 31 de diciembre este rubro comprende:
2004 2003
------ ------
US$000 US$000
Catodos de cobre 2,401 3,076
Producto en proceso 13,621 9,428
Materiales y suministros 13,712 15,802
Existencias por recibir 554 664
------ ------
30,288 28,970
Provision por obsolescencia de
materiales y suministros (1,374) (4,153)
------ ------
28,914 24,817
Productos en proceso a largo plazo (3,570) (3,175)
------ ------
25,344 21,642
====== ======
De acuerdo con estimaciones efectuadas por la Gerencia, el monto de la
provision para obsolescencia de materiales y suministros es suficiente
sobre la base de la relacion entre su consumo futuro proyectado en el
proceso productivo y su rotacion.
30
Pagina 9
6 INMUEBLES, MAQUINARIA Y EQUIPO
El movimiento de la cuenta inmuebles, maquinaria y equipo y el de su
correspondiente depreciacion acumulada, por el ano terminado el 31 de
diciembre del 2004, es el siguiente:
ADICIONES
AL COSTO/ DEDUC-
SALDO APLICADAS A CIONES Y TRANSFE- SALDO
INICIAL RESULTADOS AJUSTES RENCIAS FINAL
------- ----------- -------- -------- -------
US$000 US$000 US$000 US$000 US$000
Costo -
Terrenos 1,475 -- (51) -- 1,424
Edificios y otras
construcciones 37,408 -- (121) 3777 37,664
Maquinaria y equipo 275,000 -- (26) 4,914 279,888
Unidades de transporte 4,244 -- (18) 321 4,547
Muebles y enseres 196 -- -- -- 196
Equipos diversos 4,030 -- (100) 477 4,407
Obras en curso 2,526 16,772 -- (6,089) 13,209
Provision por comparacion
con el valor xx xxxxxxx (23,851) -- 49 -- (23,802)
------- ------- ---- ------ --------
Van: 301,028) -- -- -- 317.533
------- ======= ==== ====== --------
Vienen: 301,028 -- -- -- 317.533
------- ======= ==== ====== --------
Depreciacion acumulada -
Edificios y otras
construcciones 10,212 1,741 (56) -- 11,897
Maquinaria y equipo 129,894 18,440 (32) -- 148,302
Unidades de transporte 3,551 286 (18) -- 3,819
Muebles y enseres 105 19 -- -- 124
Equipos diversos 3,323 338 (75) -- 3,586
------- ------- ---- ------ --------
147,085 20,824 (181) -- 167,728
======= ======= ==== ====== =======
Costo neto 153,943 149,805
======= =======
31
Pagina 10
7 GASTOS DE DESARROLLO DE MINA
El movimiento de la cuenta gastos de desarrollo de mina y el de su
correspondiente amortizacion acumulada, por el ano terminado el 31 de
diciembre del 2004, es el siguiente:
ADICIONES
AL COSTO/
SALDO APLICADAS A SALDO
INICIAL RESULTADOS FINAL
------- ----------- ------
US$000 US$000 US$000
Costo -
Gastos de desarrollo 11,982 -- 11,982
Gastos de preparacion de mina 14,158 -- 14,158
------ ------ ------
26,140 -- 26,140
------ ====== ------
Amortizacion acumulada -
Gastos de desarrollo y
Gastos de preparacion de mina 8,198 1,756 9,954
------ ------ ------
Costo neto 17,942 1,756 16,186
====== ====== ======
Los gastos de desarrollo corresponden a los costos incurridos en la
confirmacion de las reservas minables en los tajos Santa Xxxx x Xxxxx
Verde. Los gastos de preparacion de mina se refieren a los costos de
desbroce incurridos hasta el 31 de diciembre de 1999 en la preparacion del
tajo Cerro Verde para continuar su explotacion determinado en funcion de
las reservas estimadas de mineral.
32
Pagina 11
La amortizacion de estos gastos se calcula por el metodo de unidades
producidas.
8 IMPUESTO A LA RENTA Y PARTICIPACION DE LOS TRABAJADORES DIFERIDO
a) Al 31 de diciembre el impuesto a la renta y la participacion de los
trabajadores diferido resulta de las siguientes partidas temporales:
2004 2003
-------- -------
US$000 US$000
Deudor:
Provision para obsolescencia de existencias (1,374) (4,153)
Diferencia en metodo de valorizacion de existencias (9,907) (14,825)
Provision para cierre de mina (4,681) (4,014)
Provision por contratos de cobertura de intereses -- (913)
------- -------
(15,962) (23,905)
------- -------
Acreedor:
Diferencia en metodo de depreciacion 110,116 98,898
Gastos de desbroce diferidos 11,852 13,269
Gastos de desarrollo de mina 2,086 1,983
------- -------
124,054 114,150
------- -------
108,092 90,245
======= =======
Tasa de la participacion de los trabajadores (8%) y
del impuesto a la renta (30%) 35.6% 35.6%
======= =======
Total del impuesto diferido acreedor al final del ano 38,480 32,127
Total del impuesto diferido acreedor al inicio del ano (32,127) (19,998)
------- -------
Efecto total del ano (6,353) (12,129)
Efecto en el patrimonio -- 325
------- -------
Cargo a resultados del ano (6,353) (11,804)
======= =======
b) El impuesto a la renta y participacion de los trabajadores diferidos
se discrimina en:
2004 2003
------ ------
US$000 US$000
Participacion de los trabajadores 8,647 7,220
Impuesto a la renta 29,833 24,907
------ ------
38,480 32,127
====== ======
33
Pagina 12
9 PARTICIPACION DE LOS TRABAJADORES
De acuerdo con la legislacion vigente, la participacion de los trabajadores
en las utilidades de la Compania es el 8% de la renta anual antes de
impuestos. Esta participacion es considerada como gasto deducible de la
Compania para la determinacion del impuesto a la renta.
10 PATRIMONIO NETO
a) Capital -
Al 31 de diciembre del 2004 y 2003 el capital autorizado, suscrito y pagado
de acuerdo con los estatutos de la Compania y sus modificaciones esta
representado por 227,309,099 acciones comunes. Segun el acuerdo de
accionistas del 11 de xxxxx del 2003 se acordo denominar el valor nominal
de las acciones en dolares estadounidenses en US$0.54 por accion. La
cotizacion bursatil de estas acciones al 31 de diciembre del 2004 fue de
US$3.96 por accion y su frecuencia de negociacion de 100%.
Al 31 de diciembre del 2004, la estructura societaria del capital de la
Compania es la siguiente:
PORCENTAJE
PORCENTAJE DE PARTICIPACION NUMERO DE TOTAL DE
INDIVIDUAL DEL CAPITAL ACCIONISTAS PARTICIPACION
--------------------------- ----------- -------------
Hasta 1.00 943 8.35
De 1.01 al 10.00 1 9.17
De 80.01 a 90.00 1 82.48
--- ------
945 100.00
=== ======
b) Capital adicional -
Al 31 de diciembre del 2004 y 2003 esta cuenta comprende el diferencial
resultante por la conversion del valor nominal de las acciones
representativas del capital social a dolares estadounidenses.
c) Reserva legal -
De acuerdo con xx Xxx General de Sociedades, la reserva legal se constituye
con la transferencia del 10% de la utilidad xxxx anual hasta alcanzar un
monto equivalente al 20% del capital pagado. En ausencia de utilidades no
distribuidas o de reservas de libre disposicion, la reserva legal xxxxxx
ser aplicada a la compensacion de perdidas, debiendo ser repuesta con las
utilidades de ejercicios posteriores. Esta reserva puede ser capitalizada
siendo igualmente obligatoria su reposicion.
34
Pagina 13
d) Resultados acumulados -
En virtud de los contratos de estabilidad tributaria suscritos con el
Estado Peruano (Nota 11- a), la Compania esta autorizada a transferir al
exterior, en divisas libremente convertibles, el integro de sus capitales y
dividendos registrados en el organismo nacional competente. Asimismo, los
dividendos y cualquier otra forma de distribucion de utilidades no
constituyen renta gravable para efectos del impuesto a la renta.
Al 31 de diciembre del 2004 esta cuenta incluye US$4.9 millones que seran
transferidos en el 2005 a una cuenta especial en el patrimonio neto
denominada utilidades restringidas. Este monto corresponde a la inversion
sobre la que se calculo el credito contra el impuesto a la renta del ano
2004 en aplicacion del Programa de Reinversion por el periodo de octubre
del 2004 a febrero del 2007 (Nota 11- c).
En adicion, esta cuenta incluye US$8.8 millones correspondiente a la
utilidad del ano 2004 que sera transferido a la reserva legal en el 2005.
11 SITUACION TRIBUTARIA
a) Xx 00 xx xxxxx xx 0000 xx Xxxxxxxx suscribio un contrato de garantias
y medidas de promocion a la inversion, mediante el cual se otorga
ciertas garantias a la Compania entre las que se encuentra la
estabilidad en el regimen tributario vigente en la fecha de aprobacion
del plan de inversion de la Compania. Xx 0 xx xxxxxxxxx xx 0000 xx
Xxxxxxxx cumplio con las condiciones de dicho contrato y recibio la
aprobacion del Gobierno en diciembre de 1994.
En adicion, el 00 xx xxxxxxx xx 0000 xx Xxxxxxxx suscribio un contrato
con las mismas caracteristicas del anterior con relacion a una
inversion de US$224,980,000, recibiendo la aprobacion del Gobierno en
noviembre de 1998. De acuerdo con los terminos del contrato, el plazo
de duracion de la estabilidad del regimen tributario se extiende por
un periodo de 15 anos contados a partir del 1 de enero de 1999.
b) La Gerencia considera que ha determinado la materia imponible bajo el
regimen general del impuesto a la renta de acuerdo con la legislacion
tributaria vigente en la fecha del contrato antes mencionado, la que
exige agregar y deducir al resultado antes de impuestos y
participaciones, las partidas que la referida legislacion reconoce
como gravables y no gravables, respectivamente.
Al 00 xx xxxxxxxxx xxx 0000 x 0000 xx xxxx del impuesto a la renta es
de 30%. En adicion al regimen general, la empresa esta sujeta al
impuesto minimo a la renta equivalente al 2% del total de sus activos
netos de depreciaciones y amortizaciones. El impuesto cargado a
resultados del ano 2003 corresponde al mayor entre el impuesto a la
renta del regimen general y el impuesto minimo a la renta. En el ano
2003 el impuesto a la renta corresponde al regimen del impuesto
minimo.
35
Pagina 14
Al 00 xx xxxxxxxxx xxx 0000 xx xxxxxxx imponible ha sido determinada como
sigue:
US$000
-------
Utilidad antes de participaciones e impuesto a la renta 139,353
-------
Mas:
Amortizacion de otros activos 1,417
Provision para cierre de mina 379
Gastos no deducibles 5,987
Otras adiciones 185
-------
7,968
-------
Menos:
Depreciacion a la tasa del 20% (11,203)
Ajuste de inventarios en proceso y productos terminados (5,230)
Provision para desvalorizacion de existencias (2,779)
Otras deducciones (2,172)
-------
(21,384)
-------
Sub-total 125,937)
Participacion de los trabajadores (10,074)
-------
115,863)
Reinversion de utilidades (Nota 10-d) (4,917)
-------
110,946
-------
Impuesto a la renta 33,283
Impuesto de anos anteriores y otros ajustes 1,979
-------
Total acreditado en resultados 35,262
=======
Al 31 de diciembre del 2004 el impuesto a la renta sobre la utilidad antes
de impuestos difiere del monto teorico que hubiera resultado de aplicar la
tasa del impuesto a los ingresos de la Compania, como sigue:
US$000
-------
Utilidad antes de impuestos 139,353
-------
Impuesto calculado aplicando la tasa de 30% 41,806
Gastos no deducibles 1,796
Gastos deducibles (332)
Reinversion de utilidades (1,475)
Participacion de los trabajadores (3,586)
-------
Impuesto a la renta del ano (corriente y diferido) 38,209
=======
36
Pagina 15
Al 31 de diciembre del 2003 no se ha efectuado esta conciliacion debido a
que en dicho ano el impuesto minimo resulto mayor que el impuesto a la
renta del regimen general.
c) De acuerdo con el Decreto Supremo No 07-94-EF, la Compania puede obtener un
beneficio tributario (credito por reinversion) aplicando las utilidades no
distribuidas a programas de inversion orientados a lograr un incremento de
los niveles de produccion (Programa de Reinversion). Los creditos por
reinversion equivalen al 80% del monto invertido y son obtenidos mediante
solicitud y aprobados por el Ministerio de Energia y Minas.
Con fechas 3 de setiembre y 25 octubre del 2004 la Compania remitio para la
aprobacion del Ministerio de Energia y Minas el Programa de Reinversion por
el periodo de octubre del 2004 a febrero del 2007 por US$800,030,000
relacionado con las obras e infraestructura para la construccion de una
planta concentradora para procesar adicionalmente 108,000 TM/dia de mineral
de sulfuros primarios para producir concentrado de cobre, lo que se
incrementara la capacidad de 39,000 TM/dia a 147,000 TM/dia de mineral de
cobre.
El 9 diciembre del 2004, a traves de la Resolucion Ministerial
No.510-2004-MEM/DM, el Ministerio de Energia y Minas aprobo el Programa de
Reinversion solicitado por la Compania con cargo a utilidades no
distribuidas por el periodo antes indicado.
En aplicacion de este programa, durante el ano 2004 la Compania reconocio
un beneficio de US$4.9 millones correspondientes a las utilidades de dicho
ano con cargo a la materia imponible que genero un menor impuesto de US$1.5
millones.
d) La Administracion Tributaria tiene la facultad de revisar y, de ser el
caso, corregir el impuesto a la renta determinado por la Compania en los
cuatro ultimos anos, contados a partir de la presentacion de la declaracion
jurada del impuesto correspondiente (anos abiertos a fiscalizacion).
En el caso del impuesto a la renta, los anos 1999 al 2003 inclusive, estan
sujetos a fiscalizacion. En el caso del Impuesto General a las Ventas el
periodo sujeto a fiscalizacion corresponde al comprendido entre diciembre
de 1999 y diciembre del 2003. Debido a que pueden producirse diferencias en
la interpretacion por parte de la Administracion Tributaria sobre las
normas aplicables a la Compania, no es posible anticipar a la fecha si se
produciran pasivos tributarios adicionales como resultado de eventuales
revisiones. Cualquier impuesto adicional, moras, recargos e intereses, si
se produjeran, seran reconocidos en los resultados del ano en el que la
diferencia de criterios con la Administracion Tributaria se resuelva. La
Gerencia y sus asesores legales estiman que no surgiran pasivos de
importancia como resultado de estas posibles revisiones.
37
Pagina 16
12 COSTO DE VENTAS
El costo de ventas por los anos terminados el 31 de diciembre comprende:
2004 2003
------- -------
US$000 US$000
Inventario inicial de productos terminados 3,076 2,372
Consumo de materias xxxxxx e insumos 46,684 39,101
Mano de obra directa 14,979 13,362
Depreciacion y amortizacion 22,765 20,396
Otros costos 38,572 31,807
Variacion de productos en proceso (4,193) --
Inventario final de productos terminados (2,401) (3,076)
------- -------
119,482 103,962
======= =======
13 GASTOS FINANCIEROS, NETO
Los gastos financieros, neto por los anos terminados el 31 de diciembre
comprenden:
2004 2003
------ ------
US$000 US$000
Intereses por prestamos bancarios -- (942)
Intereses por contratos de cobertura de
tasas de interes -- (845)
Intereses por depositos bancarios 1,148 142
Otros gastos financieros (1,975) (506)
----- -----
(827) (2,151)
===== =====
14 UTILIDAD POR ACCION
La utilidad por accion basica por cada accion comun ha sido determinada de
la siguiente manera:
2004 2003
-------------- --------------
Utilidad atribuible US$ 87,663,000 US$ 43,275,000
============== ==============
Promedio ponderado de acciones en circulacion 227,309,099 227,309,099
============== ==============
Utilidad basica por accion US$ 0.386 US$ 0.190
============== ==============
La utilidad basica por accion es calculada dividiendo la utilidad xxxx
entre el promedio ponderado de las acciones comunes en circulacion a la
fecha de los estados financieros.
38
Pagina 17
15 ADMINISTRACION DE RIESGOS FINANCIEROS
Factores de riesgo financiero
Las actividades de la Compania la exponen a ciertos riesgos financieros,
que incluyen los efectos de las variaciones en los precios xx xxxxxxx de
los minerales, variaciones en los tipos de cambio y en las tasas de
interes. Al 00 xx xxxxxxxxx xxx 0000 xx Xxxxxxxx no mantiene este tipo de
contratos de cobertura a estos riesgos. Por otro lado, como parte xx Xxxxxx
Dodge Mining Company, ciertos riesgos financieros como variacion de precios
y riesgo de cambio son cubiertos a nivel del grupo tomado en su conjunto.
i) Riesgo de tipo de cambio
La Compania opera principalmente en dolares estadounidenses y registra sus
operaciones en dicha moneda. Sus ventas, compras y gastos operativos son
sustancialmente efectuados en dicha moneda, reduciendo asi el riesgo de
verse afectada por las variaciones en los tipos de cambio en relacion con
el nuevo sol peruano.
ii) Concentracion de ventas y riesgo crediticio
La Compania realiza ventas a una afiliada del exterior y companias locales
no relacionadas. Las ventas por concentracion geografica son las
siguientes:
2004 2003
------- -------
US$000 US$000
Norteamerica 161,383 115,347
Ventas locales 99,399 41,377
------- -------
260,782 156,724
======= =======
La Compania ha establecido politicas para asegurar que la venta de bienes y
servicios se efectuan a clientes con adecuada historia de credito.
iii) Riesgo de liquidez
La administracion xxxxxxxx del xxxxxx de liquidez implica mantener
suficiente efectivo y equivalentes de efectivo, la disponibilidad de
financiamiento a traves de una adecuada cantidad xx xxxxxxx de credito
comprometidas y la capacidad de cerrar posiciones en el xxxxxxx.
39
Pagina 18
16 INFORMACION SOBRE FLUJOS DE EFECTIVO
El estado de flujos de efectivo proporciona informacion sobre los cambios
en el efectivo. Los flujos de efectivo de las actividades de operacion
incluyen pagos/cobros de intereses y pago del impuesto a la renta como
sigue:
2004 2003
------ ------
US$000 US$000
Intereses pagados 1,975 1,833
Intereses recibidos 1,148 142
Impuesto a la renta 3,278 1,393
17 RESERVAS DE MINERAL (NO AUDITADO)
Al 31 de diciembre, las reservas probadas de mineral de la Compania,
medidas en miles de toneladas metricas secas son:
LEYES
-----------
MINERAL 2004 2003 2004 2003
------- --------- ------- ---- ----
Minerales para lixiviacion 351,214 236,552 0.45 0.54
Minerales para molienda 1,295,528 420,959 0.49 0.61
Asimismo, la produccion en toneladas metricas netas ha sido la siguiente:
PRODUCCION 2004 2003
---------- ------ ------
Catodos 88,502 87,336
Precio promedio por tonelada metrica seca:
2004 2003
----- -----
US$ US$
Catodos 2,868 1,807
40
SCHEDULE 6.12
ABSENCE OF CERTAIN CHANGES AND EVENTS
- Advance Payment to Consorcio Colca towards construction work to be
performed with respect to the Pillones Dam in an aggregate approved amount
of US$1.3 million.
41
SCHEDULE 6.13
TITLE TO ASSETS, MINING AND BENEFICIATION CONCESSION AND OTHER RIGHTS
- Permit for the third phase of the expansion of the Beneficiation Concession
that has not yet been obtained and can only be granted by the Ministry of
Energy and Mines after completion of the construction and inspection
process.
- Easements related to the 220 KV Transmission Line are in the process of
being acquired. In addition, such easements have not yet been recognized by
the Electrical General Direction of the Ministry of Energy and Mines.
42
SCHEDULE 6.14
RELATED PARTY TRANSACTIONS AND COMMITMENTS
1. Supply Agreement by and between Xxxxxx Dodge Sales Company and the
Borrower, effective as of January 1, 2005.
2. Operator's Agreement between Xxxxxx Xxxxxx Dodge del Peru S.A.C. and the
Borrower, dated as of June 1, 2005.
3. Cathodes Sales Agreement between Xxxxxx Dodge Sales Company and the
Borrower, dated as of September 30, 2005.
4. Concentrate Sales Agreement between Xxxxxx Dodge Sales Company and the
Borrower, dated as of September 30, 2005.
5. Concentrate Sales Agreement between Sumitomo Metal Mining, Co., Ltd. and
the Borrower, dated as of June 1, 2005, as amended by Amendment No.1
thereto dated as of September 30, 2005.
6. Parent Company Guarantee between Xxxxxx Dodge Corporation and the Borrower
regarding the Offtake Agreements, dated as of September 30, 2005.
7. Parent Company Guarantee between Xxxxxx Dodge Corporation and the Borrower
regarding the Operator's Agreement, dated as of September 30, 2005.
Each of the above agreements will continue following the Closing.
43
Schedule 6.24
Tax Liability
The Borrower has been advised that under the current law of Peru:
1. Interest payments to a non-Peruvian governmental agency, in respect of a loan
granted by such agency with the purpose of encouraging, developing and promoting
certain activities in Peru, will be exempt from withholding tax until December
31, 2006 (the "Promotional Credit Regime"). If the Promotional Credit Regime is
not renewed, interest payments to non-Peruvian governmental agencies will be
subject to a 4.99% withholding tax rate, provided that the requirements
described in paragraph 2 below are met.
2. Payments to a Person that is not domiciled in Peru, other than interest
payments to a non-Peruvian governmental agency that qualifies for the
Promotional Credit Regime, in respect of a loan granted by such Person to a
borrower domiciled in Peru, will be subject to a 4.99% withholding tax rate,
provided that all of the following requirements are met:
(i) Amounts disbursed under the loan are transferred to the borrower through the
Peruvian financial system;
(ii) Payments made by the borrower in respect of the loan do not exceed PRIME
plus 6 percentage points (in the case of loans granted from the United States)
or LIBOR plus 7 percentage points (in the case of loans granted from other
countries);
(iii) Amounts disbursed under the loan are used in a business carried out in
Peru;
(iv) The lender and the borrower are not "related" parties, as such term is
defined in the tax laws of Peru; and
(v) The participation of the lender in the financing is not made with the sole
purpose of avoiding a direct debtor-creditor relationship between "related"
parties.
3. If the requirements set forth above are not met, amounts paid to a Person not
domiciled in Peru, in respect of a loan made by such Person, will be subject to
a 30% withholding tax rate in Peru.
Exhibit A
JBIC Loan Agreement
================================================================================
EXECUTION COPY
U.S.$247,500,000
JBIC LOAN AGREEMENT
by and among
SOCIEDAD MINERA CERRO VERDE S.A.A.,
JAPAN BANK FOR INTERNATIONAL COOPERATION,
and
SUMITOMO MITSUI BANKING CORPORATION,
as JBIC Agent
Dated as of September 30th, 2005
Cerro Verde Primary Sulfide Project
================================================================================
TABLE OF CONTENTS
PAGE
----
ARTICLE I DEFINITIONS AND INTERPRETATION.......................................... 2
Section 1.01. Definitions................................................... 2
Section 1.02. Rules of Interpretation....................................... 5
ARTICLE II AMOUNT OF FACILITY AND USE OF JBIC LOAN................................ 6
Section 2.01. Commitment.................................................... 6
Section 2.02. Eligible Currency............................................. 6
ARTICLE III DISBURSEMENT.......................................................... 6
Section 3.01. Disbursement Procedures....................................... 6
Section 3.02. Records....................................................... 6
Section 3.03. Final Disbursement............................................ 6
ARTICLE IV REPAYMENT AND PREPAYMENT OF THE JBIC LOAN.............................. 7
Section 4.01. Repayment of JBIC Loan........................................ 7
Section 4.02. Amortization Schedule......................................... 7
Section 4.03. Voluntary Prepayment.......................................... 7
Section 4.04. Mandatory Prepayment.......................................... 8
Section 4.05. Amounts Prepaid............................................... 8
Section 4.06. Suspension and Termination of JBIC Commitment................. 8
ARTICLE V INTEREST, COMMITMENT CHARGE AND OVERDUE PAYMENT......................... 8
Section 5.01. Interest...................................................... 8
Section 5.02. Overdue Payment............................................... 8
Section 5.03. Commitment Charge............................................. 9
Section 5.04. Basis of Calculation.......................................... 10
Section 5.05. Up-front Fee.................................................. 10
Section 5.06. Agency Fee.................................................... 11
Section 5.07. Promissory Notes.............................................. 11
ARTICLE VI PAYMENTS AND CURRENCY.................................................. 11
Section 6.01. Place and Time of Payment..................................... 11
Section 6.02. Payments to be Free of Claims and Taxes....................... 12
Section 6.03. Payments in Eligible Currency................................. 12
Section 6.04. Payment to be made on Business Day............................ 12
Section 6.05. Borrower Acknowledgment....................................... 12
ARTICLE VII REPRESENTATIONS AND WARRANTIES........................................ 12
Section 7.01. Representations and Warranties................................ 12
Section 7.02. JBIC Environmental Guidelines................................. 12
-i-
TABLE OF CONTENTS
(continued)
PAGE
----
ARTICLE VIII COVENANTS............................................................ 13
Section 8.01. Master Participation Agreement Covenants...................... 13
ARTICLE IX ENVIRONMENTAL AND SOCIAL CONSIDERATIONS................................ 13
Section 9.01. Environmental and Social Considerations....................... 13
Section 9.02. Effect of Breach of Environmental and Social Considerations... 14
ARTICLE X EVENTS OF DEFAULT; REMEDIES............................................. 14
Section 10.01. Events of Default............................................. 14
Section 10.02. Consequences of JBIC Event of Default......................... 15
ARTICLE XI CONDITIONS PRECEDENT................................................... 15
Section 11.01. Conditions Precedent to Initial Disbursement.................. 15
Section 11.02. Conditions to Subsequent JBIC Disbursements................... 15
ARTICLE XII TAXES, FEES AND EXPENSES.............................................. 16
Section 12.01. Indemnification for Taxes, Fees and Expenses.................. 16
Section 12.02. Relevant Currency............................................. 17
ARTICLE XIII GOVERNING LAW AND JURISDICTION....................................... 17
Section 13.01. GOVERNING LAW................................................. 17
Section 13.02. Good Faith Consultation....................................... 17
Section 13.03. Submission to Jurisdiction.................................... 17
Section 13.04. WAIVER OF TRIAL............................................... 17
ARTICLE XIV JBIC AGENT............................................................ 17
Section 14.01. Appointment of JBIC Agent..................................... 17
Section 14.02. Tax Certification............................................. 18
ARTICLE XV MISCELLANEOUS.......................................................... 18
Section 15.01. Confidentiality............................................... 18
Section 15.02. No Assignment; Funding........................................ 19
Section 15.03. No Waiver, Remedies Cumulative................................ 19
Section 15.04. Partial Illegality............................................ 19
Section 15.05. Communications................................................ 19
Section 15.06. Use of English Language....................................... 20
Section 15.07. Successors and Assigns........................................ 20
Section 15.08. Further Assurances............................................ 21
Section 15.09. Counterparts.................................................. 21
Section 15.10. Abbreviation.................................................. 21
-ii-
ANNEXES
Annex A Disbursement Procedures
Schedule 1 Request for Disbursement
Schedule 2 Statement of Expenditures
Schedule 3 Table of Proposed Disbursements
Schedule 4 JBIC Disbursement Schedule
Annex B Amortization Schedule
Annex C Repayment and Disbursement Accounts
Annex D Environmental Monitoring Form
Annex E JBIC Environmental Guidelines
Annex F Tax Certification
Annex G Disbursement and Payment Procedures
Annex H Form of Promissory Note
Annex I Environmental Disclosure
-iii-
JBIC LOAN AGREEMENT
This JBIC LOAN AGREEMENT made as of September 30th, 2005 (this "AGREEMENT")
by and among SOCIEDAD MINERA CERRO VERDE S.A.A., a Peruvian sociedad anonima
abierta listed on the Lima Stock Exchange and organized under the laws of Peru
(the "BORROWER"), JAPAN BANK FOR INTERNATIONAL COOPERATION ("JBIC"), and
SUMITOMO MITSUI BANKING CORPORATION, in its capacity as JBIC Agent (the "JBIC
AGENT").
WITNESSETH:
(A) WHEREAS, (i) the Borrower owns the Cerro Verde copper mine, including a
copper leaching and solution extraction/electrowinning (SX/EW) operation,
located in the district of Uchumayo and Yarabamba, Province of Arequipa, Peru
and (ii) the board of directors of the Borrower has approved the development
(the "SULFIDE PROJECT") of the sulfide portion of the ore body beneath the oxide
portion of the ore body currently in production, as more fully set forth in
Schedule D to the Master Participation Agreement (as defined below);
(B) WHEREAS, the Borrower, JBIC, each of the Senior Facility Lenders party
thereto, and the Appointed Parties party thereto have entered into the Master
Participation Agreement dated as of the date hereof (the "MASTER PARTICIPATION
AGREEMENT") and the Master Security Agreement dated as of the date hereof,
containing, inter alia, certain representations, warranties, and affirmative and
negative covenants of the Borrower to the Senior Facility Lenders, certain
uniform conditions of disbursement for the Senior Facility Loans, certain other
undertakings, common events of default and security provisions for the common
benefit of the Senior Facility Lenders;
(C) WHEREAS, JBIC is a governmental financial institution of Japan which
has among its objectives providing overseas investment loans to companies in
developing countries in which Japanese companies invest, and has agreed, in
accordance with the Japan Bank for International Cooperation Law and
institutional objectives, to provide a credit facility to the Borrower, which is
invested in by Japanese companies and exports a certain portion of its mining
products to Japan, for purposes of developing and promoting mining activities in
Peru to be carried out by the Borrower;
(D) WHEREAS, the Borrower has requested JBIC to make funds available to the
Borrower for the financing of the Sulfide Project described above in paragraph
(A)(ii); and
(E) WHEREAS, JBIC intends that the funding of the Tranche B Loan (as
defined below) shall be provided only upon disbursement of the Tranche B Loan
Funds by certain financial institutions designated as the JBIC Tranche B Funding
Source Banks hereunder.
NOW THEREFORE, in consideration of the foregoing and of the agreements
hereinafter set forth, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
-1-
ARTICLE I
DEFINITIONS AND INTERPRETATION
Section 1.01. Definitions. For all purposes of this Agreement, except
as otherwise defined herein, capitalized terms used herein shall have the
respective meanings ascribed to them in the Master Participation Agreement or
the Master Security Agreement, as the case may be. In addition, the following
terms shall have the following meanings:
"ALLEGED BREACH NOTICE": as defined in Section 9.02;
"AMORTIZATION SCHEDULE": the schedule of the dates and amounts of
repayments of the Tranche A Loan and Tranche B Loan set forth in Annex B, as the
same may be amended from time to time in accordance with the provisions of this
Agreement;
"AVAILABILITY PERIOD": commencing on the date on which all the conditions
set forth in Section 11.01 have been satisfied and ending on the Availability
Period End Date;
"CALCULATION DATE": (i) with respect to any Interest Period, the day which
is two (2) LIBOR Business Days prior to the commencement of such Interest
Period; and (ii) with respect to any Overdue Period, the day which is two (2)
LIBOR Business Days prior to (a) the day on which the Overdue Amount becomes due
and payable (for the period from and including such due date up to and excluding
the immediately succeeding Interest Payment Date (in the case where such period
includes the date of actual receipt of the payment by JBIC, up to and excluding
such date)), and (b) to the extent such overdue amount is not paid during the
period described in Clause (a) above each succeeding Interest Payment Date (for
the subsequent period from and including such Interest Payment Date up to and
excluding the immediately succeeding Interest Payment Date (in the case where
such period includes the date of actual receipt of the payment by JBIC, up to
and excluding such date));
"DEFAULT": any condition or event which constitutes an MPA Event of Default
or a JBIC Event of Default or which with the giving of notice or lapse of time
or both would, unless cured or waived, become an MPA Event of Default or a JBIC
Event of Default;
"DISBURSEMENT DATE": each date a JBIC Disbursement is made in accordance
with the provisions of this Agreement;
"DISBURSEMENT PROCEDURES": the disbursement procedures set forth in Annex A
hereto;
"DISBURSEMENT SCHEDULE": the disbursement schedule set forth in Schedule 4
to Annex A;
"ELIGIBLE CURRENCY": as defined in Section 2.02;
"ENVIRONMENTAL AND SOCIAL CONSIDERATIONS": the considerations described in
Section 9.01(b);
-2-
"FLOATING RATE": with respect to any Interest Period or any Overdue Period,
(i) the rate per annum (on the basis of a 360-day year) quoted on the Telerate
Screen Page 3750 for the purpose of displaying London interbank offered rates of
major banks for deposits in Dollars as the "British Bankers Association Interest
Settlement Rate" in Dollars (hereinafter referred to as "BBA LIBOR"), or if such
page ceases to display, such other page on Telerate or on such other service as
may be selected by JBIC as suitable for determining BBA LIBOR, for a period of
six (6) months, at approximately 11:00 a.m., London time, on the relevant
Calculation Date, or (ii) if no rate is quoted on such pages on such Calculation
Date, the average (rounded upwards, if necessary, to the nearest one-sixteenth
of one per cent (1/16%)) of the rates per annum for a period of six (6) months
at which deposits in Dollars are offered to at least two Reference Banks, as set
out below, in the London interbank market, in each case, at approximately 11:00
a.m., London time, on such Calculation Date. "REFERENCE BANKS" shall mean two or
more banks selected by JBIC. In the event that such rate is not available at
such time for any reason, then "Floating Rate" for such Interest Period or
Overdue Period shall be determined by JBIC;
"GUARANTEE PAYMENT": as defined in Section 5.02(b);
"INDEMNITEE": as defined in Section 12.01(b);
"JBIC": as defined in the Recitals hereto;
"JBIC AGENT": Sumitomo Mitsui Banking Corporation in its capacity as JBIC
Agent;
"JBIC DISBURSEMENT": each disbursement of the JBIC Facility made in
accordance with the provisions of this Agreement, or, as the context may
require, the principal amount of such disbursement from time to time
outstanding;
"JBIC ENVIRONMENTAL GUIDELINES": means the Japan Bank for International
Cooperation Guidelines for Confirmation of Environmental and Social
Considerations, dated April, 2002, a copy of which is attached hereto as Annex
E;
"JBIC EVENT OF DEFAULT": as defined in Section 10.01(c);
"JBIC FACILITY": as defined in Section 2.01;
"JBIC LOAN": the aggregate principal amount of all JBIC Disbursements
hereunder by JBIC to the Borrower from time to time outstanding;
"JBIC AGENT NEW YORK DISBURSEMENT ACCOUNT": the JBIC Agent New York
disbursement account specified in Annex C (or such other account as may be
designated from time to time by the JBIC Agent);
"JBIC AGENT TOKYO DISBURSEMENT ACCOUNT": the JBIC Agent Tokyo disbursement
account specified in Annex C (or such other account as may be designated from
time to time by the JBIC Agent);
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"JBIC AGENT NEW YORK REPAYMENT ACCOUNT": the JBIC Agent New York repayment
account specified in Annex C (or such other account as may be designated from
time to time by the JBIC Agent);
"JBIC NEW YORK REPAYMENT ACCOUNT": the JBIC repayment account specified in
Annex C (or such other account as may be designated from time to time by JBIC
Agent);
"JBIC TRANCHE B FUNDING SOURCE BANK": each of the financial institutions
providing the funds for the Tranche B Loan;
"LIBOR BUSINESS DAY": a day on which dealings in deposits in Dollars are
carried on in the London interbank Euro-currency market;
"MASTER PARTICIPATION AGREEMENT": as defined in the Recitals hereto;
"MATERIAL PROJECT PARTY": a party to any of the Closing Documents;
"MONTH": a period commencing on a specific day in any calendar month and
ending on and including the day immediately preceding the numerically
corresponding day in the next succeeding calendar month, provided that if there
is no such numerically corresponding day in the next succeeding calendar month,
such period shall expire on and including the last day of such next succeeding
calendar month, and references to "Months" shall be construed accordingly;
"OVERDUE AMOUNT": the Tranche A Overdue Amount and Tranche B Overdue
Amount;
"OVERDUE INTEREST": the Tranche A Overdue Interest and Tranche B Overdue
Interest;
"OVERDUE PERIOD": the Tranche A Overdue Period and Tranche B Overdue
Period;
"PAYMENT AMOUNT": as defined in Annex G;
"PAYMENT PROCEDURES": the payment procedures set forth in Annex G;
"PERSON": means any individual, corporation, partnership, joint venture,
trust, unincorporated organization or any other juridical entity, or a sovereign
state or any agency, authority or political subdivision thereof, or any
international organization, agency or authority;
"PREPAYMENT NOTICE": as defined in Section 4.03;
"RELEVANT CURRENCY": as defined in Section 12.02;
"REQUEST FOR DISBURSEMENT": a request given by the Borrower to the JBIC
Agent in the form specified in Schedule 1 to Annex A;
"REQUESTED DISBURSEMENT DATE": the Business Day specified in a Request for
Disbursement on which the Borrower has requested JBIC to make a JBIC
Disbursement pursuant to this Agreement and the Master Participation Agreement;
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"STATEMENT OF EXPENDITURES": a statement furnished by the Borrower which
shall be in the form specified in Schedule 2 to Annex A;
"TRANCHE A": as defined in Section 2.01;
"TRANCHE A LOAN": as defined in Section 2.01;
"TRANCHE A OVERDUE AMOUNT": as defined in Section 5.02(a);
"TRANCHE A OVERDUE INTEREST": as defined in Section 5.02(a);
"TRANCHE A OVERDUE PERIOD": as defined in Section 5.02(a);
"TRANCHE B": as defined in Section 2.01;
"TRANCHE B LOAN": as defined in Section 2.01;
"TRANCHE B LOAN FUNDS": the funds provided by the JBIC Tranche B Funding
Source Banks for the Tranche B Loans;
"TRANCHE B OVERDUE AMOUNT": as defined in Section 5.02(b);
"TRANCHE B OVERDUE INTEREST": as defined in Section 5.02(b); and
"TRANCHE B OVERDUE PERIOD": as defined in Section 5.02(b).
Section 1.02. Rules of Interpretation.
(a) Except as otherwise expressly provided herein, the rules of
interpretation set forth in Section 1.02 of the Master Participation Agreement
shall apply to this Agreement.
(b) This Agreement and the Master Participation Agreement shall be
viewed as, and shall constitute, one agreement governing the terms and
conditions of the Loans. Except in connection with a breach of Section 7.02 and
Article IX, remedies shall be exercised solely pursuant to and in accordance
with the Master Participation Agreement and the Master Security Agreement,
provided that in connection with the occurrence of a JBIC Event of Default, (i)
JBIC and the JBIC Agent may exercise the remedies set forth in Section 10.02 and
(ii) all other Borrower Enforcement Actions shall be exercised solely in
accordance with the Master Security Agreement.
(c) In the event of conflict between this Agreement and the Master
Participation Agreement or the Master Security Agreement, except for Section
3.02, Section 4.06(b), Section 7.02, Article IX, Article X, Section 15.01,
Section 15.02 and Annex A, the Master Participation Agreement or the Master
Security Agreement, as the case may be, shall prevail.
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ARTICLE II
AMOUNT OF FACILITY AND USE OF JBIC LOAN
Section 2.01. Commitment. JBIC hereby agrees to make available to the
Borrower, on and subject to the terms and conditions of this Agreement, a loan
facility in Dollars in an aggregate amount not exceeding two hundred forty-seven
million five hundred thousand Dollars (U.S.$247.5 million) (the "JBIC
FACILITY"), consisting of (a) a loan facility in Dollars in an aggregate
principal amount not exceeding one hundred seventy-three million two hundred
fifty thousand Dollars (U.S.$173.25 million) (such loan facility is herein
referred to as "TRANCHE A" and the aggregate principal amount of loans made
under Tranche A from time to time outstanding hereunder is referred to as the
"TRANCHE A LOAN") and (b) a loan facility in Dollars in an aggregate principal
amount not exceeding seventy-four million two hundred fifty thousand Dollars
(U.S.$74.25 million) (such loan facility is herein referred to as "TRANCHE B"
and the aggregate principal amount of loans made under Tranche B from time to
time outstanding hereunder is referred to as the "TRANCHE B LOAN").
Section 2.02. Eligible Currency. The currency in which JBIC shall make
JBIC Disbursements and, except as provided in Section 12.02, the Borrower shall
make all payments hereunder is Dollars (the "ELIGIBLE CURRENCY").
ARTICLE III
DISBURSEMENT
Section 3.01. Disbursement Procedures. Subject to the fulfillment of
the conditions referred to in Article XI and the other terms and conditions of
this Agreement, JBIC shall disburse the JBIC Facility only in accordance with
the Disbursement Procedures. Each such JBIC Disbursement shall consist of a
disbursement of the Tranche A Loan and the Tranche B Loan made at the same time
and in proportion to the aggregate principal amount of Tranche A and the
aggregate principal amount of Tranche B, provided that if the condition set
forth in Section 11.01(c) with respect to the initial Disbursement and Section
11.02(c) with respect to all subsequent JBIC Disbursements is not met in respect
of Tranche B, JBIC shall disburse only such portion of Tranche B with respect to
which the JBIC Agent shall have received the corresponding portion thereof from
the relevant JBIC Tranche B Funding Source Banks.
Section 3.02. Records. The Borrower shall retain or cause to be
retained until two (2) years after the Availability Period End Date all records
(contracts, orders, notices, invoices, bills, receipts and other documents)
evidencing the expenditures for which JBIC Disbursements are requested in
accordance with Annex A hereto and shall enable representatives or agents of
JBIC to examine such records.
Section 3.03. Final Disbursement. No JBIC Disbursement shall be made
by JBIC under this Agreement or the Master Participation Agreement after the
Availability Period End Date, unless otherwise agreed in writing by JBIC and in
accordance with Section 10.01 of the Master Participation Agreement.
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ARTICLE IV
REPAYMENT AND PREPAYMENT OF THE JBIC LOAN
Section 4.01. Repayment of JBIC Loan. On each Payment Date, the
Borrower shall repay a portion of the aggregate principal amount of the JBIC
Loan outstanding on the Availability Period End Date in an amount equal to the
product of such aggregate principal amount of the JBIC Loan multiplied by the
percentage set forth on the Amortization Schedule with respect to such Payment
Date. The final principal installment shall be repaid on the Sixteenth (16th)
Payment Date and in any event shall be in an amount equal to the aggregate
principal amount of the JBIC Loan outstanding on such date. The final Payment
Date shall occur not later than ninety (90) months after the first Payment Date,
it being understood that in no event shall the Borrower be required to repay an
amount exceeding the principal amount of the JBIC Loan outstanding on such
Payment Date.
Section 4.02. Amortization Schedule.
(a) If any prepayment of the JBIC Loan occurs, the amount prepaid
shall be deducted ratably from each of the installments shown in the
Amortization Schedule.
(b) Promptly after the Availability Period End Date, or, if any
adjustment pursuant to paragraph (a) of this Section 4.02 shall be made,
promptly after such adjustment, the JBIC Agent (in consultation with JBIC) shall
prepare and deliver to the Borrower a notice together with the adjusted
Amortization Schedule setting forth the amount of each installment to be repaid
by the Borrower on each Repayment Date. Such adjusted Amortization Schedule
shall be conclusive in the absence of manifest error.
Section 4.03. Voluntary Prepayment.
(a) Except as expressly provided otherwise in the Master Participation
Agreement, the Borrower may not voluntarily prepay all or any part of the JBIC
Loan.
(b) Subject to satisfaction of the terms of Sections 3.04 and 3.05 of
the Master Participation Agreement, the Borrower may, on any Payment Date
falling after the Completion Release Date and upon giving no less than sixty
(60) days' prior written irrevocable notice to the JBIC Agent and to JBIC (which
notice shall state the amount to be prepaid and the Payment Date on which such
voluntary prepayment shall be made; such notice, a "PREPAYMENT NOTICE"), prepay
in advance of maturity all or any part (but if in part the amount of any
prepayment shall be at least five million five hundred thousand Dollars
(U.S.$5,500,000)) of the JBIC Loan, together with all interest accrued thereon
up to and including the day immediately preceding the date of such prepayment.
Once given, a Prepayment Notice may not be withdrawn.
(c) In the event of a voluntary prepayment, the Borrower shall pay a
prepayment premium of one-half of one per cent (0.5%) of the amount of principal
amount of Tranche A to be prepaid to JBIC, which premium shall be paid
simultaneously with such prepayment (the "PREPAYMENT PREMIUM"). Once the date
for any voluntary prepayment has been notified pursuant to clause (b) above,
such date shall be deemed as the due date for the amounts to be paid on that
date (including the Prepayment Premium), and should the Borrower
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fail to pay any such amount on such date, the Borrower shall pay interest on
such overdue principal and/or interest and/or Prepayment Premium. Any request
for prepayment made by the Borrower in accordance with this Agreement shall be
irrevocable and the Borrower shall be bound to prepay the JBIC Loan in
accordance therewith.
(d) Partial prepayments shall be applied to the JBIC Loan in
accordance with Section 3.08 of the Master Participation Agreement.
Section 4.04. Mandatory Prepayment. The Borrower shall prepay the JBIC
Loan in accordance with the terms of Section 3.06 of the Master Participation
Agreement.
Section 4.05. Amounts Prepaid. Amounts prepaid pursuant hereto shall
not be reborrowed.
Section 4.06. Suspension and Termination of JBIC Commitment.
(a) JBIC or the JBIC Agent may, by notice to the Borrower, suspend the
commitment to make available the JBIC Facility under the circumstances set forth
in Section 3.10 of the Master Participation Agreement.
(b) JBIC or the JBIC Agent may, by notice to the Borrower terminate
the commitment to make available the JBIC Facility in accordance with Section
10.02.
ARTICLE V
INTEREST, COMMITMENT CHARGE AND OVERDUE PAYMENT
Section 5.01. Interest. The Borrower shall pay interest on the JBIC
Loan for each Interest Period at the rate of (a) in the case of Tranche A, the
Floating Rate for such Interest Period plus (i) prior to the Completion Release
Date 0.875% per annum and (ii) following the Completion Release Date 1.475% per
annum and (b) in the case of Tranche B, the Floating Rate for such Interest
Period plus (i) prior to the Completion Release Date 1.35% per annum and (ii)
following the Completion Release Date 1.85% per annum. Such interest shall be
paid in arrears in respect of the Tranche A Loan and Tranche B Loan on each
Interest Payment Date for each Interest Period.
Section 5.02. Overdue Payment.
(a) If the Borrower fails to pay any principal or interest payable
under this Agreement with respect to Tranche A on the due date thereof (such
overdue amount being hereinafter referred to as the "TRANCHE A OVERDUE AMOUNT"),
the Borrower shall pay JBIC interest (hereinafter referred to as the "TRANCHE A
OVERDUE INTEREST") on such Tranche A Overdue Amount for the period from and
including the due date thereof up to and excluding the date of actual receipt of
the payment by JBIC (hereinafter referred to as the "TRANCHE A OVERDUE PERIOD")
on demand, to the fullest extent permitted by applicable law, at the applicable
interest rate and margin set forth in Section 5.01 plus 2% per annum on each
Calculation Date. Such Tranche A Overdue Interest shall accrue after as well as
before judgment and in accordance
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with Section 5.04. Interest at the rate stipulated in Section 5.01 shall not
accrue on any Tranche A Overdue Amount during this Period.
(b) If the Borrower fails to pay any principal or interest payable
under this Agreement with respect to Tranche B on the due date thereof (such
overdue amount being hereinafter referred to as the "TRANCHE B OVERDUE AMOUNT"),
the Borrower shall pay JBIC interest (hereinafter referred to as the "TRANCHE B
OVERDUE INTEREST") on such Tranche B Overdue Amount for the period from and
including the due date thereof up to and excluding the date of actual receipt of
the payment by JBIC (hereinafter referred to as the "TRANCHE B OVERDUE PERIOD")
on demand, to the fullest extent permitted by applicable law, at the applicable
interest rate and margin set forth in Section 5.01 plus 2% per annum on each
Calculation Date provided that, if JBIC has made a payment to the JBIC Tranche B
Funding Source Banks, under a political risk guarantee issued to such JBIC
Tranche B Funding Source Banks (a "GUARANTEE PAYMENT"), interest on such portion
of the Tranche B Overdue Amount equal to the amount of the Guarantee Payment
shall accrue at a rate per annum equal to the reasonably evidenced costs of
funds to JBIC of funding such Guarantee Payment from time to time, as determined
by JBIC in its sole discretion (if such rate is greater than the applicable
interest rate and margin set forth in Section 5.01(b)), plus 2% per annum. Such
Tranche B Overdue Interest shall accrue after as well as before judgment and in
accordance with Section 5.04. Interest at the rate stipulated in Section 5.01
shall not accrue on any Tranche B Overdue Amount during the Tranche B Overdue
Period.
(c) Upon request by the Borrower, the JBIC Agent will promptly notify
the Borrower of the Floating Rate so determined by JBIC, provided that the
Borrower's obligation to pay such Tranche A Overdue Interest and Tranche B
Overdue Interest shall not be conditional upon notification of the relevant rate
to the Borrower by the JBIC Agent and such determination by JBIC shall be
conclusive absent manifest error.
(d) Payment of interest by the Borrower in accordance with clause (a)
above shall not prejudice the right of JBIC to exercise any other of its rights
or claims hereunder, at law or otherwise to remedy any such failure to pay any
amount on the due date for payment hereunder.
Section 5.03. Commitment Charge.
(a) The Borrower shall pay to the JBIC Agent in consideration of the
JBIC Loan a commitment charge on the daily unutilized portion of Tranche A, as
such Tranche A may be reduced or terminated as contemplated by Section 2.03 of
the Master Participation Agreement, at the rate of 0.25% per annum, and such
commitment charge shall accrue from and including the date hereof to and
including the Availability Period End Date. Such commitment charge shall be
payable in arrears on each Interest Payment Date and on each date falling three
(3) calendar months after each such Interest Payment Date for the period
commencing on the date hereof (in the case of the first payment of such
commitment charge) or the immediately preceding Interest Payment Date or the
date falling three (3) calendar months thereafter (in the case of each
subsequent payment of such commitment charge) and ending on the day immediately
preceding such subsequent Interest Payment Date or the date falling three (3)
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calendar months thereafter, with the last installment of such commitment charge
to be paid on the Availability Period End Date.
(b) The Borrower shall pay to the JBIC Agent in consideration of the
JBIC Loan a commitment charge on the daily unutilized portion of Tranche B, as
such Tranche B may be reduced or terminated as contemplated by Section 2.03 of
the Master Participation Agreement, at the rate of 0.25% per annum, and such
commitment charge shall accrue from and including the date hereof to and
including the Availability Period End Date. Such commitment charge shall be
payable in arrears on each Interest Payment Date and on each date falling three
(3) calendar months after each such Interest Payment Date for the period
commencing on the date hereof (in the case of the first payment of such
commitment charge) or the immediately preceding Interest Payment Date or the
date falling three (3) calendar months thereafter (in the case of each
subsequent payment of such commitment charge) and ending on the day immediately
preceding such subsequent Interest Payment Date or the date falling three (3)
calendar months thereafter, with the last installment of such commitment charge
to be paid on the Availability Period End Date.
Section 5.04. Basis of Calculation.
(a) Interest on Tranche A shall accrue on a day-to-day basis and be
computed on the basis of a year of three hundred and sixty (360) days and the
actual number of days elapsed (fractional sums of less than one cent (U.S.$0.01)
being disregarded). Notwithstanding anything to the contrary in the Master
Participation Agreement or any other Financing Document, interest on the JBIC
Tranche A Loan shall commence to accrue from the date of the JBIC Disbursement
in Tokyo, Japan and shall cease to accrue only upon receipt by the JBIC Agent of
payment of such interest in New York, New York at the JBIC Agent New York
Repayment Account.
(b) Interest on Tranche B shall accrue on a day-to-day basis and be
computed on the basis of a year of three hundred and sixty (360) days and the
actual number of days elapsed (fractional sums of less than one cent (U.S.$0.01)
being disregarded). Notwithstanding anything to the contrary in the Master
Participation Agreement or any other Financing Document, interest on the JBIC
Tranche B Loan shall commence to accrue from the date of the JBIC Disbursement
in Tokyo, Japan and shall cease to accrue only upon receipt by the JBIC Agent of
payment of such interest in New York, New York at the JBIC Agent New York
Repayment Account.
Section 5.05. Up-front Fee. Subject to Section 12.21(e) of the Master
Participation Agreement, the Borrower shall pay to the JBIC Agent in
consideration of the JBIC Loan (i) an up-front fee with respect to the Tranche A
Loans in the amount of 0.85% times the aggregate principal amount of Tranche A
on the earlier of the Closing Date and the date that is 30 (thirty) days after
the date of this Agreement; and (ii) an up-front fee with respect to the Tranche
B Loans in the amount of 1.10% times the aggregate principal amount of Tranche B
on the earlier of the Closing Date and the date that is 30 (thirty) days after
the date of this Agreement.
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Section 5.06. Agency Fee. The Borrower shall pay to the JBIC Agent in
respect of this Agreement, the Master Participation Agreement and any other
Financing Documents all fees provided for in the fee letters executed between
the Borrower and the JBIC Agent, the amount and method of payment of which shall
be agreed separately in such fee letters.
Section 5.07. Promissory Notes. (a) As additional evidence of the
Borrower's obligation to pay the principal of the JBIC Loans as provided in
Section 4.01 hereof, the Borrower shall execute and deliver to the JBIC Agent on
behalf of JBIC Promissory Notes issued by the Borrower, in substantially the
form set forth in Annex H, with a dual column translation into Spanish to be
included therein, in accordance with Section 2.08 of the Master Participation
Agreement.
(b) The execution and delivery by the Borrower of the Promissory Notes
shall not affect in any way whatsoever the rights or obligations of the Borrower
under this Agreement, and the right and claims of JBIC under the Promissory
Notes held by it shall not replace or supersede the rights and claims of JBIC
hereunder, provided that payment of any part of the principal of any such
Promissory Note in accordance with the terms of this Agreement shall, to the
extent that such payment if made hereunder would discharge the Borrower's
obligations hereunder in respect of the payment of the principal of the JBIC
Loan evidenced by such Promissory Note, discharge pro tanto and the payment of
any principal of a JBIC Loan in accordance with the terms and conditions hereof
shall discharge the obligations of the Borrower under the Promissory Note
evidencing such JBIC Loan to the extent of such payment.
ARTICLE VI
PAYMENTS AND CURRENCY
Section 6.01. Place and Time of Payment. (a) All payments shall be
made in accordance with the Payment Procedures set forth in Annex G (or such
other payment procedures as may be agreed by the parties from time to time).
(b) All payments to be made by the Borrower under this Agreement and
the Promissory Notes shall be paid in the Eligible Currency (or, if made
pursuant to Article XII, in the Relevant Currency) in immediately available
funds to the JBIC Agent at the JBIC Agent New York Repayment Account. In all
cases payment shall be required to be made to the JBIC Agent no later than 11:00
a.m., New York time, on the relevant Payment Date. Any payment made on such due
date but after such time shall be deemed to have been made on the immediately
succeeding Business Day, and Tranche A Overdue Interest pursuant to Section
5.02(a) and Tranche B Overdue Interest pursuant to Section 5.02(b) shall accrue
and be payable upon any payment so made. So long as the JBIC Agent receives each
such payment by 11:00 a.m., New York time, the JBIC Agent shall transfer such
funds to (i) JBIC at the JBIC New York Repayment Account and (ii) to the Tranche
B Funding Source Banks to such account as may be designated from time to time by
each of the Tranche B Funding Source Banks, in each case on the same Business
Day no later than 12:00 p.m., New York time.
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Section 6.02. Payments to be Free of Claims and Taxes. Section 3.09 of
the Master Participation Agreement, as qualified by Section 12.13 of the Master
Participation Agreement, is incorporated by reference as is fully set forth
herein.
Section 6.03. Payments in Eligible Currency. The obligation of the
Borrower hereunder to make payments in the Eligible Currency or the Relevant
Currency, as the case may be, shall not be discharged or satisfied by any
amount, tender or recovery (whether pursuant to any judgment or otherwise)
expressed, paid or made in or converted into any currency other than the
Eligible Currency or the Relevant Currency, as the case may be, except to the
extent to which such amount, tender or recovery so expressed, paid, made or
converted shall result in the effective receipt by JBIC of the full amount of
the Eligible Currency or the Relevant Currency, as the case may be, payable to
JBIC hereunder at any relevant time and accordingly the primary obligation of
the Borrower shall be enforceable as an alternative or additional cause of
action for the purpose of recovery in the Eligible Currency or the Relevant
Currency, as the case may be, of the amount (if any) by which such effective
receipt shall fall short of the full amount of the Eligible Currency or the
Relevant Currency, as the case may be, payable hereunder, and shall not be
affected by judgment being obtained for any other sum due under this Agreement.
Section 6.04. Payment to be made on Business Day. If any payment to be
made by the Borrower hereunder falls due on any day which is not a Business Day,
such payment shall be made on the immediately following Business Day and the
amount of interest shall be adjusted accordingly.
Section 6.05. Borrower Acknowledgment. The Borrower hereby
acknowledges and agrees that any assignee of or a holder of a participation or
other interest in the JBIC Loan (including each of the JBIC Tranche B Funding
Source Banks) shall be entitled through the JBIC Agent and without duplication
to the rights and benefits under each of Sections 6.02, 12.01, 12.02, 12.03 and
12.04 of this Agreement and Sections 3.11, 3.12 and 12.21 of the Master
Participation Agreement, as if each such provision named, and operated directly
in favor, of such assignee or holder.
ARTICLE VII
REPRESENTATIONS AND WARRANTIES
Section 7.01. Representations and Warranties. The Borrower has given
certain representations and warranties set forth in Article VI of the Master
Participation Agreement. The rights of JBIC in respect of such representations
and warranties are set forth in the Master Participation Agreement and the
Master Security Agreement.
Section 7.02. JBIC Environmental Guidelines. The Borrower represents
and warrants that except as disclosed in Annex I, as of the date hereof and as
of the Closing Date, the construction activities conducted in connection with
the Sulfide Project and the operations and properties of the Borrower are in
compliance with the JBIC Environmental Guidelines, except for any immaterial
issues of non-compliance of which the Borrower is not specifically aware and as
to which no remedial action has been requested by any applicable Governmental
Authority.
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ARTICLE VIII
COVENANTS
Section 8.01 Master Participation Agreement Covenants. The Borrower
has undertaken certain covenants as set forth in Article VII of the Master
Participation Agreement. The rights of JBIC in respect of such covenants are set
forth in the Master Participation Agreement and the Master Security Agreement.
ARTICLE IX
ENVIRONMENTAL AND SOCIAL CONSIDERATIONS
Section 9.01. Environmental and Social Considerations.
(a) The Borrower shall construct the Sulfide Project and operate the
Business in compliance with the JBIC Environmental Guidelines. If, due to
unforeseen circumstances, the Borrower learns that it is not in compliance with
the JBIC Environmental Guidelines, the Borrower shall promptly report such
non-compliance to JBIC.
(b) The Borrower shall implement and maintain an environmental
monitoring program which monitors the environmental compliance of the Borrower
and its Business in accordance with Section 7.23 of the Master Participation
Agreement. The Borrower shall, upon JBIC's reasonable request, report to JBIC on
measures and monitoring related to environmental and social considerations
(hereinafter referred to as the "ENVIRONMENTAL AND SOCIAL CONSIDERATIONS")
undertaken by the Borrower in connection with its compliance with the JBIC
Environmental Guidelines (including, to the extent applicable, on the results of
discussions with stakeholders of the Business held in accordance with clause (c)
below). Such report shall be in form and substance reasonably satisfactory to
JBIC and shall address, among other matters, measures taken by the Borrower with
respect to air pollution, water pollution and disposal of wastes as they relate
to the Business. From and after the date of Start-up of Commercial Production,
the Borrower shall provide an annual environmental compliance report, in the
form attached hereto as Annex D, by no later than March 31st of each year. The
Borrower shall provide promptly upon request such other items as may be
reasonably requested in writing from time to time by JBIC or the JBIC Agent with
respect to the Borrower's compliance with Applicable Environmental Laws and the
JBIC Environmental Guidelines.
(c) If any problems regarding the Environmental and Social
Considerations arise, the Borrower shall make reasonable efforts for discussions
to be held between the Borrower and stakeholders of the Business (including, to
the extent applicable, local residents and local NGOs affected by the Project).
(d) When the Government of the Republic of Peru (including local
governments) and other stakeholders of the Business have important roles to play
in terms of the Environmental and Social Considerations, the Borrower shall
endeavor to enter into agreements with such parties.
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(e) If JBIC reasonably believes that the Borrower is not in compliance
with the JBIC Environmental Guidelines, JBIC or the JBIC Agent shall have the
right to notify the Borrower of the same and to request discussion with the
Borrower concerning such non-compliance. If, following discussion of such
non-compliance, JBIC continues to reasonably believe that the Borrower is not in
compliance with the JBIC Environmental Guidelines, JBIC shall have the right to
require that the Borrower permit JBIC, any environmental consultant chosen by
JBIC or any agent or representative thereof access to the Project Property, in
each case (i) at the expense of the Borrower and (ii) subject to the
confidentiality provisions set forth in Section 15.01.
Section 9.02. Effect of Breach of Environmental and Social
Considerations. If the Borrower is in breach in any material respect of its
obligations under Section 9.01, then, after consultation between JBIC and the
Borrower, JBIC may send to the Borrower a notice of such breach (an "ALLEGED
BREACH NOTICE"). Thereafter, JBIC shall have the right to require that the
Borrower permit JBIC, any environmental consultant chosen by JBIC or any agent
or representative thereof access to the Project Property, (i) in each case at
the expense of the Borrower and (ii) subject to the confidentiality provisions
set forth in Section 15.01. If such breach remains uncured within ninety (90)
days after the receipt by the Borrower of an Alleged Breach Notice, JBIC or the
JBIC Agent may, by notice to the Borrower, declare that a JBIC Event of Default
has occurred in accordance with Section 10.01(c)(iii). Notwithstanding the
foregoing, the parties acknowledge that neither JBIC nor the JBIC Agent shall
have the right to declare the occurrence of a JBIC Event of Default, if the
Borrower has within such ninety (90) day period adopted a plan reasonably
acceptable to JBIC to cure such breach and thereafter diligently implements such
plan.
ARTICLE X
EVENTS OF DEFAULT; REMEDIES
Section 10.01. Events of Default. (a) Article IX of the Master
Participation Agreement is incorporated by reference herein as if fully set
forth herein in accordance with their terms, unless waived in accordance with
the Master Participation Agreement.
(b) Upon the occurrence and Continuance of an MPA Event of Default,
JBIC shall have each of the rights and remedies provided in Article V of the
Master Security Agreement exercisable only pursuant and in accordance to the
terms thereof.
(c) Each of the following events shall be a "JBIC EVENT OF DEFAULT"
under this Agreement:
(i) if the SMM Concentrate Sales Agreement is terminated or
cancelled for any reason or amended, supplemented or otherwise modified to
reduce the quantity of minimum annual purchases thereunder or to reduce the term
thereof, and the same is not replaced within one hundred eighty (180) days with
equivalent arrangements acceptable to JBIC with customers in Japan;
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(ii) if either SC or SMM is in breach of its obligations
under Section 2.01(c) of the Transfer Restrictions Agreement or the Sumitomo
Participant (or any Sumitomo Affiliate Transferee) makes or permits a Transfer
of its Restricted Common Stock that requires the prior written consent of JBIC
in accordance with Section 2.02(d) of the Transfer Restrictions Agreement
without the prior written consent of JBIC; or
(iii) if at any time (i) JBIC shall declare the existence of
a JBIC Event of Default in accordance with the requirements of Section 9.02 or
(ii) the representation and warranty made by the Borrower under Section 7.02
shall prove to have been false when made in any material respect and is not
corrected or cured within ten (10) Business Days after notice from JBIC or the
JBIC Agent specifying such breach and requesting that it be remedied.
Section 10.02. Consequences of JBIC Event of Default. Upon the
occurrence of a JBIC Event of Default pursuant to Section 10.01, JBIC or the
JBIC Agent (acting on behalf of JBIC) may, by notice to the Borrower, take the
following actions, so long as such actions are taken concurrently: (i) terminate
its commitment to make available the JBIC Facility and (ii) declare the JBIC
Loan then outstanding, together with accrued interest and any other charges
thereon, to be immediately due and payable.
ARTICLE XI
CONDITIONS PRECEDENT
Section 11.01. Conditions Precedent to Initial Disbursement. The
obligation of JBIC to make the initial JBIC Disbursement under this Agreement
shall be subject to (a) the fulfillment, in a manner satisfactory to JBIC, prior
to or concurrently with the making of such initial JBIC Disbursement, of the
conditions precedent set forth in Section 5.01 of the Master Participation
Agreement (or waiver thereof in accordance with Section 5.01 of the Master
Participation Agreement), which conditions are incorporated by reference herein
as if fully set forth herein; (b) the fulfillment of the conditions set out in
clause (1) of Annex A attached hereto (or waiver thereof by JBIC in accordance
with Section 5.01 of the Master Participation Agreement); and (c) with respect
to any JBIC Disbursement of Tranche B, the JBIC Agent shall have received the
corresponding portion of Tranche B from each JBIC Tranche B Funding Source Bank.
Section 11.02. Conditions to Subsequent JBIC Disbursements. The
obligation of JBIC to make any JBIC Disbursement under this Agreement subsequent
to the initial JBIC Disbursement shall be subject to (a) the fulfillment, in a
manner satisfactory to the Requisite Lenders, prior to or concurrently with the
making of such JBIC Disbursement, of the conditions precedent set forth in
Section 5.02 of the Master Participation Agreement (or waiver thereof in
accordance with Section 5.02 of the Master Participation Agreement), which
conditions are incorporated by reference herein as if fully set forth herein;
(b) the fulfillment of the conditions set out in paragraph (1) of Annex A
attached hereto (or waiver thereof in accordance with Section 5.02 of the Master
Participation Agreement); and (c) with respect to any JBIC Disbursement of
Tranche B, the JBIC Agent shall have received the corresponding portion of
Tranche B from each JBIC Tranche B Funding Source Bank.
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ARTICLE XII
TAXES, FEES AND EXPENSES
Section 12.01. Indemnification for Taxes, Fees and Expenses. The
Borrower shall pay or cause to be paid and shall indemnify JBIC and the JBIC
Agent against:
(a) Without duplication of the Borrower's obligations under Section
12.21 of the Master Participation Agreement, the Borrower agrees (i) to pay or
reimburse each of JBIC and the JBIC Agent for all of its reasonable
out-of-pocket costs and expenses incurred in connection with the negotiation,
preparation, execution, delivery, waiver or modification of this Agreement and
any other documents prepared in connection herewith or therewith, and the
consummation and administration of the transactions contemplated hereby and
thereby, including, without limitation, any documentary taxes and the reasonable
fees, disbursements and other charges of external counsel to each of JBIC and
the JBIC Agent, and (ii) to pay or reimburse each of JBIC and the JBIC Agent for
all its reasonable costs and expenses incurred in connection with any amendment,
supplement or modification to, or waiver in respect of this Agreement, or its
costs and expenses incurred in connection with the enforcement or preservation
of any rights under this Agreement, including, without limitation, the
reasonable fees, disbursements and other charges of external counsel, provided
in each case JBIC or the JBIC Agent shall first have provided the Borrower with
a receipt and supporting documentation certifying the amount of such costs and
expenses and that the relevant amounts shall be due and payable 30 days
thereafter. The agreements in this Section shall survive repayment of the
Advances, provided that no claims shall be made by JBIC or the JBIC Agent under
this Section after the first anniversary of the termination of this Agreement
and repayment of the Advances and all other amounts payable hereunder.
Notwithstanding the foregoing, and subject to Section 3.01 hereof, the Borrower
shall have no obligation to indemnify either JBIC or the JBIC Agent against any
losses, liabilities, obligations, damages, penalties, actions, judgments, suits,
costs, disbursements, or expenses arising out of the failure of JBIC or the JBIC
Agent, as the case may be, upon satisfaction of all conditions set forth in
Article XI, to disburse the amount required to be disbursed hereunder.
(b) Without duplication of the Borrower's obligations under Section
12.21 of the Master Participation Agreement, the Borrower shall indemnify the
JBIC Agent and JBIC, and each Related Party of the JBIC Agent or JBIC (each an
"Indemnitee") from, and hold each Indemnitee harmless against, any and all
losses, claims, damages, liabilities and related expenses (other than Excluded
Taxes), including the reasonable and documented fees, charges and disbursements
of any counsel for any Indemnitee, incurred by or asserted against any
Indemnitee arising out of, in connection with, or as a result of (i) the
execution or delivery of this Agreement, the performance by the parties hereto
or thereto of their respective obligations hereunder or thereunder or the
consummation of the transactions contemplated hereby or thereby, (ii) the JBIC
Loan or the use of the proceeds therefrom or (iii) any claim, litigation,
investigation or proceeding relating to any of the foregoing, regardless of
whether any Indemnitee is a party thereto; provided that such indemnity shall
not, as to any Indemnitee, be available to the extent that such losses, claims,
damages, liabilities or related expenses are incurred by reason of the
negligence or willful misconduct of such Indemnitee; provided further that in
each case JBIC or the JBIC Agent shall first have provided the Borrower with a
certificate
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setting forth the amount of such losses, claims, damages, liabilities and
related expenses, together with reasonable evidence of payment therefore.
Section 12.02. Relevant Currency. All amounts payable by the Borrower
under this Article XII in respect of any tax, duty, penalty, fee, expense,
charge, interest, loss, cost or liability shall be payable in the currency in
which such tax, duty, penalty, fee, expense, charge, interest, loss, cost or
liability is denominated or, if JBIC or the JBIC Agent shall so request, in any
other currency at the current exchange rate specified by JBIC or the JBIC Agent
(such denominated or other currency, the "RELEVANT CURRENCY").
ARTICLE XIII
GOVERNING LAW AND JURISDICTION
Section 13.01. GOVERNING LAW. IN ACCORDANCE WITH SECTION 5-1401 OF THE
NEW YORK GENERAL OBLIGATIONS LAW, THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
Section 13.02. Good Faith Consultation. The parties hereto undertake
to use good faith efforts to resolve any dispute arising out of or in connection
with this Agreement through consultation in good faith and mutual understanding,
provided that such consultation shall not prejudice the exercise of any right or
remedy of either party hereto by any such party in respect of any such dispute.
Section 13.03. Submission to Jurisdiction. The provisions of Section
12.16 of the Master Participation Agreement are incorporated by reference herein
as if fully set forth herein.
Section 13.04. WAIVER OF TRIAL. EACH OF THE PARTIES HERETO HEREBY
IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR
COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR ANY OTHER FINANCING DOCUMENT OR THE ACTIONS OF ANY
OTHER PERSON PARTY HERETO OR THERETO IN THE NEGOTIATION, ADMINISTRATION,
PERFORMANCE OR ENFORCEMENT THEREOF.
ARTICLE XIV
JBIC AGENT
Section 14.01. Appointment of JBIC Agent. JBIC hereby appoints
Sumitomo Mitsui Banking Corporation to act as JBIC's agent in connection
herewith, the Master Participation Agreement and any other related agreements to
which JBIC and the JBIC Agent are parties, and any other Financing Document and
authorizes the JBIC Agent to exercise such rights, powers and discretions as are
specifically delegated to the JBIC Agent by the terms hereof and thereof
together with all such rights, powers and discretions as are reasonably
incidental
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thereto. The Borrower hereby acknowledges that JBIC has irrevocably appointed
and authorized the JBIC Agent to act on its behalf in all matters related to
this Agreement, the Master Participation Agreement, the other Financing
Documents and any other related agreement to which JBIC and the JBIC Agent are
parties. The JBIC Agent shall be obligated to perform only those duties and
responsibilities specifically set out in this Agreement, any other Financing
Documents and any other related Agreement to which JBIC and the JBIC Agent are
parties, and the parties hereto agree that there shall be no implied covenants
or obligations arising under this Agreement or any other Financing Document on
the part of the JBIC Agent.
Section 14.02. Tax Certification. The JBIC Agent shall, from time to
time following receipt of a written request therefor by the Borrower, furnish to
the Borrower a certification as to the fact that the JBIC Agent is "unrelated"
to the Borrower, in the form set forth in Annex F, and any other certification
as may be necessary under Peruvian law to qualify for a reduced rate of
withholding tax.
ARTICLE XV
MISCELLANEOUS
Section 15.01. Confidentiality.
(a) Each party to this Agreement shall maintain the confidentiality of
all information disclosed to it concerning this Agreement and the JBIC Facility
and shall, unless otherwise required by law, not voluntarily disclose it without
the prior written consent of the other parties hereto to anyone other than to
the directors, officers, employees, accountants, consultants, counsel and
representatives of the parties hereto, or any proposed transferee of the Tranche
B Loan with a reasonable need to know such information (provided, in the case of
such a proposed transferee or participant, that such transfer is permissible
under this Agreement and provided further, in a proposed transferee or
participant, the proposed transferee or participant, as the case may be, first
agrees in writing to be subject to this Section 15.01), except that this
provision shall not prevent the parties from disclosing information that (i)
becomes generally available to the public other than as a result of a disclosure
by such Person or its representatives in violation of this Agreement, (ii) is or
becomes available to such Person on a non-confidential basis from a source other
than the parties hereto when such source is entitled to make such disclosure or
(iii) subject to paragraph (c) below, is required to be disclosed in accordance
with any applicable Governmental Rule.
(b) If such information is so disclosed to any Person, the disclosing
party agrees to instruct such Person to keep such information confidential.
(c) If such information is required to be disclosed in accordance with
any applicable Governmental Rule, unless specifically prohibited by applicable
law or court order, the disclosing party shall, prior to disclosure thereof, use
its best efforts to notify the other parties hereto of any request for
disclosure of any such information (i) by any Governmental Authority (other than
any such request in connection with an examination of the financial condition of
any Senior Facility Lender) or (ii) pursuant to any legal process, so that in
each case the other parties
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hereto may seek an appropriate protective order to maintain the confidentiality
of such information.
(d) The agreements in this Section 15.01 shall survive the termination
of this Agreement.
Section 15.02. No Assignment; Funding. This Agreement shall be binding
upon and inure to the benefit of the Borrower, JBIC and their respective
successors and assigns; provided that the Borrower may not assign any or all of
its rights or obligations hereunder to any Person in any manner whatsoever
without the prior written consent of JBIC. The Borrower acknowledges and agrees
that the Tranche B Loan shall be provided only upon disbursement of the Tranche
B Loan Funds by the JBIC Tranche B Funding Source Banks.
Section 15.03. No Waiver, Remedies Cumulative. No failure or delay in
exercising on the part of JBIC any right hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of any right preclude any
other or further exercise thereof, or the exercise of any other right. No waiver
by JBIC hereunder shall be effective unless it is in writing. The rights and
remedies provided herein are cumulative and not exclusive of any other right or
remedy provided by law.
Section 15.04. Partial Illegality. If at any time any provision hereof
becomes illegal, invalid or unenforceable in any respect under the laws of any
jurisdiction, neither the legality, validity nor enforceability of any other
provision hereof shall in any way be affected or impaired thereby.
Section 15.05. Communications. Any notice, request, demand, consent,
designation, direction, instruction, certificate, report or other communication
to be given hereunder shall be given in the English language and will be duly
given when delivered in writing or sent by electronic mail confirmed by
facsimile transmission (with written confirmation of receipt, which confirmation
may be by facsimile transmission) (provided that a notice sent by electronic
mail shall be duly given only at the time the facsimile transmission confirming
the same is sent) or facsimile transmission (with written confirmation of
receipt, which confirmation may be by facsimile transmission) to a party at its
address and facsimile transmission numbers as indicated below or to such other
address as may be furnished for this purpose by such party (any such
communication that is not in writing shall be confirmed in writing):
If to the Borrower: Sociedad Minera Cerro Verde S.A.A.
Asiento Xxxxxx Xxxxx Xxxxx X/X
Xxxxxxxx - Xxxxxxxx
Xxxx
Attention: General Manager
Telephone: (054) 283-363
Facsimile: (054) 283-376
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With a copy to PDC, at: Xxxxxx Dodge Tower
0 Xxxxx Xxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxx 00000
X.X.X.
Attention: Treasurer
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
If to JBIC: Japan Bank for International Xxxxxxxxxxx
0-0, Xxxxxxxxx 0 - Xxxxx
Xxxxxxx-xx
Xxxxx, Xxxxx 100 - 8144
Attention: Director, Division 1,
Project Finance Department
Telephone: x00-0-0000-0000
Facsimile: x00-0-0000-0000
If to the JBIC Agent: Sumitomo Mitsui Banking Corporation
Structured Finance Xxxxxxxxxx
0-0, Xxxxxxxxx 0 - Xxxxx
Xxxxxxx-xx
Xxxxx, Xxxxx 100 - 0006
Attention: Credit Control & Administration Group
Telephone: x00-0-0000-0000
Facsimile: x00-0-0000-0000
or in each case to such other address as any party hereto may designate by
written notice to the other party hereto.
Notices, requests, demands or other communications given or made as
aforesaid (i) by registered air mail shall be deemed to have been duly given or
made seven (7) Business Days after being deposited in the mails, and (ii) by
internationally recognized courier service or by facsimile shall be deemed to
have been duly given or made when the internationally recognized courier service
or facsimile or is duly received by the recipient.
Section 15.06. Use of English Language. All documents to be furnished
or notices, requests or other communications to be given or made under this
Agreement shall, unless specified otherwise in this Agreement, be in the English
language or, if in another language, shall, if JBIC so requests, be accompanied
by a translation into English certified by a representative of the Borrower.
Section 15.07. Successors and Assigns. This Agreement shall bind and
inure to the benefit of the respective successors and assigns of the Borrower,
the JBIC Agent and JBIC, except that neither the Borrower nor the JBIC Agent may
assign or otherwise transfer all or any part of its rights or obligations under
this Agreement without the prior written consent of JBIC.
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Section 15.08. Further Assurances. The Borrower agrees to cooperate
with JBIC in connection with the exercise of any of its rights hereunder and
agrees, promptly upon request by JBIC or the JBIC Agent, to execute, acknowledge
and deliver all further instruments and documents, and take all such further
acts, consistent with legal and regulatory restrictions applicable to the
Borrower, as JBIC or the JBIC Agent may reasonably request from time to time in
order to carry out the purposes hereof or to enable JBIC to exercise and enforce
its rights and remedies hereunder.
Section 15.09. Counterparts. This Agreement may be executed in any
number of counterparts and by the different parties hereto on separate
counterparts, each of which when so executed and delivered shall be an original,
but all of which shall together constitute one and the same instrument.
Section 15.10. Abbreviation. This Agreement shall be referred to as
the "JBIC LOAN TO CERRO VERDE" in communications between the Borrower and JBIC,
as well as in relevant documents.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the Borrower, JBIC and the JBIC Agent, acting through their
duly authorized representatives, have caused this Agreement to be duly executed
as of the date first written above.
JAPAN BANK FOR INTERNATIONAL COOPERATION: SOCIEDAD MINERA CERRO VERDE S.A.A.:
By: By:
------------------------------------- --------------------------------
Name: Name:
----------------------------------- ------------------------------
Title: Title:
---------------------------------- -----------------------------
SUMITOMO MITSUI BANKING CORPORATION:
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
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ANNEX A
DISBURSEMENT PROCEDURES
Unless otherwise agreed in writing by the parties to this Agreement, JBIC
Disbursements under this Agreement and the Master Participation Agreement shall
be made in accordance with the following procedures:
1. REQUEST FOR DISBURSEMENT
1.1 Simultaneously with the execution of this Agreement, the Borrower
shall deliver to JBIC and the JBIC Agent a proposed schedule of disbursement for
the JBIC Loan substantially in the form of Schedule 4 to this Annex A.
1.2 The Borrower shall, at least fifteen (15) Business Days prior to
the intended date of Disbursement, submit to the JBIC Agent a duly completed
Request for Disbursement substantially in the form of Schedule 1 to this Annex A
signed by the Borrower and accompanied by a duly completed and signed Statement
of Expenditures substantially in the form of Schedule 2 to this Annex A.
1.3 The Statement of Expenditures shall include the expenditures
already paid by the Borrower as Project Costs or estimated to be paid through
the relevant Disbursement Date. The Statement of Expenditures may also include
the expenditures that are scheduled to be paid by the Borrower during the ninety
(90) day period after the date of the relevant Statement of Expenditures (the
"Estimated Expenditures"), provided that should any Statement of Expenditures
include the Estimated Expenditures, the Borrower shall submit to the JBIC Agent
the revised relevant Statement of Expenditures promptly after such period.
1.4 In the event that any expenditure shown in a Statement of
Expenditures is incurred in a currency other than the Eligible Currency, such
amounts shall be converted into the Eligible Currency at a rate of exchange
reasonably chosen by the Borrower and used by the Borrower for the preparation
of its financial statements, as set forth in the Statement of Expenditures.
1.5 The Request for Disbursement and the Statement of Expenditures
shall be reviewed by the JBIC Agent as to its compliance with the provisions of
this Agreement. If the Request for Disbursement will result in breach of any
provision of this Agreement, the JBIC Agent, after consultation with JBIC, may
reject such Request for Disbursement.
2. DISBURSEMENT
2.1 Subject to the terms and conditions of this Agreement, including
without limitation, Sections 11.01 and 11.02 and this Annex A, the JBIC Agent
shall, upon its receipt, notify JBIC of the date and the amount of the requested
JBIC Disbursement in a Request for Disbursement. On each Disbursement Date
before the close of business in Tokyo, JBIC shall disburse the Tranche A Loans
to the JBIC Agent Tokyo Disbursement Account and on or prior to 12:00 p.m., New
York time, the JBIC Tranche B Funding Source Banks shall disburse the
Tranche B Loans into the JBIC Agent New York Disbursement Account and the
Disbursement Procedures set forth in Annex G (or such other procedures as may be
agreed by the parties from time to time) shall be observed, provided that, if
the said intended date of the JBIC Disbursement is not a Business Day, such JBIC
Disbursement shall be made on the immediately succeeding Business Day.
2.2 Notwithstanding the foregoing, JBIC shall be deemed to have made a
JBIC Disbursement to the Borrower at the time when JBIC disburses the Tranche A
Loans to the JBIC Agent Tokyo Disbursement Account and the Tranche B Loans are
disbursed into the JBIC Agent New York Disbursement Account in accordance with
Section 2.1 and shall, as from the date of such disbursement, constitute a valid
and binding obligation upon the Borrower in respect of repayment of the
corresponding amount of the JBIC Loan and the payment of interest and any other
amount payable hereunder in relation thereto, each in accordance with and in the
manner contemplated by this Agreement.
2.3 No more than one (1) JBIC Disbursement shall be made hereunder in
any calendar month period. In addition, no JBIC Disbursement shall be made
during any thirty (30) day period immediately preceding the date of payment of
commitment charges pursuant to Section 5.03.
2.4 In the event that the total amount set forth in the Statement of
Expenditures with respect to any JBIC Disbursement is less than the amount of
the JBIC Disbursement requested in the relevant Request for Disbursement, then
the JBIC Disbursement shall be made only up to the amount set forth in such
Statement of Expenditures. Except with respect to the last JBIC Disbursement,
each JBIC Disbursement shall not be less than five hundred thousand Dollars
(U.S.$500,000).
2.5 Promptly after the JBIC Disbursement is made, the JBIC Agent shall
(i) notify the Borrower of the date and amount of the Disbursement by sending
two (2) original copies of the Table of Disbursements (the "Table of
Disbursements") substantially in the form of Schedule 3 to this Annex A to the
Borrower and (ii) send a copy thereof to JBIC. The Borrower, promptly after
receipt thereof, shall (i) duly acknowledge and confirm such Table of
Disbursements and return one (1) original copy to the JBIC Agent and (ii) send a
copy thereof to JBIC.
3. GENERAL
On each day on which a JBIC Disbursement shall be made, the amount of the
Facility shall be reduced by the amount of such JBIC Disbursement.
Notwithstanding any provision of this Agreement to the contrary, JBIC shall not
be required to make any JBIC Disbursement hereunder if, as a result thereof, the
amount of the Facility would thereby be exceeded. JBIC Disbursements will be
made only during the Availability Period.
2
Schedule 1
Request for Disbursement
(Re: JBIC Loan to Cerro Verde)
Date: ________________
Serial No.: __________
Sumitomo Mitsui Banking Corporation, as JBIC Agent
[Address]
Attn: [Director]
[Name of Department]
Dear Sirs:
Pursuant to Section 1.2 of Annex A to the JBIC Loan Agreement dated Xxxxxxx
0xx, 0000 xxxxx Xxxxx Bank for International Cooperation, as Lender, Sociedad
Minera Cerro Verde S.A.A., as Borrower, and Sumitomo Mitsui Banking Corporation,
as JBIC Agent (the "JBIC Loan Agreement") (JBIC Loan to Cerro Verde) (terms
defined in the JBIC Loan Agreement (including those defined by reference to the
Master Participation Agreement referred to therein) have the same meaning
herein), we hereby request JBIC to disburse the amount specified below.
Date of JBIC Disbursement:
Disbursement Amount in the Eligible Currency: Tranche A [____________]
Tranche B [____________]
Please make a JBIC Disbursement of the above-mentioned amount by means of a
telegraphic transfer into the following account.
Bank Name/Branch Name: Sumitomo Mitsui Banking Corporation
Address of the Branch:
Account Name/Account Number:
Reference:
Attn:
The current outstanding principal amount of the [JBIC Loan] excluding the
amount set forth in this Request for Disbursement is:
Tranche A: [____________]
Tranche B: [____________]
We enclose the Statement of Expenditures specifying the above-mentioned
amount for the JBIC Disbursement.
3
We hereby certify (i) that no Default has occurred and is continuing or
would result from the making of such Disbursement (ii) that such JBIC
Disbursement is in accordance with the Table of Disbursements (attached hereto
as Schedule 3), (iii) that the proceeds of such JBIC Disbursement are (a) to be
used solely to pay expenditures (x) already paid by the Borrower as Project
Costs, (y) estimated to be paid through the relevant Disbursement Date, or (z)
that are scheduled to be paid by the Borrower as Project Costs during the ninety
(90) day period after the relevant Disbursement Date and (b) are necessary to
pay such Project Costs already paid, due or projected to become due within
ninety (90) days after such Requested Disbursement Date (other than in cases of
Punchlist Items on the final JBIC Disbursement), and (iv) that each of the
conditions precedent set forth in Section [5.01/5.02(2)] of the Master
Participation Agreement has been satisfied or waived.
Yours faithfully,
Sociedad Minera Cerro Verde S.A.A.
---------------------------------------
Name:
---------------------------------
Title:
--------------------------------
----------
(2) This reference should be Section 5.01 in case of the initial disbursement
and Section 5.02 in case of all subsequent disbursements.
4
Schedule 2
Statement of Expenditures
(Re: JBIC Loan to Cerro Verde)
Date:____________
Serial No.________
Sumitomo Mitsui Banking Corporation, as JBIC Agent
[Address]
Attn: [Director]
[Name of Department]
Dear Sirs:
Pursuant to Section 1.3 of Annex A to the JBIC Loan Agreement dated
September 30th, 2005 between Japan Bank for International Cooperation, as
Lender, Sociedad Minera Cerro Verde S.A.A., as Borrower and Sumitomo Mitsui
Banking Corporation, as JBIC Agent (the "JBIC Loan Agreement") (JBIC Loan to
Cerro Verde) (terms defined in the JBIC Loan Agreement (including those defined
by reference to the Master Participation Agreement referred to therein) having
the same meaning herein) and in relation to the disbursement requested to be
made on ____________, 20__, we hereby submit to you our Statement of
Expenditures.
Yours faithfully,
Sociedad Minera Cerro Verde S.A.A.
---------------------------------------
Name:
---------------------------------
Title:
--------------------------------
Schedule 2
Statement of Expenditures
(JBIC Loan to Cerro Verde)
1 2 3 4 5 6 7
Name of Payee Category of Brief Description of Date of Payment Amount in Currency of Exchange Rate Amount in [the
Expenditure Payment Expenditure Eligible Currency]
(A) Total *
(B) Amount to be disbursed *
Sociedad Minera Cerro Verde S.A.A.
Name:
----------------------------------
Title:
---------------------------------
Remarks:
Please insert the amount denominated in the Eligible Currency.
Schedule 3
(JBIC Loan to Cerro Verde)
No. _____________________
Date: ___________________
Table of Disbursements
(JBIC Loan to Cerro Verde)
Dear Sirs:
We are sending herewith two (2) copies of the Table of Disbursements
concerning the captioned JBIC Loan.
The said Table of Disbursements shall be conclusive and binding in the
absence of manifest error.
Yours faithfully,
Sumitomo Mitsui Banking Corporation, as
JBIC Agent
By:
------------------------------------
Title:
---------------------------------
Acknowledged and confirmed
Sociedad Minera Cerro Verde S.A.A.
By
----------------------------------
(authorized signature)
(Attachment to Schedule 3)
JAPAN BANK FOR INTERNATIONAL COOPERATION
TABLE OF DISBURSEMENTS
for JBIC Loan to Cerro Verde
(Amounts expressed in _________)
Outstanding
Date of Balance (Total of
JBIC Amount Amount Disbursed Tranche A Remarks as of
Disbursement Disbursed Tranche A Tranche B and Tranche B) previous month
------------ ------------------------ ---------------- ----------------- ----------------
Total as of this month
Schedule 4 to Annex A
JBIC Proposed Disbursement Schedule
Amount for Disbursement Amount for Disbursement
Disbursement Date Tranche A Tranche B
----------------- ----------------------- -----------------------
November 2005 9,625,000 4,125,000
March 2006 43,312,500 18,562,500
June 2006 33,687,500 14,437,500
September 2006 43,312,500 18,562,500
January 2007 43,312,500 18,562,500
----------- ----------
Total Amount U.S.$ 173,250,000 74,250,000
=========== ==========
ANNEX B
Amortization Schedule
PERCENTAGE PERCENTAGE AMOUNT (U.S.$) AMOUNT (U.S.$)
PAYMENT NO. TRANCHE A TRANCHE B TRANCHE A* TRANCHE B*
------------ ---------- ---------- -------------- --------------
1. 6.25% 6.25%
2. 6.25% 6.25%
3. 6.25% 6.25%
4. 6.25% 6.25%
5. 6.25% 6.25%
6. 6.25% 6.25%
7. 6.25% 6.25%
8. 6.25% 6.25%
9. 6.25% 6.25%
10. 6.25% 6.25%
11. 6.25% 6.25%
12. 6.25% 6.25%
13. 6.25% 6.25%
14. 6.25% 6.25%
15. 6.25% 6.25%
16. 6.25% 6.25%
---- ----
Total Amount
U.S.$ 100% 100%
==== ====
----------
* To be inserted on the Availability Period End Date
B-1
ANNEX C
DISBURSEMENT ACCOUNTS
JBIC Agent New York Disbursement Account
Account Name: Sumitomo Mitsui Banking Corporation, Tokyo (Swift: XXXXXXXX)
Reference: Payment for Cerro Verde
(Attn: Capital Markets and Treasury Operations Department)
Account Bank: Sumitomo Mitsui Banking Corporation, New York Branch
Account Number: 895002
JBIC Agent Tokyo Disbursement Account
Account Name: Sumitomo Mitsui Banking Corporation, Tokyo (Swift: XXXXXXXX)
Reference: Payment for Cerro Verde
(Attn: Capital Markets and Treasury Operations Department)
Account Bank: XX Xxxxxx Xxxxx Bank, Tokyo Branch
Account Number: 0141503300
REPAYMENT ACCOUNTS
JBIC Agent New York Repayment Account
Account Name: Sumitomo Mitsui Banking Corporation, Tokyo (Swift: XXXXXXXX)
Reference: Payment for Cerro Verde
(Attn: Capital Markets and Treasury Operations Department)
Account Bank: Sumitomo Mitsui Banking Corporation, New York Branch
Account Number: 895002
JBIC New York Repayment Account
Account Name: Japan Bank for International Cooperation
Reference: Cerro Verde
Account Bank: Bank of Tokyo-Mitsubishi Trust Company
Account Number: 00000000
C-1
ANNEX D
Environmental Monitoring Form
(JBIC Loan to Cerro Verde)
Date: ____________
To: Japan Bank for International Cooperation
0-0, Xxxxxxxxx 0-xxxxx
Xxxxxxx-xx, Xxxxx 000-0000, Xxxxx
Attn: Director General
Energy and Natural Resources Finance Department
Dear Sirs:
As required by Section 9.01(b) of the JBIC Loan Agreement dated September
30th, 2005 between Japan Bank for International Cooperation, as Lender,
Sociedad Minera Cerro Verde S.A.A., as Borrower, and Sumitomo Mitsui
Banking Corporation, as JBIC Agent (JBIC Loan to Cerro Verde), please find
enclosed the environmental monitoring form prepared by the Borrower for the
year ended on December 31, [____].
In addition, except as disclosed below, we hereby certify that, as of the
date hereof, the Borrower is not aware of any violation of the JBIC
Environmental Guidelines.
Yours faithfully,
----------------------------------------
D-1
ENVIRONMENTAL MONITORING FORM
1. WATER QUALITY (SURFACE WATER; CHILI RIVER, WATER INTAKE POINT)
EFFLUENT LIMITATIONS
MEASURED MEASURED -------------------- REMARKS
VALUE VALUE MAXIMUM AVERAGE (FREQUENCY,
ITEM UNIT (AVERAGE) (MAXIMUM) DAILY MONTHLY METHOD, ETC.)
----------- --------- --------- --------- ------- ------- -------------
pH --
EC mS/cm
Temperature degrees C
Acidity mg/L (CaCO3)
Alkalinity mg/L
TDS mg/L
TSS mg/L
2. WATER QUALITY (GROUNDWATER; DOWNSTREAM OF WASTE ROCK DUMP PLACE)
MEASURED MEASURED REMARKS
VALUE VALUE REFERRED (FREQUENCY,
ITEM UNIT (AVERAGE) (MAXIMUM) STANDARDS/CRITERIA METHOD, ETC.)
------------ --------- --------- --------- -------------------- -------------
Water Level
pH --
DO
EC mS/cm
Temperature degrees C
Acidity mg/L (CaCO3)
Alkalinity mg/L
TDS mg/L
TSS mg/L
Total Metals mg/L
Sulfates mg/L
3. WATER QUALITY (GROUNDWATER; DOWNSTREAM OF TAILINGS DAM)
MEASURED MEASURED REMARKS
VALUE VALUE REFERRED (FREQUENCY,
ITEM UNIT (AVERAGE) (MAXIMUM) STANDARDS/CRITERIA METHOD, ETC.)
------------ --------- --------- --------- -------------------- -------------
Water Level
pH --
DO
EC mS/cm
Temperature degrees C
Acidity mg/L (CaCO3)
Alkalinity mg/L
TDS mg/L
TSS mg/L
Total Metals mg/L
Total Nutrient mg/L
1
ANNEX E
JAPAN BANK FOR INTERNATIONAL COOPERATION
GUIDELINES FOR CONFIRMATION OF
ENVIRONMENTAL AND SOCIAL CONSIDERATIONS
APRIL 0000
XXXXX BANK FOR INTERNATIONAL COOPERATION
PREFACE
Japan Bank for International Cooperation (hereinafter referred to as "JBIC")
establishes and makes public "JBIC Guidelines for Confirmation of Environmental
and Social Considerations" (hereinafter referred to as the "Guidelines") with
the objective of contributing to efforts by the international community,
particularly developing regions, towards sustainable development, through
consideration of the environmental and social aspects in all projects
(hereinafter referred to as "project" or "projects") subject to lending or other
financial operations (hereinafter collectively referred to as "funding") by
JBIC. Environmental and social considerations refer not only to the natural
environment, but also to social issues such as involuntary resettlement and
respect for the human rights of indigenous peoples (hereinafter collectively
referred to as "environment"). The Guidelines apply commonly to JBIC's
International Financial Operations and Overseas Economic Cooperation Operations.
The Guidelines have been formulated on the basis of Japan's approach to
international co-operation in environmental conservation, discussions about the
international framework on environmental and social considerations and human
rights, and discussions held at the Organisation for Economic Co-Operation and
Development (OECD) regarding common approaches to the environment and public
export credits, which requires consistency between public export credit policies
and environmental conservation policies, and also regarding good environmental
practices of the Development Assistance Committee (DAC) and other issues. The
Guidelines will be reviewed as necessary in future, taking into account future
progress made in these areas.
While encouraging appropriate consideration of the environment and social
aspects in projects subject to funding, it is JBIC's policy to provide active
support to projects that promote environmental conservation and to projects that
contribute to the protection of the global environment, such as projects to
reduce greenhouse gas emissions. JBIC also has a policy of being actively
involved in the support of enhancing environmental and social considerations in
developing countries.
2
GUIDELINES
Contents
Page
----
Part 1
1. JBIC's Basic Policies Regarding Confirmation of Environmental and Social Considerations .. 3
2. Objectives and Meaning of the Guidelines ................................................. 4
3. Basic Principles Regarding Confirmation of Environmental and Social Considerations ....... 4
4. Procedures for Confirmation of Environmental and Social Considerations ................... 6
5. Disclosure of Information Regarding Confirmation of Environmental and Social
Considerations by JBIC ...................................................................... 9
6. Taking Environmental Reviews into Account for Decision-making and Loan
Agreements .................................................................................. 11
7. Ensuring Appropriate Implementation of and Compliance with the Guidelines ................ 11
8. Implementation and Review of the Guidelines .............................................. 12
Part 2(NB)
1. Environmental and Social Considerations Required for Funded Projects ..................... 13
2. EIA Reports for Category A Projects ...................................................... 17
3. Illustrative List of Sensitive Sectors, Characteristics and Areas ........................ 20
4. Information Required for Screening Process ............................................... 22
5. Checklist Categories and Items ........................................................... 23
6. Items Requiring Monitoring ............................................................... 24
NB: Part 2 is inseparable from Part 1.
3
[PART 1]
1. JBIC'S BASIC POLICIES REGARDING CONFIRMATION OF ENVIRONMENTAL AND SOCIAL
CONSIDERATIONS
JBIC confirms that project proponents are undertaking appropriate environmental
and social considerations, through various measures, so as to prevent or
minimize the impact on the environment and local communities which may be caused
by the projects for which JBIC provides funding, and not to bring about
unacceptable effects. It will thus contribute to the sustainable development of
developing regions.
In its confirmation of environmental and social considerations, JBIC places
importance on dialogue with the host country (including local governments),
borrowers and project proponents (hereinafter collectively referred to as
"borrowers and related parties") regarding environmental and social
considerations, while respecting the sovereignty of the host country. It also
takes note of the importance of transparent and accountable processes, as well
as the participation in those processes of stakeholders in the project
concerned, including local residents and local NGOs affected by the project
(hereinafter referred to as "stakeholders"). JBIC makes clear in its Guidelines
the environmental and social considerations required for projects to receive
JBIC's funding, and confirms those environmental and social considerations.
In making its funding decisions, JBIC conducts screenings and reviews of
environmental and social considerations to confirm that the requirements are
duly satisfied.
JBIC makes the utmost efforts to ensure that appropriate environmental and
social considerations are undertaken, in accordance with the nature of the
project for which JBIC provides funding, as stated in the Guidelines, through
such means as loan agreements.
Following funding decisions, if necessary, JBIC will monitor or take steps over
a certain period of time to encourage borrowers and related parties to ensure
that appropriate environmental and social considerations are undertaken.
In cases where it is involved in the planning and preparatory stages of a
project, JBIC will take steps to encourage borrowers and related parties to
undertake appropriate environmental and social considerations from the earliest
stage possible.
1
JBIC consistently strives to improve its organizational structure and
operational capacity to achieve sufficient and effective confirmation of
environmental and social considerations.
2. OBJECTIVES AND MEANING OF THE GUIDELINES
The objective of the Guidelines is to encourage project proponents to implement
appropriate environmental and social considerations in accordance with the
Guidelines, by making clear its procedures (both before and after funding
decisions are made), criteria for decision-making and requirements which
projects subject to funding are to meet. In so doing, JBIC endeavors to ensure
transparency, predictability and accountability in its confirmation of
environmental and social considerations.
3. BASIC PRINCIPLES REGARDING CONFIRMATION OF ENVIRONMENTAL AND SOCIAL
CONSIDERATIONS
(1) Parties Responsible for Environmental and Social Considerations The project
proponents are responsible for environmental and social considerations for the
project. JBIC confirms such considerations in light of the Guidelines. JBIC
encourages project proponents seeking funding from JBIC to undertake appropriate
environmental and social considerations in accordance with the nature of the
project, based on the principles listed in Section 1 of Part 2 of the
Guidelines.
(2) Confirmation of Environmental and Social Considerations by JBIC. JBIC does
the following to confirm environmental and social considerations;
(a) classifies the project into one of the categories listed in Section 4.(2)
of Part 1 (hereinafter referred to as "screening");
(b) conducts a review of environmental and social considerations when making a
decision on funding, to confirm that the requirements are duly satisfied
(hereinafter referred to as "environmental review"); and
(c) conducts monitoring and follow-up after the decision has been made on
funding (hereinafter, such monitoring and follow-up processes will be
simply referred to as "monitoring").
JBIC conducts screening and environmental reviews of projects for which it
intends to provide funding before it makes decisions on funding.
In light of the Guidelines and taking into account the characteristics of the
project and the particular circumstances of the country and its location, JBIC
confirms in its environmental reviews: 1) whether appropriate and sufficient
consideration is given to environmental and social issues before the
implementation of the project, 2) whether appropriate environmental and social
considerations can be expected after JBIC makes decisions on the funding of the
project in light of such factors as the state of preparation by the project
proponent and host government, their experience, operational capacity, and the
state of securing funds, as well as external factors of instability.
From the standpoint that confirmation of environmental and social considerations
is an important aspect in the risk assessment for the funding, JBIC carries out
environmental reviews in strict
2
conjunction with its financial, economic and technical review of projects.
As well as undertaking efficient pre-funding screening and environmental reviews
through the appropriate use of "screening forms" and "environmental checklists",
amongst other means, JBIC places emphasis on post-funding monitoring.
(3) Information Required for Confirmation of Environmental and Social
Considerations JBIC conducts screening and environmental reviews based
principally on information provided by borrowers and related parties (in the
case of export finance, including exporters). However, JBIC may request
additional information from the borrowers and related parties when necessary.
JBIC recognizes the importance of information received not only from the
borrowers and related parties but also from governments and organizations of
host countries, co-financiers and stakeholders, and utilizes such information in
its screening and environmental reviews.
With respect to projects that are co-financed by other financial institution(s),
JBIC endeavors to exchange information on environmental and social
considerations with the other institution(s) concerned.
For Category A projects (see Section 4.(2) of Part 1), JBIC checks the extent of
stakeholder participation and information disclosure being undertaken for the
project, in accordance with the environmental impact assessment systems of the
host country.
JBIC may, when necessary, conduct surveys of proposed project sites by
dispatching environmental experts to confirm environmental and social
considerations.
JBIC may, when necessary, seek and make use of opinions from outside experts.
(4) Standards for Confirmation of Appropriateness of Environmental and Social
Considerations
JBIC in principle conducts environmental reviews to confirm that projects meet
the requirements for environmental and social considerations stated in the
Guidelines in the following ways: JBIC ascertains whether a project complies
with environmental laws and standards, of the host national and local
governments concerned, as well as whether it conforms to their environmental
policies and plans.
JBIC also uses, as reference points or benchmarks, examples of standards and/or
good practices regarding environmental and social considerations established by
international and regional organizations and developed countries such as Japan.
If JBIC believes the environmental and social considerations of the project
substantially deviate from these standards and good practices, it will consult
with the host governments (including local governments), borrowers and project
proponents to confirm the background and rationale for this deviation.
JBIC takes note of the importance of good governance with regard to projects for
the sake of appropriate environmental and social considerations.
(5) Taking into Account for Funding Decisions
JBIC takes the outcomes of its environmental reviews into account for decisions
on funding. If, as a result of its environmental review, JBIC judges that
appropriate environmental and social considerations are not ensured, it will
encourage the project proponent, through the borrower, to undertake appropriate
environmental and social considerations. If appropriate environmental and social
considerations are not undertaken, there may be cases where funding is not
extended.
3
4. PROCEDURES FOR CONFIRMATION OF ENVIRONMENTAL AND SOCIAL CONSIDERATIONS
(1) Screening
Before starting an environmental review of a project, JBIC classifies the
project into one of the following categories. The subsequent environmental
review will then be conducted in accordance with the procedures for that
category.
JBIC requests the borrowers and related parties to submit the necessary
information promptly so that it may perform the screening process at an early
stage.
During the screening process, JBIC classifies each project in terms of its
potential environmental impact, taking into account such factors as: the sector
and scale of the project, the substance, degree and uncertainty of its potential
environmental impact and the environmental and social context of the proposed
project site and surrounding areas.
JBIC may revise the categorization when necessary, e.g., in cases where
environmental impact worth considering comes to light even after the screening
based on the information provided by the borrowers and related parties is
performed.
(2) Categorization
Category A: A proposed project is classified as Category A if it is likely to
have significant adverse impact on the environment. A project with complicated
impact or unprecedented impact which are difficult to assess is also classified
as Category A. The impact of Category A projects may affect an area broader than
the sites or facilities subject to physical construction. Category A, in
principle, includes projects in sensitive sectors (i.e., sectors that are liable
to cause adverse environmental impact) or with sensitive characteristics (i.e.,
characteristics that are liable to cause adverse environmental impact) and
projects located in or near sensitive areas. An illustrative list of sensitive
sectors, characteristics and areas is given in Section 3 of Part 2.
Category B: A proposed project is classified as Category B if its potential
adverse environmental impact is less adverse than that of Category A projects.
Typically, this is site-specific, few if any are irreversible, and in most cases
normal mitigation measures can be designed more readily. Projects funded by
Engineering Service Loans that are yen loans for survey and design, are
classified as Category B, with the exception of those belonging to Category C.
Category C: A proposed project is classified as Category C if it is likely to
have minimal or no adverse environmental impact. Projects that correspond to one
of the following are, in principle, classified as Category C, with the exception
of projects with sensitive characteristics and projects located in sensitive
areas as indicated in Section 3 of Part 2:
1) Projects for which the JBIC's share is not above SDR 10 million;
2) Sectors or projects in which no particular environmental impact would be
normally expected (e.g., human resources development, support for
international balance of payments, maintenance of existing facilities,
acquisition of rights and interests without additional capital investment);
or
3) Cases in which there is only minor involvement of the project by the
borrower or JBIC, such as the export/import or lease of items of machinery
or equipment that is not connected with a particular project, and where
there would be little reasonable significance in JBIC's conducting an
environmental review.
4
Category FI: A proposed project is classified as Category FI if it satisfies all
of the following: JBIC's funding of the project is provided to a financial
intermediary etc.; the selection and assessment of the actual sub-projects is
substantially undertaken by such an institution only after JBIC's approval of
the funding and therefore the sub-projects cannot be specified prior to JBIC's
approval of funding (or assessment of the project); and those sub-projects are
expected to have potential impact on the environment.
(3) Environmental Review for Each Category
After the screening process, JBIC carries out environmental reviews according to
the following procedures for each category.
Category A: Environmental reviews for Category A projects examine the potential
negative and positive environmental impact of projects. JBIC evaluates measures
necessary to prevent, minimize, mitigate or compensate for potential negative
impact, and measures to promote positive impact if any such measures are
available. Borrowers and related parties must submit Environmental Impact
Assessment (EIA) reports (see Section 2 of Part 2) for Category A projects. For
projects that will result in large-scale involuntary resettlement, basic
resettlement plans must be submitted. JBIC undertakes its environmental reviews
based on the EIA and other reports prepared by the project proponents and
submitted through the borrower.
Category B: The scope of environmental reviews for Category B projects may vary
from project to project, but it is narrower than that for Category A projects.
The environmental reviews for Category B are similar to that of category A in
that they examine potential negative and positive environmental impact and
evaluate measures necessary to prevent, minimize, mitigate or compensate for the
potential negative impact, and measures to promote positive impact if any such
measures are available. JBIC undertakes its environmental reviews based on
information provided by borrowers and related parties. Where an EIA procedure
has been conducted, the EIA report may be referred to, but this is not a
mandatory requirement.
Category C: For projects in this category, environmental reviews will not
proceed beyond screening.
Category FI: JBIC checks through the financial intermediary etc. to see whether
appropriate environmental and social considerations as stated in the Guidelines
are ensured for projects in this category.
The corresponding environmental checklists for each sector will be referred to
in conducting the aforementioned reviews.
(4) Monitoring
JBIC in principle confirms through the borrower over a certain period of time,
the results of monitoring the items which have a significant environmental
impact by the project proponents. This is in order to confirm the project
proponents' undertaking of environmental and social considerations for category
A and B projects.
The information necessary for monitoring by JBIC needs to be supplied by the
borrowers and related parties by appropriate means. When necessary, JBIC may
also conduct its own investigations. When third parties point out in concrete
terms that environmental and social considerations are not being fully
undertaken, JBIC forwards such claims to the borrowers and, if necessary,
encourages them to request the project proponents to take appropriate action. In
the project proponents' response
5
to the claim, JBIC confirms that they carry out the investigation of the
specific claim, the examination of countermeasures, and their incorporation into
the project plans through transparent and accountable processes.
Also, when necessary, JBIC may request the cooperation of the borrowers and
related parties in conducting its own investigations to confirm the state of
undertaking of environmental and social considerations.
If JBIC judges that there is a need for improvement in the situation with
respect to environmental and social considerations, it may ask the project
proponent, through the borrower, to take appropriate action in accordance with
the loan agreement. If the response of the project proponent is inappropriate,
JBIC may consider taking its own actions in accordance with the loan agreement,
including the suspension of the disbursement.
5. DISCLOSURE OF INFORMATION REGARDING CONFIRMATION OF ENVIRONMENTAL AND SOCIAL
CONSIDERATIONS BY JBIC
(1) Basic Principles
JBIC welcomes information provided by concerned organizations and stakeholders,
so that it may consider a diverse range of opinions and information in its
environmental reviews and supervision of projects. In order to encourage
concerned organizations and stakeholders to provide information to JBIC at an
early stage and to ensure its accountability and transparency in the
environmental review process, JBIC makes available, important information on
environmental reviews in ways appropriate to the nature of the project, while
the environmental review is in progress. JBIC may also, when necessary, seek the
opinions of concerned organizations and stakeholders.
In addition to the aforementioned principles, if requested by third parties,
JBIC will provide them with information regarding environmental and social
considerations within its capacity to do so.
JBIC respects the confidentiality of the commercial and other matters of the
borrowers and related parties, and observes concurrently the principles of
information disclosure and such confidentiality.
(2) Timing of Disclosure and Content of Disclosed Information
Prior to making decisions on funding and depending on the nature of the project,
JBIC discloses information in principle at the timing and with the contents
listed below. JBIC endeavors to disclose information in a manner that allows
enough time before decisions are made on funding:
- Upon completion of the screening of a project, JBIC discloses, as soon
as possible, the project name, country, location, an outline and
sector of the project, and its category classification, as well as the
reasons for that classification; and
- For Category A and Category B projects, JBIC publishes the status of
major documents on environmental and social considerations by the
borrowers and related parties, such as EIA reports and environmental
permit certificates, etc. issued by the host government on the JBIC
website, and promptly makes available the EIA reports etc.
After executing a loan agreement, JBIC provides the results of its environmental
reviews of projects in Categories A, B and FI for public perusal on the JBIC
website.
JBIC pays due consideration to the confidentiality of the commercial and other
matters of the borrowers and related parties, taking into account their
competitive relationships, and encourages
6
them to exclude such confidential information from any documents on
environmental considerations submitted by them that may later be subject to
public disclosure. Any information that is prohibited from public disclosure in
the agreement between JBIC and the borrower may be disclosed only with either
the agreement of the borrowers and related parties or in accordance with legal
requirements.
6. TAKING ENVIRONMENTAL REVIEWS INTO ACCOUNT FOR DECISION-MAKING AND LOAN
AGREEMENTS
JBIC takes the results of environmental reviews into account for its
decision-making on funding. If JBIC considers that a project is likely to have
an adverse impact on the environment due to inappropriate environmental and
social considerations, it will encourage, through the borrower the project
proponent to undertake appropriate environmental and social considerations. If
appropriate environmental and social considerations are not undertaken, JBIC may
decide not to extend funding.
JBIC will make its utmost effort to ensure that the following requirements are
met through loan agreements or their attached documents, when it is considered
necessary to ensure the enforcement of environmental and social considerations
by borrowers and related parties:
- The borrower is to report to JBIC on measures and monitoring related
to environmental and social considerations undertaken by the project
proponents. If, due to unforeseen circumstances, there is a
possibility that the requirements for environmental and social
consideration may not be fulfilled, the borrower is to report this to
JBIC;
- If any problems regarding environmental and social considerations
arise, the borrower is to make efforts for discussions to be held
between the project proponents and project stakeholders;
- When project proponents and the host governments (including local
governments) other than the borrower have important roles to play in
terms of environmental and social considerations, the borrower is to
endeavor to enter into agreements with these arties as well; and
- If it becomes evident that the borrower and the project proponents
have not met the conditions required by JBIC under the Guidelines, or
if it becomes apparent that the project will have an adverse impact on
the environment after funding is extended, due to the borrower's or
related parties' failure to supply correct information during the
environmental review process, JBIC may, in accordance with the loan
agreement, suspend the disbursement or declare all the principal
outstanding at the time, with interest and any other charges thereon,
to be payable immediately.
7. ENSURING APPROPRIATE IMPLEMENTATION OF AND COMPLIANCE WITH THE GUIDELINES
JBIC endeavors to ensure appropriate implementation of the policies and
procedures stated in the Guidelines and compliance with the Guidelines. In order
to ensure its compliance with the Guidelines, JBIC accepts objections regarding
its non-compliance with the Guidelines and takes the necessary actions.
8. IMPLEMENTATION AND REVIEW OF THE GUIDELINES
JBIC verifies the status of the implementation of the Guidelines, and, based on
its findings, conducts a comprehensive review of the Guidelines within five (5)
years of their enforcement. Revisions may then be made as needed. When making
revisions, JBIC will seek the opinions of the Japanese Government, the
governments of developing countries, Japanese companies, experts, NGOs etc.,
7
while maintaining transparency in the process.
These Guidelines will come into force from October 1, 2003. The "Environmental
Guidelines for JBIC International Financial Operations" and "JBIC Environmental
Guidelines for ODA Loans" will apply to projects for which loan applications
have essentially been made before the enactment of these Guidelines.
N.B.: If there is any ambiguity in English version and/or any inconsistency with
Japanese version, the Japanese version prevails.
8
PART 2.
1. ENVIRONMENTAL AND SOCIAL CONSIDERATIONS REQUIRED FOR FUNDED PROJECTS
In principle, appropriate environmental and social considerations are
undertaken, according to the nature of the project, based on the following:
(Underlying Principles)
- Environmental impact which may be caused by a project must be assessed and
examined from the earliest planning stage possible. Alternative proposals
or minimization measures to prevent or reduce adverse impact must be
examined and incorporated into the project plan:
- Such examination must include analysis of environmental costs and benefits
in as quantitative terms as possible and be conducted in close harmony with
economic, financial, institutional, social and technical analysis of the
project;
- The findings of the examination of environmental and social considerations
must include alternative proposals, mitigation measures and be recorded as
separate documents or as a part of other documents. Environmental Impact
Assessment (EIA) reports must be produced for projects in which there is a
reasonable expectation of particularly large adverse environmental impact;
and
- For projects that have particularly large potential adverse impact or are
highly contentious, a committee of experts may be formed to seek their
opinions, in order to increase accountability.
(Examination of Measures)
- Multiple alternative proposals must be examined to prevent or minimize
adverse impact and to choose a better project option in terms of
environmental and social considerations. In examination of measures,
priority is to be given to the prevention of environmental impact, and when
this is not possible, minimization and reduction of impact must be
considered next. Compensation measures must be examined only when impact
cannot be prevented by any of the aforementioned measures; and
- Appropriate follow-up plans and systems, such as monitoring plans and
environmental management plans, must be prepared; and costs of implementing
such plans and systems, and financial methods to fund such costs, must be
determined. Plans for projects with particularly large potential adverse
impact must be accompanied by detailed environmental management plans.
(Scope of Impact to be Examined)
- Environmental impact to be investigated and examined includes factors that
impact human health and safety as well as the natural environment, such as:
air, water, soil, waste, accidents, water usage, ecosystems, and biota.
Social concerns include: involuntary resettlement of the population, the
indigenous people, cultural heritage, landscape, gender, children's rights
and communicable diseases such as HIV/AIDS and impact that may lead to
trans-boundary and global environmental problems; and
9
- In addition to the direct and immediate impact of projects, derivative,
secondary and cumulative impact are also to be examined and investigated to
a reasonable extent. It is also desirable that the impact which can occur
at any time during the duration of the project be continuously considered
throughout the life cycle of the project.
(Compliance with Laws, Standards and Plans)
- Projects must comply with laws, ordinances and standards relating to
environmental and social considerations established by the governments that
have jurisdiction over the project site (including both national and local
governments). They are also to conform to environmental and social
consideration policies and plans of the governments that have jurisdiction
over the project site; and
- Projects must, in principle, be undertaken outside protected areas that are
specifically designated by laws or ordinances of the government for the
conservation of nature or cultural heritage (excluding projects whose
primary objectives are to promote the protection or restoration of such
designated areas). Projects are also not to impose significant adverse
impact on designated conservation areas.
(Social Acceptability and Social Impacts)
Project must be adequately coordinated so that they are accepted in a manner
that is socially appropriate to the country and locality in which the project is
planned. For projects with a potentially large environmental impact, sufficient
consultations with stakeholders, such as local residents, must be conducted via
disclosure of information from an early stage where alternative proposals for
the project plans may be examined. The outcome of such consultations must be
incorporated into the contents of the project plan; and
- Appropriate consideration must be given to vulnerable social groups, such
as women, children, the elderly, the poor and ethnic minorities, all of
whom are susceptible to environmental and social impact and who may have
little access to the decision-making process within society.
(Involuntary Resettlement)
- Involuntary resettlement and loss of means of livelihood are to be avoided
where feasible, exploring all viable alternatives. When, after such
examination, it is proved unfeasible, effective measures to minimize impact
and to compensate for losses must be agreed upon with the people who will
be affected;
- People to be resettled involuntarily and people whose means of livelihood
will be hindered or lost must be sufficiently compensated and supported by
the project proponents, etc. in timely manner. The project proponents, etc.
must make efforts to enable the people affected by the project, to improve
their standard of living, income opportunities and production levels, or at
least to restore them to pre-project levels. Measures to achieve this may
include: providing land and monetary compensation for losses (to cover land
and property losses), supporting the means for an alternative sustainable
livelihood, and providing the expenses necessary for relocation and the
re-establishment of a community at relocation sites; and
- Appropriate participation by the people affected and their communities must
be promoted in planning, implementation and monitoring of involuntary
resettlement plans and measures against the loss of their means of
livelihood.
10
(Indigenous Peoples)
- When a project may have adverse impact on indigenous peoples, all of their
rights in relation to land and resources must be respected in accordance
with the spirit of the relevant international declarations and treaties.
Efforts must be made to obtain the consent of indigenous peoples after they
have been fully informed.
(Monitoring)
- It is desirable that, after a project begins, the project proponents
monitor: (i) whether any situations that were unforeseeable before the
project began have arisen, (ii) the implementation situation and the
effectiveness of the mitigation measures prepared in advance, and that they
then take appropriate measures based on the results of such monitoring;
- In cases where sufficient monitoring is deemed essential for the
achievement of appropriate environmental and social considerations, such as
the projects for which mitigation measures should be implemented while
monitoring their effectiveness, project proponents must ensure that project
plans include monitoring plans which are feasible;
- It is desirable that project proponents make the results of the monitoring
process available to project stakeholders; and
- When third parties point out, in concrete terms, that environmental and
social considerations are not being fully undertaken, it is desirable that
a forum for discussion and examination of countermeasures be established
based on sufficient information disclosure and include the participation of
stakeholders in the relevant project. It is also desirable that an
agreement be reached on procedures to be adopted with a view to resolving
the problem.
2. EIA REPORTS FOR CATEGORY A PROJECTS
The following conditions are met in principle:
- When assessment procedures already exist in host countries, and projects
are subject to such procedures, borrowers and related parties must
officially complete those procedures and obtain the approval of the
government of the host country;
- EIA reports (which may be referred to differently in different systems)
must be written in the official language or a language widely used in the
country where the project is to be implemented. When explaining projects to
local residents, written materials must be provided in a language and form
understandable to them;
- EIA reports are required to be made available in the country and to the
local residents where the project is to be implemented. The EIA reports are
required to be available at all times for perusal by project stakeholders
such as local residents and that copying be permitted;
- In preparing EIA reports, consultation with stakeholders, such as local
residents, must take place after sufficient information has been disclosed.
Records, etc. of such consultations must be prepared;
- Consultations with relevant stakeholders, such as local residents, should
take place if necessary throughout the preparation and implementation
stages of a project. Having consultations is
11
highly desirable, especially when the items to be considered in the EIA are
being selected, and when the draft report is being prepared; and
- It is desirable that EIA reports cover the items enumerated in the Appendix
hereto.
2. APPENDIX
ILLUSTRATIVE ENVIRONMENTAL IMPACT ASSESSMENT REPORT FOR CATEGORY A PROJECTS
NB
An EIA's scope and level of detail should be decided in accordance with the
project's potential impacts. The EIA report should include the following items
(not necessarily in the order shown):
- Executive Summary: concisely discusses significant findings and recommended
actions.
- Policy, legal and administrative framework: discusses the policy, legal and
administrative framework within which the EIA report is to be carried out.
- Project description: describes the proposed project and its geographic,
ecological, social and temporal context, including any off-site investments
that may be required (e.g. dedicated pipelines, access roads, power plants,
water supply, housing, and raw material and product storage facilities).
Indicates the need for any resettlement or social development plan.
Normally includes a map showing the project site and the area affected by
the project.
- Baseline data: assesses the dimensions of the study area and describes
relevant physical, biological and socio-economic conditions, including all
changes anticipated before the project commences. Additionally, takes into
account current and proposed development activities within the project area
but not directly connected to the project. Data should be relevant to
decisions about project site, design, operation, or mitigatory measures;
the section indicates accuracy, reliability and sources of the data.
- Environmental Impacts: predicts and assesses the project's likely positive
and negative impacts, in quantitative terms to the extent possible.
Identifies mitigation measures and any negative environmental impacts that
cannot be mitigated. Explores opportunities for environmental enhancement.
Identifies and estimates the extent and quality of available data,
essential data gaps and uncertainties associated with predictions, and
specifies topics that do not require further attention.
- Analysis of alternatives: systematically compares feasible alternatives to
the proposed project site, technology, design and operation including the
"without project" situation in terms of their potential environmental
impacts; the feasibility of mitigating these impacts; their capital and
recurrent costs; their suitability under local conditions; and their
institutional, training and monitoring requirements. For each of the
alternatives, quantifies the environmental impacts to the extent possible,
and attaches economic values where feasible. States the basis for selecting
the particular project design proposed and offers justification for
recommended emission levels and approaches to pollution prevention and
abatement.
- Environmental Management Plan (EMP): describes mitigation, monitoring and
institutional measures to be taken during construction and operation to
eliminate adverse impacts, offset them, or reduce them to acceptable
levels.
12
- Consultation: Record of consultation meetings, including consultations for
obtaining the informed views of the affected people, local non-governmental
organizations (NGOs) and regulatory agencies.
NB This Appendix is based on the World Bank Operational Policy - OP 4.01, Annex
B.
13
3. ILLUSTRATIVE LIST OF SENSITIVE SECTORS, CHARACTERISTICS AND AREAS
1. Sensitive Sectors
Large-scale projects in the following sectors:
(1) Mining
(2) Oil and natural gas development
(3) Oil and gas pipelines
(4) Iron and steel (projects that include large furnaces)
(5) Non-ferrous metals smelting and refining
(6) Petrochemicals (manufacture of raw materials; including complexes)
(7) Petroleum refining
(8) Oil, gas and chemical terminals
(9) Paper and pulp
(10) Manufacture and transport of toxic or poisonous substances regulated
by international treaties, etc.
(11) Thermal power
(12) Hydropower, dams and reservoirs
(13) Power transmission and distribution lines involving large-scale
involuntary resettlement, large-scale logging or submarine electrical
cables
(14) Roads, railways and bridges
(15) Airports
(16) Ports and harbors
(17) Sewage and wastewater treatment having sensitive characteristics or
located in sensitive areas or their vicinity
(18) Waste management and disposal
(19) Agriculture involving large-scale land-clearing or irrigation
(20) Forestry
(21) Tourism (construction of hotels, etc.)
14
2. Sensitive Characteristics
(1) Large-scale involuntary resettlement
(2) Large-scale groundwater pumping
(3) Large-scale land reclamation, land development and land-clearing
(4) Large-scale logging
3. Sensitive Areas
Projects in the following areas or their vicinity
(1) National parks, nationally-designated protected areas (coastal areas,
wetlands, areas for ethnic minorities or indigenous peoples and
cultural heritage, etc. designated by national governments)
(2) Areas considered to require careful consideration by the country or
locality
Natural Environment
a) Primary forests or natural forests in tropical areas
b) Habitats with important ecological value (coral reefs, mangrove
wetlands and tidal flats, etc.)
c) Habitats of rare species requiring protection under domestic
legislation, international treaties, etc.
d) Areas in danger of large-scale salt accumulation or soil erosion
e) Areas with a remarkable tendency towards desertification
Social Environment
a) Areas with unique archeological, historical or cultural value
b) Areas inhabited by ethnic minorities, indigenous peoples or nomadic
peoples with traditional ways of life and other areas with special
social value.
4. INFORMATION REQUIRED FOR SCREENING PROCESS
The following data shall be used in principle to conduct screening. When
necessary, additional data may be required depending on the nature of the
project and peripheral circumstances, etc.
15
Items to be Listed
1. Permits and Approvals
- Need for permits and approvals for Environmental Impact Assessment
- Status of acquisition of permits and approvals for EIA
- Date of issue of permits and approvals for EIA
- Names of organizations issuing permits and approvals for EIA
- Status of acquisition of other environmental permits and approvals
2. Project Details
- Location of project site
- Project Description
- Relevant sector
- Scale, etc. of project
3. Environmental Impact
- Degree of environmental impact
- Existence of sensitive areas
- Existence of sensitive characteristics
- Scale of sensitive characteristics
5. CATEGORIES AND ITEMS IN CHECKLIST
The checklists include the following categories and items related to the
environment. When using these checklists, the appropriate items should be
checked based on the sector and nature of the project.
Category Item
-------- ----
1. Permits and approvals, explanations - EIA and environmental permits
- Explanations to the Public
2. Anti-pollution measures - Air quality
- Water quality
16
- Waste
- Soil contamination
- Noise and vibration
- Subsidence
- Odor
- Sediment
3. Natural environment - Protected areas
- Ecosystem
- Hydrology
- Topography and geology
- Management of abandoned sites
4. Social environment - Resettlement
- Living and livelihood
- Heritage
- Landscape
- Ethnic minorities and indigenous
peoples
5. Other - Impact during construction
- Accident prevention measures
- Monitoring
6. ITEMS REQUIRING MONITORING
Items requiring monitoring shall be decided according to the sector and nature
of the project, with reference to the following list of items.
Items
1. Permits and approvals, explanations
- Response to matters indicated by authorities
2. Anti-pollution measures
- Air quality: SO(2), No(2), CO, O(2), soot and dust, suspended particulate
matter, coarse particulate, etc.
- Water quality: pH, SS (suspended solids), BOD (biochemical oxygen demand)
17
/ COD (chemical oxygen demand), DO (dissolved oxygen),
total nitrogen, total phosphorus, heavy metals,
hydrocarbons, phenols, cyanogen compounds, mineral oils,
water temperature, etc.
- Waste
- Noise and vibration
- Odors
3. Natural environment
- Ecosystems: Impact on valuable species, countermeasures, etc
4. Social environment
- Resettlement
- Lifestyle and livelihood
NB: For air and water quality, specify whether you are monitoring emission
levels or environmental levels. Also, it should be noted that the items which
require monitoring will differ depending on whether the impact in question will
occur during construction or during the operation of the project.
18
ANNEX F
_____________, 2005
Messrs.
SOCIEDAD MINERA CERRO VERDE S.A.A.
ATN.: (BORROWER'S LEGAL REPRESENTATIVE)
(BORROWER'S ADDRESS)
Peru.
"AFFIDAVIT"
Dear Sirs,
We hereby represent that _________________, a Bank incorporated under the laws
of __________, is acting in its capacity of Agent in a loan facility that has
been made available to SOCIEDAD MINERA CERRO VERDE S.A.A., with the following
characteristics:
LENDER:
LENDER'S COUNTRY OR ORIGIN:
BORROWER: SOCIEDAD MINERA CERRO VERDE S.A.A.
AGENT:
PURPOSE:
FACILITY TYPE:
AVAILABILITY:
ADVANCE TERM:
AMOUNT:
INTEREST TYPE / RATE:
INTEREST PERIOD:
SECURITY:
INSTALLMENTS / PAYMENT SCHEDULE:
FEES:
To our knowledge, this transaction is not hiding a loan between economically
related parties.
This certification is being issued by an authorized officer of Sumitomo Mitsui
Banking Corporation and upon request by Sociedad Minera Cerro Verde S.A.A.
Sincerely yours,
Sumitomo Mitsui Banking Corporation
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
F-1
ANNEX G
DISBURSEMENT AND PAYMENT PROCEDURES
1. Disbursement Procedures
Not later than 2:00 p.m., New York time, on each Disbursement Date, the JBIC
Agent shall:
i. transfer to the Onshore Dollars Account the amounts of the
disbursement of the Tranche A Loan on deposit in the JBIC Agent Tokyo
Disbursement Account and the disbursement of the Tranche B Loans on
deposit in the JBIC Agent New York Disbursement Account;
ii. issue to its corresponding bank for Dollar payments an MT 202 SWIFT
message with instructions to transfer the disbursements referred to in
the immediately preceding sub-clause (i) to the Onshore Dollars
Account with a value date that is the Disbursement Date; and
iii. issue a payment order in the form of an MT 103 SWIFT message to the
Onshore Collateral Agent.
2. Payment Procedures
(1) Not later than 11:00 a.m., New York time, on the date that is two (2)
Business Days prior to each Payment Date the Borrower shall arrange for, and
confirm to the JBIC Agent that:
i. it has cash available in the Proceeds Account at least equal to the
amount required to be paid on such Payment Date (the "PAYMENT
AMOUNT"); and
ii. it has instructed the Offshore Collateral Agent to (A) issue an MT 202
SWIFT message with irrevocable instructions to transfer the Payment
Amount to the JBIC Agent New York Repayment Account with a value date
that is the Payment Date and (B) issue to the JBIC Agent an MT 103
SWIFT message advising the JBIC Agent of the transfer.
(2) Not later than 11:00 a.m., Tokyo time, on each Payment Date, the JBIC Agent
shall:
G-1
i. issue to its corresponding bank in New York an MT 202 SWIFT message
with instructions to transfer funds to the JBIC New York Repayment
Account and to the accounts of the Tranche B Funding Source Banks as
designated by them, in each case with a value date that is the Payment
Date; and
ii. notify by telephone each of JBIC and the Tranche B Funding Source
Banks of the transfer to each of its respective portion of the Payment
Amount.
G-2
ANNEX H
FORM OF JBIC PROMISSORY NOTE
XXXXXX NO NEGOCIABLE
Place and date of issuance: Lima Peru, __
Amount US$__
FOR VALUE RECEIVED, the undersigned, Sociedad Minera Cerro Verde, S.A.A. (the
"Borrower"), a sociedad anonima abierta listed on the Lima Stock Exchange and
duly incorporated under the laws of the Republic of Peru, registered with the
Public Registry of Companies of Lima, under File No. __, and whose principal
office is at __, Republic of Peru, by this non negotiable (no negociable)
promissory note ("xxxxxx") (the "Promissory Note") except as permitted in
Section 12.13 (b) of the MPA, unconditionally promises to pay to the order of __
(the "Holder"), against presentment of this note, the sum of __ dollars of the
United States of America (US$__) (the "Principal Amount"), payable on the dates
set forth in the following payment schedule (each date, a "Payment Date") and in
the amounts indicated next to the applicable Payment Date, provided that the
principal amount to be paid to the Holder on a Payment Date shall not exceed the
principal amount hereof outstanding immediately prior to such Payment Date.
PRINCIPAL AMOUNT
PAYMENT DATE TO BE REPAID
-------------------------- ----------------
First Payment Date __
6th month after the First __
Payment Date
12th month after the First __
Payment Date
18th month after the First __
Payment Date
24th month after the First __
Payment Date
30th month after the First __
Payment Date
36th month after the First __
Payment Date
42nd month after the First __
Payment Date
48th month after the First __
Payment Date
54th month after the First __
Payment Date
60th month after the First __
Payment Date
66th month after the First __
Payment Date
72nd month after the First __
Payment Date
78th month after the First __
Payment Date
84th month after the First __
Payment Date
90th month after the First __
Payment Date
The Borrower also promises to pay to the Holder interest on the outstanding and
unpaid principal amount of this Promissory Note, from the date hereof until the
last Payment Date, at an annual rate of the Base Rate plus the Applicable Margin
(the "Interest Rate"), such interest to accrue
H-1
semiannually on the outstanding principal amount during the Interest Period.
Interest shall be payable in arrears on each Interest Payment Date. All
computations of interest shall be made on the basis of a year of three hundred
and sixty (360) days and the actual number of days elapsed (fractional sums of
less than one cent (US$0.01) being disregarded).
If any payment to be made hereunder is due on a day which is not a Business Day,
such payment shall be made on the immediately succeeding Business Day.
If the principal amount of this Promissory Note is not paid in full when
due, then, without prejudice to any other rights or remedies of the Holder, such
principal amount remaining unpaid shall carry default interest from the due date
thereof, up to the date of payment of such principal amount to the Holder (after
as well as before judgment) at an annual rate equal to the Default Rate.
The Borrower may prepay on any Payment Date after the Completion Release
Date and upon not less than 60 days prior written irrevocable notice, all or
part of the outstanding principal amount hereof, so long as, in connection with
a voluntary partial prepayment, the aggregate amount of any such voluntary
partial prepayment equals at least __ (3) dollars of the United States of
America (US$__).
[No premium or penalty shall be payable in connection with a prepayment of
all or part of the outstanding principal amount hereof.][Borrower shall pay to
the Holder a prepayment premium equal to one-half of one per cent (0.5%) of the
amount of principal to be prepaid if Borrower elects to voluntarily prepay all
or part of the outstanding principal amount hereof. No premium or penalty shall
be payable in connection with other prepayments.](4)
Each prepayment of the outstanding principal amount hereof shall (unless
such prepayment repays in full such outstanding principal amount) be applied to
prepay ratably each outstanding installment of principal hereof remaining to be
paid as of the date of such prepayment.
For purposes of this Promissory Note, the following terms shall have the
following meanings:
"Administrative Agent" means CALYON New York Branch in its capacity of
administrative agent for the Holder according to the MPA.
"Applicable Margin" means [0.875% per annum][1.35% per annum] (5).
----------
(3) Insert pro rata amount of the minimum prepayment amount applicable to the
Advance(s) evidenced by the Promissory Note.
(4) Include prepayment premium language for Tranche A loans. Otherwise, include
no prepayment premium language.
(5) Include as appropriate for loans of Tranche A or Tranche B. The pagares
must be replaced on the Payment Date immediately following the Completion
Release Date.
H-2
"Base Rate" means, with respect to any Interest Period and for purposed of
the Default Rate, (i) the rate per annum (on the basis of a 360-day year) quoted
on the Telerate Screen Page 3750 for the purpose of displaying London interbank
offered rates of major banks for deposits in dollars as the "British Bankers
Association Interest Settlement Rate" in dollars (hereinafter referred to as
"BBA LIBOR"), or if such page ceases to display, such other page on Telerate or
on such other service as may be selected by the Holder as suitable for
determining BBA LIBOR, for a period of six (6) months, at approximately 11:00
a.m., London time, on the relevant Calculation Date, or (ii) if no rate is
quoted on such pages on such Calculation Date, the average (rounded upwards, if
necessary, to the nearest one-sixteenth of one per cent (1/16%)) of the rates
per annum for a period of six (6) months at which deposits in dollars are
offered to at least two Reference Banks, as set out below, in the London
interbank market, in each case, at approximately 11:00 a.m., London time, on
such Calculation Date. "Reference Banks" shall mean two or more banks selected
by the Holder. In the event that such rate is not available at such time for any
reason, then "Floating Rate" for such Interest Period or for purposed of the
Default Rate shall be determined by the Holder.
"Business Day" means a day on which banks are generally open for business
in London, England, New York, New York, United States, Tokyo, Japan, Frankfurt
am Main, Germany and Lima, Peru.
"Calculation Date" means (i) with respect to any Interest Period, the day
which is two (2) LIBOR Business Days prior to the commencement of such Interest
Period; and (ii) with respect to the Default Rate, the day which is two (2)
LIBOR Business Days prior to (a) the day on which the unpaid amount becomes due
and payable (for the period from and including such due date up to and excluding
the immediately succeeding Interest Payment Date (in the case where such period
includes the date of actual receipt of the payment by the Holder, up to and
excluding such date)), and (b) to the extent such overdue amount is not paid
during the period described in Clause (a) above each succeeding Interest Payment
Date (for the subsequent period from and including such Interest Payment Date up
to and excluding the immediately succeeding Interest Payment Date (in the case
where such period includes the date of actual receipt of the payment by the
Holder, up to and excluding such date)).
"Commercial Production Start-up Date" means the date as of which the
Borrower, in its judgment, has achieved start of commercial production as
notified by the Borrower to the Administrative Agent.
"Concentrate" means the copper concentrate to be produced by Borrower
pursuant to the Sulfide Project.
"Default Rate" means the applicable Interest Rate (including the Applicable
Margin) plus 2% per annum.
"First Payment Date" means the earlier of (i) the March 20 or the September
20 next occurring after the Commercial Production Start-up Date, and (ii) March
20, 2008.
"Government Rule" means any statute, law, regulation, ordinance, rule,
judgment, decree, injunction, order, writ, decision, directive, environmental
guideline, policy, restriction or rule of common law, requirement of, or other
mandatory governmental restriction or any similar form of decision of or
determination by, any Governmental Authority, and authoritative interpretations
H-3
thereof, whether now or hereafter in effect, applicable from time to time to the
relevant person, property or transaction.
"Governmental Authority" means any national, state, county, city, town,
village, municipal or other local governmental department, commission, board,
bureau, agency, authority or instrumentality of any nation that affects or may
affect the transactions contemplated hereby or any political subdivision
thereof, and any person exercising executive, legislative, judicial, regulatory
or administrative functions of or pertaining to any of the foregoing entities,
including, without limitation, all commissions, boards, bureaus, arbitrators and
arbitration panels, and any authority or other person controlled by any of the
foregoing.
"Interest Payment Date" means, prior to the First Payment Date, each
September 20 and March 20 and, starting on the First Payment Date, each Payment
Date.
"Interest Period" means any of the following periods:
(i) on or prior to the First Payment Date, each period commencing on
an Interest Payment Date (or with respect to the first Interest Period on
the date hereof) and ending on the day immediately preceding the next
succeeding Interest Payment Date (including the first day and the last day
of such period); and
(ii) thereafter, each period commencing on a Payment Date and ending
on the day immediately preceding the next succeeding Payment Date
(including the first day and the last day of such period).
"LIBOR Business Day" means a day on which dealings in deposits in dollars
are carried on in the London interbank Euro-currency market;
"Loan Agreement" means the Loan Agreement dated as of September 30th, 2005
between the Borrower and KfW.
"MPA" means the Master Participation Agreement dated as of September 30th,
2005 entered into among the Borrower, Japan Bank For International Cooperation,
Sumitomo Mitsui Banking Corporation, The Bank of Tokyo-Mitsubishi, Ltd., KfW,
CALYON New York Branch, The Royal Bank of Scotland plc, The Bank of Nova Scotia,
and Mizuho Corporate Bank, Ltd.
"MSA" means the Master Security Agreement dated as of September 30th, 2005
entered into among the Borrower, Japan Bank For International Cooperation,
Sumitomo Mitsui Banking Corporation, The Bank of Tokyo-Mitsubishi, Ltd., KfW,
CALYON New York Branch, The Royal Bank of Scotland plc, The Bank of Nova Scotia,
Mizuho Corporate Bank, Ltd., Citibank, N.A., and Citibank del Peru S.A.
"Peruvian Income Tax Act" means the Legislative Decree 774 of December 31,
1993, as amended.
"Sulfide Project" means the Borrower's development of a primary sulfide
portion of the ore body beneath the oxide portion of the ore body currently in
production at its Cerro Verde copper mine, located in the Districts of Uchumayo
and Yarabamba, Province of Arequipa, Peru.
H-4
"Taxes" means any present and future taxes, levies, imposts, duties,
deductions, withholdings, fees, liabilities and similar charges.
All payments by the Borrower of principal and interest hereunder shall be
made in dollars of the United States of America, not later than 11:00 a.m., New
York City time, on the due date for payment thereof (any payment received after
such time shall be deemed to have been made on the immediately succeeding
Business Day), by transfer of immediately available funds to the account of
Sumitomo Mitsui Banking Corporation in its capacity as the Holder's agent at
[ __(6)].
Any and all payments made by or on account of the Borrower in respect of
any obligation hereunder shall be made free and clear of, and without deduction
or withholding for or on account of, any and all present or future Taxes
(excluding (i) Taxes imposed on or measured by the net income, profits, or
capital of the Holder by the jurisdiction under the laws of which the Holder was
incorporated or organized, (ii) Taxes which would not have been imposed on the
Holder but for a change by the Holder of its lending office, (iii) Taxes which
would not have been imposed on a Holder but for the transfer by the Holder of an
interest herein or (iv) Taxes which would not have been imposed on a Holder but
for such Holder's having a place of business in the jurisdiction imposing the
Tax (other than a place of business arising from the transaction contemplated
hereby or from having executed, delivered, performed its obligations or received
a payment hereunder, or enforced its rights hereunder)), Taxes described in the
immediately preceding clauses (i) through (iv) being referred to herein as the
"Excluded Taxes" and Taxes other than the Excluded Taxes being referred to
herein as "Indemnified Taxes", now or hereafter imposed, levied, collected,
withheld or assessed by any Governmental Authority of the Republic of Peru,
unless such deduction or withholding is required by an applicable Government
Rule, in which case the following paragraph shall apply.
If the Borrower shall be required by law to deduct any Indemnified Taxes
now or hereafter imposed, levied or collected, withheld or assessed by any
Governmental Authority of the Republic of Peru from or in respect of any sum
payable hereunder, the Borrower shall, at its option, either (i) pay to the
Holder in respect of which such deduction or withholding is required to be made,
such additional amount (the "Additional Tax Amount") as may be necessary so that
after all required deductions and withholdings (including, without limitation,
deductions and withholdings applicable to additional sums payable under this
paragraph), the Holder receives on the due date thereof an amount equal to the
sum it would have received, had no such deduction or withholding been made, or
(ii) assume the payment of the Indemnified Tax and pay directly the full amount
to the tax administration when due in accordance with Article 47 of the Peruvian
Income Tax Act, so that the amount paid to the Holder equals the amount it would
have received if the Borrower had not been required by law to deduct such
Indemnified Tax.
The Borrower agrees to pay or reimburse upon demand in like manner and
funds, any and all documented costs and expenses of the Holder hereof or of the
Collateral Agent with respect to the enforcement of this Promissory Note.
The Borrower hereby irrevocably submits to the non-exclusive jurisdiction
of the Courts of Downtown Lima (Xxxx-Xxxxxxx) and of any Federal or State court
located in the Borough of
----------
(6) Insert payment instructions, including place of payment.
X-0
Xxxxxxxxx, Xxx Xxxx xx Xxx Xxxx, as the Holder hereof may elect for any
proceeding arising out of or relating to this Promissory Note. The Borrower
waives, to the fullest extent it may effectively do so, the defense of an
inconvenient forum to the maintenance of such action or proceeding.
The Parties further agree that, without prejudice to the law of the State
of New York governing the substantive obligations contained in the Loan
Agreement, which has originated this Promissory Note, all procedural matters or
formalities applicable to this Promissory Note to be recognized as such shall be
governed by and construed in accordance with Peruvian law.
This Promissory Note is issued in Spanish and English. The Parties agree
that the applicable version of this Promissory Note will be (i) the Spanish
version in case the jurisdiction of the Courts of Downtown Lima (Xxxx-Xxxxxxx)
is the jurisdiction elected by the Holder, or be (ii) the English version in
case the jurisdiction of any Federal or State court located in the Borough of
Manhattan, The City of New York is the jurisdiction elected by the Holder. In
case of discrepancies between the Spanish and English versions (i) the Spanish
version shall prevail when the Courts of Downtown Lima (Xxxx-Xxxxxxx) or other
Spanish speaking jurisdiction is the jurisdiction elected by the Holder, and
(ii) the English version shall prevail when the Federal or State court located
in the Borough of Manhattan, The City of New York or any other non-Spanish
speaking jurisdiction is the jurisdiction elected by the Holder.
Lima, __
By: Sociedad Minera Cerro Verde, S.A.A.
Taxpayer Registry No.: 20170072465
Name of authorized officer: __
Identification Card No __
Power register in Entry No. __ of the Public Registry
H-6
ANNEX I
Environmental Disclosure
The Borrower excludes from this representation all construction
activities and operations that are not conducted by, or that are not
under the control of, the Borrower, other than construction activities
that are being performed by third parties who are acting pursuant to
construction contractual arrangements with the Borrower.
I-1
Exhibit B
KfW Loan Agreement
EXECUTION COPY
================================================================================
KFW LOAN AGREEMENT
between
SOCIEDAD MINERA CERRO VERDE S.A.A.,
as Borrower
and
KfW,
as Lender
Dated as of September 30, 2005
US$22,500,000
================================================================================
TABLE OF CONTENTS
This table of contents is not part of the Agreement to which it is
attached, but is inserted for convenience only.
Page
----
ARTICLE I DEFINITIONS.................................................... 1
1.01 Definitions...................................................... 1
1.02 Other Definitions; Interpretation................................ 3
1.03 Incorporation by Reference....................................... 3
1.04 Types of Loans................................................... 4
ARTICLE II THE LOANS..................................................... 4
2.01 Loans............................................................ 4
2.02 Manner of Borrowing.............................................. 4
2.03 Certain Notices.................................................. 5
2.04 Conversions into Fixed Rate Loans................................ 5
2.05 Reduction in Commitment.......................................... 5
2.06 Availability Period.............................................. 5
ARTICLE III PRINCIPAL, INTEREST AND PROMISSORY NOTES..................... 5
3.01 Principal........................................................ 5
3.02 Interest......................................................... 5
3.03 Post-Default Interest............................................ 6
3.04 Promissory Notes................................................. 6
3.05 Selection of Fixed Rates......................................... 7
3.06 Consolidation of Applicable Base Rate for Fixed Rate Loans....... 7
ARTICLE IV COMMISSIONS................................................... 7
4.01 Commitment Commission............................................ 7
4.02 Loan Management Commission....................................... 8
4.03 Facility Fee..................................................... 8
ARTICLE V THE HERMES GUARANTEE........................................... 8
5.01 The HERMES Guarantee............................................. 8
5.02 Information...................................................... 8
5.03 KfW's Right to Demand Information and Give Approval Regarding
Export Contracts.............................................. 8
ARTICLE VI PREPAYMENT.................................................... 9
6.01 Voluntary Prepayments............................................ 9
6.02 Pro Rata Prepayment.............................................. 9
6.03 Prepayment Compensation for Fixed Rate Loans..................... 9
6.04 Mandatory Prepayments............................................ 10
ARTICLE VII PAYMENTS..................................................... 11
7.01 Payments......................................................... 11
KfW Loan Agreement
-ii-
7.02 Non-Business Days................................................ 11
7.03 Computations..................................................... 11
ARTICLE VIII CERTAIN INDEMNITIES......................................... 11
8.01 Increased Cost of Loans.......................................... 11
8.02 Alternative Interest Rate........................................ 12
8.03 Mitigation....................................................... 13
ARTICLE IX CONDITIONS OF LENDING......................................... 13
9.01 Initial Loan..................................................... 13
9.02 Additional Conditions............................................ 14
ARTICLE X COVENANTS....................................................... 14
ARTICLE XI REPRESENTATIONS AND WARRANTIES................................ 14
ARTICLE XII EVENTS OF DEFAULT; REMEDIES.................................. 14
12.01 Events of Default............................................... 14
12.02 Remedies........................................................ 15
12.03 Suspension, Cancellation or Termination of Commitment........... 15
ARTICLE XIII MISCELLANEOUS............................................... 15
13.01 No Waiver....................................................... 15
13.02 No Immunity..................................................... 15
13.03 Jurisdiction and Service of Process............................. 15
13.04 GOVERNING LAW................................................... 15
13.05 Assignments and Participations; Information..................... 16
13.06 Amendments, Etc................................................. 16
13.07 Counterparts.................................................... 16
13.08 Judgment Currency............................................... 17
13.09 Successors and Assigns.......................................... 17
13.10 Stamp Taxes..................................................... 17
13.11 Survival........................................................ 17
13.12 Severability.................................................... 17
13.13 WAIVER OF JURY TRIAL............................................ 17
13.14 Notices......................................................... 18
13.15 English Language................................................ 18
13.16 No Restriction.................................................. 18
EXHIBIT A - Amortization Schedule
EXHIBIT B - Form of Promissory Note
EXHIBIT C - Form of KfW Loan Agreement Drawdown Certificate
KfW Loan Agreement
KfW LOAN AGREEMENT
KfW LOAN AGREEMENT dated as of September 30, 2005 (this "Agreement")
between SOCIEDAD MINERA CERRO VERDE S.A.A., a sociedad anonima abierta organized
under the laws of Peru (the "Borrower"), and KfW, a corporation under the public
law of the Federal Republic of Germany ("KfW").
KfW is majority-owned by the German government and in accordance with its
Bylaws and institutional objectives, KfW has agreed to grant a credit facility
to the Borrower for purposes of developing and promoting mining activities in
Peru.
For purposes of financing in part the development by the Borrower of the
Sulfide Project (referred to in the Master Participation Agreement referred to
below), the Borrower is entering into various loan and credit agreements,
including this Agreement, setting out the terms upon which financing is to be
provided for such development. In conjunction therewith, the Borrower, KfW,
JBIC, the Lead JBIC Arrangers, the Commercial Banks and the Administrative Agent
are entering into a master participation agreement (the "Master Participation
Agreement"), containing certain representations, covenants, undertakings and
security for the common benefit of the Senior Facility Lenders providing the
Senior Facility Loans (as defined in the Master Participation Agreement). Also
in connection therewith, the Parent Companies shall enter into a transfer
restrictions agreement (the Transfer Restrictions Agreement referred to in the
Master Participation Agreement), for the common benefit of such Senior Facility
Lenders, and the Parent Companies shall enter into a Completion Guarantee (the
Completion Guarantee referred to in the Master Participation Agreement)
guaranteeing the payment of the Senior Loan Obligations until Completion and
containing undertakings regarding Completion of the Sulfide Project. Based on
the foregoing, KfW is prepared, on the terms and subject to the conditions set
forth herein and in the other Financing Documents, to make Loans to the Borrower
that constitute Loans in an aggregate principal amount up to US$22,500,000 for
the purchase of equipment and services delivered by the Exporter under the
Export Contracts in connection with the development of the Sulfide Project.
Accordingly, the parties hereto hereby agree as follows:
ARTICLE I
DEFINITIONS
1.01 Definitions. Terms defined in this Agreement shall have their
respective defined meanings as provided herein. Capitalized terms used herein
(including the preamble and recital of this Agreement) and not otherwise defined
herein shall have the meanings assigned to such terms in the Master
Participation Agreement (including Schedule Z thereto). As used in this
Agreement, the following terms shall have the following respective meanings:
"Applicable Base Rate" shall mean:
(a) for each Floating Rate Loan during each Interest Period or Default
Interest Period therefor, the interest rate per annum for Dollar deposits
for a period equal to (or, if there is no equal, then most comparable to)
such Interest Period or Default Interest Period
KfW Loan Agreement
-2-
which appears on Reuters Screen LIBOR01 Page (or such other page as may
replace that page on that service for the purpose of displaying the British
Bankers Association Interest Settlement Rate) at or about 11:00 a.m. London
time on the date two Eurodollar Business Days prior to the first day of
such Interest Period or Default Interest Period; provided that, if no such
rate appears on Reuters Screen LIBOR01 Page (or such other page as may
replace that page on that service for the purpose of displaying the British
Bankers Association Interest Settlement Rate) for any relevant Interest
Period or Default Interest Period, the Applicable Base Rate shall mean for
each Loan during such Interest Period or Default Interest Period the rate
per annum determined by KfW which appears on the page designated Page 3750
on the Moneyline Telerate Inc. at or about 11:00 a.m. London time on the
date two Eurodollar Business Days prior to the first day of such Interest
Period or Default Interest Period; and provided further that if no such
rates so appear on the page designated Page 3750 on the Moneyline Telerate
Inc. for any relevant period, the relevant rate of interest shall be
determined in accordance with Section 8.03 hereof.
(b) for each Fixed Rate Loan during each Fixed Rate Period therefor,
the rate per annum equal to the funding costs of KfW in Dollars of a KfW
Loan for maturities matching as closely as possible the maturity of the
requested KfW Loan.
"Default Interest Period" shall mean each successive period (not in excess
of six months) while any amount payable by the Borrower hereunder is in default,
as KfW shall choose in its sole discretion, the first such period to commence as
of the date on which such amount in default becomes due and each succeeding such
period to commence immediately upon the expiry of the immediately preceding such
period.
"Default Margin" shall mean a rate per annum equal to 2%.
"Drawdown Certificate" shall have the meaning given to that term in Section
9.02(b) hereof.
"Export Contracts" shall mean (i) the agreement between Fluor Xxxxxx
Sucursal Del Peru ("Fluor") and Exporter, dated March 15, 2005, for the purchase
of 4 High Pressure Grinding Rolls in a total amount of US$20,092,452.57 and (ii)
the agreement between Fluor and Exporter, dated February 18, 2005, for the
purchase of 4 ball xxxxx in a total amount of US$10,620,502.51, each in
connection with the Sulfide Project.
"Exporter" shall mean Polysius AG, an entity domiciled in Germany that has
entered into certain contracts for the supply of goods and/or the rendering of
services in connection with the Sulfide Project.
"Facility Fee" shall have the meaning assigned to such term in Section 4.03
hereof.
"Fixed Rate Loans" shall mean Loans the interest rates on which are
determined on the basis of rates referred to in clause (b) in the definition of
"Applicable Base Rate" in this Section 1.01.
KfW Loan Agreement
-3-
"Fixed Rate Period" shall mean, for each Fixed Rate Loan, the period from
the date such Loan is made or converted from a Floating Rate Loan into a Fixed
Rate Loan until the maturity of the Loan.
"Floating Rate Loans" shall mean Loans the interest rates on which are
determined on the basis of rates referred to in clause (a) in the definition of
"Applicable Base Rate" in this Section 1.01.
"Frankfurt Business Day" shall mean any day on which banks are generally
open for business in Frankfurt Germany.
"German Supply Portion" shall mean those items of equipment and services of
German origin which have been provided by the Exporters pursuant to the Export
Contracts.
"Germany" shall mean the Federal Republic of Germany.
"Head Office" shall mean the principal office of KfW in Germany, presently
located at XxxxxxxxxxxxxxxxXx 0-0, X-00000 Xxxxxxxxx xx Xxxx, Xxxxxxx.
"HERMES" shall mean Euler Hermes Kreditversicherungs-AG acting on behalf of
the government of the Federal Republic of Germany.
"HERMES Guarantee" shall mean the insurance coverage to be provided by
HERMES in favor of KfW in respect of the Borrower's obligations under this
Agreement, which shall be in form and substance satisfactory to KfW.
"KfW Loans" or "Loans" shall mean the loans provided for in Section 2.01
hereof, which may be Floating Rate Loans and/or Fixed Rate Loans.
"Margin" shall mean 0.35% per annum.
"Master Participation Agreement" shall have the meaning assigned to such
term in the recitals of this Agreement.
"Reuters Screen LIBOR01 Page" shall mean the display page so designated on
the Reuter Monitor Money Rates Service (or such other page as may replace that
page on that service for the purpose of displaying London interbank offered
rates for Dollar deposits).
"Type" shall have the meaning given to that term in Section 1.04 hereof.
"U.S." shall mean the United States of America.
1.02 Other Definitions; Interpretation. This Agreement shall be
interpreted in accordance with the rules of interpretation set forth in Section
1.02 of the Master Participation Agreement, which are incorporated by reference
herein as if fully set forth herein.
1.03 Incorporation by Reference. This Agreement and the Master
Participation Agreement shall be viewed as, and shall constitute, one agreement
governing the terms and
KfW Loan Agreement
-4-
conditions of the Loans, provided that the exercise of enforcement remedies
shall be made solely pursuant to and in accordance with the Master Participation
Agreement and the Master Security Agreement. In the event of conflict between
this Agreement and the Master Participation Agreement or the Master Security
Agreement, the Master Participation Agreement or the Master Security Agreement,
as the case may be, shall prevail.
1.04 Types of Loans. Loans hereunder are distinguished by "Type". The
"Type" of a Loan refers to whether such Loan is a Floating Rate Loan or a Fixed
Rate Loan, each of which constitutes a Type.
ARTICLE II
THE LOANS
2.01 Loans. KfW agrees, upon the terms and conditions of this
Agreement and the Master Participation Agreement, to make Loans to the Borrower
from time to time in such aggregate principal amount not exceeding its Aggregate
Committed Amount, and on such Business Days during the period from the date
hereof to but excluding the Availability Period End Date as the Borrower shall
request pursuant to Section 2.02 hereof. KfW's Aggregate Committed Amount shall
be utilized for the following purposes: (i) an aggregate principal amount not to
exceed approximately US$20,670,300 to finance or reimburse the Borrower for
expenses incurred in connection with up to 85% of the German Supply Portion and
(ii) an aggregate amount not to exceed approximately US$1,829,700 to finance or
reimburse the Borrower for expenses incurred in connection with up to 100% of
the Facility Fee, collectively not to exceed, in any event, US$22,500,000 in the
aggregate.
The Loans may be borrowed as Fixed Rate Loans or as Floating Rate Loans.
Floating Rate Loans may be converted into Fixed Rate Loans as provided in
Section 2.04 hereof.
The Loans shall be advanced from time to time, but in no event more
frequently than once per calendar month, in accordance with the terms of this
Agreement and the Master Participation Agreement. Any amounts borrowed and paid
or prepaid pursuant to the terms herein may not be reborrowed by the Borrower.
The Borrower shall not be relieved of its obligations under this Agreement
to pay all amounts due and payable on the relevant due date by reason of the KfW
Loans being insufficient to finance up to 100% of the Facility Fee under this
Agreement.
2.02 Manner of Borrowing. The Borrower shall give KfW not less than
fifteen (15) Business Days' prior notice (which notice shall be copied to the
Trustee and the Administrative Agent and shall be irrevocable and effective upon
receipt) specifying the date and amount of each borrowing hereunder, such notice
to be substantially in the form of Exhibit C and specifying whether the Borrower
requests a Floating Rate Loan or a Fixed Rate Loan. Except as to the borrowing
which utilizes the unborrowed portion of the Commitment in full, each borrowing
of Loans shall be in a minimum amount of US$500,000. No more than one borrowing
may be requested in any calendar month. The proceeds of each Loan shall be made
available directly to the Borrower by KfW in Dollars, on the respective
borrowing date, by credit to the Onshore Dollars Account, thus reimbursing the
Borrower for payments already made
KfW Loan Agreement
-5-
under the respective Export Contract, provided that the conditions precedent set
forth in Section 9.01 have been met.
2.03 Certain Notices. The Borrower shall notify KfW in writing (which
notice shall be irrevocable and effective upon receipt), at least five (5)
Frankfurt Business Days prior to the end of an Interest Period for any Floating
Rate Loan, if the Borrower wishes to convert such Loan into a Fixed Rate Loan
pursuant to Section 2.04 hereof.
2.04 Conversions into Fixed Rate Loans. The Borrower shall have the
right to convert Floating Rate Loans into Fixed Rate Loans; provided that (a)
the Borrower shall give KfW notice of each such conversion pursuant to Section
2.03 hereof; (b) each such conversion shall be in a minimum amount of
US$500,000, provided, however, that the Borrower may convert any Floating Rate
Loans outstanding as of the Availability Period End Date in an amount less than
US$500,000; and (c) a Floating Rate Loan may be so converted only on the last
day of an Interest Period for such Loan. Upon conversion of Floating Rate Loans
to Fixed Rate Loans all subsequent disbursements shall be made as Fixed Rate
Loans. For the avoidance of doubt, once the Borrower shall have converted
Floating Rate Loans to Fixed Rate Loans, the Borrower shall not be permitted to
revert any such Loans back to Floating Rate Loans.
2.05 Reduction in Commitment. The Borrower shall have the right to
terminate or reduce the aggregate unused amount of the Commitment subject to and
in accordance with Section 2.03 of the Master Participation Agreement.
2.06 Availability Period. The facility will be available from the date
on which the conditions precedent set forth in Section 5.01 of the Master
Participation Agreement are fulfilled through the Availability Period End Date.
ARTICLE III
PRINCIPAL, INTEREST AND PROMISSORY NOTES
3.01 Principal. The Borrower agrees to repay the principal amount of
each Loan in 16 consecutive semi-annual installments on each Payment Date,
commencing on the first Payment Date in accordance with the Amortization
Schedule set forth in Exhibit A; provided, however, that the amount of the final
payment of principal of the Loans shall in any event be equal to the remaining
unpaid principal amount of the Loans.
3.02 Interest. The Borrower agrees to pay KfW interest on the
Outstanding Base Amount of each Loan for the period from and including the date
of such Loan to but excluding the date such Loan shall be paid in full, at the
following rates per annum:
(a) during such periods as such Loan is a Floating Rate Loan, for each
Interest Period relating thereto, the Applicable Base Rate for such
Floating Rate Loan for such Interest Period plus the applicable Margin
plus, upon the occurrence and during the Continuance of any MPA Event of
Default under Section 9.01 of the Master Participation Agreement, the
Default Margin; and
(b) during such periods as such Loan is a Fixed Rate Loan, for each
Fixed Rate Period relating thereto, the Applicable Base Rate for such Fixed
Rate Loan for such
KfW Loan Agreement
-6-
Fixed Rate Period plus the applicable Margin plus, upon the occurrence and
during the Continuance of any MPA Event of Default under Section 9.01 of
the Master Participation Agreement, the Default Margin.
Interest shall accrue (i) in the case of a Fixed Rate Loan, from and including
the date of such Loan in case of the first interest payment with respect to any
Advance or from and including the Interest Payment Date to which interest has
been paid in case of the second and any subsequent interest payments with
respect to each Advance to but excluding the next succeeding Interest Payment
Date or, in the case of payment pursuant to clause (B) below, to but excluding
the date of such payment, and (ii) in the case of a Floating Rate Loan, from and
including the first day of each Interest Period for such Loan to but excluding
the last day of such Interest Period or, in the case of payment pursuant to
clause (B) or (C) below, to but excluding the date of such payment. Accrued
interest on each Loan shall be payable (A) on each Interest Payment Date; (B)
upon the payment or prepayment thereof (on the principal amount so paid or
prepaid); and (C) in the case of a Floating Rate Loan, upon the conversion of
such Loan to a Fixed Rate Loan (on the principal amount so converted). Each
Interest Period for a Floating Rate Loan shall (y) comply with the definition of
the term "Interest Period" and (z) except for the first Interest Period for a
Floating Rate Loan, will have a duration of six months.
3.03 Post-Default Interest. If any installment of principal of any
Loan or any other amount (including interest on a Loan) payable by the Borrower
hereunder is not paid in full when due (whether at the stated due date, by
acceleration or otherwise), the Borrower hereby agrees to pay from time to time
upon KfW's demand interest on the amount past due and unpaid for such period of
time within each related Default Interest Period during which such amount shall
be due and unpaid, at a rate per annum equal to the sum of (a) the Margin plus
(b) the Default Margin plus (c) (i) in the case of Fixed Rate Loan, during a
Fixed Rate Period therefor, the Applicable Base Rate therefor, and (ii) in all
other cases, the Applicable Base Rate for Floating Rate Loans for such Default
Interest Period.
3.04 Promissory Notes.
(a) As additional evidence of the Borrower's obligation to pay the
principal of the Loans as provided in Section 3.01 hereof, the Borrower shall
execute and deliver to the Trustee on behalf of KfW Promissory Notes issued by
the Borrower, in substantially the form set forth in Exhibit B hereto, with a
dual column translation into Spanish to be included therein, in accordance with
Section 2.08 of the Master Participation Agreement.
(b) The execution and delivery by the Borrower of the Promissory Notes
shall not affect in any way whatsoever the rights or obligations of the Borrower
under this Agreement, and the rights and claims of KfW under the Promissory
Notes held by it shall not replace or supersede the rights and claims of KfW
hereunder, provided that payment of any part of the principal of any such
Promissory Note in accordance with the terms of this Agreement shall, to the
extent that such payment if made hereunder would discharge the Borrower's
obligations hereunder in respect of the payment of the principal of the Loan
evidenced by such Promissory Note, discharge such obligation pro tanto and the
payment of any principal of a Loan in accordance with the terms and conditions
hereof shall discharge the obligations of the Borrower under the Promissory Note
evidencing such Loan to the extent of such payment.
KfW Loan Agreement
-7-
3.05 Selection of Fixed Rates. Not more than 15 and not less than
seven Business Days prior to a proposed borrowing of a Loan hereunder or prior
to the last day of an Interest Period for any Floating Rate Loan, the Borrower
may request that KfW advise the Borrower on an indicative basis (which shall not
be binding) of KfW's best estimate of what the expected Applicable Base Rate
would be for a Fixed Rate Loan with a Fixed Rate Period commencing on the date
of borrowing of the proposed Loan or on the last day of such Interest Period, as
the case may be, and ending on the Final Maturity Date; provided, however, that
any change in such Applicable Base Rate from that so advised by KfW shall result
only from a change in KfW's funding costs.
3.06 Consolidation of Applicable Base Rate for Fixed Rate Loans. In
the event that more than one Fixed Rate Loan is outstanding, KfW may in its own
discretion consolidate the Applicable Base Rates for Fixed Rate Loans
outstanding on such date into a single interest rate corresponding to the
weighted average of the Applicable Base Rates for such Fixed Rate Loans, rounded
down to 1/10,000 if the fifth decimal to be omitted is below 5 or rounded up to
1/10,000 if the fifth decimal to be omitted is 5 or above. Commencing with the
first Payment Date following such consolidation, such weighted average interest
rate shall constitute the Applicable Base Rate for the further computation and
payment of interest for such consolidated Fixed Rate Loans.
ARTICLE IV
COMMISSIONS
4.01 Commitment Commission. The Borrower agrees to pay KfW a
commitment commission on the daily unborrowed amount of the Commitment which may
be reduced or terminated as contemplated in Section 2.03 of the Master
Participation Agreement for the period from and including the date of this
Agreement to but excluding the earliest of (a) the date the Commitment is
borrowed in full, (b) the date the Commitment is terminated and (c) the
Availability Period End Date, at a rate per annum equal to 0.25%. Accrued
commitment commission under this Section 4.01 shall be payable quarterly, in
arrears, on each Interest Payment Date and on each date falling three calendar
months after each such Interest Payment Date, with the last installment of the
commitment commission hereunder to be paid on the Availability Period End Date.
4.02 Loan Management Commission. The Borrower shall pay to KfW an
upfront fee equal to 1% of the Commitment (determined as of the date of this
Agreement) payable within 30 days from and after the date of this Agreement.
4.03 Facility Fee. On the date of disbursement of the initial Advance,
the Borrower agrees to pay a facility fee (the "Facility Fee") in such amount as
KfW shall determine is necessary to compensate it for costs and expenses
associated with the HERMES Guarantee. The Facility Fee as determined by KfW
shall be binding on the Borrower. If the Facility Fee or a portion thereof is
refunded to KfW by HERMES, KfW shall reimburse the Borrower in an amount equal
to the amount refunded to KfW by HERMES promptly upon receipt of such refund
from HERMES. If the Facility Fee exceeds the amount set forth in Section 2.01,
the Borrower shall pay the full amount of the Facility Fee (including such
excess) to KfW in accordance with this Section 4.03.
KfW Loan Agreement
-8-
ARTICLE V
THE HERMES GUARANTEE
5.01 The HERMES Guarantee. KfW's rights to receive payment from the
Borrower under this Agreement shall be guaranteed by the Federal Republic of
Germany, pursuant to the HERMES Guarantee.
5.02 Information. Subject to Section 12.10 of the Master Participation
Agreement and the generally applicable procedures of KfW in respect of
confidential commercial information, KfW shall be entitled to give information
relating to the Sulfide Project and to the KfW Loan Agreement to representatives
of the Federal Republic of Germany having any responsibility in connection with
the HERMES Guarantee and its representatives and advisors. Furthermore, subject
to Section 12.10 of the Master Participation Agreement and the generally
applicable procedures of KfW in respect of confidential commercial information,
KfW and the representatives of the Federal Republic of Germany shall be entitled
to give information relating to the KfW Loan Agreement to international
organizations entrusted with the collection of statistical data, particularly
data in connection with debt servicing.
5.03 KfW's Right to Demand Information and Give Approval Regarding
Export Contracts. The Borrower shall inform KfW without delay of any event that,
in its reasonable judgment, could be reasonably expected to materially impede or
endanger the implementation of the Export Contracts according to schedule. The
Borrower shall not, without the prior written consent of KfW (which may not be
unreasonably withheld), agree to any modification of or amendment to the Export
Contracts that (a) reduces the total price of the Export Contracts below
US$22,500,000 or (b) changes the Exporter under such Export Contracts. In
addition, the Borrower shall inform KfW without delay of its own accord of any
modification of or amendment to the Export Contracts that may materially affect
the volume of goods and services or any other material provision of the Export
Contracts. The Borrower shall on demand furnish any information reasonably
requested by KfW regarding the Export Contracts.
ARTICLE VI
PREPAYMENT
6.01 Voluntary Prepayments.
(a) The Borrower shall have the right to prepay the Loans, in whole or in
part, without premium or penalty other than as required by Sections 6.01(b) and
Section 6.03 hereof, at any time or from time to time in accordance with Section
3.05 of the Master Participation Agreement; provided, however, that each
prepayment of a Fixed Rate Loan, and each prepayment of a Floating Rate Loan on
a date other than the last day of the then current Interest Period, shall be
accompanied by, and the Borrower hereby agrees to pay to KfW on the date of such
prepayment, payment of the prepayment compensation (if any) required under
Section 6.03 hereof and reimbursement of funding losses or expenses (if any)
required under Section 3.11 of the Master Participation Agreement. Partial
prepayment shall be applied to the Loans in accordance with Section 3.08 of the
Master Participation Agreement.
KfW Loan Agreement
-9-
(b) Notwithstanding any provision herein to the contrary, if the Borrower
makes a voluntary prepayment of all or any portion of the principal outstanding
amount of any Floating Rate Loan or Fixed Rate Loan at any time prior to the
Final Maturity Date with the proceeds of replacement debt obtained (either at
the time or within a period of one year from the date of such voluntary
prepayment) from a Person other than the Parent Companies or an Affiliate of the
Parent Companies, the Borrower shall, on the date that such replacement debt is
obtained, pay to KfW a prepayment fee equal to one-half of one per cent (0.5%)
of the aggregate principal amount of Floating Rate Loans and Fixed Rate Loans
prepaid by the Borrower.
(c) Notwithstanding any provisions herein to the contrary, if KfW exercises
its rights to suspend, cancel or terminate its aggregate Committed Amount
pursuant to Section 12.03 (other than by reason of, directly or indirectly,
improper acts or inactions of the Borrower), then the Borrower may prepay all or
any portion of any Loan without prepayment premium or penalty of any kind
whatsoever.
6.02 Pro Rata Prepayment. The extent to which payments or prepayments
by the Borrower to any Senior Lender in respect of the Senior Loan Obligations
must be a Pro Rata Payment shall be determined in accordance with Section 3.04
of the Master Participation Agreement. KfW may waive its right to receive any
such prepayment without prejudice to its right to receive any subsequent
prepayment. Each prepayment of Loans under this Section 6.02 shall be
accompanied by the prepayment compensation (if any) required under Section 6.03
hereof and amounts (if any) then payable under Section 3.11 of the Master
Participation Agreement.
6.03 Prepayment Compensation for Fixed Rate Loans. Without duplication
of any compensation payable under Section 3.11 of the Master Participation
Agreement, upon any payment prior to scheduled maturity (whether pursuant to
this Article VI or Article XII hereof or otherwise) of any principal of any
Fixed Rate Loan, in whole or in part if (a) the sum of the interest payments
which (in the absence of such prepayment) would have been payable on each
installment of such Loan (or portion thereof) so prepaid, on each Payment Date
from the date of such prepayment to the original scheduled maturity date of such
installment, at the applicable rate for such Loan specified in Article III
hereof minus the applicable Margin (for purposes of this Section 6.03, the
"Prepayment Interest") exceeds (b) the sum of the interest payments which would
be received if the principal amount of each installment of such Loan (or portion
thereof) so prepaid were re-invested, for the period from the date of such
prepayment to the original scheduled maturity date hereunder of such
installment, at the Reinvestment Rate (as defined below) (for purposes of this
Section 6.03, the "Reinvestment Interest"), the Borrower agrees to pay KfW a
prepayment commission in respect of each such prepayment in an amount (computed
as of the date of such prepayment) equal to the Present Value (as defined below)
of the amount of such excess.
For purposes of this Section 6.03, "Reinvestment Rate" shall mean, in
respect of each installment of principal prepaid, the rate which appears on the
Reuters Screen RTRTSY1 Page at or about 4:00 p.m. (Frankfurt time) on a date
selected by KfW occurring on or within five Eurodollar Business Days prior to
the date of such prepayment, for actively traded U.S. Treasury obligations
having substantially the same scheduled maturity as such installment
(interpolating, where appropriate, between the yield to maturity quotations for
the next shorter and next longer
KfW Loan Agreement
-10-
maturities for any Loan installment scheduled to mature at a time for which no
such yield quotation is expressed); and the "Present Value" of any amount
receivable or deemed receivable on a specified future date shall mean such
amount discounted to present value (from such specified future date to the date
of such prepayment) at the Reinvestment Rate.
6.04 Mandatory Prepayments. The Borrower shall make Mandatory
Prepayments as set forth in Section 3.06 of the Master Participation Agreement.
KfW may waive its right to receive any Mandatory Prepayments without prejudice
to its right to receive any subsequent Mandatory Prepayment. Each prepayment of
Loans under this Section 6.04 shall be accompanied by the prepayment
compensation (if any) required under Section 6.03 hereof and amounts (if any)
then payable under Section 3.11 of the Master Participation Agreement.
In case of mandatory prepayments made in accordance with Section 3.06 of
the Master Participation Agreement, the Borrower shall, upon KfW's demand,
prepay the outstanding Loans in full (or in the amount of the affected portion
thereof) together with accrued interest thereon and all other amounts payable to
KfW hereunder (including amounts, if any, payable under Section 6.03 hereof and
Section 3.11 of the Master Participation Agreement), in the case of each
outstanding Floating Rate Loan, on the last day of the then current Interest
Period for such Floating Rate Loan and, in the case of each outstanding Fixed
Rate Loan, on the first Payment Date occurring at least three months after the
date of such demand (or, in the case of any Loan, on such earlier date as shall
be certified by KfW as being the last permissible date for such prepayment under
the relevant law, rule, regulation, treaty or directive).
ARTICLE VII
PAYMENTS
7.01 Payments. All payments and prepayments on account of the
principal of and interest on the Loans, fees, commissions, indemnities and other
amounts payable under this Agreement or any Promissory Note by the Borrower
shall be made to KfW in Dollars and in immediately available funds, without
set-off, counterclaim or reduction for any reason whatsoever, by credit to an
account designated by KfW at Citibank in New York, New York (Swift Code: BIC
XXXXXX00, Account number: 00000000, Account name: KfW) and designating KfW in
Frankfurt am Main, Germany as the beneficiary (Swift Code: KFWIDEE, Payment
Reference: yyyymmdd/Cerro Verde (8137091719), not later than 11:00 a.m. New York
City time on the date on which such payment shall become due.
7.02 Non-Business Days. If any payment under this Agreement falls due
on a day which is not a Business Day, the due date therefor shall be extended to
the next succeeding Business Day and interest shall be payable for any principal
so extended for the period of such extension.
7.03 Computations. Interest hereunder calculated on the basis of the
quotations referred to in clause (a) and clause (b) of the definition of
"Applicable Base Rate" shall be computed on the basis of a year of 360 days and
actual days elapsed. Prepayment compensation under Section 6.04 hereof, shall be
computed on the basis of a year of 365 days (or 366 days, as the case may be)
and actual days elapsed. Commitment commission hereunder shall be computed on
the basis of a year of 360 days and actual days elapsed.
KfW Loan Agreement
-11-
ARTICLE VIII
CERTAIN INDEMNITIES
8.01 Increased Cost of Loans. In the event that, at any time or from
time to time, as a result of any change in any applicable laws (including the
adoption of any new laws), rules, regulations, treaties, directives or requests
of general applicability of any applicable governmental, fiscal or monetary
authority (whether imposing or modifying taxation (other than Excluded Taxes and
Indemnified Taxes, provision for which is made in Section 8.01 hereof), reserve
or special or other deposit requirements or any other requirements or
conditions, and whether or not having the force of law), or in the
interpretation or administration thereof by any court or any such authority
charged with the interpretation or administration thereof (including, without
limitation, any change in the regulations implementing the proposals for a
risk-based capital framework described by the Basle Committee on Banking
Regulations and Supervisory Practices in its paper entitled "International
Convergence of Capital Measurement and Capital Standards" dated July 1988, as
modified and supplemented), or by reason of KfW's compliance with any such law,
rule, regulation, treaty, directive or request, the cost to KfW of making,
maintaining or funding the Loans is increased, or any amount (or the effective
return on any amount) received or receivable by KfW hereunder or under the
Promissory Notes is reduced, or the rate of return to be earned by KfW with
respect to any Loan is reduced, or KfW is required to make any payment in
connection with any transactions contemplated hereby, by or in an amount
reasonably deemed by KfW to be material, then the Borrower will on demand by KfW
from time to time pay KfW such additional amount or amounts as (in the good
faith determination of KfW) are necessary to compensate KfW for such increased
cost, reduction or payment; provided that, KfW shall not be entitled to make any
claim for additional costs under this Section 8.01, to the extent any such
additional cost is attributable directly or indirectly to the application of,
compliance with or implementation of any part or "pillar" of the International
Convergence of Capital Measurement Standards: a Revised Framework, published by
the Basle Committee on Banking Supervision in June 2004 (as in effect on the
date hereof), or any implementation or interpretation thereof, whether by any
law or regulation, or otherwise, or to any change by KfW from one method of
calculating capital adequacy to another, insofar as such additional costs are
directly or indirectly attributable to credit-related events or circumstances
that are specific to KfW and not solely to general regulatory guidelines or
requirements imposed on the banking sector generally. Any such demand by KfW
shall be accompanied by a certificate from KfW stating the basis for its demand
and setting forth in reasonable detail the calculations of the amount thereof.
8.02 Alternative Interest Rate. If, with respect to any Interest
Period for any Floating Rate Loan or with respect to any Default Interest
Period, KfW determines in its reasonable judgment that quotations of interest
rates of the types referred to in clause (a) in the definition of "Applicable
Base Rate" are not being provided in the relevant amounts or for the relevant
maturity for purposes of determining the "Applicable Base Rate" for such
Interest Period or Default Interest Period, KfW shall promptly give notice
thereof to the Borrower, and the following provisions shall apply:
(a) During the thirty-day period following the date of any such notice
(the "Negotiation Period"), KfW and the Borrower will negotiate in good
faith for the purpose of agreeing upon an alternative, mutually acceptable
basis (the "Substitute
KfW Loan Agreement
-12-
Basis") for determining the rate of interest to be applicable to such Loan
from time to time and if, at the expiration of the Negotiation Period, KfW
and the Borrower have agreed upon a Substitute Basis and any required
governmental approvals therefor have been obtained, the Substitute Basis
shall take effect from such date (including, if agreed, such retroactive
date) as KfW and the Borrower may in such circumstance agree.
(b) If at the expiration of the Negotiation Period, a Substitute Basis
shall not have been agreed upon or any required governmental approvals
therefor shall not have been obtained, KfW shall notify the Borrower of the
cost to KfW (as reasonably determined by it) of funding and maintaining the
outstanding affected Loan for such Interest Period or Default Interest
Period, and the interest payable to KfW on such Loan for such Interest
Period or Default Interest Period shall be interest at a rate per annum
equal to the cost of funding and maintaining such Loan as so notified by
KfW plus the applicable Margin (and, as appropriate, the Default Margin).
The procedures specified in (a) and (b) above shall apply to each relevant
period succeeding the first such period to which they were applied unless and
until KfW notifies the Borrower that the condition referred to in the first
sentence of this Section 8.02 no longer exists (which notice KfW agrees to give
promptly following the cessation of such condition) or until each affected
Floating Rate Loan is converted into a Fixed Rate Loan pursuant to Section 2.04
hereof, whereupon interest on such Loan shall again be determined in accordance
with the provisions of Section 3.02 hereof, effective commencing on the first
Payment Date next succeeding the date of such notice or (if a Fixed Rate Period
is so established) the first day of such Fixed Rate Period.
8.03 Mitigation. If an event or circumstance occurs that would entitle
KfW to exercise any of the rights or benefits afforded by this Article VIII,
KfW, promptly upon becoming aware of the same, shall take such steps as may be
reasonably available to it to eliminate or mitigate the effects of such event or
circumstance; provided, however, that KfW shall not be under any obligation to
take any steps that, in its sole discretion, would (a) result in its incurring
additional costs or taxes or (b) otherwise be disadvantageous to KfW.
ARTICLE IX
CONDITIONS OF LENDING
9.01 Initial Loan. The obligation of KfW to make the initial Loan to
be made by it hereunder is subject to the satisfaction (or waiver by KfW) of the
following conditions:
(a) Satisfaction of Common Conditions Precedent. The common conditions
precedent to the initial disbursement of the Senior Facility Loans set
forth in Section 5.01 of the Master Participation Agreement shall have been
satisfied (or waived as provided therein).
(b) HERMES Guarantee. The HERMES Guarantee shall have been issued,
shall be the legal, valid and binding obligation of HERMES (acting in its
capacity as an agent of the government of the Federal Republic of Germany),
shall be in full force and effect, shall have been duly registered with the
relevant governmental or other authorities
KfW Loan Agreement
-13-
and all relevant fees and charges relating thereto which are then due and
payable shall have been paid in full.
(c) Export Contracts. The Export Contracts shall not have been
cancelled, rescinded or terminated for reasons other than performance of
their terms.
(d) No modifications of Export Contracts. No modification of, or
amendment to, the Export Contracts that will (i) reduce the total price of
the Export Contracts below US$22,500,000 or (ii) change the Exporter under
the Export Contracts, in each case without the prior consent of KfW.
(e) Drawdown Certificate. Not less than 15 Business Days prior to the
proposed date of borrowing, KfW shall have received a KfW Loan Agreement
Drawdown Certificate in substantially the form set forth in Exhibit C
hereof (a "Drawdown Certificate"), duly completed and executed by the
Borrower and the Borrower shall have provided the Trustee and the
Administrative Agent with a copy of such Drawdown Certificate.
9.02 Additional Conditions. The obligation of KfW to make each Loan
(excluding the initial Loan which is subject to the conditions described in
Section 9.01 above) hereunder is subject to the further conditions:
(a) Satisfaction of Common Conditions Precedent. The common conditions
precedent set forth in Section 5.02 of the Master Participation Agreement
shall have been satisfied (or waived as provided therein);
(b) Drawdown Certificate. Not less than 15 Business Days prior to the
proposed date of borrowing KfW shall have received a KfW Loan Agreement
Drawdown Certificate in substantially the form set forth in Exhibit C
hereof (a "Drawdown Certificate"), duly completed and executed by the
Borrower and the Borrower shall have provided the Trustee and the
Administrative Agent with a copy of such Drawdown Certificate; and
(c) HERMES Guarantee. The HERMES Guarantee shall not have been
revoked, canceled, restricted or suspended, unless such revocation,
cancellation, restriction or suspension was directly and proximately caused
by (i) the failure of KfW to pay any applicable guarantee fee after the
Borrower has paid to KfW all amounts demanded in respect thereof pursuant
to Section 4.03 hereof when due or (ii) misrepresentations by KfW to HERMES
unless such misrepresentations were based upon information supplied to KfW
in writing by the Borrower or the Parent Companies.
ARTICLE X
COVENANTS
The Borrower has undertaken certain covenants as set forth in Article VII
of the Master Participation Agreement. The rights of KfW in respect of such
covenants are set forth in the Master Participation Agreement and Master
Security Agreement. The Borrower further
KfW Loan Agreement
-14-
covenants and agrees with KfW that it shall use the loan proceeds solely in
accordance with the terms of Section 2.01 hereof.
ARTICLE XI
REPRESENTATIONS AND WARRANTIES
The Borrower has given certain representations and warranties in
Article VI of the Master Participation Agreement. The rights of KfW in respect
of such representations and warranties are set forth in the Master Participation
Agreement and Master Security Agreement.
ARTICLE XII
EVENTS OF DEFAULT; REMEDIES
12.01 Events of Default. Subject to Section 12.02, each of the MPA
Events of Default set forth in Section 9.01 of the Master Participation
Agreement is hereby incorporated by reference in this Agreement as if fully set
forth herein, in accordance with their terms, unless waived in accordance with
the Master participation Agreement.
12.02 Remedies. Upon the occurrence and Continuance of an MPA Event of
Default, KfW shall only have each of the rights and remedies provided in the
Master Participation Agreement and the Master Security Agreement exercisable
only pursuant to and in accordance with the terms thereof.
12.03 Suspension, Cancellation or Termination of Commitment. In the
event that HERMES revokes, cancels, restricts or suspends the HERMES Guarantee
(other than by reason of improper acts or inactions on the part of KfW) then (i)
KfW shall have the right to suspend, cancel or terminate its Aggregate Committed
Amount, (ii) KfW shall not be required to disburse or fund any additional Loans
and (iii) the provisions of Section 3.10 of the Master Participation Agreement
shall apply.
ARTICLE XIII
MISCELLANEOUS
13.01 No Waiver. No failure on the part of KfW to exercise, and no
delay in exercising, and no course of dealing with respect to, any right, power
or privilege under this Agreement or the Promissory Notes shall operate as a
waiver thereof; nor shall any single or partial exercise of any right, power or
privilege under this Agreement or the Promissory Notes preclude any other or
further exercise thereof or the exercise of any other right, power or privilege.
Except as expressly provided herein and in the Master Participation Agreement,
the remedies provided herein are cumulative and not exclusive of any remedies
provided by law.
13.02 No Immunity. To the extent that any party hereto has or
hereafter may acquire any immunity from any court or from jurisdiction of any
process (whether through service of notice, attachment prior to judgment,
attachment in aid of execution, execution, sovereign immunity or otherwise) with
respect to itself or its property, it irrevocably waives such immunity, to the
fullest extent permitted by law, in respect of its obligations under this
Agreement and the Promissory Notes.
KfW Loan Agreement
-15-
13.03 Jurisdiction and Service of Process. The provisions of Section
12.16 of the Master Participation Agreement shall be deemed incorporated herein
mutatis mutandis. The Borrower confirms its appointment of CT Corporation as
agent for process pursuant to Section 12.16(b) of the Master Participation
Agreement.
13.04 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
13.05 Assignments and Participations; Information.
(a) The Borrower may not assign its rights or obligations hereunder or
under the Promissory Notes without the prior consent of KfW.
(b) KfW may at any time transfer the Loans, the Promissory Notes and
Commitments to a wholly-owned subsidiary of KfW whose jurisdiction is Germany,
and in the event of such transfer all references herein to "KfW" shall be deemed
to such wholly-owned subsidiary.
(c) KfW may at any time sell, assign, transfer, grant participations in, or
otherwise dispose of a portion of the Loans, the Promissory Notes or the
Commitment (collectively, "Transferred Interests") (i) to any other Person
subject to Section 12.13 of the Master Participation Agreement or (ii) if an MPA
Event of Default has occurred and is continuing, to HERMES or any agency,
instrumentality or political subdivision of Germany (for purposes of this
Section 13.05, collectively, "HERMES" and, together with any transferee in
accordance with clause (i) of this Section 13.05(c), "Transferees"). Upon the
execution and delivery by any Transferee to the Borrower of an instrument in
writing pursuant to which such Transferee agrees to assume the obligations of
KfW hereunder with respect to the Transferred Interest, such Transfer will be
effective and such Transferee may exercise all legal and equitable rights and
remedies, and shall be entitled to the benefits of Article VII hereof, as if
such Transferee were a lender hereunder holding a "Loan" in the amount of the
Transferred Interest held by it.
(d) KfW may furnish any information concerning the Borrower in the
possession of KfW from time to time to Transferees (including prospective
Transferees) subject to the confidentiality provisions contained in Section
12.10 of the Master Participation Agreement.
(e) Notwithstanding anything in the Master Participation Agreement to the
contrary, KfW shall be entitled as and when required or requested by HERMES to
give information to the representatives of HERMES and international
organizations entrusted with the collection of statistical data, particularly in
connection with debt servicing, in connection with the implementation of this
Agreement.
(f) Except as otherwise expressly provided in this Agreement, this
Agreement is legally independent of all Export Contracts. In connection with the
performance of its obligations under this Agreement, the Borrower may in no
event raise objections on the basis of the Export Contracts for which the
financing is in part provided or any other contract providing for the export of
goods or services.
KfW Loan Agreement
-16-
13.06 Amendments, Etc. Subject to Article X of the Master
Participation Agreement, the provisions of this Agreement may not be amended,
modified or waived except by an instrument or instruments in writing or by
facsimile transmission signed by the Borrower and KfW.
13.07 Counterparts. This Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one and the same
instrument, and either of the parties hereto may execute this Agreement by
signing any such counterpart.
13.08 Judgment Currency. This is an international loan transaction in
which the specification of Dollars and payment in New York, New York, U.S. is of
the essence, and Dollars shall be the currency of account in all events. The
obligations of the Borrower to make payments hereunder shall not be discharged
by an amount paid in any currency other than Dollars, whether pursuant to a
court or arbitral judgment or otherwise, to the extent that the amount so paid
upon conversion to Dollars and transferred to New York, New York under normal
banking procedures does not yield the amount of Dollars due, and the Borrower
hereby, as a separate obligation and notwithstanding any such judgment, agrees
to indemnify the Trustee, the Appointed Parties' Agents and each Senior Facility
Lender against, and to pay to the Trustee, the Appointed Parties' Agents and
each Senior Facility Lender on demand, in Dollars, any difference between the
sum originally due in Dollars and the amount of Dollars received upon any such
conversion and transfer. The provisions of Section 12.06 of the Master
Participation Agreement shall be deemed incorporated herein in their entirety.
13.09 Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the Borrower and KfW and their respective permitted
successors and assigns.
13.10 Stamp Taxes. The Borrower agrees to pay all stamp and other
duties or taxes imposed by any taxing authority of or in Peru on this Agreement,
the Loans or the Promissory Notes, or on the enforcement of any thereof or of
any rights under any thereof, or on the introduction of any thereof before any
court or other authority, and shall indemnify KfW against all liabilities,
costs, claims and expenses resulting from any failure to pay or delay in paying
any such duty or tax.
13.11 Survival. Without limitation, the obligations of the Borrower
under Sections 6.03, 8.01 and 13.10 hereof and Sections 3.09 and 3.11 of the
Master Participation Agreement and the obligations of KfW under Section 3.09 of
the Master Participation Agreement shall survive the repayment of the Loans and
the cancellation of the Promissory Notes.
13.12 Severability. Any provision hereof which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof or affecting the validity or enforceability of such
provision in any other jurisdiction. Any gap resulting as a consequence of any
such invalidity shall be filled by a provision consistent with the purpose of
this Agreement.
13.13 WAIVER OF JURY TRIAL. EACH OF THE BORROWER AND KfW HEREBY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW,
KfW Loan Agreement
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ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR
INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE PROMISSORY NOTES OR
THE TRANSACTIONS CONTEMPLATED HEREBY WHETHER BASED ON CONTRACT, TORT OR OTHER
THEORY.
13.14 Notices. The provisions of Section 12.11 of the Master
Participation Agreement shall be deemed incorporated herein in its entirety.
Except as otherwise provided in this Agreement, all such communications shall be
deemed to have been duly given when transmitted by telecopier and received or
personally delivered or, in the case of a mailed notice, upon receipt, in each
case given or addressed as aforesaid.
13.15 English Language. This Agreement is made in the English
language. Any translation of this Agreement shall have no legal validity.
13.16 No Restriction. Nothing herein shall in any way limit the
Borrower's ability to seek damages from Exporter under any of the Export
Contracts if the goods delivered pursuant to the Export Contract do not meet
contract specifications set forth under such Export Contract.
KfW Loan Agreement
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed.
SOCIEDAD MINERA CERRO VERDE S.A.A.
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
KfW Loan Agreement
KfW
By:
-----------------------------------
Name:
----------------------------------
Title:
---------------------------------
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
KfW Loan Agreement
EXHIBIT A
to KfW Loan Agreement
AMORTIZATION SCHEDULE
% of the aggregate
amounts of all
Repayment Advances made by
Number KfW to be repaid
--------- ------------------
1 6.25
2 6.25
3 6.25
4 6.25
5 6.25
6 6.25
7 6.25
8 6.25
9 6.25
10 6.25
11 6.25
12 6.25
13 6.25
14 6.25
15 6.25
16 6.25
KfW Loan Agreement
EXHIBIT B
to KfW Loan Agreement
Form of Promissory Note (Xxxxxx)
XXXXXX NO NEGOCIABLE
Place and date of issuance: Lima Peru, __
Amount US$ __
FOR VALUE RECEIVED, the undersigned, Sociedad Minera Cerro Verde, S.A.A.
(the "Borrower"), a sociedad anonima abierta listed on the Lima Stock Exchange
and duly incorporated under the laws of the Republic of Peru, registered with
the Public Registry of Companies of Lima, under File No. __, and whose principal
office is at __, Republic of Peru, by this non negotiable (no negociable)
promissory note ("xxxxxx") (the "Promissory Note"), except as permitted in
Section 12.13 (b) of the MPA, unconditionally promises to pay to the order of __
(the "Holder"), against presentment of this note, the sum of __ dollars of the
United States of America (US$ __) (the "Principal Amount"), payable on the dates
set forth in the following payment schedule (each date, a "Payment Date") and in
the amounts indicated next to the applicable Payment Date, provided that the
principal amount to be paid to the Holder on a Payment Date shall not exceed the
principal amount hereof outstanding immediately prior to such Payment Date.
PRINCIPAL AMOUNT PRINCIPAL AMOUNT
PAYMENT DATE TO BE REPAID PAYMENT DATE TO BE REPAID
-------------------- ---------------- --------------------- ----------------
First Payment Date __ 48th month after the __
First Payment Date
6th month after the __ 54th month after the __
First Payment Date First Payment Date
12th month after the __ 60th month after the __
First Payment Date First Payment Date
18th month after the __ 66th month after the __
First Payment Date First Payment Date
24th month after the __ 72nd month after the __
First Payment Date First Payment Date
30th month after the __ 78th month after the __
First Payment Date First Payment Date
36th month after the __ 84th month after the __
First Payment Date First Payment Date
42nd month after the __ 90th month after the __
First Payment Date First Payment Date
KfW Loan Agreement
-2-
The Borrower also promises to pay to the Holder interest on the outstanding
and unpaid principal amount of this Promissory Note, from the date hereof until
the last Payment Date, at an annual rate of the Base Rate plus the Applicable
Margin (the "Interest Rate"), such interest to accrue semiannually on the
outstanding principal amount during the Interest Period. Interest shall be
payable in arrears on each Interest Payment Date. All computations of interest
shall be made on the basis of a year of 360 days and actual days elapsed.
If any payment to be made hereunder is due on a day which is not a Business
Day, such payment shall be made on the immediately succeeding Business Day.
If the principal amount of this Promissory Note is not paid in full when
due, then, without prejudice to any other rights or remedies of the Holder, such
principal amount remaining unpaid shall carry default interest for such period
of time within each related Default Interest Period during which such amount
shall be due and unpaid, at an annual rate equal to the Default Rate.
The Borrower may prepay on any Payment Date upon at least 60 days' prior
notice, all or part of the outstanding principal amount hereof, so long as, in
connection with a voluntary partial prepayment, the aggregate amount of any such
voluntary partial prepayment equals at least __(7) dollars of the United States
of America (US$__).
If Borrower prepays all or part of the outstanding principal amount hereof
[on a date other than the last day of the then current Interest Period](8), the
Borrower shall pay to the Holder [(a) a prepayment commission equal to the
Present Value of the excess (if any) of (i) the sum of the interest payments
which (in the absence of such prepayment) would have been payable on each
installment hereof (or portion thereof) so prepaid, on each Payment Date from
the date of such prepayment to the original scheduled maturity date of such
installment, at the Base Rate over (ii) the sum of the interest payments which
would be received if the principal amount of each installment hereof (or portion
thereof) so prepaid were re-invested, for the period from the date of such
prepayment to the original scheduled maturity date hereunder of such
installment, at the Reinvestment Rate (as defined below), and (b)](9)
reimbursement of its funding losses or expenses (if any) related to such
prepayment; provided that, if the Borrower makes a voluntary prepayment of all
or any portion of the principal outstanding amount hereof with the proceeds of
replacement debt obtained (either at the time or within a period of one year
from the date of such voluntary prepayment) from a person other than the Parent
Companies or an Affiliate of the Parent Companies, the Borrower shall, as of the
date that such replacement debt is obtained, pay to the Holder a prepayment fee
equal to 0.5% of the aggregate principal amount prepaid and provided further
that if the Holder suspends, cancels or terminates its commitments to lend to
the Borrower under the credit facility, as contemplated in Section 12.03 of the
Loan Agreement, the
----------
(7) Insert pro rata amount of the minimum prepayment amount applicable to the
Advance(s) evidenced by the Promissory Note.
(8) Include this bracketed language only for Floating Rate Loans.
(9) Include this bracketed language only for Fixed Rate Loans.
KfW Loan Agreement
-3-
Borrower may prepay all or any portion of the outstanding amount hereof without
prepayment premium or penalty of any kind whatsoever.
Each prepayment of the outstanding principal amount hereof shall (unless
such prepayment repays in full such outstanding principal amount) be applied to
prepay ratably each outstanding installment of principal hereof remaining to be
paid as of the date of such prepayment.
For purposes of this Promissory Note, the following terms shall have the
following meanings:
"Administrative Agent" means CALYON New York Branch in its capacity of
administrative agent for the Holder according to the MPA.
"Affiliate" means, with respect to any Person (the "First Person"), any
other Person (the "Second Person") which directly or indirectly Controls, or is
under common Control with, or is Controlled by, such First Person.
"Applicable Margin" means 0.35% per annum.
"Base Rate" means, for any Interest Period or Default Interest Period
therefor, [the interest rate per annum for dollar deposits for a period equal to
(or, if there is no equal, then most comparable to) such Interest Period or
Default Interest Period which appears on Reuters Screen LIBOR01 Page (or such
other page as may replace that page on that service for the purpose of
displaying the British Bankers Association Interest Settlement Rate) at or about
11:00 a.m. London time on the date two Eurodollar Business Days prior to the
first day of such Interest Period or Default Interest Period; provided that, if
no such rate appears on Reuters Screen LIBOR01 Page (or such other page as may
replace that page on that service for the purpose of displaying the British
Bankers Association Interest Settlement Rate) for any relevant Interest Period
or Default Interest Period, the Base Rate shall mean for each Loan during such
Interest Period or Default Interest Period the rate per annum determined by the
Holder which appears on the page designated Page 3750 on the Moneyline Telerate
Inc. at or about 11:00 a.m. London time on the date two Eurodollar Business Days
prior to the first day of such Interest Period or Default Interest Period](10)
"Business Day" means a day on which banks are generally open for business
in London, England, New York, New York, United States, Tokyo, Japan, Frankfurt
am Main, Germany and Lima, Peru.
"Collateral Agent" means Citibank del Peru S.A. in its capacity of onshore
collateral agent for the Holder according to the MSA.
----------
(10) Insert (i) this bracketed language for Floating Rate Loans or (ii) the
Fixed Rate calculated in accordance with clause (b) of the definition of
Applicable Base Rate.
KfW Loan Agreement
-4-
"Commercial Production Start-up Date" means the date as of which the
Borrower, in its judgment, has achieved start of commercial production as
notified by the Borrower to the Administrative Agent.
"Concentrate" means the copper concentrate to be produced by Borrower
pursuant to the Sulfide Project.
"Control" (including, with its correlative meanings "Controlled by" and
"under common Control with") means possession, directly or indirectly, of power
(whether or not exercised) to direct or cause the direction of or exercise a
controlling influence on management or policies (whether through legal or
beneficial ownership of securities or partnership or other ownership interests,
by contract, representation on the board of directors or similar governing body
or otherwise).
"Default Interest Period" means each successive period (not in excess of
six months) while any amount payable by the Borrower hereunder is in default, as
the Holder shall choose in its sole discretion, the first such period to
commence as of the date on which such amount in default becomes due and each
succeeding such period to commence immediately upon the expiry of the
immediately preceding such period.
"Default Rate" means the applicable Interest Rate (including the Applicable
Margin) plus 2% per annum.
"Eurodollar Business Day" means any day on which banks are generally open
for business in London, England.
"First Payment Date" means the earlier of (i) the March 20 or the September
20 next occurring after the Commercial Production Start-up Date, and (ii) March
20, 2008.
"Government Rule" means any statute, law, regulation, ordinance, rule,
judgment, decree, injunction, order, writ, decision, directive, environmental
guideline, policy, restriction or rule of common law, requirement of, or other
mandatory governmental restriction or any similar form of decision of or
determination by, any Governmental Authority, and authoritative interpretations
thereof, whether now or hereafter in effect, applicable from time to time to the
relevant person, property or transaction.
"Governmental Authority" means any national, state, county, city, town,
village, municipal or other local governmental department, commission, board,
bureau, agency, authority or instrumentality of any nation that affects or may
affect the transactions contemplated hereby or any political subdivision
thereof, and any person exercising executive, legislative, judicial, regulatory
or administrative functions of or pertaining to any of the foregoing entities,
including, without limitation, all commissions, boards, bureaus, arbitrators and
arbitration panels, and any authority or other person controlled by any of the
foregoing.
"Interest Payment Date" means, prior to the First Payment Date, each
September 20 and March 20 and, starting on the First Payment Date, each Payment
Date.
"Interest Period" means any of the following periods:
KfW Loan Agreement
-5-
(i) on or prior to the First Payment Date, each period commencing on
an Interest Payment Date (or with respect to the first Interest Period on
the date hereof) and ending on the day immediately preceding the next
succeeding Interest Payment Date (including the first day and the last day
of such period); and
(ii) thereafter, each period commencing on a Payment Date and ending
on the day immediately preceding the next succeeding Payment Date
(including the first day and the last day of such period).
"Loan Agreement" means the Loan Agreement dated as of September 30, 2005
between the Borrower and KfW.
"MPA" means the Master Participation Agreement dated as of September 30,
2005 entered into among the Borrower, Japan Bank For International Cooperation,
Sumitomo Mitsui Banking Corporation, The Bank of Tokyo-Mitsubishi, Ltd., KfW,
CALYON New York Branch, The Royal Bank of Scotland plc, The Bank of Nova Scotia,
and Mizuho Corporate Bank, Ltd.
"MSA" means the Master Security Agreement dated as of September 30, 2005
entered into among the Borrower, Japan Bank For International Cooperation,
Sumitomo Mitsui Banking Corporation, The Bank of Tokyo-Mitsubishi, Ltd., KfW,
CALYON New York Branch, The Royal Bank of Scotland plc, The Bank of Nova Scotia,
Mizuho Corporate Bank, Ltd., Citibank, N.A., and Citibank del Peru S.A.
"Parent Companies" means, collectively, Xxxxxx Dodge Corporation, Sumitomo
Metal Mining Co. Ltd., Sumitomo Corporation and Compania de Minas Buenaventura
S.A.A.
"Peruvian Income Tax Act" means the Legislative Decree 774 of December 31,
1993, as amended.
"Present Value" of any amount receivable or deemed receivable on a
specified future date, means such amount discounted to present value (from such
specified future date to the date of such prepayment) at the Reinvestment Rate.
"Reinvestment Rate" means, in respect of each installment of principal
prepaid, the rate which appears on the Reuters Screen RTRTSY1 Page at or about
4:00 p.m. (Frankfurt time) on a date selected by the Holder occurring on or
within five Eurodollar Business Days prior to the date of such prepayment, for
actively traded U.S. Treasury obligations having substantially the same
scheduled maturity as such installment (interpolating, where appropriate,
between the yield to maturity quotations for the next shorter and next longer
maturities for any Loan installment scheduled to mature at a time for which no
such yield quotation is expressed).
"Reuters Screen LIBOR01 Page" shall mean the display page so designated on
the Reuter Monitor Money Rates Service (or such other page as may replace that
page on that service for the purpose of displaying London interbank offered
rates for Dollar deposits).
"Sulfide Project" means the Borrower's development of a primary sulfide
portion of the ore body beneath the oxide portion of the ore body currently in
production at its Cerro Verde copper mine, located in the Districts of Uchumayo
and Yarabamba, Province of Arequipa, Peru.
KfW Loan Agreement
-6-
"Taxes" means any present and future taxes, levies, imposts, duties,
deductions, withholdings, fees, liabilities and similar charges.
All payments by the Borrower of principal and interest hereunder shall be
made in dollars of the United States of America and in immediately available
funds, without set-off, counterclaim or reduction for any reason whatsoever, by
credit to an account designated by the Holder at Citibank in New York, New York
(Swift Code: BIC XXXXXX00, Account number: 00000000, Account name: KfW) and
designating the KfW in Frankfurt am Main, Germany as the beneficiary (Swift
Code: KFWIDEE, Payment Reference: yyyymmdd/Cerro Verde (8137091719), not later
than 11:00 a.m. New York City time on the date on which such payment shall
become due.
Any and all payments made by or on account of the Borrower in respect of
any obligation hereunder shall be made free and clear of, and without deduction
or withholding for or on account of, any and all present or future Taxes
(excluding (i) Taxes imposed on or measured by the net income, profits, or
capital of the Holder by the jurisdiction under the laws of which the Holder was
incorporated or organized, (ii) Taxes which would not have been imposed on the
Holder but for a change by the Holder of its lending office, (iii) Taxes which
would not have been imposed on a Holder but for the transfer by the Holder of an
interest herein or (iv) Taxes which would not have been imposed on a Holder but
for such Holder's having a place of business in the jurisdiction imposing the
Tax (other than a place of business arising from the transaction contemplated
hereby or from having executed, delivered, performed its obligations or received
a payment hereunder, or enforced its rights hereunder)), Taxes described in the
immediately preceding clauses (i) through (iv) being referred to herein as the
"Excluded Taxes" and Taxes other than the Excluded Taxes being referred to
herein as "Indemnified Taxes", now or hereafter imposed, levied, collected,
withheld or assessed by any Governmental Authority of the Republic of Peru,
unless such deduction or withholding is required by an applicable Government
Rule, in which case the following paragraph shall apply.
If the Borrower shall be required by law to deduct any Indemnified Taxes
now or hereafter imposed, levied or collected, withheld or assessed by any
Governmental Authority of the Republic of Peru from or in respect of any sum
payable hereunder, the Borrower shall, at its option, either (i) pay to the
Holder in respect of which such deduction or withholding is required to be made,
such additional amount (the "Additional Tax Amount") as may be necessary so that
after all required deductions and withholdings (including, without limitation,
deductions and withholdings applicable to additional sums payable under this
paragraph), the Holder receives on the due date thereof an amount equal to the
sum it would have received, had no such deduction or withholding been made, or
(ii) assume the payment of the Indemnified Tax and pay directly the full amount
to the tax administration when due in accordance with Article 47 of the Peruvian
Income Tax Act, so that the amount paid to the Holder equals the amount it would
have received if the Borrower had not been required by law to deduct such
Indemnified Tax.
The Borrower agrees to pay or reimburse upon demand in like manner and
funds, any and all documented costs and expenses of the Holder hereof or of the
Collateral Agent with respect to the enforcement of this Promissory Note.
KfW Loan Agreement
-7-
The Borrower hereby irrevocably submits to the non-exclusive jurisdiction
of the Courts of Downtown Lima (Xxxx-Xxxxxxx) and of any Federal or State court
located in the Borough of Manhattan, The City of New York, as the Holder hereof
may elect for any proceeding arising out of or relating to this Promissory Note.
The Borrower waives, to the fullest extent it may effectively do so, the defense
of an inconvenient forum to the maintenance of such action or proceeding.
The Parties further agree that, without prejudice to the law of the State
of New York governing the substantive obligations contained in the Loan
Agreement, which has originated this Promissory Note, all procedural matters or
formalities applicable to this Promissory Note to be recognized as such shall be
governed by and construed in accordance with Peruvian law.
This Promissory Note is issued in Spanish and English. The Parties agree
that the applicable version of this Promissory Note will be (i) the Spanish
version in case the jurisdiction of the Courts of Downtown Lima (Xxxx-Xxxxxxx)
is the jurisdiction elected by the Holder, or be (ii) the English version in
case the jurisdiction of any Federal or State court located in the Borough of
Manhattan, The City of New York is the jurisdiction elected by the Holder. In
case of discrepancies between the Spanish and English versions (i) the Spanish
version shall prevail when the Courts of Downtown Lima (Xxxx-Xxxxxxx) or other
Spanish speaking jurisdiction is the jurisdiction elected by the Holder, and
(ii) the English version shall prevail when the Federal or State court located
in the Borough of Manhattan, The City of New York or any other non-Spanish
speaking jurisdiction is the jurisdiction elected by the Holder.
Lima, __
By: Sociedad Minera Cerro Verde, S.A.A.
Taxpayer Registry No.: 20170072465
Name of authorized officer: __
Identification Card No __
Power register in Entry No. __ of the Public Registry
KfW Loan Agreement
EXHIBIT C
to KfW Loan Agreement
[Form of Drawdown Certificate]
To: KfW IPEX-Bank
Xxxxxxxx 00 00 00
X-00 046 Frankfurt/Main
From: SOCIEDAD MINERA CERRO VERDE S.A.A.
Date: _______________
KFW LOAN AGREEMENT
Request for drawing no.
X1a1 - Loan No. [__________]
dated as of [_________]
for US$[___]
1. The Borrower hereby requests a [Floating Rate / Fixed Rate] Loan under the
KfW Loan Agreement in US$ as follows:
(a) Drawdown Date: __________________
(b) Amount: ______________ US$_____________
2. The Amount in paragraph 1(b) is made up of:
(a) US$______________ in respect of German goods and services supplied by
Polysius AG; and/or
[(b) US$_____________ in respect of the Facility Fee charged by HERMES for
the HERMES Guarantee](11)
3. The Borrower confirms that:
(a) the representation and warranties contained in Article VI of the
Master Participation Agreement shall be true and correct in all
material respects as of the date of the initial disbursement;
(b) no MPA Default has occurred and is Continuing; and
(c) each of the other conditions contained in [Section 5.01 [first
disbursement only], [Section 5.02 [Conditions Precedent for subsequent
disbursements only] of the Master Participation Agreement and [Section
9.01 [initial disbursement only], [Section 9.02 [Conditions Precedent
for subsequent disbursements only] of the KfW Loan Agreement is
satisfied on the date of this Request or is expected to be satisfied
immediately after the disbursement is made (as applicable).
----------
(11) [Only applies to disbursement of the initial Advance and shall include 100%
of the Facility Fee.]
KfW Loan Agreement
-2-
4. The Borrower confirms that the aggregate amount borrowed under the KfW Loan
Agreement does not exceed 85% of the aggregate amounts of the purchase
orders placed to date under the Export Contracts plus the amounts borrowed
to finance the Facility Fee.
5. The Borrower requests that the amount mentioned under paragraph 1(b) above
be paid to the Onshore Dollars Account.
6. Terms defined in the KfW Loan Agreement shall bear the same meanings when
used in this Request.
BORROWER
By:
------------------------------------
Authorized Signatory
KfW Loan Agreement
Exhibit C
Commercial Banks Loan Agreement
EXECUTION COPY
================================================================================
LOAN AGREEMENT
among
SOCIEDAD MINERA CERRO VERDE S.A.A.,
as Borrower
EACH OF THE LENDERS NAMED HEREIN,
and
CALYON NEW YORK BRANCH,
as Administrative Agent
Dated as of September 30, 2005
================================================================================
TABLE OF CONTENTS
Page
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APPENDIX 1 - Notice of Borrowing
EXHIBIT A - Form of Promissory Note
EXHIBIT B - Amortization Schedule
EXHIBIT C - Assignment and Acceptance Agreement
-i-
LOAN AGREEMENT dated as of September 30, 2005 among SOCIEDAD MINERA CERRO
VERDE S.A.A., a sociedad anonima abierta organized under the laws of Peru (the
"Borrower"); each of the Lenders that is a signatory hereto as a "Lender", or
each lender that may from time to time become a Lender, pursuant to Section
11.05(b) hereof, (each, a "Lender" and, collectively, the "Lenders"); and CALYON
NEW YORK BRANCH, as agent for the Lenders (in such capacity, the "Administrative
Agent").
WHEREAS, On the date hereof, the Borrower, JBIC, the Lead JBIC Arrangers,
KfW, the Lenders and the Administrative Agent have entered into the Master
Participation Agreement (the "Master Participation Agreement"), which sets forth
various terms for the financing of the development of the Sulfide Project;
WHEREAS, for purposes of financing in part the development of the Sulfide
Project, the Borrower desires that the Lenders make certain loans to it, and the
Lenders wish to make certain loans to the Borrower, all on the terms and
conditions set forth herein and in the Master Participation Agreement.
NOW THEREFORE, in consideration of the foregoing, the agreements contained
herein and in the Master Participation Agreement and for other good and valid
consideration, the receipt and adequacy of which are hereby expressly
acknowledged, the parties hereto agree as follows:
Section 1. Definitions and Accounting Matters.
1.01 Certain Defined Terms. Except as otherwise defined herein,
capitalized terms used herein (including the preamble and recital of this
Agreement) shall have the meanings assigned to such terms in the Master
Participation Agreement (including Schedule Z thereto). For purposes of this
Agreement, the following terms shall have the respective meanings set forth
below:
"Additional Costs" has the meaning assigned thereto in Section 5.01(a).
"Advance Date" has the meaning assigned thereto in Section 4.05.
"Agreement" means this Loan Agreement.
"Applicable Lending Office" means, for each Lender, the "Lending Office" of
such Lender (or of an affiliate of such Lender) designated on the signature
pages hereof or such other office of such Lender (or of an affiliate of such
Lender) as such Lender may from time to time designate pursuant to Section 5.05
as the office by which its Loans are to be made and maintained.
"Availability Period" means, collectively, the Tranche A Availability
Period and the Tranche B Availability Period.
"Borrower" has the meaning assigned thereto in the first paragraph of this
Agreement.
Commercial Banks Loan Agreement
-2-
"Borrowing" means Loans made on the same date and as to which a single
Interest Period is in effect pursuant to a Notice of Borrowing.
"Commitment" means the aggregate of the Tranche A Commitment and the
Tranche B Commitment.
"Default Interest Period" means each successive period (not in excess of
six months) as the Administrative Agent shall choose (with the consent of the
Majority Bank Lenders), during which any amount payable by the Borrower
hereunder is in default. The first such period shall commence as of the date on
which such amount in default becomes due, and each such succeeding period shall
commence immediately upon the expiry of the immediately preceding period;
provided, however, that in the absence of, or pending consent of the Majority
Bank Lenders, each Default Interest Period has a duration of one month.
"Default Margin" means, in respect of any principal of any Loan or any
other amount under this Agreement (including interest on a Loan), a rate per
annum equal to 2%.
"Eurocurrency Liabilities" has the meaning assigned thereto in Regulation
D.
"Lenders" has the meaning assigned thereto in the first paragraph of this
Agreement.
"LIBOR Rate" means, with respect to any Interest Period or Default Interest
Period for any Loan, the interest rate per annum for deposits in Dollars, if
any, for a period equal to the relevant interest period which appears on page
3750 on the Moneyline Telerate Inc. (or such other page or pages as shall
replace that page or pages for the purpose of displaying offered rates of
leading banks for London interbank deposits in Dollars) at or about 11:00 a.m.
London time on the second Eurodollar Business Day before and for value on the
first day of the Interest Period or Default Interest Period. If such rate does
not appear on page 3750 on the Moneyline Telerate Inc. or such other page as
shall replace that page for the purpose of displaying offered rates of leading
banks for London interbank deposits in Dollars, the LIBOR Rate shall be the
interest per annum equal to the average (rounded upward to the nearest fifth
decimal place, if such average is not such a decimal) of the interest rates per
annum (as provided to the Administrative Agent) at which deposits in Dollars are
offered by the principal office of each of the Reference Banks in London,
England to prime banks in the London interbank market at or about 11:00 a.m.
(London time) (or as soon thereafter as practicable) two Eurodollar Business
Days before the first day of the Interest Period or Default Interest Period in
an amount substantially equal to each such Reference Bank's Loan comprising part
of such borrowing to be outstanding during such interest period and for a period
equal to (or if there is no equal, then most comparable) such interest period.
The LIBOR Rate for any interest period for each Loan comprising part of the same
borrowing shall be determined by the Administrative Agent on the basis of
applicable rates furnished to and received by such agent from the Reference
Banks two Eurodollar Business Days before the first day of such interest period.
If any of the Reference Banks shall be unable or otherwise fails to provide a
rate for the purposes of determining LIBOR as hereinabove provided, then LIBOR
shall be determined on the basis of the rate or rates quoted by the remaining
Reference Banks.
"LIBOR Reserve Period" has the meaning assigned to that term in Section
5.01(d).
Commercial Banks Loan Agreement
-3-
"Loans" means, collectively, the Tranche A Loans and the Tranche B Loans
provided to the Borrower pursuant to Section 2.01.
"Majority Bank Lenders" means Lenders holding more than 50% of the sum of
(a) the aggregate amount of uncancelled and undrawn Commitments and (b) the
aggregate principal amount of outstanding Loans.
"Margin" means (a) for the period from and including the date hereof to but
excluding the Completion Release Date, 1.20% per annum, (b) for the period from
and including the Completion Release Date to but excluding the third anniversary
of the Completion Release Date, 1.4% per annum, (c) for the period from and
including the third anniversary of the Completion Release Date to but excluding
the fifth anniversary of the Completion Release Date, 1.70% per annum, (d) for
the period from and including the fifth anniversary of the Completion Release
Date to but excluding the seventh anniversary of the Completion Release Date, 2%
per annum and (e) for the period from and including the seventh anniversary of
the Completion Release Date thereafter, 2.20% per annum.
"Master Participation Agreement" has the meaning assigned thereto in the
recitals of this Agreement.
"Participant" has the meaning assigned thereto in Section 11.05(c).
"Reference Banks" means, collectively CALYON New York Branch, Mizuho
Corporate Bank Ltd., Scotia Capital and The Royal Bank of Scotland plc, or such
substitute banks designated as such by the Administrative Agent from time to
time to provide the quotations required for the determination of the LIBOR Rate
and being the principal London offices of each such bank.
"Regulation D" means Regulation D of the Board of Governors of the Federal
Reserve System of the United States (or any successor), as the same may be
modified and supplemented and in effect from time to time.
"Regulatory Change" means, with respect to any Lender, any change after the
date of this Agreement in any law or regulations or the adoption or making after
such date of any interpretation, directive or request applying to a class of
financial institutions including such Lender of or under any law or regulations
(whether or not having the force of law and whether or not failure to comply
therewith would be unlawful) by any court or governmental or monetary authority
charged with the interpretation or administration thereof.
"Substitute Basis" has the meaning assigned thereto in Section 5.02.
"Tranche A Availability Period" means the period from the date hereof until
the Tranche A Commitment Termination Date.
"Tranche A Commitment" means, for each Lender, the obligation of such
Lender to make Tranche A Loans to the Borrower in an aggregate principal amount
not to exceed the amount set forth opposite the name of such Lender in Appendix
A-1 of the Master Participation Agreement (as the same may be reduced at any
time or from time to time pursuant to Sections 2.01, 2.10 and
Commercial Banks Loan Agreement
-4-
11.05 hereof and Section 2.03 of the Master Participation Agreement or pursuant
to a permitted assignment) or, in the case of an assignee of a Tranche A
Commitment, the amount specified in the Assignment and Acceptance Agreement
entered into by such assignee.
"Tranche A Commitment Termination Date" means the earlier of (i) the
Availability Period End Date and (ii) the date on which the aggregate amount of
the Tranche A Commitments of all Lenders is fully borrowed, terminated or
reduced to zero.
"Tranche A Loans" has the meaning assigned thereto in Section 2.01.
"Tranche B Availability Period" means the period from the date on which the
Tranche A Loans shall have been fully drawn until the Tranche B Commitment
Termination Date.
"Tranche B Commitment" means, for each Lender, the obligation of such
Lender to make Tranche B Loans to the Borrower in an aggregate principal amount
not to exceed the amount set forth opposite the name of such Lender in Appendix
A-1 of the Master Participation Agreement (as the same may be reduced at any
time or from time to time pursuant to Sections 2.01, 2.10 and 11.05 hereof and
Section 2.03 of the Master Participation Agreement or pursuant to a permitted
assignment) or, in the case of an assignee of a Tranche B Commitment, the amount
specified in the Assignment and Acceptance Agreement entered into by such
assignee.
"Tranche B Commitment Termination Date" means the earlier of (i) the
Availability Period End Date and (ii) the date on which the aggregate amount of
the Tranche B Commitments of all Lenders is fully borrowed, terminated or
reduced to zero.
"Tranche B Loans" has the meaning assigned thereto in Section 2.01.
1.02 Other Definitions; Headings. The table of contents to this
Agreement and section headings contained herein are for convenience of reference
only and shall not affect the construction hereof.
1.03 Reference to Master Participation Agreement. This Agreement and
the Master Participation Agreement shall be viewed as, and shall constitute, one
agreement governing the terms and conditions of the Loans; provided that the
exercise of enforcement remedies shall be made solely pursuant to and in
accordance with the Master Participation Agreement and the Master Security
Agreement. In the event of conflict between this Agreement and the Master
Participation Agreement or the Master Security Agreement, the Master
Participation Agreement or the Master Security Agreement, as the case may be,
shall prevail.
1.04 Interpretation. Section 1.02 of the Master Participation
Agreement is hereby incorporated herein by reference as if fully set forth
herein.
Commercial Banks Loan Agreement
-5-
Section 2. Loans, Promissory Notes and Prepayments.
2.01 Loans.
(a) Subject to the terms and conditions of this Agreement and the Master
Participation Agreement, each Lender severally agrees to make loans to the
Borrower in Dollars from time to time during the Tranche A Availability Period
(the "Tranche A Loans") in an aggregate principal amount up to but not exceeding
the amount of the Tranche A Commitment of such Lender. If the full amount of the
Tranche A Commitment is not disbursed during the Tranche A Availability Period,
the amount of any undrawn portion thereof shall be automatically reduced to zero
as provided in Section 2.03 of the Master Participation Agreement.
(b) Subject to the terms and conditions of this Agreement and the Master
Participation Agreement, each Lender severally agrees to make loans to the
Borrower in Dollars from time to time during the Tranche B Availability Period
(the "Tranche B Loans") in an aggregate principal amount up to but not exceeding
the amount of the Tranche B Commitment of such Lender. If the full amount of the
Tranche B Commitment is not disbursed during the Tranche B Availability Period,
the amount of any undrawn portion thereof shall be automatically reduced to zero
as provided in Section 2.03 of the Master Participation Agreement.
(c) Any amounts borrowed and paid or prepaid in accordance with the terms
herein shall not be reborrowed by the Borrower.
2.02 Borrowings. The Borrower shall give the Administrative Agent (who
shall promptly notify the Lenders) notice of each Borrowing hereunder (which
notice shall be copied to the Trustee and shall be irrevocable and effective
upon receipt) as provided in Section 4.04, such notice to be substantially in
the form of Appendix 1 to this Agreement. Except as to a Borrowing which
utilizes the unborrowed Tranche A Commitments or Tranche B Commitments, as the
case may be, in full, each Borrowing hereunder shall be in a minimum amount of
US$2,500,000 and, if greater, in an amount which is an integral multiple of
US$1,000,000.
Not later than 10:00 a.m. New York time on the date specified in each
notice for borrowing hereunder, each Lender shall make available the aggregate
amount of the Loans to be made by it on such date (as determined in accordance
with Section 4.02) to the Administrative Agent, at account number
01-88179-3701-00 (Attn: Loan Settlement, Ref: Cerro Verde) maintained by the
Administrative Agent with CALYON New York Branch (ABA# 026-008-073) in
immediately available funds. The amount so received by the Administrative Agent
shall, subject to the terms and conditions of this Agreement and the Master
Participation Agreement, be made available to the Borrower by 11:00 a.m. New
York time on such date, by depositing such amount, in immediately available
funds, in the Onshore Dollars Account.
2.03 Agent and Other Fees. The Borrower shall pay to the
Administrative Agent, for its own account, the Administrative Agent's fee, and
to the Lenders (as Lead Arrangers) the upfront fees, each in the amounts set
forth in the fee letter dated July 28, 2005 between the Lenders and the Borrower
on the dates set forth in such fee letter.
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2.04 Commitment Fees. The Borrower shall pay to the Administrative
Agent for the account of each Lender a commitment fee on the daily average
unused amount of such Lender's Tranche A Commitment and Tranche B Commitment,
for the period from and including the date hereof to but excluding the final day
of the Tranche A Availability Period and the Tranche B Availability Period, as
the case may be, at a rate per annum equal to 0.375%. Accrued commitment fees
shall be payable quarterly in arrears on each Interest Payment Date, on each
date falling three calendar months after each Interest Payment Date and, in the
case of the last installment of commitment fees payable hereunder, on the last
day of the Tranche A Availability Period and the Tranche B Availability Period,
as the case may be.
2.05 Lending Offices. The Loans made by each Lender shall be made and
maintained at such Lender's Applicable Lending Office.
2.06 Several Obligations; Remedies Independent. The amounts payable by
the Borrower at any time hereunder and under the Promissory Notes to each Lender
shall be separate and independent obligations of the Borrower and each Lender
shall be entitled, in accordance with the Master Participation Agreement, to
protect and enforce its rights arising out of this Agreement and the Promissory
Notes held by it, and, except as otherwise provided in the Master Participation
Agreement, it shall not be necessary for any other Lender or the Administrative
Agent to consent to, or be joined as an additional party in, any proceedings for
such purposes.
2.07 Promissory Notes. As additional evidence of the Borrower's
obligation to pay the principal of the Loans as provided herein, the Borrower
shall execute and deliver to the Administrative Agent on behalf of each Lender,
Promissory Notes issued by the Borrower, in substantially the form set forth in
Exhibit A hereto, with a dual column translation into Spanish to be included
therein, in accordance with Section 2.08 of the Master Participation Agreement.
2.08 Voluntary Prepayments of Loans. The Borrower shall have the right
to prepay Loans, either in whole or in part, in accordance with Section 3.05 of
the Master Participation Agreement, at any time or from time to time. Each
prepayment of Loans under this Section 2.08 shall be accompanied by the
prepayment compensation (if any) required under Section 3.11 of the Master
Participation Agreement. Any prepayment made by the Borrower pursuant to
Sections 2.08, 2.09 and 2.11 shall be made together with all accrued but unpaid
interest on amounts prepaid and all other amounts (including any amounts due
pursuant to Section 5) then due from the Borrower hereunder. Partial prepayment
shall be applied to the Loans in accordance with Section 3.08 of the Master
Participation Agreement.
2.09 Pro Rata Prepayments. The extent to which prepayments by the
Borrower to any Senior Lender in respect of the Senior Loan Obligations must be
a Pro Rata Payment shall be determined in accordance with Section 3.04 of the
Master Participation Agreement. A Lender may waive its right to receive any such
prepayment without prejudice to its right to receive any subsequent prepayment.
Each prepayment of Loans shall be accompanied by the prepayment compensation (if
any) required under Section 3.11 of the Master Participation Agreement and shall
be applied in accordance with the Master Participation Agreement. Amounts
prepaid pursuant to this Section 2.09 may not be reborrowed by the Borrower.
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2.10 Change in Commitments.
(a) Commitments Generally. The Borrower shall have the right to terminate
or reduce the aggregate unused amount of the Commitment subject to and in
accordance with Section 2.03 of the Master Participation Agreement.
(b) Tranche B Loan Commitments. On the date on which the Borrower issues
Peruvian Bonds under the Peruvian Bonds Program, the Borrower shall reduce the
aggregate unutilized amount of Tranche B Commitments outstanding on such date in
an amount equal to the lesser of: (i) the aggregate amount of the Peruvian Bonds
issuance and (ii) the aggregate unutilized amount of Tranche B Commitments
outstanding on such date. To the extent that the aggregate proceeds of issuance
of the Peruvian Bonds on such date exceeds the aggregate unutilized amount of
Tranche B Commitments outstanding on such date, the Borrower shall prepay the
Tranche B Loans outstanding (together with interest accrued and payable thereon)
in an amount equal to the difference between (x) the aggregate proceeds of
issuance of the Peruvian Bonds on such date and (y) the aggregate unutilized
amount of Tranche B Commitments outstanding on such date.
(c) No Reinstatement. Any portion of the Commitments once terminated or
reduced may not be reinstated.
2.11 Mandatory Prepayments.
(a) Loans. The Borrower shall be obligated to prepay the Loans pursuant to
Section 3.06 of the Master Participation Agreement.
(b) Peruvian Bonds Program. On the date on which the Borrower issues
Peruvian Bonds under the Peruvian Bonds Program, the Borrower shall prepay the
Tranche B Loans in the principal amount required under Section 2.10(b).
Section 3. Payments of Principal and Interest.
3.01 Repayment of Loans. The Borrower hereby promises to pay to the
Administrative Agent, for the account of the Lenders, the principal amount of
the Loans in consecutive semi-annual installments payable commencing on the
first Payment Date and on each subsequent Payment Date thereafter, each such
installment to be in an aggregate principal amount computed in accordance with
the Amortization Schedule set forth in Exhibit B (which Amortization Schedule
may be revised by the Administrative Agent from time to time to take into
account (a) prepayments of the Loans pursuant to the terms hereof and the Master
Participation Agreement and (b) the actual first Payment Date); provided,
however, that the amount of the final payment of principal of the Loans shall in
any event be equal to the remaining unpaid principal amount of the Loans.
3.02 Interest.
(a) The Borrower hereby promises to pay to the Administrative Agent, for
the account of each Lender, interest on the unpaid principal amount of the Loan
from such Lender for the period from and including the date of such Loan to but
excluding the date such Loan shall be paid in full, at a rate per annum equal
to, for each Interest Period, the LIBOR Rate for such Loan for such Interest
Period plus the applicable Margin.
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(b) The Borrower agrees that during the Continuance of any MPA Event of
Default under Section 9.01 of the Master Participation Agreement (other than an
MPA Event of Default under Section 9.01(a) of the Master Participation Agreement
relating to this Agreement), the interest rate per annum which the Borrower is
obligated to pay in respect of each Interest Period pursuant to sub-Section (a)
above shall be increased by adding to such interest rate the Default Margin.
(c) Accrued interest on each Loan shall be payable on each Interest Payment
Date and upon any prepayment of a Loan (on the prepaid amount). Promptly after
the determination of any interest rate provided for herein or any change
therein, the Administrative Agent shall give notice thereof to each of the
Lenders and the Borrower.
(d) If any installment of principal of any Loan or any other amount
(including interest on a Loan) payable hereunder is not paid in full when due
(whether at the stated due date, by acceleration, by mandatory prepayment or
otherwise), the Borrower hereby agrees to pay from time to time upon demand
interest on the amount past due and unpaid for such period of time within each
related Default Interest Period during which such amount shall remain due and
unpaid, at a rate per annum equal to (i) in respect of principal, the Default
Margin plus the greater of (A) the rate of interest payable in respect of such
principal pursuant to Section 3.02(a) (or, if applicable, Section 5.02) in
effect immediately prior to such default in payment and (B) the sum of the LIBOR
Rate for such Default Interest Period plus the Margin and (ii) in respect of
such other amounts, the Default Margin plus the LIBOR Rate for such Default
Interest Period plus the Margin.
Section 4. Payments; Pro Rata Treatment; Computations; Etc.
4.01 Payments.
(a) Except to the extent otherwise provided herein, all payments of
principal, interest and other amounts to be made by the Borrower under this
Agreement and the Promissory Notes (including fees and indemnities) shall be
made in Dollars, in immediately available funds, without deduction, set-off or
counterclaim, to the Administrative Agent for the account of the Lenders at
account number 01-88179-3701-00 (Attn: Loan Settlement, Ref: Cerro Verde)
maintained by the Administrative Agent with CALYON New York Branch
(ABA#026-008-073), not later than 11:00 a.m. New York time on the date on which
such payment shall become due (each such payment made after such time on such
due date to be deemed to have been made on the next succeeding Business Day).
(b) Each payment received by the Administrative Agent under this Agreement
or any Promissory Note for the account of any Lender shall be paid by the
Administrative Agent promptly to such Lender, in immediately available funds,
for the account of such Lender's Applicable Lending Office for the Loan or other
obligation in respect of which such payment is made.
(c) If the due date of any payment under this Agreement or any Promissory
Note would otherwise fall on a day that is not a Business Day, such date shall
be extended to the next succeeding Business Day, and interest shall be payable
for any principal so extended for the
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period of such extension; provided, however, that if such next succeeding
Business Day falls in the following month, such date shall be the Business Day
immediately preceding such date.
4.02 Pro Rata Treatment. Except to the extent otherwise provided
herein or in the Master Participation Agreement, the Loans shall be disbursed by
the Lenders pro rata in accordance with the maximum respective principal amounts
of each Lender's Commitment. The extent to which payments by the Borrower to any
Senior Facility Lender in respect of the Senior Loan Obligations must be a Pro
Rata Payment shall be determined in accordance with Section 3.04 of the Master
Participation Agreement.
4.03 Computations. Interest on Loans and commitment fees shall be
computed on the basis of a year of 360 days and actual days elapsed (including
the first day but excluding the last day) occurring in the period for which such
interest and commitment fees are payable.
4.04 Certain Notices.
(a) Notices by the Borrower to the Administrative Agent of borrowings,
termination or reduction of Commitments and voluntary prepayments of Loans shall
be irrevocable and shall be effective only if received by the Administrative
Agent not later than 11:00 a.m. New York time on the number of days, as the case
may be, prior to the date of the relevant borrowing, termination or reduction of
Commitments and voluntary prepayments of Loans, as the case may be, specified
below:
Type of Notice Required Prior Notice
----------------------------------- ----------------------------------
Borrowing of Loans; 15 Business Days for Base Advances
Termination or Reduction of and 10 New York Business Days for
Commitments under Section 2.10; and Stand-by Advances
Mandatory Prepayments of Loans
Voluntary Prepayments of Loans 60 days
(b) If received later than 11:00 a.m. New York time on such date, such
notice shall be effective on the next succeeding Business Day unless the
Borrower is notified by the Administrative Agent that such notice shall be
effective on the original Business Day.
(c) Each notice of borrowing or voluntary prepayment shall specify (i) the
Tranche A Loans and/or Tranche B Loans to be borrowed or prepaid, (ii) the
aggregate amount (subject to Sections 2.02, 2.08 and 2.09) of each Tranche A
Loan and/or Tranche B Loan to be borrowed and (iii) the date of borrowing or
voluntary prepayment (which shall be a Business Day). Each such notice of
termination or reduction shall specify the amount of the Commitments to be
terminated or reduced. The Administrative Agent shall promptly notify the
Lenders of the contents of each such notice (and in any event by the Business
Day after the Administrative Agent's receipt thereof).
Commercial Banks Loan Agreement
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4.05 Non-Receipt of Funds by the Administrative Agent.
(a) Without limiting Section 2.07 of the Master Participation Agreement,
unless the Administrative Agent shall have been notified by a Lender or the
Borrower (the "Payor") prior to the date on which the Payor is to make payment
to the Administrative Agent of (in the case of a Lender) the proceeds of a Loan
to be made by such Lender hereunder or (in the case of the Borrower) a payment
to the Administrative Agent for account of one or more of the Lenders hereunder
(such payment being herein called the "Required Payment"), which notice shall be
effective upon receipt, that the Payor does not intend to make the Required
Payment to the Administrative Agent, the Administrative Agent may assume that
the Required Payment has been made and may, in reliance upon such assumption
(but shall not be required to), make the amount thereof available to the
intended recipient(s) on such date; and, if the Payor has not in fact made the
Required Payment to the Administrative Agent, the recipient(s) of such payment
shall, on demand, repay to the Administrative Agent the amount so made available
together with interest thereon in respect of each day during the period
commencing on the date (the "Advance Date") such amount was so made available by
the Administrative Agent until the date the Administrative Agent recovers such
amount at a rate per annum equal to that indicated by the Administrative Agent
in a notice to such recipient(s) as the Administrative Agent's cost of funds for
such period (determined by the Administrative Agent in its reasonable
discretion, which determination shall be conclusive) and, if such recipient(s)
shall fail promptly to make such payment, the Administrative Agent shall be
entitled to recover such amount, on demand, from the Payor, together with
interest as aforesaid.
(b) If neither the recipient(s) nor the Payor shall return the Required
Payment to the Administrative Agent within three Business Days of the Advance
Date, then, retroactively to the Advance Date, the Payor and the recipient(s)
shall each be obligated to pay interest on the Required Payment as follows:
(i) if the Required Payment shall represent a payment to be made
by the Borrower, as the case may be, to the Lenders, the Payor(s) and the
recipient(s) shall each be obligated retroactively to the Advance Date to
pay interest in respect of the Required Payment at the rate of interest
provided for pursuant to Section 3.02 (and, in case the recipient(s) shall
return the Required Payment to the Administrative Agent, without limiting
the obligation of any such Payor(s) under Section 3.02 to pay interest to
such recipient(s) in respect of the Required Payment); and
(ii) if the Required Payment shall represent proceeds of a Loan
to be made by the Lenders to the Borrower, the Payor and the Borrower shall
each be obligated retroactively to the Advance Date to pay interest in
respect of the Required Payment at the rate of interest provided for such
Required Payment pursuant to Section 3.02 (and, in case the Borrower shall
return such Required Payment to the Administrative Agent, without limiting
any claim the Borrower may have against the Payor in respect of the
Required Payment).
(c) In the event that the Payor and the recipient(s) both return the
Required Payment to the Administrative Agent together with interest thereon as
required hereby, the
Commercial Banks Loan Agreement
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Administrative Agent shall promptly pay to the recipient(s) such Required
Payment together with such interest paid by the recipient(s).
(d) The Administrative Agent shall promptly notify each Lender of any
receipt of notice by the Administrative Agent from the Borrower that the
Borrower does not intend to make the Required Payment to the Administrative
Agent for account of one or more of the Lenders.
Section 5. Yield Protection, Etc.
5.01 Additional Costs.
(a) The Borrower shall pay directly to each Lender from time to time such
amounts as are necessary to compensate such Lender for any increase in costs
attributable to its making or maintaining of any Loans to the Borrower or its
obligation to make any Loans hereunder to the Borrower, or any reduction in any
amount receivable by such Lender hereunder in respect of any of such Loans or
such obligation (such increases in costs and reductions in amounts receivable
being herein called "Additional Costs"), in each case, from those costs and
amounts receivable existing on the date hereof, resulting from any Regulatory
Change that:
(i) imposes or modifies any reserve, special deposit or similar
requirements, including any application of the Regulation D requirement,
relating to any extensions of credit or other assets of, or any deposits
with or other liabilities of, such Lender (including any of such Loans or
any deposits referred to in the definition of "LIBOR Rate" in Section
1.01), or any commitment of such Lender (including the Commitment of such
Lender hereunder); or
(ii) imposes or any Lender or the London interbank market any other
condition affecting this Agreement or Loans made by such Lender.
(b) Without limiting the effect of the foregoing provisions of this Section
5.01 (but without duplication), the Borrower shall pay directly to each Lender
from time to time on request such amounts as such Lender may determine in good
faith to be necessary to compensate such Lender (or, without duplication, the
bank holding company of which such Lender is a subsidiary) for any increase in
costs that it in good faith determines is attributable to the maintenance by
such Lender (or any Applicable Lending Office or such bank holding company),
pursuant to any law or regulation or any interpretation, directive, guideline or
request (whether or not having the force of law and whether or not failure to
comply therewith would be unlawful) of or by any court or governmental,
monetary, fiscal or other authority (i) following any Regulatory Change or (ii)
implementing any risk-based capital guideline or other requirement (whether or
not having the force of law and whether or not the failure to comply therewith
would be unlawful) issued after the date of this Agreement by any government or
governmental or supervisory authority implementing at the national level the
Basle Accord, of capital in respect of its Commitment or Loans (such
compensation to include, without limitation, an amount equal to any reduction of
the rate of return on assets or equity of such Lender (or any Applicable Lending
Office or such bank holding company) to a level below that which such Lender (or
any Applicable Lending Office or such bank holding company) could have achieved
but for such law, regulation, interpretation, directive, guideline or request).
For purposes of this Section 5.01(b), "Basle Accord" shall mean the proposals
for risk-based capital framework described by the Basle Committee on Banking
Commercial Banks Loan Agreement
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Regulations and Supervisory Practices in its paper entitled "International
Convergence of Capital Measurement and Capital Standards" dated July 1988, as
amended, modified and supplemented and in effect from time to time or any
replacement thereof.
(c) Section 5.01 does not apply, and no Lender shall be entitled to make
any claim under Section 5.01, to the extent any Additional Cost is attributable
directly or indirectly to the application of, compliance with or implementation
of any part or "pillar" of the International Convergence of Capital Measurement
Standards: a Revised Framework, published by the Basle Committee on Banking
Supervision in June 2004 (as in effect on the date hereof), or any
implementation or interpretation thereof, whether by any law or regulation, or
otherwise, or to any change by a Lender from one method of calculating capital
adequacy to another, insofar as such Additional Costs are directly or indirectly
attributable to credit-related events or circumstances that are specific to a
Lender and not solely to general regulatory guidelines or requirements imposed
on the commercial banking sector generally.
(d) Each Lender shall notify the Borrower of any event occurring after the
date of this Agreement entitling such Lender to compensation under clause (a) or
(b) of this Section 5.01 as promptly as practicable, but in any event, within
six months after such Lender obtains actual knowledge thereof; provided, that if
such Lender fails to give such notice within six months after it obtains actual
knowledge of such an event, such Lender shall, with respect to compensation
payable pursuant to this Section 5.01 in respect of any Additional Costs
resulting from such event, only be entitled to payment under this Section 5.01
for costs incurred from and after the date six months prior to the date that
such Lender does give such notice. Each Lender shall designate a different
Applicable Lending Office, if possible, for the Loans of such Lender affected by
such event if such designation will avoid the need for, or reduce the amount of,
such compensation and will not, in the sole opinion of such Lender, be
disadvantageous to such Lender, except that such Lender shall have no obligation
to designate an Applicable Lending Office located in the United States of
America. Each Lender shall furnish to the Borrower a certificate setting forth
in reasonable detail the basis and amount of each request by such Lender for
compensation under clause (a) or (b) of this Section 5.01. The payment of any
such amount by the Borrower shall not preclude the Borrower from contesting such
calculation.
(e) In the event that any Lender shall determine at any time that it is
required to maintain reserves in respect of Eurocurrency Liabilities during any
period during which the principal amount of any Loan is outstanding (each such
period, for such Lender, a "LIBOR Reserve Period"), but only in respect of any
period during which any reserve shall actually be maintained by such Lender for
the Loans as a result of a reserve requirement applicable to it under Regulation
D in connection with Eurocurrency Liabilities, then such Lender shall promptly
give notice to the Borrower and the Administrative Agent of such determination,
and the Borrower shall directly pay to such Lender additional interest on the
unpaid principal amount of such Loan during such LIBOR Reserve Period at a rate
per annum which shall, during each monthly period applicable to such Loan, be
the amount by which (i) the LIBOR Rate for such monthly period divided (and
rounded upward, if necessary, to the next whole multiple of 1/100 of 1%) by a
percentage equal to 100% minus the then-stated maximum rate of all reserve
requirements (including, without limitation, any marginal, emergency,
supplemental, special or other reserves) applicable to such Lender in respect of
Eurocurrency Liabilities exceeds (ii) the LIBOR Rate for such monthly period.
Any Lender so requesting compensation shall furnish along with such
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notice a certificate setting forth in reasonable detail the cost actually
incurred to maintain such reserves and the basis for the determination of such
amount. Additional interest payable pursuant to the immediately preceding
sentence shall be paid by the Borrower at the time that it is otherwise required
to pay interest in respect of such Loan or, if later demanded by any Lender,
promptly on the next Payment Date for any principal of the Loans after such
demand. Each Lender agrees that, if it gives notice to the Borrower and the
Administrative Agent of the existence of a LIBOR Reserve Period, it shall
promptly notify the Borrower and the Administrative Agent of any termination
thereof, at which time the Borrower shall cease to be obligated to pay
additional interest to such Lender pursuant to the first sentence of this
paragraph until such time, if any, as a subsequent LIBOR Reserve Period shall
occur.
(f) Any determination or allocation made by any Lender pursuant to this
Section 5.01 shall be made by such Lender in good faith and, absent error, will
be conclusive, so long as such determination is applied to the Borrower in a
non-discriminatory manner as compared to similarly situated borrowers.
5.02 Alternate Interest Rate. Anything herein to the contrary
notwithstanding, if, on or prior to the determination of any LIBOR Rate for any
Interest Period or Default Interest Period:
(a) the Administrative Agent determines, which determination shall be
conclusive absent manifest error, that quotations of interest rates for the
relevant deposits referred to in the definition of "LIBOR Rate" in Section
1.01 hereof are not being provided in the relevant amounts or for the
relevant maturities for purposes of determining rates of interest as
provided herein; or
(b) the Majority Bank Lenders notify the Administrative Agent that (i)
the relevant rates of interest referred to in the definition of "LIBOR
Rate" in Section 1.01 hereof upon which the rate of interest for such
Interest Period or Default Interest Period is to be determined will not
adequately reflect the cost to such Lenders of making or maintaining Loans,
or maintaining any other amount hereunder not paid when due, for such
Interest Period or Default Interest Period or (ii) deposits in Dollars in
the London interbank market are not available to Lenders in the ordinary
course of business in sufficient amounts to make and/or maintain their
Loans,
then the Administrative Agent shall notify the Borrower thereof and the
following provisions shall apply:
(A) During the thirty-day period following the date of any such notice
(the "Negotiation Period"), the Administrative Agent (on behalf of the
Lenders) and the Borrower will negotiate in good faith for the purpose of
agreeing upon an alternative, mutually acceptable basis (the "Substitute
Basis") for determining the rate of interest to be applicable to Loans, and
any other amounts hereunder not paid when due, from time to time and if, at
the expiry of the Negotiation Period, the Administrative Agent (on behalf
of the Lenders) and the Borrower have agreed upon a Substitute Basis and
any required governmental approvals therefor have been obtained, the
Substitute Basis shall take effect
Commercial Banks Loan Agreement
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from such date (including such retroactive date) as the Administrative
Agent (on behalf of the Lenders) and the Borrower may in such circumstance
agree.
(B) If at the expiry of the Negotiation Period, a Substitute Basis
shall not have been agreed upon or any required governmental approvals
therefor shall not have been obtained, the Administrative Agent (with the
consent of the Majority Bank Lenders) shall notify the Borrower of the cost
to the Lenders (as reasonably determined by them) of funding and
maintaining the outstanding affected Loans, and any other amounts hereunder
not paid when due for such Interest Period or Default Interest Period and
the interest payable to the Lenders on Loans and such other amounts not
paid when due to which such Interest Period or Default Interest Period
applies shall be interest at a rate per annum equal to the cost of funding
and maintaining such Loans or such other amounts as so notified by the
Administrative Agent plus the applicable Margin plus, during any Interest
Period or any Default Interest Period, upon the occurrence and during the
Continuance of any MPA Event of Default under Section 9.01 of the Master
Participation Agreement (other than any Event of Default under Section
9.01(a) thereof relating to this Agreement), the Default Margin.
The procedures specified in (A) and (B) above shall apply to each relevant
period succeeding the first such period to which they were applied unless and
until the Administrative Agent notifies the Borrower that the condition referred
to in clause (a) of this Section 5.02 no longer exists or the Administrative
Agent (at the request of the Majority Bank Lenders) notifies the Borrower that
the condition referred to in clause (b) of this Section 5.02 no longer exists
(which notice the Lenders agree to give or cause to be given promptly following
the cessation of such condition), whereupon interest on Loans shall again be
determined in accordance with the provisions of Section 3.02, effective
commencing on the third Business Day after the date of such notice.
5.03 Compensation. Upon request of the Administrative Agent on behalf
of any Lender, the Borrower shall pay to the Administrative Agent for the
account of such Lender such amount or amounts as shall be sufficient to
indemnify it for any Funding Losses in accordance with Section 3.11 of the
Master Participation Agreement.
5.04 Mitigation. If an event or circumstance occurs that would entitle
a Lender to exercise any of the rights or benefits afforded by this Section 5,
such Lender, promptly upon becoming aware of the same, shall take all steps as
may be reasonably available to eliminate or mitigate the effects of such event
or circumstance; provided, however, that such Lender shall not be under any
obligation to take any step that, in its sole discretion, would (a) result in
its incurring additional material costs or taxes or (b) otherwise be
disadvantageous to such Lender; provided, further, that the Borrower shall
reimburse any such Lender for all reasonable and documented costs and taxes
incurred pursuant to this Section 5.04.
5.05 Applicable Lending Offices. A Lender may change its Applicable
Lending Office for any Loan by written notice to the Administrative Agent, the
Trustee and the Borrower and such notice shall be effective for purposes of this
Agreement as of the date specified therein.
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Section 6. Conditions Precedent.
6.01 Initial Loans. The obligation of each Lender to make its initial
Loan hereunder is subject to Section 3.10 of the Master Participation Agreement
and the satisfaction (or waiver by each Lender) of any conditions set forth in
Section 5.01 of the Master Participation Agreement.
6.02 Additional Conditions. The obligation of each Lender to make any
Loan hereunder (excluding its initial Tranche A Loan which is subject to
conditions described in Section 6.01 above) is subject to the satisfaction (or
waiver by it) of the following conditions:
(a) Satisfaction of Common Conditions Precedent. The common conditions
precedent set forth in Section 5.02 of the Master Participation Agreement
shall have been satisfied (or waived as provided therein); and
(b) Suspension. The obligation of any Senior Facility Lender shall not
have been deemed to be suspended pursuant to Section 3.10 of the Master
Participation Agreement.
Section 7. Representations and Warranties. The Borrower has given
certain representations and warranties for the benefit of the Lenders in Article
VI of the Master Participation Agreement. The rights of the Lenders in respect
of such representations and warranties are set forth in the Master Participation
Agreement and the Master Security Agreement.
Section 8. Covenants. The Borrower has given covenants and agreements
set forth in Article VII of the Master Participation Agreement. The rights of
the Lenders in respect of such covenants and agreement are set forth in the
Master Participation Agreement and the Master Security Agreement.
Section 9. Events of Default; Remedies.
9.01 Events of Default. Subject to Section 9.02, each of the MPA
Events of Default set forth in Section 9.01 of the Master Participation
Agreement is hereby incorporated by reference in this Agreement as if fully set
forth herein, in accordance with their terms, unless waived in accordance with
the Master Participation Agreement.
9.02 Remedies. Upon the occurrence and Continuance of an MPA Event of
Default as provided in Section 9.01 hereof, the Lenders shall have each of the
rights and remedies provided in the Master Participation Agreement and the
Master Security Agreement exercisable only pursuant to and in accordance with
the terms thereof.
Commercial Banks Loan Agreement
-16-
Section 10. The Administrative Agent.
10.01 Appointment, Powers and Immunities.
(a) Each Lender hereby irrevocably appoints and authorizes the
Administrative Agent to act as its agent hereunder, with such rights,
authorities, discretions and powers as are specifically delegated to the
Administrative Agent by the terms of this Agreement, together with such other
powers as are reasonably incidental thereto, and each Lender authorizes and
instructs the Administrative Agent to execute and deliver each of the Master
Participation Agreement, the Completion Guarantee, the Transfer Restrictions
Agreement and any other Financing Document to which such Lender and/or the
Administrative Agent is a party and each such Lender agrees to be bound by the
terms and conditions of each such agreement as if it had executed and delivered
such agreement for and in its own name.
(b) Each Lender hereby agrees and acknowledges that the Administrative
Agent shall act for and on behalf of the Lenders hereunder for purposes of each
of the Master Participation Agreement, the Completion Guarantee and the Transfer
Restrictions Agreement, and each Lender hereby authorizes such action by the
Administrative Agent on its behalf in accordance with its appointment hereunder.
Notwithstanding the foregoing, the Administrative Agent shall promptly upon
request of any Lender deliver any request, notice or communication permitted to
be given by any Senior Facility Lender under or pursuant to the Master
Participation Agreement, the Completion Guarantee and the Transfer Restrictions
Agreement.
(c) The Administrative Agent (which term as used in this sentence and in
Section 10.05 shall include reference to its Affiliates and its Affiliates'
officers, directors, employees and agents) shall not: (i) have any duties or
responsibilities except those expressly set forth in this Agreement, or by
reason of this Agreement be a trustee for any Lender, (ii) be responsible to the
Lenders for any recitals, statements, representations or warranties contained in
this Agreement, or in any certificate or other document referred to or provided
for in, or received by any of them under, this Agreement, or for the value,
validity, effectiveness, genuineness, enforceability or sufficiency of this
Agreement, any Promissory Note or any other document referred to or provided for
herein or for any failure by the Borrower or any other Person to perform any of
its obligations hereunder or thereunder, (iii) be required to initiate or
conduct any litigation or collection proceedings hereunder or (iv) be
responsible for any action taken or omitted to be taken by it hereunder or under
any other document or instrument referred to or provided for herein or in
connection herewith, except for its own gross negligence or willful misconduct.
(d) The Administrative Agent may employ agents and attorneys-in-fact, and
the Administrative Agent shall not be responsible for the negligence or
misconduct of any such agents or attorneys-in-fact selected by it in good faith.
The Administrative Agent may deem and treat the payee of any Promissory Note as
the holder thereof for all purposes hereof unless and until a notice of the
assignment or transfer thereof shall have been filed with the Administrative
Agent.
(e) Any bank serving as Administrative Agent hereunder shall have the same
rights and powers in its capacity as a Lender as any other Lender and may
exercise the same as though it were not the Administrative Agent, and such bank
and its Affiliates may accept deposits from,
Commercial Banks Loan Agreement
-17-
lend money to and generally engage in any kind of business with the Borrower or
Affiliate thereof as if it were not the Administrative Agent hereunder.
10.02 Reliance by Administrative Agent. The Administrative Agent shall
be entitled to rely upon, and shall not incur any liability for relying upon,
any certification, notice, request, consent, statement, instrument, document or
other communication (including any thereof by telephone, telecopy, telex,
telegram or cable) believed by it to be genuine and correct and to have been
signed or sent by or on behalf of the proper Person or Persons, and upon advice
and statements of legal counsel, independent accountants and other experts
selected by the Administrative Agent. As to any matters not expressly provided
for by this Agreement, the Administrative Agent shall in all cases be fully
protected in acting, or in refraining from acting, hereunder in accordance with
instructions given by the Majority Bank Lenders, and such instructions of the
Majority Bank Lenders and any action taken or failure to act pursuant thereto
shall be binding on all of the Lenders. The Administrative Agent shall not be
responsible for or have any duty to ascertain or inquire into (a) any statement,
warranty or representation made in or in connection with this Agreement, any
other Financing Document or the Sulfide Project, (b) the contents of any
certificate, report or other document delivered hereunder or in connection
herewith, (c) the performance or observance of any of the covenants, agreements
or other terms or conditions set forth herein, (d) the validity, enforceability,
effectiveness or genuineness of this Agreement or any other agreement,
instrument or document, or (e) the satisfaction of any condition set forth in
Section 6 or elsewhere herein, other than to confirm receipt of items required
to be delivered to the Administrative Agent.
10.03 Defaults. The Administrative Agent shall not be deemed to have
knowledge or notice of the occurrence of an MPA Default (other than the
non-payment of principal of or interest on Loans or of commitment fees) unless
the Administrative Agent has received notice from a Lender or the Borrower
specifying such MPA Default and stating that such notice is a "Notice of
Default". In the event that the Administrative Agent receives such a notice of
the occurrence of any MPA Default, the Administrative Agent shall give prompt
notice thereof to the Lenders and the Borrower (and shall give each Lender
prompt notice of each such non-payment).
10.04 Indemnification. The Lenders agree to indemnify the
Administrative Agent (to the extent not reimbursed under Section 12.21 of the
Master Participation Agreement, but without limiting the obligations of the
Borrower under said Section 12.21 of the Master Participation Agreement) ratably
in accordance with the aggregate principal amount of the Loans held by the
Lenders (or, if no Loans are at the time outstanding, ratably in accordance with
their respective Commitments), for any and all liabilities, obligations, losses,
claims, damages, penalties, actions, judgments, settlements, suits, costs,
expenses or disbursements of any kind and nature whatsoever that may be imposed
on, incurred by or asserted against (including by any Lender) the Administrative
Agent arising out of or by reason of any investigation in or in any way relating
to or arising out of this Agreement or any other documents contemplated by or
referred to herein or the transactions contemplated hereby (including, without
limitation, the costs and expenses that the Borrower is obligated to pay under
Section 12.21 of the Master Participation Agreement but excluding, unless an MPA
Event of Default has occurred and is continuing, normal administrative costs and
expenses incident to the performance of the Administrative Agent's agency duties
hereunder) or the enforcement of any of the terms hereof
Commercial Banks Loan Agreement
-18-
or of any such other documents; provided, however, that no Lender shall be
liable for any of the foregoing to the extent they arise from the gross
negligence or willful misconduct of the Administrative Agent.
10.05 Non-Reliance on Administrative Agent and Other Lenders. Each
Lender agrees that it has, independently and without reliance on the
Administrative Agent or any other Lender, and based on such documents and
information as it has deemed appropriate, made its own credit analysis of the
Borrower and its respective Affiliates and its own decision to enter into this
Agreement and that it will, independently and without reliance upon the
Administrative Agent or any other Lender, and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
analysis and decisions in taking or not taking action under this Agreement. The
Administrative Agent shall not be required to keep itself informed as to the
performance or observance by the Borrower of this Agreement or any other
document referred to or provided for herein or to inspect the properties or
books of the Borrower. Except for notices, reports and other documents and
information expressly required to be furnished to the Lenders by the
Administrative Agent hereunder (as to which the Administrative Agent only shall
have the duty to forward what it has received), the Administrative Agent shall
not have any duty or responsibility to provide any Lender with any credit or
other information concerning the affairs, financial condition or business of the
Borrower or any of its respective Affiliates that may come into its possession.
10.06 Failure to Act. Except for action expressly required of the
Administrative Agent hereunder, the Administrative Agent shall in all cases be
fully justified in failing or refusing to act hereunder unless it shall receive
further assurances to its satisfaction from the Lenders of their indemnification
obligations under Section 10.04 against any and all liability and expense that
may be incurred by the Administrative Agent by reason of taking or continuing to
take any such action.
10.07 Resignation or Removal of Administrative Agent. The
Administrative Agent, subject to the appointment of a successor as provided in
this Section 10.07, may resign at any time by notifying the Lenders and the
Borrower. The Administrative Agent may be removed as agent hereunder upon 30
days' notice by an instrument in writing signed by the Majority Bank Lenders and
the Borrower. Upon any such resignation or removal, the Majority Bank Lenders
shall have the right, with the approval of the Borrower not to be unreasonably
withheld, to appoint a successor Administrative Agent. No removal or resignation
of a Administrative Agent or appointment of a successor Administrative Agent
shall be effective until (a) the appointment of a successor is accepted and (b)
solely in the case of a removal all indemnity and compensation required under
the Financing Documents have been paid or provided for. If no successor shall
have been so appointed by Majority Bank Lenders and shall have accepted such
appointment within 30 days after the retiring Administrative Agent gives notice
of its resignation, then the retiring Administrative Agent may, on behalf of the
Lenders, appoint a successor Administrative Agent with the approval of the
Borrower not to be unreasonably withheld which shall be a bank with an office in
New York, New York or London, or an affiliate of any such bank. Upon the
acceptance of its appointment as the Administrative Agent hereunder by a
successor Administrative Agent, such successor Administrative Agent shall
succeed to and become vested with all the rights, powers, privileges and duties
of the retiring Administrative Agent and the retiring Administrative Agent shall
be discharged from its duties and obligations hereunder. The
Commercial Banks Loan Agreement
-19-
fees payable by the Borrower to a successor Administrative Agent shall be the
same as those payable to its predecessor unless otherwise agreed between the
Borrower and such successor. After a Administrative Agent's resignation
hereunder, the provisions of this Section 10 shall continue in effect for its
benefit in respect of any actions taken or omitted to be taken by it while it
was acting as the Administrative Agent.
10.08 Voting. Except as otherwise specified in the Master
Participation Agreement, in each instance that the Lenders are required to vote
hereunder, a vote shall be taken among the Lenders within the period of time
specified by the Administrative Agent.
10.09 Administrative Agent Notices. The Administrative Agent agrees to
promptly furnish to each Lender a copy of each written communication (including
financial information and project reports) received by it from the Parent
Companies, the Borrower or the Trustee expressly relating to, and any amendment
or waiver of any of the provisions of, this Agreement, the Master Participation
Agreement, the Transfer Restrictions Agreement, the Security Documents, the
other Financing Documents, the Project Documents and the transactions
contemplated hereby and thereby, or from any Senior Lender pursuant to Section
10.02 of the Master Participation Agreement. In addition, the Administrative
Agent agrees to promptly advise each Lender of any material action taken, or any
action proposed by the Lenders to be taken that is not taken, by the Senior
Lenders at any meeting of Senior Lenders.
Section 11. Miscellaneous.
11.01 Waiver. Except as expressly provided herein, no failure on the
part of the Administrative Agent or any Lender to exercise and no delay in
exercising, and no course of dealing with respect to, any right, power or
privilege under this Agreement or any Promissory Note shall operate as a waiver
thereof, nor shall any single or partial exercise of any right, power or
privilege under this Agreement or any Promissory Note preclude any other or
further exercise thereof or the exercise of any other right, power or privilege.
The remedies provided herein are cumulative and not exclusive of any remedies
provided by law.
11.02 Notices.
(a) Except as otherwise expressly provided herein, all notices and other
communications provided for hereunder shall be (i) in writing (including
telecopier) and (ii) telecopied or sent by overnight courier (if for inland
delivery) or international courier (if for overseas delivery) to a party hereto
at its address and contact number specified in the signature pages hereto, or at
such other address and contact number as is designated by such party in a
written notice to the other parties hereto.
(b) All such notices and communications shall be effective (i) if sent by
telecopier, when sent (on receipt of written or oral confirmation of receipt)
and (ii) if sent by courier, (A) one day after deposit with an overnight courier
if for inland delivery and (B) three days after deposit with an international
courier if for overseas delivery. Notice of any address or facsimile number
change shall be effective only upon receipt.
(c) The Borrower agrees that the Administrative Agent may make any notices
and communications received hereunder (the "Communications") available to the
Lenders in an
Commercial Banks Loan Agreement
-20-
electronic/soft medium by posting the Communications on Intralinks or a
substantially similar electronic transmission system (the "Platform"). THE
PLATFORM IS PROVIDED "AS IS" AND "AS AVAILABLE". THE AGENT PARTIES (AS DEFINED
BELOW) DO NOT WARRANT THE ACCURACY OR COMPLETENESS OF THE COMMUNICATIONS, OR THE
ADEQUACY OF THE PLATFORM AND EXPRESSLY DISCLAIM LIABILITY FOR ERRORS OR
OMISSIONS IN THE COMMUNICATIONS. NO WARRANTY OF ANY KIND, EXPRESS, IMPLIED OR
STATUTORY, INCLUDING, WITHOUT LIMITATION, ANY WARRANTY OF MERCHANTABILITY,
FITNESS FOR A PARTICULAR PURPOSE, NON-INFRINGEMENT OF THIRD PARTY RIGHTS OR
FREEDOM FROM VIRUSES OR OTHER CODE DEFECTS, IS MADE BY THE AGENT PARTIES IN
CONNECTION WITH THE COMMUNICATIONS OR THE PLATFORM. IN NO EVENT SHALL THE
ADMINISTRATIVE AGENT OR ANY OF ITS AFFILIATES OR ANY OF THEIR RESPECTIVE
OFFICERS, DIRECTORS, EMPLOYEES, AGENTS, ADVISORS OR REPRESENTATIVES
(COLLECTIVELY, THE "AGENT PARTIES") HAVE ANY LIABILITY TO ANY CREDIT PARTY, ANY
LENDER OR ANY OTHER PERSON OR ENTITY FOR DAMAGES OF ANY KIND, INCLUDING, WITHOUT
LIMITATION, DIRECT OR INDIRECT, SPECIAL, INCIDENTAL OR CONSEQUENTIAL DAMAGES,
LOSSES OR EXPENSES (WHETHER IN TORT, CONTRACT OR OTHERWISE) ARISING OUT OF SUCH
CREDIT PARTY'S OR THE ADMINISTRATIVE AGENT'S TRANSMISSION OF COMMUNICATIONS
THROUGH THE INTERNET, EXCEPT TO THE EXTENT THE LIABILITY OF ANY AGENT PARTY IS
FOUND IN A FINAL NON-APPEALABLE JUDGMENT BY A COURT OF COMPETENT JURISDICTION TO
HAVE RESULTED PRIMARILY FROM SUCH AGENT PARTY'S GROSS NEGLIGENCE OR WILLFUL
MISCONDUCT.
(d) Each Lender agrees that notice to it (as provided in the next sentence)
specifying that the Communications have been posted to the Platform shall
constitute effective delivery of the Communications to such Lender for purposes
of the Financing Documents. Each Lender agrees (i) to provide to the
Administrative Agent in writing (including by electronic communication),
promptly after the date of this Agreement, an e-mail address to which the
foregoing notice may be sent by electronic transmission and (ii) that the
foregoing notice may be sent to such e-mail address.
(e) Nothing herein shall prejudice the right of the Administrative Agent or
any Lender to give any notice or other communication pursuant to any Financing
Document in any other manner specified in such Financing Document.
11.03 Amendments, Etc.
(a) Neither this Agreement nor any terms hereof may be amended,
supplemented or modified other than pursuant to a written instrument executed by
(i) Borrower, (ii) the Administrative Agent, acting in accordance with clause
(b) of this Section 11.03 and Section 10.01 of the Master Participation
Agreement and (iii) with respect to any amendment, supplement or modification
that modifies any provision of this Agreement in a manner that adversely affects
any rights of the Administrative Agent hereunder or enlarges its duties
hereunder, the Administrative Agent.
Commercial Banks Loan Agreement
-21-
(b) No amendment, modification, supplement or waiver of any provision of
this Agreement shall, unless by an instrument signed or consented to by all of
the Lenders: (i) increase, or extend the term of the Tranche A Commitments or
Tranche B Commitments, or extend the term or waive any requirement for the
reduction or termination of the Tranche A Commitments or Tranche B Commitments,
(ii) extend the date fixed for the payment of principal of or interest on any
Loan or any commitment or other fee hereunder or under the Promissory Notes,
(iii) reduce the amount of any such payment of principal, (iv) reduce the rate
at which interest is payable thereon or any commitment or other fee is payable
hereunder, or alter the basis for calculating any other obligations, (v) alter
the rights or obligations of the Borrower under Section 2.08, 2.09, 2.10 or
2.11, (vi) alter the terms of this Section 11.03 or Section 4.02, (vii) modify
the definition of the term "Majority Bank Lenders" or modify in any other manner
the number or percentage of the Lenders required to make any determinations or
waive any rights hereunder or to modify any provision hereof or (viii) waive any
of the conditions precedent set forth in Section 6.
(c) No waiver by any party hereto of any of its rights, powers and
privileges under this Agreement shall be effective other than pursuant to a
written instrument executed by the Party waiving such right, power or privilege,
except that a waiver of rights, powers and privileges by the Senior Facility
Lenders can be executed by the Administrative Agent acting in accordance with
Section 10.01 of the Master Participation Agreement.
(d) Any modification, supplement or waiver shall be for such period and
shall be subject to such conditions as shall be specified in the instrument
effecting the same and any such waiver shall be effective only in the specific
instance and for the purpose for which given.
11.04 Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
permitted assigns.
11.05 Assignments and Participations.
(a) The Borrower may not assign any of its rights or obligations hereunder
or under the Promissory Notes without the prior written consent of all of the
Lenders and the Administrative Agent (and any attempted assignment or transfer
by the Borrower without such consent shall be null and void).
(b) Each of the Lenders may assign any and all of its rights and
obligations hereunder only pursuant to Section 12.13 of the Master Participation
Agreement. Upon execution and delivery by the assignee to the Borrower and the
Administrative Agent and the Administrative Agent of an assignment and
acceptance agreement substantially in the form of Exhibit C hereto (such
agreement, an "Assignment and Acceptance"), pursuant to which such assignee
agrees to become a "Lender" hereunder (if not already a Lender) having the
Commitment and Loans specified in such instrument, the assignee shall have, to
the extent of such assignment, the rights, obligations and benefits of a Lender
hereunder holding the Commitment and Loans (or portion(s) thereof) assigned to
it (in addition to the Commitment and Loans, if any, theretofore held by such
assignee) and the assigning Lender shall, to the extent of such assignment, be
released from the Commitment and Loans (or portion(s) thereof) so assigned (and,
in the case of an Assignment and Acceptance covering all of the assigning
Lender's rights and obligations under this
Commercial Banks Loan Agreement
-22-
Agreement, such Lender shall cease to be a party hereto but shall continue to be
entitled to, for periods during which it held the Loans, the benefits of
Sections 5.01 and 11.06 hereof and Sections 3.09 and 12.21 of the Master
Participation Agreement).
(c) Each Lender may sell or agree to sell to one or more commercial banks
or lending institutions (a "Participant") a participation in all or any part of
its Loans, its Promissory Notes or in its Commitments; provided that no
Participant shall have any rights or benefits under this Agreement, any
Promissory Note or any other Financing Documents. All amounts payable by the
Borrower to any Lender under Section 5 in respect of Loans held by it, and its
Commitment, shall be determined as if such Lender had not sold or agreed to sell
any participations in such Loans and Commitment, and as if such Lender were
funding each of such Loan and Commitment in the same way that it is funding the
portion of such Loan and Commitment in which no participations have been sold.
(d) A Lender or the Administrative Agent, as the case may be, may furnish
any information concerning the Borrower in the possession of such Lender or the
Administrative Agent from time to time to assignees and Participants (including
prospective assignees and Participants) subject to the confidentiality
provisions set forth in Section 12.10 of the Master Participation Agreement.
11.06 Survival/Reinstatement. The obligations of the Borrower under
Section 5 and the obligations of the Lenders under Section 10.04 shall survive
the repayment of the Loans and the termination of the Commitments. This
Agreement shall continue to be effective or be reinstated, as the case may be,
if at any time payment and performance of the Borrower's obligations hereunder,
or any part thereof, is, pursuant to applicable law, rescinded or reduced in
amount, or must otherwise be restored or returned by the Administrative Agent or
any Lender. In the event that any payment or any part thereof is so rescinded,
reduced, restored or returned, such obligations shall be reinstated and deemed
reduced only by such amount paid and not so rescinded, restored or returned.
11.07 No Immunity. To the extent that any party hereto has or
hereafter may acquire any immunity from jurisdiction of any court or from any
process (whether through service of notice, attachment prior to judgment,
attachment in aid of execution, execution, sovereign immunity or otherwise) with
respect to itself or its property, it irrevocably waives such immunity, to the
fullest extent permitted by law, in respect of its obligations under this
Agreement and the Promissory Notes.
11.08 Counterparts. This Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one and the same
instrument and any of the parties hereto may execute this Agreement by signing
any such counterpart.
11.09 GOVERNING LAW AND SUBMISSION TO JURISDICTION. THIS AGREEMENT
SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
NEW YORK. THE PROVISIONS OF SECTION 12.16 OF THE MASTER PARTICIPATION AGREEMENT
SHALL BE DEEMED INCORPORATED HEREIN MUTATIS MUTANDIS. THE BORROWER CONFIRMS ITS
APPOINTMENT OF
Commercial Banks Loan Agreement
-23-
CT CORPORATION AS AGENT FOR SERVICE OF PROCESS, PURSUANT TO SECTION 12.16(B) OF
THE MASTER PARTICIPATION AGREEMENT.
11.10 WAIVER OF JURY TRIAL. EACH OF THE BORROWER AND THE LENDERS
HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL
RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING
OUT OF OR RELATING TO THIS AGREEMENT, THE NOTES OR THE TRANSACTIONS CONTEMPLATED
HEREBY WHETHER BASED ON CONTRACT, TORT OR OTHER THEORY.
11.11 Judgment Currency. This is an international loan transaction in
which the specification of Dollars and payment in New York, New York, United
States of America is of the essence, and Dollars shall be the currency of
account in all events. The provisions of Section 12.06 of the Master
Participation Agreement shall be deemed incorporated herein in its entirety.
11.12 Severability. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
11.13 English Language. This Agreement is made in the English
language. Any translation of this Agreement shall have no legal validity.
[The remainder of this page is intentionally left blank.]
Commercial Banks Loan Agreement
S-1
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered as of the day and year first above written.
The Borrower
SOCIEDAD MINERA CERRO VERDE S.A.A.
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
Address for: Sociedad Minera Cerro Verde S.A.A.
Notices
c/o Asiento Xxxxxx Cerro Verde
Uchumayo (Arequipa/Peru), Casilla
Postal #299
Shipping: Xx. Xxxxxxx Xxxxxx #000
Xxxxxxx, Xxxxxxxx, Xxxxxxxx of Peru
Attention: General Manager
Fax No.: (054) 283-376
Telephone No.: (054) 283-363
With a copy to: PDC, at
Xxxxxx Dodge Tower
0 Xxxxx Xxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxx 00000
U.S.A
Attention: Treasurer
Fax No: (000) 000-0000
Telephone No: (000) 000-0000
Commercial Banks Loan Agreement
S-2
The Administrative Agent
CALYON NEW YORK BRANCH,
as Administrative Agent
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
Address for notices: CALYON New York Branch
1301 Avenue of the Americas
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxx Xxxxxxxxx
Fax No.: 000.000.0000
Telephone No.: 000.000.0000
Commercial Banks Loan Agreement
S-3
The Lenders
Commitment
Tranche A: US$22,500,000 CALYON NEW YORK BRANCH,
Tranche B: US$22,500,000 as Lender
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
Lending Office: New York Branch
Address for notices: CALYON New York Branch
1301 Avenue of the Americas
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxx Xxxxxxxxx
Fax No.: 000.000.0000
Telephone No.: 000.000.0000
Commercial Banks Loan Agreement
S-4
Commitment
Tranche A: US$22,500,000 MIZUHO CORPORATE BANK, LTD.,
Tranche B: US$22,500,000 as Lender
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
Lending Office: New York Branch
Address for Notices: 0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx Xxxxxxxx
Fax No.: 000.000.0000
Telephone No.: 000.000.0000
Commercial Banks Loan Agreement
S-5
Commitment
Tranche A: US$22,500,000 THE BANK OF NOVA SCOTIA,
Tranche B: US$22,500,000 as Lender
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
Lending Office: Toronto
Address for Notices: Scotia Capital
00 Xxxx Xxxxxx Xxxx, 00xx Xxxxx
P.O. Box 4085, Station A
Corporate Banking - Mining
Xxxxxxx, Xxxxxxx, Xxxxxx
X0X 0X0
Attention: Xxxxxxx X. Xxxx
Xxxxxxxxx Xxxxxxxxxxx
Fax No.: 000.000.0000
Telephone No.: 000.000.0000/0006
Commercial Banks Loan Agreement
S-6
Commitment
Tranche A: US$22,500,000 THE ROYAL BANK OF SCOTLAND PLC,
Tranche B: US$22,500,000 as Lender
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
Lending Office: The Royal Bank of Scotland plc
Structured Finance, Xxxxx 0
000 Xxxxxxxxxxx
Xxxxxx XX0X 0XX
Xxxxxx Xxxxxxx
Address for notices: The Royal Bank of Scotland plc
Structured Finance, Xxxxx 0
000 Xxxxxxxxxxx
Xxxxxx XX0X 0XX
Xxxxxx Xxxxxxx
Attention: Xxxxxx Xxxxxxx
Fax No.: xx00 00 0000 0000
Telephone No.: xx00 00 0000 0000
Commercial Banks Loan Agreement
Appendix 1
to Loan Agreement
FORM OF NOTICE OF BORROWING
[Date](12)
TO: [________________________________________] (the "Administrative Agent")
FROM: Sociedad Minera Cerro Verde S.A.A. (the "Borrower")
RE: Notice of Borrowing pursuant to Section 2.02 of the Commercial Banks Loan
Agreement dated as of September 30, 2005 between the Borrower, CALYON New
York Branch, as Administrative Agent and the Lenders party thereto (the
"Loan Agreement")
The Borrower hereby requests disbursement under the Loan Agreement to the
Onshore Dollars Account under the Master Security Agreement on ________, 20__
(the "Disbursement Date") in an aggregate amount equal to [US$___________ as a
Tranche A Loan] and/or [US$________ as a Tranche B Loan].(13)
Disburse to: [name of bank in New York, account number]
The Borrower hereby represents and warrants to the Lenders and the
Administrative Agent as of the date hereof that:
1. The requested disbursement date is a Business Day falling on or
before the [Tranche A Commitment Termination Date] and/or [the Tranche B
Commitment Termination Date].(14)
2. The requested disbursement is pro rata with disbursements requested
under the Senior Loan Documents and is calculated in accordance with
Section [ ] of the Master Participation Agreement.
3. The disbursements requested hereby have been or are scheduled to be
utilized in accordance with Section 7.04 of the Master Participation
Agreement.
4. The disbursements of Senior Loans made to date (if any) have been
or are being utilized for purposes of the Sulfide Project in accordance
with Section 7.04 of the Master Participation Agreement.
----------
(12) [To be dated no later than 15 Business Days before the date for the Loan to
which this Notice of Borrowing relates.]
(13) [To be inserted as applicable.]
(14) [To be inserted as applicable.]
Appendix 1 to Commercial Banks Loan Agreement
-2-
5. No MPA Default or MPA Event of Default has occurred and is
Continuing.
6. The conditions contained in [Section 5.01 [initial disbursement
only] and] Section 5.02 of the Master Participation Agreement 15 and
[Section 6.01 [initial disbursement only] and] Section 6.02 of the
Commercial Banks Loan Agreement have been satisfied (or are expected to be
satisfied on the date of disbursement, as applicable).
The Borrower agrees that, if prior to its receipt of the disbursement
requested hereby it determines that any matter certified by it herein will not
be true and correct as of the time of such disbursement, it will promptly so
notify the Administrative Agent. Except to the extent set forth in any such
notice, each matter certified by the Borrower herein shall be deemed once again
to be certified as true and correct as of the time of such disbursement as if
then made.
All defined terms used herein and not defined herein have the meanings
assigned to them in the Loan Agreement.
SOCIEDAD MINERA CERRO VERDE S.A.A.
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
----------
(15) [To be inserted solely in connection with the initial disbursement of
Loans.]
Appendix 1 to Commercial Banks Loan Agreement
Exhibit A
to Loan Agreement
[FORM OF PROMISSORY NOTE (XXXXXX)]
XXXXXX NO NEGOCIABLE
Place and date of issuance: Lima Peru, __
Amount US$__
FOR VALUE RECEIVED, the undersigned, Sociedad Minera Cerro Verde, S.A.A. (the
"Borrower"), a sociedad anonima abierta listed on the Lima Stock Exchange and
duly incorporated under the laws of the Republic of Peru, registered with the
Public Registry of Companies of Lima, under File No. __, and whose principal
office is at __, Republic of Peru, by this non negotiable (no negociable)
promissory note ("xxxxxx") (the "Promissory Note"), except as permitted in
Section 12.13 (b) of the MPA, unconditionally promises to pay to the order of __
(the "Holder"), against presentment of this note, the sum of __ dollars of the
United States of America (US$__) (the "Principal Amount"), payable on the dates
set forth in the following payment schedule (each date, a "Payment Date") and in
the amounts indicated next to the applicable Payment Date, provided that the
principal amount to be paid to the Holder on a Payment Date shall not exceed the
principal amount hereof outstanding immediately prior to such Payment Date.
PRINCIPAL AMOUNT
PAYMENT DATE TO BE REPAID
-------------------------- ----------------
First Payment Date __
6th month after the First __
Payment Date
12th month after the First __
Payment Date
18th month after the First __
Payment Date
24th month after the First __
Payment Date
30th month after the First __
Payment Date
36th month after the First __
Payment Date
42nd month after the First __
Payment Date
48th month after the First __
Payment Date
54th month after the First __
Payment Date
60th month after the First __
Payment Date
66th month after the First __
Payment Date
72nd month after the First __
Payment Date
78th month after the First __
Payment Date
84th month after the First __
Payment Date
90th month after the First __
Payment Date
The Borrower also promises to pay to the Holder interest on the outstanding
and unpaid principal amount of this Promissory Note, from the date hereof until
the last Payment Date, at an annual rate of the Base Rate plus the Applicable
Margin (the "Interest Rate"), such interest to accrue semiannually on the
outstanding principal amount during the Interest Period. Interest shall be
payable in arrears on each Interest Payment Date. All computations of interest
shall be
Exhibit A to Commercial Banks Loan Agreement
-2-
made on the basis of a year of 360 days and actual days elapsed (including the
first day but excluding the last day) occurring in the period for which such
interest are payable.
If any payment to be made hereunder is due on a day which is not a Business
Day, such payment shall be made on the immediately succeeding Business Day.
If the principal amount of this Promissory Note is not paid in full when
due, then, without prejudice to any other rights or remedies of the Holder, such
principal amount remaining unpaid shall carry default interest for such period
of time within each related Default Interest Period during which such amount
shall remain due and unpaid at an annual rate equal to the Principal Default
Rate. If any other amount payable hereunder is not paid in full when due, then,
without prejudice to any other rights or remedies of the Holder, such amount
remaining unpaid shall carry default interest for such period of time within
each related Default Interest Period during which such amount shall remain due
and unpaid at an annual rate equal to the Other Amounts Default Rate.
The Borrower may prepay on any Payment Date upon at least 60 days' prior
notice, all or part of the outstanding principal amount hereof, so long as, in
connection with a voluntary partial prepayment, the aggregate amount of any such
voluntary partial prepayment equals at least __(16) dollars of the United States
of America (US$__).
Borrower shall reimburse to the Holder its funding losses or expenses (if
any) related to such prepayment, if Borrower elects to voluntarily prepay all or
part of the outstanding principal amount hereof on a date other that an Interest
Payment Date or a Payment Date, as the case may be. No premium or penalty shall
be payable in connection with other prepayments.
Each prepayment of the outstanding principal amount hereof shall (unless
such prepayment repays in full such outstanding principal amount) be applied to
prepay ratably each outstanding installment of principal hereof remaining to be
paid as of the date of such prepayment.
For purposes of this Promissory Note, the following terms shall have the
following meanings:
"Administrative Agent" means CALYON New York Branch in its capacity of
administrative agent for the Holder according to the MPA.
"Applicable Margin" means [1.20% per annum](17).
----------
(16) Insert pro rata amount of the minimum prepayment amount applicable to the
Advance(s) evidenced by the Promissory Note.
(17) On the closing date include the first applicable margin. On the Payment
Date immediately following the Completion Release Date, the xxxxxx shall be
substituted to include the complete "Margin" language.
Exhibit A to Commercial Banks Loan Agreement
-3-
"Base Rate" means, with respect to any Interest Period or Default Interest
Period, the interest rate per annum for deposits in dollars of the United States
of America, if any, for a period equal to the relevant interest period which
appears on page 3750 on the Moneyline Telerate Inc. (or such other page or pages
as shall replace that page or pages for the purpose of displaying offered rates
of leading banks for London interbank deposits in dollars) at or about 11:00
a.m. London time on the second Eurodollar Business Day before and for value on
the first day of the Interest Period or Default Interest Period. If such rate
does not appear on page 3750 on the Moneyline Telerate Inc. or such other page
as shall replace that page for the purpose of displaying offered rates of
leading banks for London interbank deposits in Dollars, the Base Rate shall be
the interest per annum equal to the average (rounded upward to the nearest fifth
decimal place, if such average is not such a decimal) of the interest rates per
annum (as provided to the Administrative Agent) at which deposits in dollars of
the United States are offered by the principal office of each of the Reference
Banks in London, England to prime banks in the London interbank market at or
about 11:00 a.m. (London time) (or as soon thereafter as practicable) two
Eurodollar Business Days before the first day of the Interest Period or Default
Interest Period in an amount substantially equal to each such Reference Bank's
Loan comprising part of such borrowing to be outstanding during such interest
period and for a period equal to (or if there is no equal, then most comparable)
such interest period. The Base Rate for any interest period shall be determined
by the Administrative Agent on the basis of applicable rates furnished to and
received by such agent from the Reference Banks two Business Days before the
first day of such interest period. If any of the Reference Banks shall be unable
or otherwise fails to provide a rate for the purposes of determining the Base
Rate as hereinabove provided, then the Base Rate shall be determined on the
basis of the rate or rates quoted by the remaining Reference Banks.
"Business Day" means a day on which banks are generally open for business
in New York, New York, United States, Tokyo, Japan, Frankfurt am Main, Germany,
London, England and Lima, Peru.
"Collateral Agent" means Citibank del Peru S.A. in its capacity of onshore
collateral agent for the Holder according to the MSA.
"Commercial Production Start-up Date" means the date as of which the
Borrower, in its judgment, has achieved start of commercial production as
notified by the Borrower to the Administrative Agent.
"Concentrate" means the copper concentrate to be produced by Borrower
pursuant to the Sulfide Project.
"Default Interest Period" means each successive period (not in excess of
six months) as the Administrative Agent shall choose (with the consent of the
Majority Bank Lenders), during which any amount payable by the Borrower
hereunder is in default. The first such period shall commence as of the date on
which such amount in default becomes due, and each such succeeding period shall
commence immediately upon the expiry of the immediately preceding period;
provided, however, that in the absence of, or pending consent of the Majority
Bank Lenders, each Default Interest Period has a duration of one month.
Exhibit A to Commercial Banks Loan Agreement
-4-
"Eurodollar Business Day" means any day on which banks are generally open
for business in London, England.
"First Payment Date" means the earlier of (i) the March 20 or the September
20 next occurring after the Commercial Production Start-up Date, and (ii) March
20, 2008.
"Government Rule" means any statute, law, regulation, ordinance, rule,
judgment, decree, injunction, order, writ, decision, directive, environmental
guideline, policy, restriction or rule of common law, requirement of, or other
mandatory governmental restriction or any similar form of decision of or
determination by, any Governmental Authority, and authoritative interpretations
thereof, whether now or hereafter in effect, applicable from time to time to the
relevant person, property or transaction.
"Governmental Authority" means any national, state, county, city, town,
village, municipal or other local governmental department, commission, board,
bureau, agency, authority or instrumentality of any nation that affects or may
affect the transactions contemplated hereby or any political subdivision
thereof, and any person exercising executive, legislative, judicial, regulatory
or administrative functions of or pertaining to any of the foregoing entities,
including, without limitation, all commissions, boards, bureaus, arbitrators and
arbitration panels, and any authority or other person controlled by any of the
foregoing.
"Interest Payment Date" means, prior to the First Payment Date, each
September 20 and March 20 and, starting on the First Payment Date, each Payment
Date.
"Interest Period" means any of the following periods:
(i) on or prior to the First Payment Date, each period commencing on
an Interest Payment Date (or with respect to the first Interest Period on
the date hereof) and ending on the day immediately preceding the next
succeeding Interest Payment Date (including the first day and the last day
of such period); and
(ii) thereafter, each period commencing on a Payment Date and ending
on the day immediately preceding the next succeeding Payment Date
(including the first day and the last day of such period).
"Loan Agreement" means the Loan Agreement dated as of September 30, 2005
among the Borrower, CALYON NEW YORK BRANCH, MIZUHO CORPORATE BANK, LTD., THE
BANK OF NOVA SCOTIA, and THE ROYAL BANK OF SCOTLAND PLC.
"MPA" means the Master Participation Agreement dated as of September 30,
2005 entered into among the Borrower, Japan Bank For International Cooperation,
Sumitomo Mitsui Banking Corporation, The Bank of Tokyo-Mitsubishi, Ltd., KfW,
CALYON New York Branch, The Royal Bank of Scotland plc, The Bank of Nova Scotia,
and Mizuho Corporate Bank, Ltd.
"MSA" means the Master Security Agreement dated as of September 30, 2005
entered into among the Borrower, Japan Bank For International Cooperation,
Sumitomo Mitsui Banking Corporation, The Bank of Tokyo-Mitsubishi, Ltd., KfW,
CALYON New York Branch, The
Exhibit A to Commercial Banks Loan Agreement
-5-
Royal Bank of Scotland plc, The Bank of Nova Scotia, Mizuho Corporate Bank,
Ltd., Citibank, N.A., and Citibank del Peru S.A.
"Other Amounts Default Rate" means the applicable Interest Rate (including
the Applicable Margin) plus 2% per annum.
"Peruvian Income Tax Act" means the Legislative Decree 774 of December 31,
1993, as amended.
"Principal Default Rate" means 2% per annum plus the greater of (i) the
Interest Rate (including the Applicable Margin) in effect immediately prior to
the date in which the respective principal amount became due and was not paid,
and (ii) the Base Rate for such Default Interest Period plus the Applicable
Margin.
"Reference Banks" means, collectively CALYON New York Branch, Mizuho
Corporate Bank Ltd., Scotia Capital and The Royal Bank of Scotland plc, or such
substitute banks designated as such by CALYON New York Branch from time to time
to provide the quotations required for the determination of the Base Rate and
being the principal London offices of each such bank.
"Sulfide Project" means the Borrower's development of a primary sulfide
portion of the ore body beneath the oxide portion of the ore body currently in
production at its Cerro Verde copper mine, located in the Districts of Uchumayo
and Yarabamba, Province of Arequipa, Peru.
"Taxes" means any present and future taxes, levies, imposts, duties,
deductions, withholdings, fees, liabilities and similar charges.
All payments by the Borrower of principal and interest hereunder shall be
made in dollars of the United States of America, in immediately available funds,
without deduction, set-off or counterclaim, to CALYON New York Branch for the
account of the Holder at account number __, favour __ maintained by CALYON, New
York Branch (SWIFT code __) with __ (SWIFT code [ ]), in New York, New York, not
later than 11:00 a.m. New York time on the date on which such payment shall
become due (each such payment made after such time on such due date to be deemed
to have been made on the next succeeding Eurodollar Business Day).
Any and all payments made by or on account of the Borrower in respect of
any obligation hereunder shall be made free and clear of, and without deduction
or withholding for or on account of, any and all present or future Taxes
(excluding (i) Taxes imposed on or measured by the net income, profits, or
capital of the Holder by the jurisdiction under the laws of which the Holder was
incorporated or organized, (ii) Taxes which would not have been imposed on the
Holder but for a change by the Holder of its lending office, (iii) Taxes which
would not have been imposed on a Holder but for the transfer by the Holder of an
interest herein or (iv) Taxes which would not have been imposed on a Holder but
for such Holder's having a place of business in the jurisdiction imposing the
Tax (other than a place of business arising from the transaction contemplated
hereby or from having executed, delivered, performed its obligations or received
a payment hereunder, or enforced its rights hereunder)), Taxes described in the
immediately preceding clauses (i) through (iv) being referred to herein as the
"Excluded Taxes" and Taxes other than the Excluded Taxes being referred to
herein as "Indemnified Taxes", now
Exhibit A to Commercial Banks Loan Agreement
-6-
or hereafter imposed, levied, collected, withheld or assessed by any
Governmental Authority of the Republic of Peru, unless such deduction or
withholding is required by an applicable Government Rule, in which case the
following paragraph shall apply.
If the Borrower shall be required by law to deduct any Indemnified Taxes
now or hereafter imposed, levied or collected, withheld or assessed by any
Governmental Authority of the Republic of Peru from or in respect of any sum
payable hereunder, the Borrower shall, at its option, either (i) pay to the
Holder in respect of which such deduction or withholding is required to be made,
such additional amount (the "Additional Tax Amount") as may be necessary so that
after all required deductions and withholdings (including, without limitation,
deductions and withholdings applicable to additional sums payable under this
paragraph), the Holder receives on the due date thereof an amount equal to the
sum it would have received, had no such deduction or withholding been made, or
(ii) assume the payment of the Indemnified Tax and pay directly the full amount
to the tax administration when due in accordance with Article 47 of the Peruvian
Income Tax Act, so that the amount paid to the Holder equals the amount it would
have received if the Borrower had not been required by law to deduct such
Indemnified Tax.
The Borrower agrees to pay or reimburse upon demand in like manner and
funds, any and all documented costs and expenses of the Holder hereof or of the
Collateral Agent with respect to the enforcement of this Promissory Note.
The Borrower hereby irrevocably submits to the non-exclusive jurisdiction
of the Courts of Downtown Lima (Xxxx-Xxxxxxx) and of any Federal or State court
located in the Borough of Manhattan, The City of New York, as the Holder hereof
may elect for any proceeding arising out of or relating to this Promissory Note.
The Borrower waives, to the fullest extent it may effectively do so, the defense
of an inconvenient forum to the maintenance of such action or proceeding.
The Parties further agree that, without prejudice to the law of the State
of New York governing the substantive obligations contained in the Loan
Agreement, which has originated this Promissory Note, all procedural matters or
formalities applicable to this Promissory Note to be recognized as such shall be
governed by and construed in accordance with Peruvian law.
This Promissory Note is issued in Spanish and English. The Parties agree
that the applicable version of this Promissory Note will be (i) the Spanish
version in case the jurisdiction of the Courts of Downtown Lima (Xxxx-Xxxxxxx)
is the jurisdiction elected by the Holder, or be (ii) the English version in
case the jurisdiction of any Federal or State court located in the Borough of
Manhattan, The City of New York is the jurisdiction elected by the Holder. In
case of discrepancies between the Spanish and English versions (i) the Spanish
version shall prevail when the Courts of Downtown Lima (Xxxx-Xxxxxxx) or other
Spanish speaking jurisdiction is the jurisdiction elected by the Holder, and
(ii) the English version shall prevail when the Federal or State court located
in the Borough of Manhattan, The City of New York or any other non-Spanish
speaking jurisdiction is the jurisdiction elected by the Holder.
Lima, __
By: Sociedad Minera Cerro Verde, S.A.A.
Exhibit A to Commercial Banks Loan Agreement
-7-
Taxpayer Registry No.: 20170072465
Name of authorized officer: __
Identification Card No __
Power register in Entry No. __ of the Public Registry
Exhibit A to Commercial Banks Loan Agreement
EXHIBIT B
AMORTIZATION SCHEDULE
% of aggregate amount of all
Repayment Advances made by the Lenders to
Number be repaid
--------- -------------------------------
1 6.25
2 6.25
3 6.25
4 6.25
5 6.25
6 6.25
7 6.25
8 6.25
9 6.25
10 6.25
11 6.25
12 6.25
13 6.25
14 6.25
15 6.25
16 6.25
Exhibit B to Commercial Banks Loan Agreement
EXHIBIT C
ASSIGNMENT AND ACCEPTANCE AGREEMENT
Reference is made to the Loan Agreement dated as of September 30, 2005 (as
the same may be amended, supplemented or otherwise modified and in effect from
time to time, the "Loan Agreement"), among Sociedad Minera Cerro Verde S.A.A.,
as Borrower, each of the Lenders named therein and [ ], as Administrative Agent
for the Lenders. Capitalized terms used but not defined herein shall have the
meanings assigned to them in the Loan Agreement.
1. [__________] (the "Assignor") hereby sells and assigns to [___________]
(the "Assignee") without recourse to the Assignor, and the Assignee hereby
purchases and assumes from the Assignor without recourse to the Assignor,
effective as of the date set forth in Schedule 1 attached hereto (the
"Assignment Date"), the interests set forth on Schedule 1 hereto (the "Assigned
Interest") in the Assignor's rights and obligations under the Loan Agreement,
including, without limitation, the interests in the Commitment of the Assignor
on the Assignment Date and the Loans owing to the Assignor which are outstanding
on the Assignment Date as listed in Schedule 1 hereto, but excluding accrued
interest and fees to and excluding the Assignment Date. The assignment executed
hereby is made pursuant to and in accordance with Section 11.05(b) of the
Commercial Banks Loan Agreement. From and after the execution and delivery by
the Assignee to the Trustee and the Administrative Agent of this Assignment and
Acceptance Agreement, (a) the Assignee shall be a party to and be bound by the
provisions of the Loan Agreement, the Master Participation Agreement and each
other Financing Document the Assignor was party to and, to the extent of the
Assigned Interest, have the rights, obligations and benefits of a Lender
thereunder holding the Commitment and Loans (or portion(s) thereof) set forth on
Schedule 1 hereto and (b) the Assignor shall, to the extent of the Assigned
Interest, be released from the Commitment and Loans (or portion(s) thereof) so
assigned.
2. The Assignor (a) represents and warrants that it is the legal and
beneficial owner of the interest being assigned by it hereunder and that such
interest is free and clear of any adverse claim, (b) makes no representation or
warranty and assumes no responsibility with respect to any statements,
warranties or representations made in or in connection with the Master
Participation Agreement, the Loan Agreement, the other Financing Documents or
the execution, legality, validity, enforceability, genuineness, sufficiency or
value of the Master Participation Agreement, the Loan Agreement, the other
Financing Documents or any other instrument or document furnished pursuant
thereto and (c) makes no representation or warranty and assumes no
responsibility with respect to the financial condition of the Borrower or the
performance or observance by the Borrower of any of their obligations under the
Master Participation Agreement, the Senior Loan Documents, the other Financing
Documents or the Project Documents or any other instrument or document furnished
pursuant thereto.
Exhibit B to Commercial Banks Loan Agreement
-2-
3. The Assignee (a) represents and warrants that it is legally authorized
to enter into this Assignment and Acceptance, (b) confirms that it has received
a copy of the Master Participation Agreement, the Senior Loan Documents, the
other Financing Documents and such other documents and information as it has
deemed appropriate to make its own credit analysis and decision to enter into
this Assignment and Acceptance, (c) agrees that it will, independently and
without reliance upon the Trustee, the Administrative Agent, the Assignor or any
other Lender and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking or
not taking action under the Senior Loan Documents, the Master Participation
Agreement and the other Financing Documents, (d) appoints and authorizes the
Administrative Agent and the Administrative Agent, respectively, to take such
action as agent (in their respective capacities as Administrative Agent under
the Master Participation Agreement and Administrative Agent under the Commercial
Banks Loan Agreement, respectively), on its behalf and to exercise such powers
and discretion under the Master Participation Agreement, the Commercial Banks
Loan Agreement and each other Financing Document as are delegated to the
Administrative Agent and the Administrative Agent, respectively, by the terms
thereof, together with such powers as are incidental thereto, (e) agrees that it
will be bound by the provisions of, and will perform in accordance with their
terms all of the obligations which by the terms of the Master Participation
Agreement, the Commercial Banks Loan Agreement, the Promissory Notes and the
other Financing Documents are required to be performed by it as a Lender and (f)
specifies as its lending offices (and address for notices) the offices set forth
beneath its name on the signature pages hereof.
From and after the Assignment Date, the Trustee and the Administrative
Agent, as applicable, shall make all payments under the Financing Documents in
respect of the interest assigned hereby (including, without limitation, all
payments of principal, interest or distributions) to the Assignee. The Assignor
and Assignee shall make all appropriate adjustments in payments under the
Financing Documents for periods prior to the Assignment Date directly between
themselves.
THIS ASSIGNMENT AND ACCEPTANCE SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
-3-
IN WITNESS WHEREOF, the parties hereto have caused this Assignment and
Acceptance to be executed by their respective officers thereunto duly
authorized, as of the date first above written.
[NAME OF ASSIGNOR]
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
[NAME OF ASSIGNEE]
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
Lending Office (and address for
notices):
[Address]
Acknowledged this ______ day of
___________________, ____
[___________________________________],
as Administrative Agent
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
-4-
Schedule 1
to
Assignment and Acceptance
Dated ___________, ____
Date of Assignment:
Legal Name of Assignor:
Legal Name of Assignee:
Assignee's Address for Notices:
Effective Date of Assignment ("Assignment Date")(18):
Amount of Assigned Tranche A Interest:
Assigned Tranche A Commitment:
Assigned Tranche A Loans outstanding as of the Assignment Date:
Assignor's Total Tranche A Commitment and Tranche A Loans Outstanding as of the
Assignment Date:
Assignee's Total Tranche A Commitment and Tranche A Loans
Outstanding as of the Assignment Date:
Amount of Assigned Tranche B Interest:
Assigned Tranche B Commitment:
Assigned Tranche B Loans outstanding as of the Assignment Date:
Assignor's Total Tranche B Commitment and Tranche B Loans Outstanding as
of the Assignment Date:
Assignee's Total Tranche B Commitment and Tranche B Loans Outstanding as of the
Assignment Date:
----------
(18) [Must be at least five Business Days after execution hereof by all required
parties.]
Exhibit D
Form of Peruvian Bonds Indenture
EXHIBIT D
FORM OF PERUVIAN BONDS INDENTURE
PERUVIAN BONDS INDENTURE
Among
SOCIEDAD MINERA CERRO VERDE S.A.A.,
as Issuer,
CITICORP PERU S.A. S.A.B.,
as Common Representative,
and
CITIBANK DEL PERU S.A.
as Structuring Entity
Dated as of ____________, 2005
Table of Contents
Page
----
Article I DEFINITIONS.................................................... 3
Article II PURPOSE OF THE INDENTURE...................................... 32
Section 2.01 Purpose................................................ 32
Article III GENERAL TERMS AND CONDITIONS OF THE PROGRAM.................. 32
Section 3.01 Placing Agent.......................................... 32
Section 3.02 Class.................................................. 32
Section 3.03 Co-Ownership........................................... 32
Section 3.04 Issuance Costs......................................... 32
Section 3.05 Use of Proceeds........................................ 32
Section 3.06 Issues and Series...................................... 32
Section 3.07 Placement Date......................................... 33
Section 3.08 Issue Date............................................. 33
Section 3.09 Collateral............................................. 33
Section 3.10 Applicable Law......................................... 33
Section 3.11 Place of Payment and Paying Agent...................... 33
Section 3.12 Secondary Market....................................... 33
Section 3.13 Currency............................................... 34
Section 3.14 Program Amount......................................... 34
Section 3.15 Private Offering....................................... 34
Section 3.16 Optional Redemption.................................... 34
Section 3.17 Term of the Program.................................... 35
Section 3.18 Placement Price........................................ 35
Section 3.19 Redemption of the Bonds and Payments of Principal...... 35
Section 3.20 Common Representative.................................. 35
Section 3.21 Placement of Issues.................................... 35
Section 3.22 Interest Rate.......................................... 36
Section 3.23 Face Amount of the Bonds............................... 36
Section 3.24 Commercial Production Start-up Date.................... 36
Section 3.25 Other Terms and Conditions............................. 36
Article IV OBLIGATIONS OF THE ISSUER..................................... 36
Section 4.01 Obligations of the Issuer.............................. 36
Article V RESTRICTIONS APPLICABLE TO THE ISSUER.......................... 40
Section 5.01 Applicable Restrictions................................ 40
Article VI REPRESENTATIONS AND WARRANTIES OF THE ISSUER.................. 42
Section 6.01 Organization........................................... 42
Section 6.02 Information Disclosed and Provided..................... 42
Section 6.03 Legal Proceedings...................................... 43
Section 6.04 Compliance with Other Instruments and Laws............. 43
Section 6.05 Taxes.................................................. 43
i
Table of Contents
Page
----
Section 6.06 Absence of Undisclosed Liabilities..................... 44
Section 6.07 Financial Statements................................... 44
Section 6.08 Ranking................................................ 44
Section 6.09 [Mining and Beneficiation Concessions.................. 44
Section 6.10 [Environmental Matters................................. 45
Section 6.11 [Labor Matters......................................... 45
Section 6.12 [Consents, etc......................................... 45
Section 6.13 [No MPA Default........................................ 45
Section 6.14 [Security Documents.................................... 45
Section 6.15 Ratification and Amendment of Representations and
Warranties............................................. 45
Article VII COLLATERAL................................................... 46
Section 7.01 Collateral............................................. 46
Section 7.02 Enforcement on the Collateral.......................... 46
Section 7.03 Release of Collateral.................................. 46
Article VIII DEFAULTS AND EVENTS OF DEFAULT.............................. 46
Section 8.01 Defaults............................................... 46
Section 8.02 Occurrence of Defaults................................. 48
Section 8.03 Events of Default and Remedies Prior to Payment in Full
of Senior Facility Loan Obligations.................... 49
Section 8.04 Remedies Following Payment in Full of Senior Facility
Loan Obligations....................................... 56
Section 8.05 [Abandonment........................................... 59
Article IX COMMON REPRESENTATIVE......................................... 60
Section 9.01 Duties................................................. 60
Section 9.02 Liability.............................................. 60
Section 9.03 Powers, Rights and Duties of Common Representative With
Respect to Each Issue.................................. 60
Section 9.04 Powers, Rights and Duties of Common Representative With
Respect to All Issues.................................. 62
Section 9.05 Limited Interference in Business of the Issuer......... 63
Section 9.06 Statutory Bondholder Remedies.......................... 63
Section 9.07 Actions of Common Representative Binding on Present and
Future Bondholders..................................... 63
Section 9.08 Events of Defaults..................................... 64
Section 9.09 Obligations of the Common Representative Pursuant to
Applicable Law......................................... 64
Section 9.10 Resignation of the Common Representative............... 64
Section 9.11 Removal of the Common Representative................... 65
Section 9.12 Dissolution of the Common Representative............... 66
Section 9.13 Consultation with Counsel, etc......................... 66
Article X BONDHOLDERS MEETINGS........................................... 66
Section 10.01 Powers of the General Meeting.......................... 66
ii
Table of Contents
Page
----
Section 10.02 Powers of the Special Meeting.......................... 67
Section 10.03 Notice of a General Meeting or Special Meeting......... 68
Section 10.04 Quorum, Installation and Resolutions................... 69
Article XI ISSUER'S INDEMNIFICATION...................................... 72
Section 11.01 Claims Indemnified..................................... 72
Section 11.02 Claims Excluded........................................ 72
Section 11.03 Claim Procedure........................................ 72
Section 11.04 Issuer's Rights Under Applicable Law................... 73
Article XII ARBITRATION.................................................. 73
Section 12.01 Resolution of Disputes Through Arbitration............. 73
Section 12.02 Arbitration Procedure.................................. 73
Article XIII MISCELLANEOUS............................................... 74
Section 13.01 Statement of Equivalence............................... 74
Section 13.02 Notices................................................ 74
Section 13.03 Interpretation......................................... 76
Section 13.04 Severability........................................... 76
Section 13.05 Governing Law.......................................... 76
Section 13.06 Public Instrument...................................... 76
Schedule A -- Committed Amounts
Schedule B -- Mining Concessions
Schedule 6.04 -- Core Governmental Approval
Schedule 6.05 -- Taxes
Schedule 6.09 -- Mining Benefits and Concessions
Schedule 6.10 -- [Environmental Matters]
Schedule 6.11 -- [Labor Matters]
Schedule 6.12 -- [Consents]
iii
The Notary Public is hereby requested to enter in his Register of Public
Instruments this Bond Issue Indenture (hereinafter the "Indenture"), entered
into by and between:
- Sociedad Minera Cerro Verde S.A.A., (the "Issuer"), a company (a) duly
organized and existing under the laws of the Republic of Peru, with
Taxpayer Registration (RUC) No __, with a place of business for all
purposes hereof at __, (b) duly represented by its General Manager, Mr. __,
identified with National Identity Document (DNI) No __and by its Financial
Manager, Mr. __, identified with [foreign] identity card No. __, and (c)
authorized for such purpose by that certain meeting of the Board of
Directors of the Issuer held on __; and
- Citicorp Peru S.A. S.A.B., (the "Common Representative"), a company (a)
duly organized and existing under the laws of the Republic of Peru, with
Taxpayer Registration No __, with a place of business for all purposes
hereof at __, and (b) duly represented by __, identified with National
Identity Document (DNI) No __, pursuant to the power of attorney recorded
on file No __ of the Lima and Callao Corporate Register;
With the intervention of:
- Citibank del Peru S.A., (the "Structuring Entity"), a company (a) duly
organized and existing under the laws of the Republic of Peru, with
Taxpayer Registration (RUC) No __, with a place of business for all
purposes hereof at __, and (b) duly represented by its attorney-in-fact,
Mr. __, identified with National Identity Document (DNI) No __, pursuant to
the power of attorney recorded on file No __ of the Lima and Callao
Corporate Register;
Subject to the terms and conditions set forth in the following clauses:
RECITALS
(a) The Issuer is a stock corporation incorporated under the laws of the
Republic of Peru, established for an indefinite term, the purpose of which is to
engage in mining activities, under its by-laws and Applicable Law;
(b) The Issuer was organized by public instrument dated __, drawn up before
the Notary Public in and for Lima, __, and recorded in file No __ of the Lima
and Callao Public Mining Registry Office. The Issuer is regulated by its
by-laws, the General Corporate Law and other Applicable Law;
(c) The Shareholders' Equity of the Issuer is US$ __ (__ and 00/100
Dollars), as stated in the audited annual financial statements of the Issuer as
of __. The registered capital stock of the Issuer on the date hereof is S/.__
(__ and 00/100 Nuevos Soles);
(d) The Issuer owns the Cerro Verde copper mine, including a copper
leaching and solution extraction/electrowinning (SX/EW) operation, located in
the District of Uchumayo and Yarabamba, Province of Arequipa, Peru (the "CURRENT
OPERATIONS");
(e) The Board of Directors of the Issuer has approved the development of a
primary sulfide portion of the ore body beneath the oxide portion of the ore
body currently in production (the "SULFIDE PROJECT");
(f) By resolution of the general shareholder meeting, dated __ (the
"GENERAL SHAREHOLDERS' MEETING"), the Shareholders approved the issuance of the
Bonds through the Program in an amount not to exceed US$[250,000,000.00] (two
hundred and fifty million and 00/100 Dollars);
(g) Likewise, such General Shareholders' Meeting authorized the Board of
Directors of the Issuer to agree and decide on the terms and conditions of the
Program and the various Issues to be made thereunder and to delegate all or some
of such power in the officers or attorneys of the Issuer that they may deem
convenient;
(h) Pursuant to the aforementioned authorization, the meeting of the Board
of Directors of the Issuer held on __ empowered Mr. __ and __ with the same
powers granted to the Board of Directors by the General Shareholders' Meeting,
including the power to agree on the terms and characteristics of the Program
including the various Issues to be made thereunder. Additionally, the
aforementioned officers were also authorized to execute, either jointly or
severally, any and all public and/or private documents deemed appropriate or
necessary for the purposes of the Program and each Issue to be made thereunder;
(i) Pursuant to the aforementioned authorization, the general terms and
conditions of the Program (as set forth herein) have been agreed upon. The
specific terms and conditions of each Issue under the Program are to be
determined in the applicable supplements to the Offering Circular and the
Supplemental Indentures;
(j) On September 30, 2005, the Issuer entered into that certain Master
Security Agreement (the "MASTER SECURITY AGREEMENT"), by and among the Issuer,
Japan Bank for International Cooperation ("JBIC"), Sumitomo Mitsui Banking
Corporation ("SMBC"), The Bank of Tokyo-Mitsubishi, Ltd. ("BOT-M"), KfW ("KFW"),
Calyon New York Branch ("CALYON"), The Royal Bank of Scotland PLC ("RBS"), The
Bank of Nova Scotia ("SCOTIA CAPITAL"), Mizuho Corporate Bank ("MIZUHO" and
collectively with JBIC, SMBC, BOT-M, KfW, Calyon, RBS and Scotia Capital, the
"SENIOR FACILITY LENDERS"), Calyon, as administrative agent (the "ADMINISTRATIVE
AGENT"), Citibank, N.A., as trustee and offshore collateral agent (in such
capacities, the "TRUSTEE" and the "OFFSHORE COLLATERAL AGENT") and Citibank del
Peru S.A., as onshore collateral agent (the "ONSHORE COLLATERAL AGENT");
(k) On September 30, 2005, the Issuer entered into that certain Master
Participation Agreement (as amended, supplemented and modified in accordance
with terms thereof, the "MASTER PARTICIPATION AGREEMENT"), by and among the
Issuer, JBIC, SMBC, BOT-M, KfW, the Commercial Banks and the Administrative
Agent;
(l) On September 30, 2005, the Issuer entered into that certain Completion
Guarantee (as amended, supplemented and modified in accordance with terms
thereof, the "COMPLETION GUARANTEE") among the Parent Companies (as defined
herein), the Issuer, the Senior Facility Lenders and the Administrative Agent.
2
ARTICLE I
DEFINITIONS
In this Indenture, the following terms and expressions shall have the following
meanings:
ABANDONMENT the meaning given in Section 8.05 of this
Indenture.
ABANDONMENT EVENT OF DEFAULT the meaning given in Section 8.02(d) of this
Indenture.
ABANDONMENT INQUIRY the meaning given in Section 8.05 of this
Indenture.
ABANDONMENT TRIGGERING EVENT the meaning given in Section 8.05 of this
Indenture.
ACCOUNTS: the Proceeds Account, the Onshore Dollars
Account, the Onshore Nuevos Soles Account, the
Operating Onshore Dollars Account and the
Operating Onshore Nuevos Soles Account, each
established pursuant to the Master Security
Agreement.
ADMINISTRATIVE AGENT: the meaning given in the recitals to this
Indenture.
ADVANCE: any advance made by a Senior Facility Lender
from time to time pursuant to the applicable
Senior Facility Loan Agreement.
AFFILIATES: with respect to any Person (the "FIRST
PERSON"), any other Person (the "SECOND
PERSON") which directly or indirectly controls,
or is under common control with, or is
controlled by, such First Person. As used in
this definition, "control" (including, with its
correlative meanings "CONTROLLED BY" and "UNDER
COMMON CONTROL WITH") shall mean possession,
directly or indirectly, of power (whether or
not exercised) to direct or cause the direction
of or exercise a controlling influence on
management or policies (whether through legal
or beneficial
3
ownership of securities or partnership or other
ownership interests, by contract,
representation on the board of directors or
similar governing body or otherwise).
AGGREGATE COMMITTED AMOUNT: with respect to each Senior Facility Lender,
the sum of its Base Committed Amount and
Stand-By Committed Amount, if any.
AGGREGATE ISSUED BOND AMOUNT: with respect to the Bonds, the aggregate
principal amount of Bonds issued by the Issuer
pursuant to this Indenture and the applicable
Supplemental Indentures.
ANCILLARY CAPITAL
EXPENDITURES: capital expenditures that are neither
Incremental Capital Expenditures nor Sustaining
Capital Costs.
APPLICABLE ENVIRONMENTAL LAWS any statute, law, ordinance, code, rule,
regulation, order, decree or other requirement
of any Peruvian Governmental Authority
regulating the protection of human health (as
it relates to releases of, or exposure to,
hazardous substances) or the environment,
applicable to the Sulfide Project and the
Issuer.
APPLICABLE LAW: the legal rules and provisions in force in the
Republic of Peru.
ASSIGNED AGREEMENTS: the meaning given in Section 3.03 of the Master
Security Agreement.
AVAILABILITY PERIOD END DATE: the earliest of (i) the Completion Release
Date, (ii) the date of full utilization of
the Senior Facility Loans and (iii) the date
that is 30 months after the date of the initial
disbursement of the first Base Advance, but in
any event no later than one month prior to the
first Payment Date.
BANKRUPTCY EVENT OF DEFAULT: the meaning given in Section 8.02(c) of this
Indenture.
4
BASE ADVANCE: those Advances requested by the Issuer from the
Senior Facility Lenders on a pro rata basis up
to their respective Base Committed Amounts,
pursuant to the terms of the Master
Participation Agreement.
BASE COMMITTED AMOUNT: with respect to each Senior Facility Lender,
the amount set forth opposite its name on
Schedule A hereto, in the column entitled "Base
Committed Amounts", as such amount may be
adjusted from time to time.
BENEFICIATION CONCESSION: the beneficiation concession identified on
Schedule B hereto.
BONDHOLDER: the holder of one or more Bonds.
BONDS: registered securities to be issued by the
Issuer pursuant to this Indenture and the
applicable Supplemental Indentures, and,
subject to Section 7.03 secured by the
Collateral.
BONDS OBLIGATIONS: the obligations to pay the principal of and
interest on the Bonds, including any interest
accruing after the filing of a petition in
bankruptcy or the commencement of any
insolvency or bankruptcy proceedings with
respect to the Issuer, and all commissions,
fees, indemnities and other amounts payable to
the Bondholders under this Indenture.
BOT-M: the meaning given in the recitals to this
Indenture.
BUSINESS: the Sulfide Project and the Current Operations.
BUSINESS DAY: a day on which banks are generally open for
business in Lima, Peru.
BVN: Compania de Minas Buenaventura S.A.A.
5
CALYON: the meaning given in the recitals to this
Indenture.
CALYON LENDER: Calyon or any assignee of Calyon that (i) has
purchased Senior Facility Loans in excess of
U.S.$10 million and (ii) has been designated by
Calyon, or by the immediate predecessor Calyon
Lender, by written notice to the Administrative
Agent and the Issuer as the Calyon Lender.
CAPITAL LEASE OBLIGATIONS: for any Person, the obligations of such Person
to pay rent or other amounts under a lease of
(or other agreement conveying the right to use)
any Property which obligations are required to
be classified and accounted for as a capital
lease on a balance sheet of such Person under
United States GAAP and, for the purposes hereof
the amount of such obligations shall be the
capitalized amount thereof, determined in
accordance with United States GAAP.
CATHODES: the copper cathodes produced by the Issuer.
CAVALI: the meaning given in Section 3.02 of this
Indenture.
CCMC: Cyprus Climax Metals Company.
CLAIMS: the meaning given in Section 11.01 of this
Indenture.
CLOSING DATE: The date of disbursement of the initial Base
Advance by the Senior Facility Lenders.
CLOSING PROJECT DOCUMENTS: collectively, the Offtake Agreements, the Power
Supply Agreements, the Construction Agreements,
the Operator's Agreement and the Port Services
Agreement.
6
COLLATERAL: the collateral to be secured from time to time
pursuant to the Master Security Agreement or
any other Security Document.
COMMERCIAL BANKS LOAN
AGREEMENT: the Senior Facility Loan Agreement entered into
among the Issuer, the Administrative Agent and
the Commercial Banks.
COMMERCIAL BANKS: any of Calyon, RBS, Scotia Capital or Mizuho.
COMMERCIAL PRODUCTION START-UP
DATE: the meaning given in Section 3.24 of this
Indenture.
COMMITMENT: the Commitment of each Senior Facility Lender
to make Advances pursuant to the Senior
Facility Loan Agreement to which it is a party.
COMMON REPRESENTATIVE: the meaning given in the preamble to this
Indenture and any permitted successors and
assigns.
COMPLETION GUARANTEE: the meaning given in the recitals to this
Indenture.
COMPLETION RELEASE DATE: the date of achievement of either (i) Full
Completion or (ii) Partial Completion.
CONASEV: National Supervisory Commission of Companies
and Securities (Comision Nacional Supervisora
de Empresas y Valores).
CONCENTRATES: the copper concentrate to be produced by the
Issuer pursuant to the Sulfide Project.
CONCESSIONS: collectively, the Beneficiation Concession and
the Mining Concessions.
7
CONSTRUCTION AGREEMENTS: the Construction Agreement No. CV 12915, dated
as of December 14, 2004, between the Issuer and
Fluor Xxxxxx Sucursal Del Peru; and the
Engineering Agreement No. CV 12913, dated as of
December 14, 2004, between the Issuer and Fluor
Canada Ltd.
CORE GOVERNMENTAL APPROVAL: the meaning given in Section 6.04(d) of this
Indenture.
CORE MINING CONCESSIONS: collectively, Cerro Verde Mining Concession 1,
2, 3 and the Beneficiation Concession.
COURT OF ARBITRATION: the meaning given in Section 12.02(a) of this
Indenture.
CURRENT OPERATIONS: the meaning given in the recitals to this
Indenture.
DEBT BUY-DOWN RELEASE DATE: the date upon which any of the circumstances
described in Section 3.03(d) of the Completion
Guarantee shall occur.
DEFAULT: the meaning given in Section 8.01 of this
Indenture.
DEFAULT RATE: the annual default rate that will be applied,
without demand or notice, upon the occurrence
of a Payment Default with respect to a specific
Issue or Series, as an additional charge and
without prejudice to payment of interest
accrued at the Interest Rate applicable to the
applicable Issue or Series. The Default Rate
shall be set forth in the applicable
Supplemental Indenture, Pricing Supplement
and/or public offering notice.
DISBURSEMENT DATE: the date requested for the disbursement of a
Base Advance or a Stand-By Advance, as the case
may be, in the relevant notice delivered by the
Issuer to the applicable Senior Facility Lender
pursuant to the relevant Senior Facility Loan
Agreement.
8
DOLLARS OR US$: the lawful currency of the United States.
EARLY REDEMPTION: the meaning given in Section 3.16(a) of this
Indenture.
EARLY REDEMPTION DATE: the meaning given in Section 3.16(a) of this
Indenture.
EQUIVALENT: for any amount, the calculation of currency
equivalents on any day which such calculation
shall be based on the foreign exchange spot
mid-rates for such day reported in The Wall
Street Journal, Eastern Edition, or, if not so
reported, on the mid-market foreign exchange
spot closing rates for such day reported in the
Financial Times, or, if not so reported, on
spot foreign exchange mid-market rates for
trading among banks in amounts of
U.S.$1,000,000 and more as quoted by or to the
Trustee.
EVENT OF DEFAULT: any of an Ordinary Event of Default, a Payment
Event of Default, a Bankruptcy Event of
Default, and an Abandonment Event of Default.
EVENT OF POLITICAL FORCE
MAJEURE: the occurrence of an Expropriatory Action, War
or a material breach or effective unilateral
amendment or cancellation by the Republic of
Peru of the Stability Agreement (it being
understood that an assertion or determination
that certain benefits of the Stability
Agreement do not apply to part of the
operations of the Issuer will not be treated as
an Event of Political Force Majeure).
EXPENSE CAP: the meaning given in Section 4.01(l) of this
Indenture.
EXPROPRIATORY ACTION: any action or series of actions (individually
or in the aggregate together with similar prior
actions or series of actions) that is taken,
authorized or ratified by Peru or any agency,
instrumentality or political subdivision
thereof, for the appropriation, requisition,
confiscation,
9
expropriation or nationalization (by
intervention, condemnation or other form of
taking), whether with or without compensation,
of (i) equity interests constituting more than
20% of aggregate common equity interests in the
Issuer, or (ii) ownership or control of the
Project Property or any substantial part
thereof the loss of which would have a Material
Adverse Effect.
FINANCIAL STATEMENTS: the meaning given in Section 6.07 of this
Indenture.
FINANCING DOCUMENTS: the Senior Lenders Financing Documents and the
Senior Facility Lenders Financing Documents.
FULL COMPLETION: for purposes of the Completion Guarantee, the
full completion of the Sulfide Project which
shall occur upon the delivery by the Issuer to
the Administrative Agent of the certificates
and other documents listed in clauses (a)
through (h) of Section 2.01 of the Completion
Guarantee.
GENERAL CORPORATE LAW: Law No 26887, as amended.
GENERAL MEETING: any meeting to which all of the Bondholders are
entitled to attend, as provided in Article X of
this Indenture.
GENERAL SHAREHOLDERS' MEETING: the meaning given in the recitals to this
Indenture.
GOVERNMENTAL APPROVAL: any authorization, consent, approval, license,
ruling, permit, concession, certification,
exemption, filing (other than with respect to
the perfection of any security interest),
variance, order, judgment, decree, publication,
notice to, declaration of or with or
registration by or with any Governmental
Authority.
GOVERNMENTAL AUTHORITY: any national, state, county, city, town,
village, municipal or other local governmental
department, commission, board, bureau, agency,
authority or
10
instrumentality of any nation that affects or
may affect the transactions contemplated hereby
or any political subdivision thereof, and any
Person exercising executive, legislative,
judicial, regulatory or administrative
functions of or pertaining to any of the
foregoing entities, including, without
limitation, all commissions, boards, bureaus,
arbitrators and arbitration panels, and any
authority or other Person controlled by any of
the foregoing.
GUARANTEE RELEASE DATE: either (i) the date of achievement of Full
Completion, with respect to all Parent
Companies, or (ii) the date of occurrence of
the Debt Buy-Down Release Date as contemplated
under Section 3.03(d) of the Completion
Guarantee.
IDENTIFIED MATERIAL PROJECT
DOCUMENTS: the Offtake Agreements, the Operator's
Agreement, the Power Supply Agreements,
evidence of the Issuer's water rights for the
Sulfide Project and the Core Mining
Concessions, and, in each case, any substitute
agreement thereto entered into after the date
hereof.
INCREMENTAL CAPITAL
EXPENDITURES: capital expenditures made to implement
productivity improvements.
INDEBTEDNESS: for any Person, without duplication, (i) all
indebtedness created, issued or incurred by
such Person for borrowed money (whether by loan
or the issuance and sale of debt securities or
the sale of Property to another Person subject
to an understanding or agreement, contingent or
otherwise, to repurchase such Property from
such Person); (ii) obligations of such Person
to pay the deferred purchase or acquisition
price of Property or services, other than trade
accounts payable arising, and accrued expenses
incurred, in the ordinary course of business so
long as such trade accounts payable are payable
within 90 days after the date the respective
goods
11
are delivered or the respective services are
rendered; (iii) obligations of such Person in
respect of letters of credit or similar
instruments issued or accepted by banks and
other financial institutions for account of
such Person; (iv) all indebtedness of others
secured by (or for which the holder of any such
obligation has an existing right, contingent or
otherwise, to be secured by) a Lien on any
Property of such Person, whether or not such
Indebtedness so secured thereby has been
assumed by such Person; (v) Capital Lease
Obligations of such Person; and (vi)
indebtedness of others guaranteed by such
Person.
INDEMNITEE or INDEMNITEES: the meaning given in Section 11.01 of this
Indenture.
INDENTURE: the meaning given in the preamble to this
Indenture.
INSURANCE: property and casualty insurance coverage
maintained by the Issuer with respect to the
Issuer's Property.
INTEREST PAYMENT: the meaning given in Section 3.22(b) of this
Indenture.
INTEREST PAYMENT DATE: the meaning given in Section 3.22(c) of this
Indenture.
INTEREST RATE: the meaning given in Section 3.22(a) of this
Indenture.
ISSUE: any of the various issues of Bonds issued by
the Issuer under the Program.
ISSUE DATE: the meaning given in Section 3.08 of this
Indenture.
ISSUER: the meaning given in the preamble to this
Indenture.
JBIC: the meaning given in the recitals to this
Indenture.
12
JBIC LOAN AGREEMENT: the Senior Facility Loan Agreement entered into
among the Issuer, the JBIC Agent (as defined
therein) and JBIC.
KFW: the meaning given in the recitals to this
Indenture.
KFW LENDER: KfW or any assignee of KfW that (i) has
purchased Senior Facility Loans in excess of
U.S.$10 million and (ii) has been designated by
KfW, or by the immediate predecessor KfW
Lender, by written notice to the Administrative
Agent and the Issuer as the KfW Lender, unless
KfW has suspended it Commitment and the Issuer
has entered into a Replacement Loan Agreement
with a Replacement Lender that is not an
Affiliate of a Parent Company in which case
such Replacement Lender shall become the KfW
Lender.
KFW LOAN AGREEMENT: the Senior Facility Loan Agreement entered into
between the Issuer and KfW.
LIEN: with respect to any Property, any mortgage,
lien, pledge, charge, lease, easement,
servitude, right of others, security interest
or encumbrance of any kind in respect of such
Property. For the purposes of this definition,
any Person shall be deemed to own subject to a
Lien any Property which it has acquired or
holds subject to the interest of a vendor or
lessor under any conditional sale agreement,
capital lease or other title retention
agreement (other than an operating lease)
relating to such Property.
MAJORITY FACILITY LENDERS: with respect to any vote or decision to be made
by Senior Facility Lenders, (i) before the
Availability Period End Date, a vote or
decision made by (x) Senior Facility Lenders
with a cumulative Aggregate Committed Amount
greater than 66 2/3% of the cumulative
Aggregate Committed Amount of all Senior
Facility Lenders and (y) at least 4
13
Senior Facility Lenders Votes; and (ii) after
the Availability Period End Date, a vote or
decision made by (x) Senior Facility Lenders
holding Senior Facility Loans with an
Outstanding Advance Amount greater than 66 2/3%
of the Outstanding Advance Amount of the Senior
Facility Loans held by all Senior Facility
Lenders and (y) at least 4 Senior Facility
Lenders Votes.
MAJORITY LENDERS: with respect to any vote or decision to be made
by Senior Lenders, (i) before the Availability
Period End Date, a vote or decision made by (x)
Senior Lenders with, in the case of Senior
Facility Lenders, a cumulative Aggregate
Committed Amount and, in the case of the
Bondholders, an Aggregate Issued Bond Amount
greater than 66 2/3% of the sum of the
cumulative Aggregate Committed Amount of all
Senior Facility Lenders and the Aggregate
Issued Amount of all Bonds and (y) at least 5
Senior Lenders Votes (or, prior to an issuance
of Bonds, 4 Senior Facility Lenders Votes); and
(ii) after the Availability Period End Date, a
vote or decision made by (x) Senior Lenders
holding Senior Loans with an Outstanding
Advance Amount greater than 66 2/3% of the
Outstanding Advance Amount of the Senior Loans
held by all Senior Lenders and (y) at least 5
Senior Lenders Votes (or, prior to an issuance
of Bonds, 4 Senior Facility Lenders Votes).
MASTER PARTICIPATION
AGREEMENT: the meaning given in the recitals to this
Indenture.
MASTER SECURITY AGREEMENT: the meaning given in the recitals to this
Indenture.
MATERIAL ADVERSE EFFECT: a Material Adverse Lender Effect and/or a
Material Adverse Project Effect.
MATERIAL ADVERSE LENDER
EFFECT: a material adverse effect on (i) the ability of
the Issuer to timely pay the Senior Loan
14
Obligations, (ii) the security interests
granted by Issuer pursuant to the Security
Documents (other than to the extent listed in
legal opinions of counsel to the Issuer
delivered on or prior to the date of issuance
of the Bonds), (iii) the rights and remedies of
the Senior Lenders under any Financing
Document, Project Document, the Indenture or
any Supplemental Indenture (iv) the Collateral
(taken as a whole), (v) the ability of the
Issuer or (prior to the Guarantee Release Date)
any Parent Company to timely perform any of its
respective material obligations under the
Indenture, any Supplemental Indenture or any
Financing Document to which it is a party or
(vi) the validity or enforceability of any
Financing Document, the Indenture or any
Supplemental Indenture.
MATERIAL ADVERSE PROJECT a material adverse effect on the ability of the
EFFECT: Issuer to complete and operate the Sulfide
Project as contemplated in the Identified
Material Project Documents, (ii) the Current
Operations or the Sulfide Project, including
the projected costs of construction, operation
or maintenance of the Sulfide Project, or (iii)
the ability of the Issuer or any Parent Company
to timely perform any of its respective
material obligations under any Project Document
to which it is a party or (iv) the validity or
enforceability of any Project Document.
MATURITY DATE: the meaning given in Section 3.19 of this
Indenture.
MINING CONCESSIONS: the mining concessions owned by the Issuer and
identified on Schedule B hereto.
MIZUHO: the meaning given in the recitals to this
Indenture.
MIZUHO LENDER: Mizuho or any assignee of Mizuho that (i) has
purchased Senior Facility Loans in
15
excess of U.S.$10 million and (ii) has been
designated by Mizuho, or the immediate
predecessor Mizuho Lender, by written notice to
the Administrative Agent and the Issuer as the
Mizuho Lender.
NEW PARTY ACCESSION AGREEMENT: the meaning given in Section 3.09 of this
Indenture.
NOTICE OF ABANDONMENT EVENT OF the meaning given in Section 8.03(d)(iii)(A) of
DEFAULT: this Indenture.
NOTICE OF BANKRUPTCY EVENT OF the meaning given in Section 8.03(c)(iv) of
DEFAULT: this Indenture.
NOTICE OF INDENTURE EVENT OF any of the Notice of Abandonment Event of
DEFAULT: Default, the Notice of Bankruptcy Event of
Default, the Notice of Ordinary Event of
Default and the Notice of Payment Event of
Default.
NOTICE OF ORDINARY EVENT OF the meaning given in Section 8.03(a)(iii) of
DEFAULT: this Indenture.
NOTICE OF ORDINARY DEFAULT the meaning given in Section 8.02(a)of this
Indenture.
NOTICE OF PAYMENT EVENT OF the meaning given in Section 8.03(b)(ii)(A) of
DEFAULT: this Indenture.
NUEVOS SOLES: the lawful currency of the Republic of Peru.
OFFERING CIRCULAR: the framework informative prospectus relating
to the Program, as amended, modified, restated
or supplemented from time to time.
OFFSHORE COLLATERAL: the non-Peruvian collateral to be secured from
time to time by the Master Security Agreement
or any other Offshore Security Document,
including (i) the non-domestic Sales
Agreements, (ii) the Assigned Agreements and
(iii) the Proceeds Accounts.
16
OFFSHORE COLLATERAL AGENT: the meaning given in the recitals to this
Indenture.
OFFSHORE SECURITY DOCUMENTS: the Master Security Agreement and each other
agreement or document, filings, notices,
arrangements or the like which are required to
establish and maintain the security interest in
the Offshore Collateral for the benefit of the
Secured Parties.
OFFTAKE AGREEMENTS: the PDC Guarantee, the SMM Concentrate Sales
Agreement, the PD Concentrate Sales Agreement
and the PD Cathodes Sales Agreement.
ONSHORE ACCOUNTS: the Onshore Dollars Account, the Onshore Nuevos
Soles Account, the Operating Onshore Dollars
Account and the Operating Onshore Nuevos Soles
Account.
ONSHORE COLLATERAL: the Peruvian collateral to be secured from time
to time by the Master Security Agreement or any
other Onshore Security Document, including (i)
currently-owned or after-acquired Project
Property, (ii) the Core Mining Concessions
required to be mortgaged pursuant to the Master
Security Agreement, (iii) the domestic Sales
Agreements, if any, (iv) the Onshore Accounts
to the extent provided in the Master Security
Agreement, and (v) the SMCV Shares.
ONSHORE COLLATERAL AGENT: the meaning given in the recitals to this
Indenture.
ONSHORE DOLLARS ACCOUNT: the meaning given in Section 4.01(a)(ii) of the
Master Security Agreement.
ONSHORE NUEVOS SOLES ACCOUNT: the meaning given in Section 4.01(a)(iv) of the
Master Security Agreement.
ONSHORE SECURITY DOCUMENTS: each of the following documents governed by
Peruvian law: (i) the mining mortgages
(hipoteca minera), the mining pledge (xxxxxx
xxxxxx) (equipment, machinery and movable
assets), the floating mining
17
pledge (xxxxxx xxxxxx flotante) (minerals and
Cathode and Concentrate in inventory), each
granted pursuant to Section 3.01 of the Master
Security Agreement, (ii) the conditional
assignments of rights (cesion condicionada de
derechos) granted pursuant to Section
3.02(a)(ii) of the Master Security Agreement,
(iii) the Contrato de Cuenta Escrow for Onshore
Accounts executed pursuant to Section 3.05(b)
of the Master Security Agreement, (iv) the
pledge (prenda) for the SMCV Shares pursuant to
Section 3.07 of the Master Security Agreement,
and (v) the civil mortgages (hipoteca), if any,
and the industrial pledge (prenda industrial),
if any, each granted pursuant to Section
3.09(b) of the Master Security Agreement, and
(vi) any other agreement or document, filings,
notices, arrangements or the like which are
required to establish and maintain the security
interest in the Onshore Collateral for the
benefit of the Senior Lenders.
OPERATING ONSHORE DOLLARS the meaning given in Section 4.01(a)(iii) of
ACCOUNT: the Master Security Agreement.
OPERATING ONSHORE NUEVOS the meaning given in Section 4.01(a)(v) of the
SOLES ACCOUNT: Master Security Agreement.
OPERATOR: Xxxxxx Xxxxxx Dodge Del Peru S.A.C.
OPERATOR'S AGREEMENT: the Operator's Agreement, dated as of June 1,
2005, between the Issuer and the Operator.
ORDINARY DEFAULT CURE PERIOD: the meaning given in Section 8.02(a) of this
Indenture.
ORDINARY EVENT OF DEFAULT: the meaning given in Section 8.02(a) of this
Indenture.
OUTSTANDING ADVANCE AMOUNT: with respect to each Senior Facility Lender,
the sum of its Outstanding Base Amount and, if
applicable, its Outstanding Stand-By Amount
and, with respect to the
18
Bonds, the corresponding Outstanding Bond
Amount.
OUTSTANDING BASE AMOUNT: on any date, with respect to each Senior
Facility Lender, the aggregate unpaid amount,
on such date, of all Base Advances made by such
Senior Facility Lender.
OUTSTANDING BOND AMOUNT: on any date, with respect to the Bonds, the
principal amount of Bonds outstanding on such
date.
OUTSTANDING STAND-BY AMOUNT: on any date, with respect to each Commercial
Bank, the aggregate unpaid amount, on such
date, of all Stand-By Advances made by such
Commercial Bank.
PARENT COMPANIES: collectively, PDC, SMM, SC and BVN.
PARTIAL COMPLETION: for purposes of the Completion Guarantee, the
partial completion of the Sulfide Project which
shall occur upon the delivery by the Issuer to
the Administrative Agent of (i) the
certificates and other documents listed in
clauses (a) and (b) of Section 2.02 of the
Completion Guarantee and (ii) the Non-Variable
Certificates (which certificates are those
listed in clauses (c) through (h) of Section
2.01 of the Completion Guarantee).
PAYING AGENT: the meaning given in Section 3.11 of this
Indenture.
PAYMENT DATE: the earlier of (i) March 20 or September 20
next occurring after the Commercial Production
Start-Up Date and (ii) March 20, 2008, and,
thereafter every March 20 and September 20,
until the Maturity Date, the last day of such
month, provided that if any such date shall
fall on a day that is not a Business Day, the
relevant Payment Date shall be the immediately
succeeding Business Day and the Bondholders
shall not be entitled to any interest on
account of such delay in payment, or if the
Senior
19
Facility Loans have been fully repaid, such
other days as set forth in applicable
Supplemental Indenture.
PAYMENT DEFAULT: the meaning given in Section 8.01(a) of this
Indenture.
PAYMENT DEFAULT CURE PERIOD: the meaning given in Section 8.02(b) of this
Indenture.
PAYMENT EVENT OF DEFAULT: the meaning given in Section 8.02(b) of this
Indenture.
PD CATHODES SALES AGREEMENT: that certain Cathodes Sales Agreement, dated as
of September 30, 2005, between the Issuer and
PD Sales Company.
PD CONCENTRATE SALES that certain Concentrate Sales Agreement, dated
AGREEMENT: September 30, 2005, between the Issuer and PD
Sales Company.
PDC: Xxxxxx Dodge Corporation
PDC GUARANTEE: that certain Parent Company Guarantee, dated of
September 30, 2005, entered into by PDC for the
benefit of the Issuer, pursuant to which PDC
has agreed to guarantee the obligations of PD
Sales Company under the PD Concentrate Sales
Agreement and the obligations of PD Sales
Company under the PD Cathodes Sales Agreement.
PD SALES COMPANY: Xxxxxx Dodge Sales Company Incorporated.
PERMITTED INVESTMENT: with respect to all Accounts, any of the
following (denominated in Dollars in the case
of the Proceeds Account, the Onshore Dollars
Account and the Operating Onshore Dollars
Account and denominated in Nuevos Soles in the
case of the Onshore Nuevos Soles Account and
the Onshore Operating Nuevos Soles Account):
(i) obligations maturing or capable of
redemption by the holder not more
20
than six months after the date of
acquisition thereof and issued or
guaranteed by any government, governmental
agency or international organization
similar obligations of which have one of
the two highest ratings from a credit
rating agency of international standing;
(ii) demand deposits, time deposits,
certificates of deposit or other
obligations (including acceptances)
maturing or capable of redemption by the
holder not more than six months after the
date of investment or acquisition thereof
which are issued, accepted or guaranteed
by a bank having capital funds and
reserves of not less than
U.S.$1,000,000,000 (or the Equivalent) and
a rating (as most recently published) on
its outstanding senior long-term
unsecured, unguaranteed indebtedness of A
or higher by Standard & Poor's and A2 or
higher by Moody's;
(iii) commercial paper, corporate promissory
notes or other obligations maturing or
capable of redemption by the holder not
more than six months after the date of
acquisition thereof which (A) have, or are
supported by an unconditional guarantee
from a corporation similar obligations of
which have, one of the two highest ratings
from a credit rating agency of
international standing, or (B) are
obligations which are supported by an
unconditional guarantee or letter of
credit from any bank referred to in clause
(ii) above;
(iv) repurchase agreements fully collateralized
by Permitted Investments of the type
described in clauses (i), (ii) and (iii)
above, provided that the Permitted
Investments that collateralize
21
such repurchase agreements may mature or
be capable of redemption by the holder
more than six months after the date of
investment or acquisition thereof;
(v) any other investments so long as the
Issuer notifies in writing the
Administrative Agent of the proposed
investment, and the Administrative Agent,
acting pursuant to instructions from the
Supermajority Lenders, consents to such
proposal; and
(vi) money market funds [capable of redemption
at any time] having a rating in the
highest investment category granted
thereby by a recognized credit rating
agency at the time of acquisition,
including any fund for which the Trustee
or the Offshore Collateral Agent or an
Affiliate of the Trustee or the Offshore
Collateral Agent serves as an investment
advisor, administrator, shareholder
servicing agent, custodian or
subcustodian, notwithstanding that (A) the
Trustee or the Offshore Collateral Agent
or an Affiliate of the Trustee or the
Offshore Collateral Agent charges and
collects fees and expenses from such funds
for services rendered (provided that such
charges, fees and expenses are on terms
consistent with terms negotiated at arm's
length) and (B) the Trustee or the
Offshore Collateral Agent charges and
collects fees and expenses for services
rendered, pursuant to this Agreement.
PERMITTED LIENS: the meaning given in Section 5.01(f) of this
Indenture.
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PERSON: any individual, corporation, partnership, joint
venture, association, joint stock company,
trust, unincorporated organization or
government agency or political subdivision
thereof.
PERUVIAN GAAP: generally accepted accounting principles in
Peru as in effect from time to time.
PLACEMENT DATE: the meaning given in Section 3.07 of this
Indenture.
PLACING AGENT: the meaning given in Section 3.01 of this
Indenture.
PORT SERVICES AGREEMENT: the Port Services Agreement, dated December 31,
2004, between the Issuer and Terminal
Internacional del Sur S.A.
POWER SUPPLY AGREEMENTS: (i) the Power Supply Agreement (110 MW), dated
December 31, 2004, between the Issuer and
ElectroPeru S.A., (ii) the Power Supply
Agreement (46 MW), dated December 31, 2004,
between the Issuer and ElectroPeru S.A., and
(iii) the Power Supply Agreement, dated
December 29, 2004, between the Issuer and
Empresa de Generacion Electrica de Arequipa
S.A. - EGASA.
PRICING SUPPLEMENT: the informative pricing supplement relating to
a specific Issue within the framework of the
Program, as amended, modified, restated or
supplemented from time to time.
PRINCIPAL PAYMENT: the meaning given in Section 3.19(b) of this
Indenture.
PRIVATE ISSUE: the meaning given in Section 3.15(a) of this
Indenture.
PROCEEDS ACCOUNT: the account established pursuant to Section
4.01(a)(i) of the Master Security Agreement.
PROGRAM: the program of Bonds issued pursuant to this
Indenture and the applicable
23
Supplemental Indentures, which shall be known
as ["Sociedad Minera Cerro Verde S.A.A. First
Bonds Program"]
PROGRAM AMOUNT: the meaning given in Section 3.14 of this
Indenture.
PROJECT COSTS: all costs and expenses to be incurred by the
Issuer to finance and complete the Sulfide
Project, including, without limitation, all
costs and expenses incurred in connection with
the design, equipment procurement,
installation, construction and start-up of the
Sulfide Project, the grant to the Issuer of the
Governmental Approvals and all other easements,
licenses and other real property rights and
interests required for the Sulfide Project,
acquisition of an inventory of initial
supplies, Ancillary Capital Expenditures
required to complete ancillary projects
necessary for the completion or operation of
the Sulfide Project, initial working capital,
interest during construction, initial funding
of the Senior Debt Service Reserve Sub-Account,
Extraordinary Major Maintenance Reserve
Sub-Account, Tax Contingency Reserve
Sub-Account and Power Generator Reserve
Sub-Account (as each such account is defined in
the Master Security Agreement) and stamp
duties.
PROJECT DOCUMENTS: collectively, the Closing Project Documents and
any other agreement material to the operations
of the Sulfide Project that is entered into
after the Closing Date.
PROJECT PROPERTY: all Property of the Issuer, whether now owned
or hereafter acquired, and wherever located
(other than any interest of the Issuer in the
Accounts).
PROMISSORY NOTE: each promissory note executed and delivered by
the Issuer on each Disbursement Date in favor
of each Senior
24
Facility Lender making an Advance on such date.
PROPERTY: any rights or interest in, to or under property
of any kind whatsoever, whether real, personal
or mixed and whether tangible or intangible.
RBS: the meaning given in the recitals to this
Indenture.
RBS LENDER: RBS or any assignee of RBS that (i) has
purchased Senior Facility Loans in excess of
U.S.$10 million and (ii) has been designated by
RBS, or the immediate predecessor RBS Lender,
by written notice to the Administrative Agent
and the Issuer as the RBS Lender.
REDEMPTION PRICE: the meaning given in Section 3.16(a) of this
Indenture.
REPLACEMENT DEBT: Indebtedness of the Issuer, the proceeds of
which are used to prepay any of the Senior
Loans.
REPLACEMENT LENDERS: Any lender that has entered into a Replacement
Loan Agreement with the Issuer.
REPLACEMENT LOAN AGREEMENT: a loan agreement (w) which is entered into on
terms and conditions no less favorable to the
Issuer than the terms and conditions of the
Senior Facility Loan Agreement under which the
Commitment has been suspended or terminated,
(x) which provides for payment of principal and
interest on the same dates as principal and
interest are payable under the Senior Facility
Loan Agreement under which the Commitment has
been suspended or terminated (y) does not
mature earlier than the Maturity Date and (z)
which shall be secured on a pari passu basis
with the other Senior Facility Loan Agreements
but which shall not entitle the lender
thereunder (or holder of loans thereunder) to
any voting rights so long as such lender
25
or holder is a Parent Company or an Affiliate
thereof.
RESUMPTION CERTIFICATE The meaning given in Section 8.05 of this
Indenture.
SALES AGREEMENT: a contract or agreement entered into by or on
behalf of the Issuer for the sale or other
disposition of Concentrates, Cathodes or other
products produced by the Sulfide Project or the
Current Operations.
SC: Sumitomo Corporation
SCOTIA CAPITAL: the meaning given in the recitals to this
Indenture.
SCOTIA CAPITAL LENDER: Scotia Capital or any assignee of Scotia
Capital that (i) has purchased Senior Facility
Loans in excess of U.S.$10 million and (ii) has
been designated by Scotia Capital, or the
immediate predecessor Scotia Capital Lender, by
written notice to the Administrative Agent and
the Issuer as the Scotia Capital Lender.
SECURED PARTIES: The Senior Lenders, the Trustee, the Onshore
Collateral Agent, the Offshore Collateral
Agent, the Administrative Agent, and the JBIC
Agent under the JBIC Loan Agreement.
SECURITIES MARKET LAW: Consolidated Text of the Securities Market Law
(Texto Unico Ordenado de xx Xxx del Xxxxxxx de
Valores) approved by Supreme Decree
093-2002-EF/94.10, as amended.
SECURITY DOCUMENTS: the Onshore Security Documents and the Offshore
Security Documents.
SENIOR FACILITY LENDERS: any of JBIC, KfW Lender, Calyon Lender, RBS
Lender, Scotia Capital Lender and Mizhuo
Lender.
SENIOR FACILITY LENDERS the Master Participation Agreement, each Senior
FINANCING Facility Loan Agreement, each
26
DOCUMENTS: Promissory Note, and the Transfer Restrictions
Agreement.
SENIOR FACILITY LENDERS VOTE: a vote cast by the Senior Facility Lenders in
accordance with Section 6.09 of the Master
Security Agreement, it being understood that
the JBIC shall have 3 Senior Facility Lenders
Votes and each other Senior Facility Lender
shall have one Senior Facility Lenders Vote.
SENIOR FACILITY LOAN collectively the Commercial Banks Loan
AGREEMENTS: Agreement, the JBIC Loan Agreement and the KfW
Loan Agreement.
SENIOR FACILITY LOANS: loans provided to the Issuer by the Senior
Facility Lenders pursuant to various Senior
Facility Loan Agreements, together with any
Replacement Debt.
SENIOR FACILITY LOAN the obligations to pay the principal of and
OBLIGATIONS: interest on the Senior Facility Loans,
including any interest accruing after the
filing of a petition in bankruptcy or the
commencement of any insolvency or bankruptcy
proceedings with respect to the Issuer, and all
commissions, fees, indemnities and other
amounts payable to the Senior Facility Lenders
under the Master Participation Agreement and
their respective Senior Facility Loan
Agreements.
SENIOR LENDERS: prior to an issuance of Peruvian Bonds, each
Senior Facility Lender and after an issuance of
Bonds, collectively, each Senior Facility
Lender and, collectively, the Bondholders, it
being understood that the Bondholders shall
collectively count as only one Senior Lender.
SENIOR LENDERS FINANCING the Completion Guarantee and each Security
DOCUMENTS: Document.
SENIOR LENDERS VOTE: a vote cast by the Senior Lenders in accordance
with Section 6.09 of the Master Security
Agreement.
27
SENIOR LOANS: prior to an issuance of the Bonds, the Senior
Facility Loans and, after an issuance of the
Bonds, collectively, the Senior Facility Loans
and the Bonds.
SENIOR LOAN OBLIGATIONS: the Senior Facility Loan Obligations and the
Bonds Obligations.
SERIES: one or more series of Bonds that are part of a
single Issue.
SHAREHOLDER: any of the Sumitomo Participant, CCMC, and BVN.
SHAREHOLDERS' EQUITY: at any date, the subscribed and paid-in capital
stock plus legal reserves, other reserves and
retained earnings plus Subordinated Loans, if
any, as reported in the consolidated balance
sheet of the Issuer as of such date determined
in accordance with Peruvian GAAP and as set
forth in the Issuer's most recent quarterly or
annual financial statements, as applicable.
SHAREHOLDERS' PARENTS: any of PDC, SMM and SC.
SMBC: the meaning given in the recitals to this
Indenture.
SMCV SHARES: the shares of the Issuer held by or on behalf
of the Shareholders at any time.
SMM: Sumitomo Metal Mining Co., Ltd.
SMM CONCENTRATE SALES that certain Concentrate Sales Agreement, dated
AGREEMENT: June 1, 2005, between the Issuer and SMM, as
amended on the date of the signing of the
Master Security Agreement.
SPECIAL MEETING: any meeting of the Bondholders of a specific
Issue as provided in Article X of this
Indenture.
STABILITY AGREEMENT: the agreement executed by and between the
Issuer and the Ministry of Energy and Mines and
dated as of February 13, 1998, pursuant to
which the Peruvian State
28
granted in favor of the Issuer a Contract of
Guarantees and Investment Promotion Measures
stabilizing certain legal matters until its
expiration on December 31, 2013.
STAND-BY ADVANCE: Any subsequent advance to the Base Advances up
to the aggregate Base Committed Amount by the
Commercial Banks pursuant to the Commercial
Banks Loan Agreement.
STAND-BY COMMITTED AMOUNT: with respect to each Commercial Bank, the
amount set forth opposite its name on Schedule
A hereto, in the column titled "Stand-By
Committed Amounts," as such amount may be
adjusted from time to time.
STRUCTURING ENTITY: the meaning given in the preamble to this
Indenture.
SUB-ACCOUNTS: the meaning given in Section 4.01(b) of the
Master Security Agreement.
SUBORDINATED LENDER: a Person making a Subordinated Loan to the
Issuer.
SUBORDINATED LOAN: unsecured indebtedness of the Issuer to a
Subordinated Lender, whether presently
outstanding or hereafter created, incurred or
assumed, that is subordinated to the Senior
Loans in accordance with the "Terms of
Subordination" as attached to the Completion
Guarantee.
SUCCESSOR REPRESENTATIVE: the meaning given in Section 9.10(d) of this
Indenture.
SULFIDE PROJECT: the meaning given in the recitals to this
Indenture.
SUMITOMO PARTICIPANT: SMM Cerro Verde Netherlands B.V.
SUPERMAJORITY LENDERS: with respect to any vote or decision to be made
by Senior Lenders, (i) before the Availability
Period End Date, a vote or decision made by (x)
Senior Lenders with, in the case of Senior
Facility Lenders, a
29
cumulative Aggregate Committed Amount and, in
the case of Peruvian Bondholders, an Aggregate
Issued Bond Amount greater than 662/3% of the
sum of the cumulative Aggregate Committed
Amount of all Senior Facility Lenders and the
Aggregate Issued Amount of all Peruvian Bonds
and (y) at least 6 Senior Lenders Votes (or,
prior to an issuance of Peruvian Bonds, 5
Senior Facility Lenders Votes); and (ii) after
the Availability Period End Date, a vote or
decision made by (x) Senior Lenders holding
Senior Loans with an Outstanding Advance Amount
greater than 662/3% of the Outstanding Advance
Amount of the Senior Loans held by all Senior
Lenders and (y) at least 6 Senior Lenders Votes
(or, prior to an issuance of Peruvian Bonds, 5
Senior Facility Lenders Votes).
SUPPLEMENTAL INDENTURE: any supplement to this Indenture entered into
by the Issuer and the Common Representative
whereby the specific terms and conditions of a
Bond Issue shall be set forth.
SUSTAINING CAPITAL COSTS: at any time, the capital expenditures
(including repairs and replacement funded by
Insurance proceeds) of the Issuer required, in
the opinion of the Issuer, to maintain its
business operating at or near its design
capacity.
TERM: the meaning given in Section 3.17 of this
Indenture.
TOTAL LOSS: The actual total loss of the Business or any
event which short of actual total loss is
deemed by the Issuer's insurance carriers to be
a total loss of the Business for purposes of
paying claims under its property and casualty
policies.
TRANSFER RESTRICTIONS the Transfer Restrictions Agreement, dated as
AGREEMENT: of September 30, 2005, among the Sumitomo
Participant, BVN, CCMC,
30
SMM, SC, PDC, the Senior Facility Lenders and
the Administrative Agent.
TRUSTEE: the meaning given in the recitals to this
Indenture.
UNITED STATES: the United States of America
UNITED STATES GAAP: generally accepted accounting principles in the
United States as in effect from time to time.
WAR: war (declared or undeclared), civil war,
revolution, insurrection, civil strife or
terrorism (other than any such acts undertaken
primarily to achieve labor or student
objectives) in Peru which directly and
proximately causes (i) cessation of
substantially all construction or operation of
the Sulfide Project for a period of at least 30
consecutive days and renders it unreasonable or
impossible without unreasonable risk of
physical harm to Sulfide Project workers at the
Sulfide Project site to resume significant
construction or operation activities at the
Sulfide Project or (ii) damage to or
destruction of the Project Property to such
extent that it would be unreasonable for the
Issuer to proceed to completion of the Sulfide
Project.
31
ARTICLE II
PURPOSE OF THE INDENTURE
Section 2.01 Purpose. The purpose of this Indenture is to set forth the
general terms and conditions of the Bonds, as well as the rights and duties of
the Issuer and the Bondholders, in accordance with the provisions of the
Securities Market Law, the General Corporate Law and other Applicable Law.
Through the execution of this Indenture and the applicable Supplemental
Indenture by the Common Representative, the Bondholders will adhere to, and
ratify each and every term and condition of this Indenture and the applicable
Supplemental Indenture.
ARTICLE III
GENERAL TERMS AND CONDITIONS OF THE PROGRAM
Section 3.01 Placing Agent. __ shall act as placing agent with respect to
all Issues (the "PLACING AGENT").
Section 3.02 Class. The Bonds shall be registered, unseverable and freely
transferable, and will be represented by book entries in the accounting record
kept by CAVALI ICLV S.A. ("CAVALI"), a securities clearing entity duly
authorized by CONASEV. Nonetheless, should the Bonds be placed through a private
offering under article 5 of the Securities Market Law, it is understood that the
Bonds shall be subject to the transfer restrictions provided for therein.
Section 3.03 Co-Ownership. In the case of co-ownership of the Bonds, the
co-owners will agree on a single person to exercise the rights as Bondholder on
behalf of all co-owners of such Bonds and will provide written notice thereof to
the Issuer, signed by co-owners representing more than 50% of the co-owners and
authenticated by a notary public; provided that all co-owners of such Bonds
shall be jointly liable to the Issuer for any obligations arising from their
capacity as Bondholders.
Section 3.04 Issuance Costs. All costs related to the issuance of each
Issue shall be borne by the Issuer.
Section 3.05 Use of Proceeds. The Issuer shall use the proceeds of the
Bonds as set forth under applicable Supplemental Indenture.
Section 3.06 Issues and Series. (a) The Bonds shall be issued in one or
more Issues. Each Issue may consist of one or more Series of Bonds.
(b) All Bonds shall rank pari passu with the other Senior Loans without any
preference to the other Senior Loans by reason of date of incurrence, currency
of repayment or otherwise. Except as set forth in the preceding sentence, the
Bonds are neither qualified nor subordinated in relation to other obligations of
the Issuer.
32
(c) As permitted by Section 309 of the General Corporate Law, each Issue,
and each Series within a specific Issue, shall rank pari passu among all
Bondholders regardless of Issue and Series. Therefore, in the case of the
winding up of the Issuer, no Bondholder shall have pre-emptive rights, and each
Bondholder shall rank pari passu among all Bondholders regardless of Issue and
Series.
Section 3.07 Placement Date. The placement date of a specific Issue or
Series (the "PLACEMENT DATE") shall be set as provided in the applicable
Supplemental Indenture, Pricing Supplement and/or public offering notice. The
Placement Date of such Issue or Series shall be communicated publicly pursuant
to the applicable public offering notice.
Section 3.08 Issue Date. The issue date of a specific Issue or Series (the
"ISSUE DATE") shall be set as provided in the applicable Supplemental Indenture,
Pricing Supplement and/or public offering notice. The Issue Date of such Issue
or Series shall be communicated publicly pursuant to the applicable public
offering notice.
Section 3.09 Collateral. On the date of the execution of the Supplemental
Indenture relating to the first Issue under the Program, as security for the
Issuer's obligations under this Indenture and the applicable Supplemental
Indenture, the Common Representative, the Issuer and the Administrative Agent
shall enter into a conditional accession agreement (the "NEW PARTY ACCESSION
AGREEMENT"). The New Party Accession Agreement shall become effective upon the
Issue Date of the first Issue whereupon the Common Representative shall become a
party to the Completion Guarantee and the Master Security Agreement, and the
Common Representative, and the Bondholders, collectively and through the Common
Representative, shall have all of the rights and obligations of, respectively,
the Common Representative and a Senior Lender under, respectively, the
Completion Guarantee and the Master Security Agreement.
Section 3.10 Applicable Law. Each Issue shall be governed by Applicable
Law.
Section 3.11 Place of Payment and Paying Agent. (a) Payments of interest
and redemption of principal on the Bonds shall be made through CAVALI which
shall act as paying agent (the "PAYING AGENT"), and shall be made with such
funds as the Issuer shall provide from time to time; provided that the Issuer
shall have the right to appoint a replacement paying agent with respect to a
specific Issue pursuant to a Supplemental Indenture and/or the public offering
notice.
(b) The Paying Agent, and any other paying agent appointed by the Issuer as
provided above, shall not be liable to the Bondholders or the Common
Representative nor shall it be under any obligation to make any payment with its
own resources to the Bondholders or the Common Representative in the event that,
notwithstanding a demand for payment, the Issuer fails to provide such funds as
set forth in the pertaining agreement to be entered by and between the Issuer
and the Paying Agent (or any replacement paying agent).
Section 3.12 Secondary Market. The Bonds may be traded on the Lima Stock
Exchange and/or any other centralized trading mechanism, as established in the
applicable Supplemental Indenture and/or Pricing Supplement.
33
Section 3.13 Currency. The Bonds shall be issued in Dollars. Payment of
principal and interest on the Bonds shall be made in Dollars.
Section 3.14 Program Amount. The Issuer may issue Bonds under the Program
with an aggregate principal amount not to exceed [U.S.$250,000,000.00 (two
hundred and fifty million and 00/100 Dollars)] (the "PROGRAM AMOUNT"), which
amount may be increased by the agreement of the Issuer, the Common
Representative and the Structuring Entity, without the consent of the
Bondholders, any General Meeting or any Special Meeting.
Section 3.15 Private Offering. (a) Without prejudice to the provisions of
this Indenture, the Issuer, in its sole discretion, may place one or more Issues
through private offerings (each such placement, a "PRIVATE ISSUE"); provided
that the aggregate principal amount of any Bonds issued pursuant to a Private
Issue shall be counted towards the Program Amount described above.
(b) The terms and conditions of any such Private Issue shall be governed by
the specific terms and conditions set forth in this Indenture and the
Supplemental Indenture relating to such Private Issue.
Section 3.16 Optional Redemption. The Bonds are subject to the following
redemption options:
(a) Early Redemption. The Issuer shall have the right, in its sole
discretion, to redeem the outstanding Bonds, in whole or in part (an "EARLY
REDEMPTION"), on any date (the "EARLY REDEMPTION DATE") at a price (the
"REDEMPTION PRICE") equal to the sum of:
(i) the aggregate outstanding principal amount of the Bonds as of the
Early Redemption Date; and
(ii) accrued and unpaid interest on the outstanding principal amount
of the Bonds as of the Early Redemption Date.
No prepayment premium or penalty shall be due and payable in connection
with an Early Redemption unless such Early Redemption is financed with the
proceeds of replacement debt obtained (either at the time or within a period of
one year from such Early Redemption Date) from a Person other than the Parent
Companies or an Affiliate of the Parent Companies, in which case a prepayment
premium shall be payable as provided in the Supplemental Indenture entered into
in connection with the Bonds so redeemed.
Notwithstanding the foregoing, installments of interest on the Bonds that
are due and payable on interest payment dates that fall on the Early Redemption
Date shall be payable to the Bondholders as provided in this Indenture, the
applicable Supplemental Indentures and Applicable Law.
Notice of any Early Redemption described herein shall be published in "El
Peruano" at least thirty (30) Business Days but not more than sixty (60)
Business Days prior to the Early Redemption Date.
34
Unless the Issuer defaults in payment of the Redemption Price, interest
will cease to accrue on the Bonds on such Early Redemption Date.
In the event of an Early Redemption, all Bondholders shall be treated
equally and shall receive their respective pro rata portion of the Redemption
Price, and payment of the Redemption Price shall be made through the Paying
Agent or such other paying agent as the Issuer may appoint in the applicable
Supplemental Indenture and/or the public offering notice.
(b) Redemption under the General Corporate Law. The Issuer may redeem the
Bonds in any of the circumstances contemplated within Section 330 of the General
Corporate Law. In the case of such a redemption, Section 89 of the Securities
Market Law shall also apply.
(c) Additional Redemption Option. The Issuer may also redeem the Bonds in
other circumstances if so provided in the applicable Supplemental Indentures and
Pricing Supplements, in the form and within the time limits provided therein. In
the case of such a redemption, Section 89 of the Securities Market Law shall
also apply.
Section 3.17 Term of the Program. The term (the "TERM") of the Program
shall be the period of two (2) years from the listing thereof in the Public
Register of the Securities Market of CONASEV. The Issuer and the Structuring
Entity may, without the consent of the Bondholders, extend the Term for similar
periods.
Section 3.18 Placement Price. The Bonds may be placed at, below or over
the par value thereof as provided in the applicable Supplemental Indenture
and/or Pricing Supplement.
Section 3.19 Redemption of the Bonds and Payments of Principal. (a) The
maturity date of the Bonds (the "MATURITY Date") shall be set forth in the
applicable Supplemental Indenture.
(b) All payments with respect to amounts of principal due with respect to a
specific Issue (each such payment, a "PRINCIPAL PAYMENT") shall be made on the
applicable Payment Date. All Principal Payments shall be made through the Paying
Agent or such other paying agent as the Issuer may appoint in the applicable
Supplemental Indenture and/or the public offering notice. All Bondholders of a
specific Issue shall be treated equally with respect to the Principal Payments
and shall receive their respective pro rata portion of such Principal Payments.
Section 3.20 Common Representative. There shall be a single Common
Representative representing all Issues.
Section 3.21 Placement of Issues. The date, time and time limits relating
to the placement of each Issue or Series shall be set forth in the applicable
Supplemental Indenture, Pricing Supplement and/or public offering notice.
35
Section 3.22 Interest Rate. (a) The applicable interest rate for a
specific Issue and/or Series (the "INTEREST RATE") may be fixed, variable or
associated with the evolution of any indicator, and shall be determined prior to
the applicable Issue Date in accordance with the placement process described in
the Offering Circular or the additional information included in the applicable
Supplemental Indenture, Pricing Supplement or public offering notice.
(b) The Interest Rate for a specific Issue and/or Series, together with
provisions for the payment of accrued interest (each such payment, an "INTEREST
PAYMENT"), shall be set forth in the applicable Supplemental Indenture, Pricing
Supplement and/or public offering notice.
(c) The date of each Interest Payment (the "INTEREST PAYMENT DATE") shall
be set forth in the applicable Supplemental Indenture. In the event that the
date on which an Interest Payment is due is not a Business Day, the Issuer shall
make such Interest Payment on the immediately succeeding Business Day and the
Bondholders shall not be entitled to any interest on account of such delay in
payment.
Section 3.23 Face Amount of the Bonds. The face amount of each Bond shall
be set forth in the applicable Supplemental Indenture, Pricing Supplement and/or
public offering notice.
Section 3.24 Commercial Production Start-up Date. The Issuer shall notify
the Common Representative of the date as of which, in its judgment, it has
achieved start of commercial production of the Sulfide Project (the "COMMERCIAL
PRODUCTION START-UP DATE"); provided that such date shall be same date as the
date notified by the Issuer to the Senior Facility Lenders for purposes of
determining the date of payment of principal of the Senior Facility Loans.
Section 3.25 Other Terms and Conditions. The terms and conditions set forth
herein shall apply to each Issue and Series thereof. The specific terms and
conditions relating to each Issue that are not set forth in this Indenture shall
be set forth in the applicable Supplemental Indenture, Pricing Supplement and/or
public offering notice.
ARTICLE IV
OBLIGATIONS OF THE ISSUER(19)
Section 4.01 Obligations of the Issuer. Without prejudice to the
obligations set forth in the Securities Market Law, the regulations on the
primary public offering and the sale of securities (Reglamento de Oferta Publica
Primaria y de Venta de Valores Mobiliarios), approved by CONASEV Resolution No
141-98-EF/94.10, as amended, and
----------
(19) Note: provisions in brackets below will only be included if the relevant
provision is required for marketing purpose or by applicable laws or
regulations.
36
other Applicable Law, the Issuer undertakes the following obligations to the
Bondholders of a specific Issue, unless otherwise authorized by a Special
Meeting of any specific Issue:
(a) Make Principal Payments and Interest Payments on the Bonds as they
become due and payable.
(b) (i) Verify that all information (A) disclosed in this Indenture, the
Offering Circular, the applicable Supplemental Indenture and Pricing Supplement,
and (B) delivered to CONASEV and/or the Common Representative with respect to a
specific Issue is true and correct and that all such information is disclosed
and/or delivered in a clear and timely fashion.
(ii) With respect to information relating to the Program and/or the
Issuer, disclose any and all relevant information that is required to be
disclosed by and in accordance with Applicable Law, except for information
that qualifies as "reserved information" under Applicable Law and is
disclosed as such to CONASEV.
(iii) The information disclosed by the Issuer should not be construed
as a recommendation or suggestion for potential investors aimed to
interfere in their respective investment decisions.
(c) Provide the Common Representative with copies of all information
submitted to CONASEV within the [five (5)] Business DAYS following the date on
which the Issuer delivers such information to CONASEV; provided that the Issuer
shall be under no obligation to provide the Common Representative with copies of
information submitted to CONASEV in accordance with this Section 4.01(c) to the
extent that the Issuer classifies such information as "reserved" in accordance
with Applicable Law.
(d) Provide such additional information relating to the performance of its
material obligations with respect to a specific Issue as a Special Meeting,
General Meeting or the Common Representative, on behalf of the applicable Issue,
may reasonably request in writing. Such information shall be delivered within
[thirty (30)] Business Days following any such request, unless the provision of
such information by the Issuer is forbidden or protected by Applicable Law, or
may damage the Issuer.
(e) In the event that one or more creditors of the Issuer file a petition
for the Issuer to be declared insolvent or in situacion de concurso under the
General Bankruptcy System Law (Ley General del Sistema Concursal), Law No.
27809, or under any such provision as may replace the aforementioned law, the
Issuer shall, upon notification of the filing of such a petition, notify the
Common Representative of such petition and keep it reasonably informed of
developments relating to such petition.
(f) Within three (3) Business Days from the end of each calendar trimester,
the Issuer shall deliver a certificate to the Common Representative certifying
that, to the best of its knowledge, no Default or Event of Default has occurred
with respect to a specific Issue.
(g) Comply in all material respects with all Applicable Laws, including
required Governmental Approvals, rules, regulations and orders of Peru and each
other applicable
37
jurisdiction, unless the necessity of compliance therewith is contested in good
faith by appropriate proceedings, and with respect to which adequate accounting
reserves have been established and maintained by the Issuer in accordance with
United States GAAP with respect thereto.
(h) Pay and discharge, before the same shall become delinquent, all taxes,
assessments and governmental charges or levies lawfully imposed on it or its
property (including interest and penalties) pursuant to Applicable Law, unless
such taxes, assessments, governmental charges or levies are contested in good
faith and by appropriate proceedings and adequate accounting reserves are
established by the Issuer in accordance with United States GAAP with respect
thereto.
(i) Permit the compliance by the Common Representative with its obligations
under this Indenture and the Supplemental Indentures, if applicable, and respect
the powers and duties vested in the Common Representative.
(j) Sell (i) the volumes of Concentrate and Cathodes, as the case may be,
covered in the Offtake Agreements at the prices stipulated therein, and (ii) the
balance of its production of Concentrate and Cathodes in U.S.$ at market prices,
and cause all proceeds arising from the Offtake Agreements or from other sales
of Concentrate or Cathodes to be paid directly to the Trustee for deposit to the
Proceeds Account or, in the case of Domestic Sales, to the Issuer for deposit to
the Onshore Dollars Account.
(k) Not enter into any material transactions except in the ordinary course
of business, on ordinary commercial terms and on the basis of arms' length
arrangements, provided that neither this covenant nor Section 4.01(r) shall
limit the Issuer's ability to transfer (including, without limitation, by way of
donation) its co-ownership interest in the Pillones Dam to any third party so
long as the water rights of the Issuer for the Current Operations and the
Sulfide Project are unaffected by such transfer; and provided further that the
transactions undertaken pursuant to any Identified Material Project Document
with a Parent Company shall be deemed to meet the standard in this clause (k).
(l) As required by Section 319 of the General Corporate Law, pay the
expenses of the Bondholder syndicate of a specific Issue up to a limit of two
percent (2.0%) of the annual Interest Rate of the applicable Issue and/or Series
(the "EXPENSE CAP"); provided that any expenses incurred for the benefit of all
Issues, including expenses incurred in connection with a General Meeting, shall
be distributed pro rata among each Issue for the purpose of calculating the
Expense Cap.
(m) [All transactions between the Issuer and any of its Affiliates shall be
on commercially reasonable terms that are at least as favorable to the Issuer as
those which might be obtained in an arm's length transaction with a Person that
is not an Affiliate, it being agreed that all Closing Project Documents between
the Issuer and any of its Affiliates (excluding changes thereto or negotiation
of variable provisions thereunder after the date hereof) are deemed to meet this
standard.]
(n) [The Issuer shall at all times (either directly or through one or
several global insurance policies maintained by one or several of its
Affiliates) maintain property and
38
casualty insurance coverage with respect to the Project Property, of an
insurable nature and of a character usually insured in such amount as are
customary for copper mines and mining facilities of similar location, type and
scale.]
(o) [Mining Concessions.
(i) The Issuer shall keep the Core Mining Concessions in full force
and effect and shall, shall pay all fees and other payments payable in
connection with the continuation therewith, defend its right, title and
interest in, to and under the Core Mining Concessions against any adverse
or competing claim.
(ii) The Issuer shall keep the Mining Concessions that are not Core
Mining Concessions in full force and effect, shall pay all fees and other
payments payable in connection with the continuation therewith, and shall
defend its right, title and interest in, to and under such Mining
Concessions against any adverse or competing claim, except to the extent
that the failure of such Mining Concession to be in full force and effect
or the failure of the Issuer to defend its right, title and interest in, to
and under such Mining Concessions against any adverse or competing claim
would not be reasonably likely to have a Material Adverse Effect.]
(p) [Notice of Defaults. The Issuer shall immediately notify the Common
Representative upon its discovery of the occurrence of any Default or Event of
Default.]
(q) [Environmental Compliance. The Issuer shall, and shall cause all other
persons occupying the site of its Business to, in all material respects perform
its obligations and operate its Business in accordance with all Applicable
Environmental Laws.]
(r) [Facilities. The Issuer shall maintain the facilities necessary for the
operation of the Sulfide Project and its Current Operations in good repair in
accordance with good industry mining practice.]
(s) As of the date of execution of each Supplemental Indenture, the Issuer
shall have delivered or caused to be delivered to the Structuring Entity and the
Common Representative the following documents, each of which shall be
satisfactory to the Structuring Entity in form and substance:
(i) Authorizations, etc. The Structuring Entity and the Common
Representative shall have received certified copies of the organizational
documents of the Issuer and of the actions of the board of directors or
other governing body of the Issuer taken to authorize the execution,
delivery and performance of the Indenture and the applicable Supplemental
Indenture, and the performance by it of its obligations hereunder and
thereunder.
(ii) Incumbency and Signatures. The Structuring Entity and the Common
Representative shall have received certificates of the Issuer in respect of
the authority and incumbency, and containing a specimen signature, of each
Person who has signed or will sign on its behalf the Supplemental Indenture
or any certificate to be delivered thereunder or hereunder, or who will,
until replaced by
39
another Person or Persons duly authorized for that purpose, otherwise act
as representative for the purposes of signing documents in connection with
this Indenture and the transactions contemplated hereby and thereby.
(iii) Security Documents. The Structuring Entity and the Common
Representative shall have received executed copies of each Security
Document, the Master Security Agreement and the Completion Guarantee and
each such agreement shall be in full force and effect, and all actions
required to be taken under the Security Documents to perfect the security
interest created thereunder shall have been taken.(20)
ARTICLE V
RESTRICTIONS APPLICABLE TO THE ISSUER
Section 5.01 Applicable Restrictions. Unless otherwise authorized by a
Special Meeting of a specific Issue, the Issuer shall be subject to the
following restrictions with respect to each Issue from the Issue Date of each
such Issue through the applicable Maturity Date:
(a) In the event that a Default and/or Event of Default relating to a
specific Issue occurs and is continuing, the Issuer, unless otherwise required
by Applicable Law, shall not agree on (i) the application of profits for any
dividend distribution; (ii) the payment of dividends, whether in cash or in kind
(except for dividends resulting from the capitalization of profits or reserves);
(iii) any distribution on the Shareholders' Equity; or (iv) the purchase,
redemption or other acquisition of any shares of the Issuer or any reduction of
Shareholders' Equity; provided that this restriction does not include any
reduction of Shareholders' Equity without distribution (whether in cash or in
kind) in favor of the shareholders of the Issuer, including, without limitation,
a reduction of Shareholders' Equity that is the result of the compensation of
losses.
(b) The Issuer shall not conduct any business other than any business
related to or incidental to the Current Operations and the Sulfide Project and
any activity contemplated in the Financing Documents, provided that the Issuer
shall have the right to conduct any other mining activity so long as (A) such
activity is conducted in the Concessions area, (B) such activity does not have a
Material Adverse Effect, (C) the Issuer observes its affirmative covenants
(including, without limitation, with respect to insurance) in relations to such
activity, (D) the Senior Lenders are given a first priority security interest in
the assets of the Issuer related to such activity, and (E) such activity is
undertaken after the Completion Release Date. This provision shall not prevent
the Issuer from entering into agreements or other arrangements with PDC or any
of its Affiliates regarding any copper concentrate leaching facilities
constructed, owned or operated by PDC or such Affiliate of PDC.
----------
(20) Note: Legal opinions to be described in the Supplemental Indenture.
40
(c) The Issuer shall not transfer or assign, in whole or in part, the debt
resulting from the issuance of the Bonds.
(d) The Issuer shall not enter into any merger or consolidation with any
other entity.
(e) The Issuer shall not make any loan or advance to any Person except for
(i) Permitted Investments, (ii) down payments and prepayments to suppliers,
(iii) loans and advances to its employees and loans to employees of the Operator
for travel, moving and household expenses of such employees and for the purchase
of land and the construction and purchase of housing for such employees, in the
ordinary course of business and in an aggregate amount not exceeding
U.S.$5,000,000 (or its Equivalent) at any one time outstanding and (iv) other
loans and advances in connection with the Business in an aggregate amount not
exceeding U.S.$10,000,000 (or its Equivalent) at any one time outstanding.
(f) The Issuer shall not create, assume or suffer to exist any Lien upon
any of its Property, assets or contractual rights in each case whether now owned
or hereafter acquired, except for the following Liens (collectively, "PERMITTED
LIENS"):
(i) Liens imposed by any Governmental Authority for taxes not yet due
or which are being contested in good faith and by appropriate proceedings
(and against which adequate accounting reserves are being maintained in
accordance with United States GAAP);
(ii) Liens for customs duties, relating to imported assets, owed by
the Issuer that have been deferred in accordance with Applicable Law;
(iii) deposits or pledges to secure the Issuer's obligations under
workmen's compensation, social security or similar laws, or under
unemployment insurance;
(iv) deposits or pledges to secure bids, tenders, contracts (other
than contracts for the payment of money), leases, statutory obligations,
surety and appeal bonds, and other obligations of like nature arising in
the ordinary course of business;
(v) bankers' liens arising in the ordinary course of the Issuer's
activities with commercial banks;
(vi) mechanic's, workmen's, materialmen's or other like liens arising
in the ordinary course of business with respect to obligations which are
not due or which are being contested in good faith and by appropriate
proceedings (and against which adequate reserves are being maintained);
(vii) the rights of a buyer of identified goods of the Issuer pursuant
to Section 2-501 of the Uniform Commercial Code as in effect from time to
time in the State of New York or any other similar provision of applicable
law;
41
(viii) easements (including easements for electric transmission lines)
and minor imperfections of title on real estate and Concessions (other than
the Core Mining Concessions), provided that such imperfections and
easements do not render title unusable for purposes of the Business;
(ix) Liens on any Property of the Issuer to which the Issuer has not
consented and which are being contested by the Issuer in good faith and by
appropriate proceedings or liens imposed by law (and against which adequate
accounting reserves are being maintained in accordance with United States
GAAP); and
(x) Liens created pursuant to the Security Documents or otherwise for
the benefit of the Senior Lenders, the Onshore Collateral Agent and the
Offshore Collateral Agent.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF THE ISSUER(21)
The Issuer represents and warrants to the Common Representative, the Structuring
Entity and the Bondholders, as of the date hereof, that:
Section 6.01 Organization. The Issuer is a sociedad anonima abierta,
established for an indefinite term, duly incorporated, validly existing and in
good standing under the laws of the Republic of Peru. The Issuer has the
corporate power and authority to enter into and perform this Indenture, each
Supplemental Indenture and each other Senior Lenders Financing Document and to
carry out the transactions contemplated hereby and thereby; the execution and
delivery of this Indenture, each Supplemental Indenture and each other Senior
Lenders Financing Document and the consummation of the transactions contemplated
hereby and thereby have been or will have been duly authorized by all necessary
corporate action on the part of the Issuer; this Indenture, and each
Supplemental Indenture will have been, duly executed and delivered by a duly
authorized officer of the Issuer; and this Indenture and each other Senior
Lenders Financing Document constitutes, and each Supplemental Indenture will
constitute, the valid, legal and binding obligation of the Issuer, in each case
enforceable in accordance with their respective terms, except that such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium and similar laws affecting the rights and remedies of
creditors or parties to executory contracts generally and by equitable
principles of general applicability.
Section 6.02 Information Disclosed and Provided. All of the information
disclosed in the Offering Circular and this Indenture, each Supplemental
Indenture and the applicable Pricing Supplement and all information that the
Issuer may provide to
----------
(21) Note: Provisions in brackets below will only be included if the relevant
provision is required for marketing purpose or by applicable laws or
regulations.
42
CONASEV, the Bondholders and the Common Representative with respect to a
specific Issue, in each case, complies with the requirements of Applicable Law.
Section 6.03 Legal Proceedings. Except as disclosed in the Offering
Circular and there is no action, suit, proceeding or investigation, at law or in
equity, or before any Governmental Authority or other Person, pending or, to the
best knowledge of the Issuer, threatened, against or affecting the Issuer or its
assets that (a) questions the validity of this Indenture or any Supplemental
Indenture or any action taken pursuant hereto or thereto or (b) in any case or
in the aggregate would reasonably be expected to result in a Material Adverse
Effect.
Section 6.04 Compliance with Other Instruments and Laws.
(a) Neither the execution and delivery of this Indenture or any
Supplemental Indenture, nor the consummation of the transactions contemplated
hereby or thereby, will result in any violation of or be in conflict with,
constitute a default under, or result in the creation of any lien, charge or
encumbrance upon any property of the Issuer pursuant to any provision of the
organizational documents of the Issuer.
(b) Neither the execution and delivery of this Indenture or any
Supplemental Indenture, nor the consummation of the transactions contemplated
hereby or thereby, will result in any material violation of or be in material
conflict with, constitute a material default under, or result in the creation of
any lien, charge or encumbrance upon any material property of the Issuer
pursuant to any provision of any agreement, instrument, judgment, decree, order,
law or regulation applicable to the Issuer or any of its properties.
(c) Except as disclosed in the Offering Circular, the Issuer is in material
compliance with all such provisions, agreements, instruments, judgments,
decrees, orders, laws or regulations applicable to the Issuer or any of its
properties except for any that the Issuer is disputing in good faith by
appropriate proceedings and for which the Issuer has set aside adequate
accounting reserves in accordance with United States GAAP.
(d) Schedule 6.04 sets forth each Governmental Approval which is necessary
under Applicable Law in connection with the transactions contemplated by the
Financing Documents and the Project Documents, including any environmental
regulatory permits and approvals necessary to commence and conduct construction
and to operate the Sulfide Project and the Current Operations, but excepting
routine and non-material approvals and authorizations (each a "CORE GOVERNMENTAL
APPROVAL").
(e) (i) the Issuer has obtained, and is in compliance with all of the terms
and requirements of, each Core Governmental Approval listed as having been made
or obtained on Schedule 6.04 and (ii) all such Core Governmental Approvals are
in full force and effect.
Section 6.05 Taxes. Except as disclosed in Schedule 6.05 or the Offering
Circular and except for taxes being contested in good faith by appropriate
proceedings and for which the Issuer has set aside adequate accounting reserves
in accordance with United States GAAP, the Issuer has filed or caused to be
filed all tax returns required to be filed by it, and
43
has paid all taxes shown to be due and payable on such returns, or on any
assessments made against it or any of its properties by written notice, and all
other taxes, assessments, fees, liabilities or other charges imposed on it or on
its properties by applicable laws or regulations, except where such failure to
file or pay, in any case or in the aggregate, would not reasonably be expected
to result in a Material Adverse Effect.
Section 6.06 Absence of Undisclosed Liabilities. [Except as disclosed in
the Offering Circular] the Issuer has not incurred any liabilities or
obligations that would be required to be reflected or reserved against in a
balance sheet prepared in accordance with Peruvian GAAP in a manner consistent
with the Financial Statements except for (a) liabilities or obligations
reflected or reserved against in the Financial Statements or (b) liabilities,
including liabilities incurred in the ordinary course of business since December
31, 2004 that, in any case or in the aggregate, would not reasonably be expected
to result in a Material Adverse Effect.
Section 6.07 Financial Statements. (a)The financial statements of the
Issuer included in the Offering Circular (including any restatements thereof, if
applicable), as well as with respect to a specific Issue, the financial
statements of the Issuer included in the applicable Pricing Supplement (such
financial statements included in the applicable Pricing Supplement, the
"FINANCIAL STATEMENTS"), fairly present, in all material respects, the financial
condition of the Issuer and the results of operations and changes in financial
position as of the date of such statements, and have been prepared in accordance
with Peruvian GAAP consistently applied throughout the periods reported therein.
There are no material off-balance sheet transactions, arrangements, obligations
or relationships attributable to the Issuer's business or to which the Issuer is
a party.
(b) Except as otherwise disclosed in writing to the Common Representative,
or as otherwise disclosed in the Offering Circular and the applicable Pricing
Supplement, since the date of such financial statements there has been no
material adverse change in the Issuer's financial condition.
Section 6.08 Ranking. The obligations of the Issuer under this Indenture,
any Supplemental Indenture and the Bonds issued hereunder and thereunder, will
at all times rank in right of payment and of collateral security (a) pari passu
with the Issuer's obligations under the Senior Facility Loan Agreements and the
Senior Facility Loans made thereunder, (b) senior to the obligations of the
Issuer in respect of the Subordinated Loans and (c) pari passu in right of
payment with or senior in right of payment to, and senior in right of collateral
security (other than Permitted Liens) to, all other obligations of the Issuer
other than those which have priority under Applicable Law.
Section 6.09 [Mining and Beneficiation Concessions. Except as set forth in
Schedule 6.09 or as would not, in any case or in the aggregate, reasonably be
expected to result in a Material Adverse Lender Effect, the Issuer has full and
sufficient rights to use the Core Mining Concessions, water rights and surface
lands necessary for the Business as currently conducted and with respect to the
Sulfide Project, as described in the Offering Circular. Except as would not, in
any case or in the aggregate, reasonably be expected to result in a Material
Adverse Lender Effect, or as disclosed in Schedule 6.09, the real
44
property not owned by Issuer is currently served by all easements, rights of way
and utilities services that are necessary for the operation of the Business as
currently conducted thereon or contemplated to be conducted thereon.]
Section 6.10 [Environmental Matters. Except as set forth in Schedule 6.10
or as disclosed in the Offering Circular, the Issuer is in compliance in all
material respects with all Applicable Environmental Laws.]
Section 6.11 [Labor Matters. Except as set forth in Schedule 6.11 or as
disclosed in the Offering Circular, the Issuer is in material compliance with
all applicable laws and regulations relating to labor, industrial relations and
the employment of its employees.]
Section 6.12 [Consents, etc. Except as set forth in Schedule 6.12 or as
disclosed in the Offering Circular, neither the execution or delivery by the
Issuer of this Indenture nor the consummation or performance by the Issuer of
the transactions provided for hereby or thereby is subject to any requirement
that the Issuer obtain any consent, approval or authorization of, or make any
declaration or filing with, any third party that is not a Governmental
Authority, except where the failure to obtain such consent, approval or
authorization or to make such declaration or filing would not reasonably be
expected to materially impair the operation of the Business.]
Section 6.13 [No MPA Default. To the extent any Senior Facility Loan
Obligations remain outstanding on the date as of which this representation is
made, no event of default has been declared and is continuing under the Master
Participation Agreement.]
Section 6.14 [Security Documents. The security interests granted in the
Collateral pursuant to the Security Documents which are on the date as of which
this representation is made are required to be registered pursuant to the terms
of the Master Security Agreement have been duly registered and such
registrations is in full force and effect.]
Section 6.15 Ratification and Amendment of Representations and Warranties.
(a)With respect to each Issue, the Issuer shall be deemed to have ratified the
validity of the representations and warranties set forth in this Article VI to
the Common Representative, on behalf of the Bondholders of the applicable Issue
and the Structuring Entity in the following situations:
(i) Upon execution of the applicable Supplemental Indenture (unless
the Issuer expressly states otherwise therein);
(ii) Upon execution of the public deeds incorporating this Indenture
and the applicable Supplemental Indenture (unless the Issuer otherwise
notifies the Common Representative and the Structuring Entity in writing
prior to the execution of such public deeds); and
(iii) On the Placement Date of each of the Bonds of such Issue (unless
the Issuer otherwise notifies the Common Representative and the Structuring
Entity in writing at least [two (2)] Business Days prior to the Placement
Date).
45
(b) With respect to each Issue, (i) the representations and warranties set
forth in this Article VI may be amended, extended, and/or adjusted in the
applicable Supplemental Indenture, and (ii) if requested by the Issuer, a breach
of any of the representations and warranties set forth in this Article VI may be
waived upon approval of a Special Meeting of the applicable Issue.
ARTICLE VII
COLLATERAL
Section 7.01 Collateral. All payment and other obligations of the Issuer
under the Bonds and the Senior Facility Loan Agreements are secured by the
Collateral.
Section 7.02 Enforcement on the Collateral. The enforcement on the
Collateral by the Senior Lenders shall be governed by the provisions of the
Master Security Agreement, which governs the relationship between the Senior
Facility Lenders and the Bondholders, and the other Security Documents.
Section 7.03 Release of Collateral. Pursuant to the terms of the Master
Security Agreement, upon the payment in full of the Senior Facility Loan
Obligations and upon receipt by the Common Representative of a written
certificate from the Administrative Agent to such effect, all security interests
and rights in the Collateral created in favor of the Senior Lenders pursuant to
the Master Security Agreement and the other Security Documents shall terminate
and be released; provided, however, that the Issuer and the Common
Representative shall have received from any two of the rating agencies that have
issued a rating with respect to the Bonds written confirmation that immediately
after the release of the Collateral, and as a result thereof, the rating of the
Bonds will be at least equal to the greater of (i) the rating of the Bonds
immediately before such release and (ii) the rating issued to the Bonds as of
their Issue Date, provided further, that in the event that one or both of such
rating agencies are unable to provide such written confirmation, the Issuer may
seek written confirmation from one or more, as the case may be, other rating
agencies registered with CONASEV. Thereafter, the Issuer shall not, without the
prior written consent of the Common Representative, create, assume or suffer to
exist any Lien upon any of its material Property, assets or contractual rights,
in each case whether then owned or thereafter acquired, except for Permitted
Liens.
ARTICLE VIII
DEFAULTS AND EVENTS OF DEFAULT(22)
Section 8.01 Defaults. Each of the following events shall constitute a
"DEFAULT" with respect to a specific Issue during the term of effectiveness of
the Bonds of such Issue:
----------
(22) Note: Provisions in brackets below will only be included if the relevant
provision is required for marketing purpose or by applicable laws or
regulations.
46
(a) The Issuer fails to make a payment in respect of interest or principal
on the Bonds or the Senior Facility Loans (each such default, a "PAYMENT
DEFAULT") when and as such payment shall be due and payable, as provided in this
Indenture, the applicable Supplemental Indenture or in the applicable Senior
Facility Lender Financing Documents, provided that a Payment Default shall not
occur if such default is the result of the actions of or the failure to act by
the Paying Agent or any other paying agent appointed by the Issuer as provided
in Section 3.11(a) of this Indenture.
(b) The Issuer fails to (i) use the proceeds of the Bonds of such Issue for
the purposes set forth in this Indenture or the applicable Supplemental
Indenture, (ii) observe any of the material restrictions in Article V of this
Indenture, (iii) meet the material obligations contained in Article IV of this
Indenture, or (iv) meet any other material obligation, term or condition set
forth in this Indenture or the applicable Supplemental Indenture, in such a
manner that such Default could reasonably result in a Material Adverse Effect.
(c) The Issuer commences a proceeding under any applicable bankruptcy,
reorganization, arrangement, readjustment of debt, relief of debtors,
dissolution, insolvency, liquidation or similar law (whether now or hereafter in
effect) relating to itself, or is declared bankrupt, is dissolved by reason of
insolvency or makes a general assignment for the benefit of creditors, or any
action is taken by it for the purpose of effecting any of the foregoing or by a
receiver, custodian or trustee or other officer or representative of a court or
of creditors; or there is commenced against it any such proceeding which remains
undismissed for 60 days from the date the Issuer receives such notification from
the court where such proceeding has been filed.
(d) A representation or warranty made by the Issuer hereunder shall prove
to have been false when made or ratified in any material respect and such breach
of representation or warranty could reasonably be expected to have a Material
Adverse Effect.
(e) Any of this Indenture, the applicable Supplemental Indenture, the Bonds
issued thereunder, the applicable Pricing Supplement or any of the Senior
Lenders Financing Documents is declared null, voidable or invalid by final and
binding decision of the competent authority and, consequently, is legally void,
or if the Issuer challenges the validity thereof, except due to causes not
attributable to the Issuer.
(f) The Issuer shall fail to obtain, maintain or renew any Core
Governmental Approval and (i) such failure is reasonably likely to have a
Material Adverse Effect and the Issuer fails to obtain a replacement Core
Governmental Approval within 90 days after the occurrence of such failure to
obtain, maintain or renew such Core Governmental Approval or (ii) in the case of
a Core Governmental Approval that is an Identified Material Project Document,
such failure is reasonably likely to have a Material Adverse Project Effect and
the Issuer fails to obtain a replacement Core Governmental Approval within 180
days after the occurrence of such failure to obtain, maintain or renew such Core
Governmental Approval.
47
(g) Any Indebtedness of the Issuer (other than the Senior Loans and
Subordinated Loans) that is due and payable (it being understood that
Indebtedness other than for borrowed money shall not be deemed to be due and
payable if there is a good faith dispute as to the amount of such Indebtedness)
in a principal amount in excess of U.S.$10,000,000 or its Equivalent is not paid
when due (and any grace period relating thereto has expired) or becomes or is
declared to be due and payable prior to the stated maturity thereof and such
Indebtedness shall remain unpaid for 30 days from its due date or from the date
of such acceleration.
(h) Final judgment or judgments for the payment of money in excess of
U.S.$10,000,000 in the aggregate or its Equivalent shall be rendered by a court
or courts against the Issuer and shall remain unpaid, unstayed on appeal,
undischarged, unbonded or undismissed for a period of 60 days from the date of
notification to the Issuer.
(i) Any of the Shareholders or the Shareholders' Parents breaches its share
transfer restrictions set forth in Article II of the Transfer Restrictions
Agreement.
(j) [To the extent that the Collateral has not been released as described
in Section 7.03, security interests purported to be created by or under any of
the Security Documents with respect to the Collateral shall fail or cease to be
validly perfected first priority security interests where such failure or
cessation is, by itself or in the aggregate, reasonably likely to have a
Material Adverse Effect.]
(k) [Abandonment or Total Loss of the Sulfide Project or the Current
Operations shall have occurred.]
Section 8.02 Occurrence of Defaults.
(a) Notwithstanding the Issuer's obligations under the regulations on
material facts and confidential information (Reglamento de Hechos de Importancia
e Informacion Reservada", approved by CONASEV Resolution No. 107-2002-EF/94.10),
upon the occurrence of one or more of the Defaults described in Section 8.01
(other than the Defaults described in subsections (a), (c) and (k) of Section
8.01) with respect to a specific Issue, the Issuer shall report such event in
writing to the Common Representative within three (3) Business Days after the
Issuer is notified or first becomes aware of such Default. Upon the receipt of
such notification, the Common Representative shall verify the occurrence such
Default as contemplated under Section 9.08 of this Indenture, and upon such
verification, convene a General Meeting pursuant to Article X of this Indenture.
In such General Meeting, the Bondholders shall instruct the Common
Representative whether or not to deliver a notice to the Issuer, with a copy to
the Administrative Agent, declaring that a Default has occurred (the "NOTICE OF
ORDINARY DEFAULT"). The Issuer shall have a period of thirty (30) Business Days
from the next Business Day following the day on which the Issuer receives the
Notice of Ordinary Default with respect to the applicable Default in order to
cure such Default (the "ORDINARY DEFAULT CURE PERIOD"), provided that with
respect to those Defaults described in subsections (b) of Section 8.01, the
Ordinary Default Cure Period shall be (i) zero (0) days with respect to the
obligations set forth under Sections 5.01(a) and 5.01(d), (ii) thirty (30) days
with respect to the obligations set forth under Sections 4.01(j)(ii), [4.01(o),
4.01(r)], 5.01(b), 5.01(e), and 5.01(f), and (iii) ninety (90) days with respect
to the obligations set forth under
48
Sections 4.01(e), 4.01(g), 4.01(h), 4.01(j)(i), 4.01(k), [4.01(m), 4.01(n), and
4.01(q)], in each case, from the date the Issuer receives the Notice of Ordinary
Default with respect to a applicable Default, except for in case of Default with
respect to the Issuer's obligation under Section 4.01(o), but only relates to
covenants to keep the Core Mining Concessions in full force and effective, 30
days from the date of occurrence of the breach of such covenant. In the event
that the Issuer fails to cure the applicable Default during the applicable
Ordinary Default Cure Period, an Ordinary Event of Default with respect to the
applicable Issue shall be deemed to have occurred (each, an "ORDINARY EVENT OF
DEFAULT").
(b) Upon the occurrence of a Payment Default described in (a) of Section
8.01 with respect to a specific Issue and the failure on the part of the Issuer
to cure such Payment Default by the next Business Day following the date on
which the applicable payment was originally due (the "PAYMENT DEFAULT CURE
PERIOD"), a Payment Event of Default shall be deemed to have occurred with
respect to the applicable Issue (each, a "PAYMENT EVENT OF DEFAULT").
(c) Upon the occurrence of a Default described in subsection (c) of Section
8.01 (each, a "BANKRUPTCY EVENT OF DEFAULT"), a Bankruptcy Event of Default with
respect to all Issues shall be deemed to have occurred.
(d) [Upon the occurrence of a Default described in subsection (k) of
Section 8.01 (an "ABANDONMENT EVENT OF DEFAULT"), an Abandonment Event of
Default with respect to all Issues shall be deemed to have occurred.]
Section 8.03 Events of Default and Remedies Prior to Payment in Full of
Senior Facility Loan Obligations. Prior to the payment in full of the Senior
Facility Loan Obligations, the Bondholders shall have the following remedies
upon the occurrence of an Ordinary Event of Default, Payment Event of Default,
Bankruptcy Event of Default or Abandonment Event of Default, as the case may be:
(a) Ordinary Event of Default. Upon the occurrence of an Ordinary Event of
Default with respect to a particular Issue,
(i) The Issuer shall report such Ordinary Event of Default to CONASEV
and to the entity entrusted with conducting the centralized negotiation
mechanism where the Bonds are registered through a "Material Fact"
communication, as well as to the Common Representative of the affected
Issue, without prejudice to the obligation set forth in Section 4.01(c) of
this Indenture.
(ii) (A) Within ten (10) Business Days following the occurrence of an
Ordinary Event of Default, the Common Representative shall schedule a
Special Meeting of the Bondholders of the applicable Issue in accordance
with the requirement of Article X (except as otherwise provided in this
Section 8.03(a)).
49
(B) The Common Representative shall notify the Issuer, in
writing, on the same Business Day that such Special Meeting has been
scheduled.
(iii) (A) At the Special Meeting scheduled pursuant to Section
8.03(a)(ii) above, the Bondholders of the applicable Issue shall resolve
whether or not to instruct the Common Representative to (1) extend the
Ordinary Default Cure Period; (2) to the extent that there are multiple
Issues under the Program, schedule a General Meeting at which Bondholders
of all Issues shall resolve as to whether or not to direct the Common
Representative to deliver a notice of such Ordinary Event of Default (the
"NOTICE OF ORDINARY EVENT OF DEFAULT") to the Issuer and to commence or not
to commence the voting process relating to the potential exercise of
remedies pursuant to Article V of the Master Security Agreement (including
by exercising its right to request the Administrative Agent to convene a
meeting of the Senior Lenders) or (3) to the extent that there is only one
(1) Issue under the Program, whether or not to deliver a Notice of Ordinary
Event of Default to the Issuer and to commence or not to commence the
voting process relating to the potential exercise of remedies pursuant to
Article V of the Master Security Agreement; provided that so long as the
Senior Facility Loans remain outstanding, the Special Meeting described
hereunder shall be prohibited from taking, or from directing the Common
Representative to take, any other actions with respect to the exercise of
remedies upon the occurrence of an Ordinary Event of Default.
(B) The Common Representative shall notify the Issuer, in
writing, no later than the next Business Day following the day on
which the Special Meeting is held with respect to the general terms of
the resolutions adopted at such Special Meeting.
(iv) In the event that the Special Meeting described in this Section
8.03(a) resolves to direct the Common Representative to schedule a General
Meeting at which the Bondholders of all Issues shall resolve as to whether
or not to direct the Common Representative to deliver to the Issuer a
Notice of Ordinary Event of Default, the Common Representative shall
schedule a General Meeting pursuant to the procedures set forth in Section
10.03 of this Indenture.
(v) (A) At the General Meeting described in Section 8.03(a)(iv), the
Bondholders shall resolve whether or not to instruct the Common
Representative to deliver a Notice of Ordinary Event of Default to the
Issuer and to commence or not to commence the voting process relating to
the potential exercise of remedies pursuant to Article V of the Master
Security Agreement (including by exercising its right to request the
Administrative Agent to convene a meeting of the Senior Lenders); provided
that so long as the Senior Facility Loans remain outstanding, the General
Meeting described hereunder shall be prohibited from taking, or from
directing the Common Representative to take, any other actions with respect
to the exercise of remedies upon the occurrence of an Ordinary Event of
Default.
50
(B) In the event that such General Meeting resolves to direct the
Common Representative to deliver to the Issuer a Notice of Ordinary
Event of Default, the Common Representative shall (i) notify the
Issuer, in writing, no later than the next Business Day following the
day on which such General Meeting is held with respect to the general
terms of the resolutions adopted at such General Meeting and (ii)
deliver such Notice of Ordinary Event of Default to the Issuer, with a
copy to the Administrative Agent, within [three (3)] Business Days of
the day on which such General Meeting is held.
(vi) (A) For the avoidance of doubt, the remedies set forth in this
Section 8.03(a) shall be the exclusive and sole remedies of the Bondholders
upon the occurrence of an Ordinary Event of Default so long as the Senior
Facility Loans remain outstanding.
(B) Following the payment in full of the Senior Facility Loan
Obligations, upon the occurrence of an Ordinary Event of Default, the
Bondholders shall have the remedies set forth in Section 8.04(a) of
this Indenture.
(b) Payment Event of Default. Upon the occurrence of a Payment Event of
Default with respect to a particular Issue,
(i) (A) Within two (2) Business Days following the occurrence of a
Payment Event of Default, the Common Representative shall schedule a
Special Meeting of the Bondholders of the applicable Issue in accordance
with the requirements of Article X (except as otherwise set forth in this
Section 8.03(b)).
(B) The Common Representative shall notify the Issuer, in
writing, on the same Business Day that such Special Meeting has been
scheduled.
(ii) (A) At the Special Meeting scheduled pursuant to Section
8.03(b)(i) above, the Bondholders of the applicable Issue shall resolve
whether or not to instruct the Common Representative (1) to extend the
Payment Default Cure Period; (2) to the extent that there are multiple
Issues under the Program, to schedule a General Meeting at which
Bondholders of all Issues shall vote as to whether or not to direct the
Common Representative to deliver a notice of such Payment Event of Default
(the "NOTICE OF PAYMENT EVENT OF DEFAULT") to the Issuer and to commence or
not to commence the voting process relating to the potential exercise of
remedies pursuant to Article V of the Master Security Agreement (including
by exercising its right to request the Administrative Agent to convene a
meeting of the Senior Lenders); or (3) to the extent that there is only one
(1) Issue under the Program, whether or not to deliver a Notice of Payment
Event of Default to the Issuer and to commence or not to commence the
voting process relating to the potential exercise of remedies pursuant to
Article V of the Master Security Agreement; provided that so long as the
Senior Facility Loans remain
51
outstanding, the Special Meeting described hereunder shall be prohibited
from taking, or from directing the Common Representative to take, any other
actions with respect to the exercise of remedies upon the occurrence of a
Payment Event of Default.
(B) The Common Representative shall notify the Issuer, in
writing, no later than the next Business Day following the day on
which the Special Meeting is held with respect to the general terms of
the resolutions adopted at such Special Meeting and, if applicable,
the extent to which the Special Meeting was unable to adopt any
resolutions relating to the Payment Event of Default.
(iii) (A) Each Bondholder of the applicable Issue shall not exercise
its statutory right to collect unpaid interest and principal on the Bonds
until a resolution has been adopted by the Bondholders of the applicable
Issue at the Special Meeting with respect to what measures shall be taken
among those described in Section 8.03(b)(ii)(A) above. Moreover, as
provided in Section 326 of the General Corporate Law, the Bondholders of
the applicable Issue may not commence individual collection actions which
are inconsistent with a resolution adopted by the Bondholders of such Issue
at the Special Meeting described herein.
(B) Notwithstanding the provisions of this Section 8.03(b), each
Bondholder of the applicable Issue may exercise its statutory right to
collect unpaid interest and principal on the Bonds, as well as any
other right described in Section 326 of the General Corporate Law, (1)
in the event that no resolution is reached as to the exercise of
remedies at the Special Meeting described in Section 8.03(b)(ii), from
the next Business Day following the date of such Special Meeting or
the second call of such Special Meeting, as the case may be, or (2) in
the event that the Special Meeting described in Section 8.03(b)(ii)(A)
is not held on the first or second call, from the next Business Day
following the date on which such Special Meeting was scheduled to be
held on the second call as provided in Article X.
(C) To the extent the Common Representative is notified by a
Bondholder pursuant to Section 9.06, the Common Representative shall
notify the Issuer, in writing, of the exercise of statutory remedies
by individual Bondholders, if any, no later than the next Business Day
following the date on which the Common Representative receives notice
of the exercise of such statutory remedies.
(iv) In the event that the Special Meeting described in this Section
8.03(b) resolves to direct the Common Representative to schedule a General
Meeting at which the Bondholders of all Issue shall resolve as to whether
or not to direct the Common Representative to deliver to the Issuer a
Notice of Payment Event of Default, the Common Representative shall
schedule a General Meeting pursuant to the procedures set forth in Section
10.03 of this Indenture.
52
(v) (A) At the General Meeting described in Section 8.03(b)(iv), the
Bondholders shall resolve whether or not to instruct the Common
Representative to deliver a Notice of Payment Event of Default to the
Issuer and to commence or not to commence the voting process relating to
the potential exercise of remedies pursuant to Article V of the Master
Security Agreement (including by exercising its right to request the
Administrative Agent to convene a meeting of the Senior Lenders), provided
that so long as the Senior Facility Loans remain outstanding, the General
Meeting described hereunder shall be prohibited from taking, or from
directing the Common Representative to take, any other actions with respect
to the exercise of remedies upon the occurrence of a Payment Event of
Default.
(B) In the event that such General Meeting resolves to direct the
Common Representative to deliver to the Issuer a Notice of Payment
Event of Default, the Common Representative shall (1) notify the
Issuer, in writing, no later than the next Business Day following the
day on which such General Meeting is held with respect to the general
terms of the resolutions adopted at such General Meeting and (2)
deliver such Notice of Payment Event of Default to the Issuer, with a
copy to the Administrative Agent, within [three (3)] Business Days of
the day on which such General Meeting is held.
(vi) (A) For the avoidance of doubt, the remedies set forth in this
Section 8.03(b) and those granted to the Bondholders by Applicable Law
shall, subject to the terms and conditions set forth in this Section
8.03(b), be the exclusive and sole remedies of the Bondholders upon the
occurrence of a Payment Event of Default so long as the Senior Facility
Loans remain outstanding.
(B) Following the payment in full of the Senior Facility Loan
Obligations, upon the occurrence of a Payment Event of Default, the
Bondholders shall have the remedies set forth in Section 8.04(b) of
this Indenture.
(vii) For the avoidance of doubt, any and all actions taken in
connection with the foreclosure upon the Collateral which secures all
payment and other obligations of the Issuer under the Bonds and the Senior
Facility Loan Agreements must be taken pursuant to the terms and conditions
of the Master Security Agreement. Accordingly, Article 328 of the General
Corporate Law should not be interpreted as providing an alternative way for
individual Bondholders to foreclose upon the Collateral in a manner that is
inconsistent with the specific terms and conditions provided for in the
Master Security Agreement. Furthermore, no Bondholder can accelerate the
payment obligations of principal or interest on the Bonds unless as
expressly set forth under Article V of the Master Security Agreement or
Section 8.03(e) of this Indenture. Accordingly, the parties expressly agree
that the acceleration right contemplated under Article 1323 of the Peruvian
Civil Code shall not be applicable to the payment obligations of the Issuer
under the Bonds.
53
(c) Bankruptcy Event of Default. Upon the occurrence of a Bankruptcy Event
of Default,
(i) All of the Bonds shall automatically become immediately due and
payable, both as to principal and interest, without further notice and
without presentment, demand, protest or other notice of any kind, all of
which are hereby expressly waived by the Issuer.
(ii) The Issuer shall report such Bankruptcy Event of Default to
CONASEV and to the entity entrusted with conducting the centralized
negotiation mechanism where the Bonds are registered through a "Material
Fact" communication, as well as to the Common Representative, without
prejudice to the obligation set forth in Section 4.01(c) herein.
(iii) (A) No later than two (2) Business Days following the occurrence
of a Bankruptcy Event of Default, the Common Representative shall schedule
a General Meeting of the Bondholders of all Issues in accordance with the
requirements of Article X (except as otherwise set forth in this Section
8.03(c)).
(B) (1)The Common Representative shall notify the Issuer, in
writing, on the same Business Day that such General Meeting has been
scheduled.
(iv) (A) At the General Meeting scheduled pursuant to Section
8.03(c)(iii) above, the Bondholders of all Issues shall resolve whether or
not to direct the Common Representative to deliver a Notice of such
Bankruptcy Event of Default (the "NOTICE OF BANKRUPTCY EVENT OF DEFAULT")
to the Issuer and to commence or not to commence the voting process
relating to the potential exercise of remedies pursuant to Article V of the
Master Security Agreement (including by exercising its right to request the
Administrative Agent to convene a meeting of the Senior Lenders); provided
that so long as the Senior Facility Loans remain outstanding, the General
Meeting described hereunder shall be prohibited from taking, or from
directing the Common Representative to take, any other actions with respect
to the exercise of remedies upon the occurrence of a Bankruptcy Event of
Default.
(B) In the event that such General Meeting resolves to direct the
Common Representative to deliver to the Issuer a Notice of Bankruptcy
Event of Default, the Common Representative shall (1) notify the
Issuer, in writing, no later than the next Business Day following the
day on which such General Meeting is held with respect to the general
terms of the resolutions adopted at such General Meeting and (2)
deliver such Notice of Bankruptcy Event of Default to the Issuer, with
a copy to the Administrative Agent, within [three (3)] Business Days
of the day on which such General Meeting is held.
(v) For the avoidance of doubt, the remedies set forth in this Section
8.03(c) shall be the exclusive and sole remedies of the Bondholders upon
the
54
occurrence of a Bankruptcy Event of Default so long as the Senior Facility
Loans remain outstanding.
(vi) Following the payment in full of the Senior Facility Loan
Obligations upon the occurrence of a Bankruptcy Event of Default, the
Bondholders shall have the remedies set forth in Section 8.04(c) of this
Indenture.
(d) [Abandonment Event of Default. Upon the occurrence of an Abandonment
Event of Default,
(i) The Issuer shall report such Abandonment Event of Default to
CONASEV and to the entity entrusted with conducting the centralized
negotiation mechanism where the Bonds are registered through a "Material
Fact" communication, as well as to the Common Representative, without
prejudice to the obligation set forth in Section 4.01(c) herein.
(ii) (A) Within two (2) Business Days following the occurrence of an
Abandonment Event of Default, the Common Representative shall schedule a
General Meeting of the Bondholders of all Issues in accordance with the
requirements of Section 10.03 (except as otherwise set forth in this
Section 8.03(d)).
(B) The Common Representative shall notify the Issuer, in
writing, on the same Business Day that such General Meeting has been
scheduled.
(iii) (A) At the General Meeting scheduled pursuant to Section
8.03(d)(ii) above, the Bondholders of all Issues shall resolve whether or
not to direct the Common Representative to deliver a Notice of such
Abandonment Event of Default (the "NOTICE OF ABANDONMENT EVENT OF DEFAULT")
to the Issuer and to commence or not to commence the voting process
relating to the potential exercise of remedies pursuant to Article V of the
Master Security Agreement (including by exercising its right to request the
Administrative Agent to convene a meeting of the Senior Lenders); provided
that so long as the Senior Facility Loans remain outstanding, the General
Meeting described hereunder shall be prohibited from taking, or from
directing the Common Representative to take, any other actions with respect
to the exercise of remedies upon the occurrence of an Abandonment Event of
Default.
(B) In the event that such General Meeting resolves to direct the
Common Representative to deliver to the Issuer a Notice of Abandonment
Event of Default, the Common Representative shall (1) notify the
Issuer, in writing, no later than the next Business Day following the
day on which such General Meeting is held with respect to the general
terms of the resolutions adopted at such General Meeting and (2)
deliver such Notice of Abandonment Event of Default to the Issuer,
with a copy to the Administrative Agent, within [three (3)] Business
Days of the day on which such General Meeting is held.
55
(iv) For the avoidance of doubt, the remedies set forth in this
Section 8.03(d) shall be the exclusive and sole remedies of the Bondholders
upon the occurrence of an Abandonment Event of Default so long as the
Senior Facility Loans remain outstanding.
(v) Following the payment in full of the Senior Facility Loan
Obligations upon the occurrence of an Abandonment Event of Default, the
Bondholders shall have the remedies set forth in Section 8.04(d) of this
Indenture.]
(e) Cross-Acceleration. In the event that all of the Senior Facility Loan
Obligations become immediately due and payable pursuant to the terms of the
Master Security Agreement, all of the Bonds shall automatically become
immediately due and payable, without further notice and without presentment,
demand, protest or other notice of any kind, all of which are hereby expressly
waived by the Issuer.
(f) Rescission of Acceleration. Following an acceleration of the Bonds of
any Issue in accordance with the terms hereof and of the Master Security
Agreement, such acceleration shall be rescinded and annulled in circumstances
where the Senior Lenders have made decision to rescind and annul such
acceleration in accordance with Section 5.01(c) of the Master Security
Agreement.
Section 8.04 Remedies Following Payment in Full of Senior Facility Loan
Obligations. Upon the payment in full of the Senior Facility Loan Obligations,
the Bondholders shall have the following remedies upon the occurrence of an
Ordinary Event of Default, Payment Event of Default Bankruptcy Event of Default,
or Abandonment Event of Default, as the case may be:
(a) Ordinary Event of Default. Upon the occurrence of an Ordinary Event of
Default with respect to a particular Issue,
(i) The Issuer shall report such Ordinary Event of Default to CONASEV
and to the entity entrusted with conducting the centralized negotiation
mechanism where the Bonds are registered through a "Material Fact"
communication, as well as to the Common Representative of the affected
Issue, without prejudice to the obligation set forth in Section 4.01(c) of
this Indenture.
(ii) (A) Within ten (10) Business Days following an Ordinary Event of
Default, the Common Representative shall schedule a Special Meeting of the
Bondholders of the applicable Issue in accordance with the requirements of
Article X.
(B) The Common Representative shall notify the Issuer, in
writing, on the same Business Day that such Special Meeting has been
scheduled.
(iii) (A) At the Special Meeting scheduled pursuant to Section
8.04(a)(ii) above, the Bondholders of the applicable Issue shall resolve
whether or not to instruct the Common Representative to (1) extend the
Ordinary Default Cure
56
Period; (2) declare the Bonds of the applicable Issue to be due and
payable, both as to principal and as to interest and upon such declaration,
all principal and interest of the Bonds of the applicable Issue shall
automatically become immediately due and payable without any further notice
and without presentment, demand, protest or other notice of any kind, all
of which are expressly waived by the Issuer; (3) waive any remedies of the
Bondholders of the applicable Issue with respect to such Ordinary Event of
Default; or (4) take any other actions that such Special Meeting may deem
appropriate with respect to such Ordinary Event of Default.
(B) The Common Representative shall notify the Issuer, in
writing, no later than the next Business Day following the day on
which the Special Meeting is held with respect to the general terms of
the resolutions adopted at such Special Meeting.
(b) Payment Event of Default. Upon the occurrence of a Payment Event of
Default with respect to a particular Issue,
(i) (A) Following the expiration of the Payment Default Cure Period
and within two (2) Business Days following such expiration of the Payment
Default Cure Period, the Common Representative shall schedule a Special
Meeting of the Bondholders of the applicable Issue in accordance with the
requirements of Article X.
(B) The Common Representative shall notify the Issuer, in
writing, on the same Business Day that such Special Meeting has been
scheduled.
(ii) (A) At the Special Meeting scheduled pursuant to Section
8.04(b)(i) above, the Bondholders of the applicable Issue shall resolve
whether or not to instruct the Common Representative to (1) extend the
Payment Default Cure Period; (2) declare the Bonds of the applicable Issue
to be due and payable, both as to principal and as to interest and upon
such declaration, all principal and interest of the Bonds of the applicable
Issue shall automatically become immediately due and payable without any
further notice and without presentment, demand, protest or other notice of
any kind, all of which are hereby expressly waived by the Issuer; (3) waive
any remedies of the Bondholders of the applicable Issue with respect to
such Payment Event of Default; or (4) take any other actions that such
Special Meeting may deem appropriate with respect to such Payment Event of
Default.
(B) The Common Representative shall notify the Issuer, in
writing, no later than the next Business Day following the day on
which the Special Meeting is held with respect to the general terms of
the resolutions adopted at such Special Meeting and, if applicable,
the extent to which the Special Meeting was unable to adopt any
resolutions relating to the Payment Event of Default.
(iii) (A) Each Bondholder of the applicable Issue shall not exercise
its statutory right to collect unpaid interest and principal on the Bonds
until a resolution
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has been adopted by the Bondholders of the applicable Issue at the Special
Meeting with respect to what measures shall be taken among those described
in Section 8.04(b)(ii)(A) above. Moreover, as provided in Section 326 of
the General Corporate Law, the Bondholders of the applicable Issue may not
commence individual collection actions which are inconsistent with a
resolution adopted by the Bondholders of such Issue at the Special Meeting
described herein.
(B) Notwithstanding the provisions of this Section 8.04(b), each
Bondholder of the applicable Issue may exercise its statutory right to
collect unpaid interest and principal on the Bonds, as well as any
other right described in Section 326 of the General Corporate Law, (1)
in the event that no resolution is reached as to the exercise of
remedies at the Special Meeting described in Section 8.04(b)(ii), from
the next Business Day following the date of such Special Meeting or
the second call of such Special Meeting, as the case may be or (2) in
the event that the Special Meeting described in Section 8.04(b)(ii)(A)
is not held on the first or second call, from the next Business Day
following the date on which such Special Meeting was scheduled to be
held on the second call as provided in Article X.
(C) To the extent that the Common Representative is notified by a
Bondholder pursuant to Section 9.06, the Common Representative shall
notify the Issuer, in writing, of the exercise of statutory remedies
by individual Bondholders, if any, no later than the next Business Day
following the date on which the Common Representative receives notice
of the exercise of such statutory remedies.
(c) Bankruptcy Event of Default. Upon the occurrence of a Bankruptcy Event
of Default,
(i) All of the Bonds shall automatically become immediately due and
payable, both as to principal and as to interest, without further notice
and without presentment, demand, protest or other notice of any kind, all
of which are hereby expressly waived by the Issuer.
(ii) The Issuer shall report such Bankruptcy Event of Default to
CONASEV and to the entity entrusted with conducting the centralized
negotiation mechanism where the Bonds are registered through a "Material
Fact" communication, as well as to the Common Representative, without
prejudice to the obligation set forth in Section 4.01(c) herein.
(iii) (A) Within two (2) Business Days following the occurrence of a
Bankruptcy Event of Default, the Common Representative shall schedule a
General Meeting of the Bondholders of all Issues in accordance with the
requirements of Article X.
(B) The Common Representative shall notify the Issuer, in
writing, on the same Business Day that such General Meeting has been
scheduled.
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(iv) (A) At the General Meeting scheduled pursuant to Section
8.04(c)(iii) above, the Bondholders of all Issues shall resolve whether or
not to instruct the Common Representative to take any other actions that
such General Meeting may deem appropriate with respect to such Bankruptcy
Event of Default.
(B) The Common Representative shall notify the Issuer, in
writing, no later than the next Business Day following the day on
which the General Meeting is held with respect to the general terms of
the resolutions adopted at such General Meeting.
(d) [Abandonment Event of Default. Upon the occurrence of an Abandonment
Event of Default,
(i) The Issuer shall report such Abandonment Event of Default to
CONASEV and to the entity entrusted with conducting the centralized
negotiation mechanism where the Bonds are registered through a "Material
Fact" communication, as well as to the Common Representative, without
prejudice to the obligation set forth in Section 4.01(c) herein.
(ii) (A) Within two (2) Business Days following the occurrence of an
Abandonment Event of Default, the Common Representative shall schedule a
General Meeting of the Bondholders of all Issues in accordance with the
requirements of Article X.
(B) The Common Representative shall notify the Issuer, in
writing, on the same Business Day that such General Meeting has been
scheduled.
(iii) (A) At the General Meeting scheduled pursuant to Section
8.04(d)(ii) above, the Bondholders of all Issues shall resolve whether or
not to instruct the Common Representative to take any other actions that
such General Meeting may deem appropriate with respect to such Abandonment
Event of Default.
(B) The Common Representative shall notify the Issuer, in
writing, no later than the next Business Day following the day on
which the General Meeting is held with respect to the general terms of
the resolutions adopted at such General Meeting.]
Section 8.05 [Abandonment. If the Issuer voluntarily ceases all or
substantially all construction or production activities of the Sulfide Project
or the Current Operations and such cessation continues without interruption for
90 days (the "ABANDONMENT TRIGGERING EVENT"), the Common Representative shall
have the right, pursuant to a resolution of a Special Meeting or, if there are
multiple Issues, of General Meeting, to deliver to the Issuer a notice (an
"ABANDONMENT INQUIRY") requesting a certificate (a "RESUMPTION CERTIFICATE")
from the Issuer certifying that the Issuer intends to cause all or substantially
all construction or production activities of the Sulfide Project or the Current
Operations, as the case may be, to resume as soon as is commercially
practicable. If, following the Issuer's receipt of an Abandonment Inquiry, (i)
within 30 days following delivery of the
59
Abandonment Inquiry to the Issuer, the Issuer does not deliver a Resumption
Certificate or the Issuer does not resume all or substantially all such
activities, (ii) the Issuer timely delivers a Resumption Certificate but does
not resume all or substantially all such activities within 30 days following
such delivery, or (iii) the Issuer timely delivers a Resumption Certificate and
resumes such activities but does not maintain such activities for at least 120
days during the 180-day period following timely delivery of such a certificate,
an Abandonment shall be deemed to have occurred (an "ABANDONMENT"). For purposes
of this provision, the Issuer shall not be deemed to have voluntarily ceased
construction or production activities of the Sulfide Project or the Current
Operations if the cessation of construction or production activities is caused
by an Event of Political Force Majeure or results from the depletion of the ore
resources for the Current Operations, which is expected to occur prior to the
Maturity Date.]
ARTICLE IX
COMMON REPRESENTATIVE
Section 9.01 Duties. The Common Representative shall have no powers, rights
or duties other than those specifically set forth or provided for in this
Indenture, any Supplemental Indenture, Applicable Law, and, upon effectiveness
of the New Party Accession Agreement, the Completion Guarantee and the Master
Security Agreement.
Section 9.02 Liability. (a) The Common Representative shall not be liable
for any error of judgment or for any act done or omitted to be done by it in
good faith or for any mistake of fact or law, or for anything which it may do or
refrain from doing, except for its own gross negligence or willful misconduct.
Further, the Common Representative shall not be liable for any act, failure to
act or Default of the Issuer or for any actions that individual Bondholders may
elect to take against the Issuer.
(b) The Common Representative shall not be liable to the Bondholders of a
specific Issue for (i) any information provided by the Issuer in the Offering
Circular, this Indenture, any of the Supplemental Indentures and Pricing
Supplements and any other document prepared or furnished by the Issuer in order
to register the Program or any Bonds in the Public Register of the Securities
Market of CONASEV, (ii) any information provided by the Issuer to CONASEV, and
any General Meeting and/or Special Meeting during the term of effectiveness of
the Bonds of a specific Issue, or (iii) not disclosing any non-public
information (informacion privilegiada) relating to the Issuer in compliance with
article 43 of the Securities Market Law and other Applicable Law.
(c) To the extent the Common Representative comes across any non public
information (informacion privilegiada) relating to the Issuer, it shall request
the Issuer to disclose such information to the market as required by Applicable
Law.
Section 9.03 Powers, Rights and Duties of Common Representative With
Respect to Each Issue. The Common Representative shall have the following
individual powers, rights and duties with respect to the each Issue, unless
otherwise provided in this Indenture and/or the applicable Supplemental
Indenture:
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(a) Schedule a Special Meeting (i) as soon as fifty percent (50%) of the
Issue is subscribed, (ii) as required by the terms of this Indenture and/or the
applicable Supplemental Indenture, (iii) as requested, through a letter recorded
by a Notary Public, by one or more Bondholders representing no less than twenty
percent (20%) of the aggregate face value of the then-outstanding Bonds of such
Issue; (iv) as requested by the Issuer pursuant to Section 10.03 of this
Indenture, (v) as required by the Administrative Agent, and (vi) whenever it
deems it necessary.
(b) Chair any Special Meetings scheduled pursuant to Section 9.03(a) above.
(c) Keep the minutes book of any Special Meeting scheduled pursuant to
Section 9.03(a) above, and be responsible for its custody and conservation.
(d) Exercise all of the powers and perform all of the duties contemplated
under this Indenture and/or the applicable Supplemental Indenture.
(e) Retain legal representation for the Bondholders of the specific Issue
as a group.
(f) Attend the deliberations at any general shareholders meeting of the
Issuer, without the right to vote, in accordance with item 3 of Section 325 of
the General Corporate Law.
(g) Confirm the payment by the Issuer of interest and principal with
respect to the Bonds and, in general, safeguard the rights of the Bondholders
within the limits set forth in this Indenture and/or the applicable Supplemental
Indenture. The aforementioned limits shall not preclude the applicability of the
provisions in Section 92 of the Securities Market Law.
(h) Request from the Issuer all information and documentation required to
be provided by this Indenture and Applicable Law, and make such information and
documentation available to each Bondholder, upon prior written request, at the
address indicated in Section 13.02(b) of this Indenture.
(i) Appoint the individual or individuals who will permanently represent
the Common Representative in connection with its dealings with the Issuer.
(j) Call a general shareholders meeting of the Issuer in the event that (i)
there is a Payment Default for more than eight (8) Business Days and (ii) the
Issuer has failed to call such a meeting within such period.
(k) (i) Institute and pursue legal proceedings on behalf of the Bondholders
and (ii) take other actions on behalf of the Bondholders to preserve rights or
property granted to it pursuant to this Indenture and/or the applicable
Supplemental Indenture, each as directed by the applicable Special Meeting and
at the sole cost and expense of the Bondholders attending such Special Meeting,
without prejudice to the provisions of Section 327 of the General Corporate Law;
provided that the Common Representative shall retain such legal counsel in
connection with the legal proceedings described above as directed by the
applicable Special Meeting; provided further that the Common Representative
shall not be
61
liable to the Bondholders for the performance of such legal counsel during such
legal proceedings, for the outcome of such legal proceedings, or for any
expenses arising therefrom.
(l) Within twenty-five (25) Business Days of payment in full of principal
and interest on the Bonds of such Issue, execute, jointly with the Issuer, the
applicable public instrument of repayment.
(m) Maintain the confidentiality of all non-public information relating to
the Issuer and/or its shareholders as may become known to it in it capacity as
Common Representative, unless disclosure of such non-public information is
absolutely necessary for the Common Representative to meet its obligations under
this Indenture and/or the applicable Supplemental Indenture. For purposes of
this Section 9.03(m), the Common Representative shall request the Issuer to
disclose any such non-public information and the Issuer shall make such
disclosure in accordance with Applicable Law.
(n) Deliver a notice that an Event of Default has ceased to exist to the
Issuer and the Administrative Agent in accordance with a resolution issued
pursuant to Section 10.02(a).
(o) Any other obligations now or hereafter provided by Applicable Law,
including, without limitation, those set forth in Section 92 of the Securities
Market Law.
Section 9.04 Powers, Rights and Duties of Common Representative With
Respect to All Issues. The Common Representative shall have the following
individual powers, rights and duties with respect to the all Issues as a whole,
without prejudice to its individual powers, rights and duties as Common
Representative with respect to each specific Issue:
(a) Schedule a General Meeting (i) as required pursuant to the terms of
this Indenture; (ii) as requested, through a letter recorded by a Notary Public,
by one or more Bondholders representing no less than twenty percent (20%) of the
aggregate face value of the then-outstanding Bonds; (iii) as requested by the
Issuer pursuant to Section 10.03 of this Indenture; and (iv) as required by the
Administrative Agent.
(b) Chair any General Meeting scheduled pursuant to Section 9.04(a) above.
(c) Upon the execution of the first Supplemental Indenture pursuant to this
Indenture, execute and deliver the New Party Accession Agreement.
(d) (i) Upon resolution of a General Meeting or Special Meeting, as the
case may be, scheduled pursuant to Section 8.03, deliver to the Issuer and the
Administrative Agent the applicable Notice of Indenture Event of Default.
(ii) Upon resolution of a General Meeting contemplated under Section
8.02(a), deliver to the Issuer a Notice of Ordinary Default.
(iii) Upon resolution of a General Meeting or Special Meeting, as the
case may be, request the Administrative Agent to convene a meeting of the
Senior Lenders as contemplated under Section 6.10 of the Master Security
Agreement.
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(iv) Provide the Bondholders, as required by the Administrative Agent,
with any material information relating to any voting or other decisions to
be made by the Senior Lenders with respect to the exercise of remedies
pursuant to Article V of the Master Security Agreement or the Completion
Guarantee.
(v) To the extent instructed by further resolution of such General
Meeting, participate in any voting or other decisions to be made by the
Senior Lenders with respect to the exercise of remedies pursuant to Article
V of the Master Security Agreement or the Completion Guarantee.
(e) Deliver a notice that an Event of Default has ceased to exist to the
Issuer and the Administrative Agent in accordance with a resolution issued
pursuant to Section 10.01(a).
(f) Upon resolution of a General Meeting or Special Meeting, as the case
may be, scheduled pursuant to Article X of this Agreement, provide any consent
or approval with respect to any amendment or supplement to, or waiver of
provisions of, any Financing Documents that requires the consent or approval of
the Bondholders.
(g) Keep the Minutes Book of any General Meeting scheduled pursuant to
Section 9.04(a) above and be responsible for its custody and conservation.
(h) Participate in decisions to be made by the Senior Lenders as a group
pursuant to terms of the Master Security Agreement and the Completion Guarantee.
Section 9.05 Limited Interference in Business of the Issuer. The Common
Representative shall coordinate its requests and other activities involving the
Issuer so as to avoid duplication of tasks on part of the Issuer and to avoid
any interference, other than what is strictly necessary, with the conduct of the
business of the Issuer.
Section 9.06 Statutory Bondholder Remedies. Notwithstanding the Common
Representative's appointment herein to act on behalf of the Bondholders of each
Issue, each Bondholder shall retain the right to pursue its individual statutory
remedies, as provided in Section 326 and Section 328 of the General Corporate
Law except as set forth in Section 8.03 and Section 8.04 of this Indenture and
in Article V of the Master Security Agreement; provided that each Bondholder
shall notify the Common Representative, in writing, of the exercise of its
individual statutory remedies on the next Business Day following such exercise
of remedies.
Section 9.07 Actions of Common Representative Binding on Present and Future
Bondholders. (a) Any legal proceedings instituted or pursued by the Common
Representative pursuant to this Indenture, the applicable Supplemental
Indenture, and/or Applicable Law shall be final and binding on all present and
future Bondholders of all present and future Issues; provided the foregoing
shall not be interpreted as precluding the exercise by any or all of the
Bondholders, present and future, of (i) the right to contest the validity of
resolutions adopted by the Bondholders in a meeting as provided in the General
Corporate Law and (ii) the right to terminate the Common Representative's
representation as provided in Section 92 of the Securities Market Law.
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(b) Any actions, procedures or other acts taken by the Common
Representative in its performance of the resolutions adopted at a General
Meeting or Special Meeting, as the case may be, shall be final and binding on
(i) in the case of a General Meeting, all present and future Bondholders, and
(ii) in the case of a Special Meeting, all present and future Bondholders of the
applicable Issue, and, in each case, inclusive of dissidents and Bondholders who
failed to attend such meeting; provided that the foregoing shall not be
interpreted as precluding the exercise by present and future Bondholders of the
right to contest the validity of resolutions adopted by the Bondholders in a
meeting as provided in the General Corporate Law.
Section 9.08 Events of Defaults. The Common Representative, upon receipt of
notice in accordance with the terms of this Indenture and/or any applicable
Supplemental Indenture of the occurrence of one or more Defaults described in
Section 8.01 of this Indenture, shall (a) verify the occurrence of such Default,
and in case of Default specified under Section 8.02(a) of this Indenture,
schedule a General Meeting as contemplated under Section 8.02(a) of this
Indenture, and (b) upon expiration of the applicable cure period, if any,
schedule a Special Meeting or General Meeting, as the case may be, in order to
allow the applicable Bondholders to make decisions as to the exercise of
remedies, as provided in Section 8.03 or Section 8.04, as the case may be. In
the event that a Special Meeting or General Meeting contemplated under Section
8.03 or Section 8.04 does not occur for whatever reason, the Common
Representative shall promptly notify the Issuer accordingly.
Section 9.09 Obligations of the Common Representative Pursuant to
Applicable Law. Nothing contained within this Article IX should be interpreted
as limiting any of the obligations imposed by Applicable Law upon the Common
Representative.
Section 9.10 Resignation of the Common Representative.
(a) Subject to the provisions of this Section 9.10, the Common
Representative may elect to resign from its position as Common Representative on
behalf of Bondholders of all Issues anytime following the first Special Meeting
of the first Issue.
(b) Upon electing to resign, the Common Representative shall inform the
Bondholders with respect thereto by a notice published in the official gazette
"El Peruano" and in any high-circulation newspaper in the city of Lima.
Likewise, the Common Representative shall notify the Issuer, in writing, of its
election to resign within three (3) Business Days following publication of the
aforementioned notice.
(c) Concurrently with the publication of the notice to the Bondholder as
set forth in Section 9.10(b) above, the Common Representative shall schedule a
General Meeting to be held within ten (10) Business Days following publication
of such notice. At such General Meeting, the Common Representative shall inform
the Bondholders of the cause for its resignation.
(d) The Common Representative shall continue to perform in such position
until the General Meeting scheduled pursuant to Section 9.10(c) above appoints a
successor common representative (a "SUCCESSOR REPRESENTATIVE"); provided that in
the event that such General Meeting fails to appoint a Successor Representative
within thirty (30)
64
Business Days following the publication of the notice as set forth in Section
9.10(b) above, the Common Representative's appointment as such shall terminate
automatically.
(e) In the event that the Common Representative's appointment as such
terminates automatically as set forth in Section 9.10(d) above, the Issuer shall
appoint a Successor Representative within twenty (20) Business Days following
such automatic termination of the Common Representative's appointment.
(f) Any Successor Representative appointed pursuant to the terms of this
Indenture shall be subject to the provisions of this Indenture and all
Supplemental Indentures governing the rights and obligations of the Common
Representative.
(g) The Common Representative shall not be held liable for any resignation
that it tenders in accordance with the terms of this Indenture.
(h) Subject to Section 4.01 of this Indenture, in the event of a
resignation of the Common Representative pursuant to this Section 9.10, the
Issuer shall be responsible for the payment of all reasonable costs and expenses
arising from the appointment of the Successor Representative, including any
reasonable service fee due to such Successor Representative.
Section 9.11 Removal of the Common Representative.
(a) A General Meeting may resolve to remove the Common Representative with
or without cause by providing the Common Representative with written notice of
such removal.
(b) The general procedures for scheduling a General Meeting set forth in
this Indenture shall apply for the scheduling of the General Meeting described
in Section 9.11(a) above, and the Common Representative shall not, under any
circumstances, refuse to schedule such General Meeting. However, notwithstanding
the foregoing, in the event that the Common Representative fails to schedule
such General Meeting in accordance with procedures set forth in this Indenture,
the Issuer shall schedule such General Meeting.
(c) Unless otherwise resolved at the General Meeting described in Section
9.11(a) above, the Common Representative shall not chair such General Meeting.
(d) In the event that the General Meeting described in Section 9.11(a)
above resolves to remove the Common Representative, the Common Representative
shall continue to perform in such position until such General Meeting appoints a
Successor Representative; provided that in the event that such General Meeting
fails to appoint a Successor Representative within thirty (30) Business Days
following its resolution to remove the Common Representative, the Common
Representative's appointment as such shall terminate automatically.
(e) The General Meeting shall notify the Issuer, in writing, of the
resolution to remove the Common Representative and the appointment of the
Successor Representative on the next Business Day following such resolution or
appointment, as the case may be.
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(f) In the event that the Common Representative is removed and replaced by
a Successor Representative pursuant to this Section 9.11, the Bondholders shall
be responsible for all costs and expenses arising from such removal and
replacement. The Issuer shall only be responsible for the payment of the
reasonable service fee of the Successor Representative; provided that payment of
any such fee by the Issuer shall be subject to the Expense Cap set forth in
Section 4.01(l) of this Indenture.
Section 9.12 Dissolution of the Common Representative
(a) In the event that the Common Representative enters into a process of
dissolution and winding up or is placed under intervention by the Banking and
Insurance Superintendence (Superintendencia de Banca, Seguros y AFP) or CONASEV,
as the case may be, one or more Bondholders representing no less than twenty
percent (20%) of the aggregate face value of the then-outstanding Bonds, through
a letter recorded by a Notary Public, may schedule a General Meeting, either
directly or indirectly through a representative, to remove the Common
Representative and appoint a Successor Representative.
(b) The General Meeting scheduled pursuant to Section 9.12(a) above shall
notify the Issuer, in writing, of its resolution, if any, to remove the Common
Representative and the appointment of a Successor Representative.
(c) The provisions of Section 9.10(d)-(h) shall apply to any appointment of
a Successor Representative pursuant to this Section 9.12.
Section 9.13 Consultation with Counsel, etc. The Common Representative may
consult with, and obtain advice from, legal counsel and other experts, in
connection with the performance of its duties hereunder and it shall incur no
liability and shall be fully protected in acting in good faith in accordance
with the opinion and advice of such counsel and other experts (as to matters
within any such expert's field of expertise). The Common Representative shall
not be responsible for the negligence or misconduct of any counsel and other
experts selected by it without gross negligence or willful misconduct on its
part.
ARTICLE X
BONDHOLDERS MEETINGS
Section 10.01 Powers of the General Meeting. Any duly called and installed
General Meeting shall have the following powers:
(a) Adopt (i) any of the resolutions described in Section 8.03 or Section
8.04, as the case may be, including, without limitation, instructing the Common
Representative to deliver to the Issuer (with a copy thereof to the
Administrative Agent) the applicable Notice of Indenture Event of Default in
order to commence the voting process relating to the potential exercise of
remedies under Article V of the Master Security Agreement, (ii) any further
resolutions instructing the Common Representative to participate in the exercise
of rights and remedies under Article V of the Master Security Agreement and/or
the Completion Guarantee and (iii) any resolution directing the Common
Representative to
66
deliver to the Issuer (with a copy thereof to the Administrative Agent) a notice
that an Event of Default has ceased to exist.
(b) To the extent permitted by Applicable Law, and with the consent of the
Issuer, agree to amend those terms and conditions that are applicable to all
Issues under this Indenture.
(c) Adopt any of the resolutions (i) described in Section 9.10 relating to
the resignation of the Common Representative and (ii) described in Section 9.11
relating to the removal of the Common Representative and appointment of a
Successor Representative (in the event that such resolution accepts the
resignation or removal of the Common Representative, as the case may be).
(d) Adopt resolutions directing the Common Representative to request an
audit and/or inspection of the Issuer (it being understood that the Bondholders
shall be responsible for all costs and expenses relating to such audit and/or
inspection); provided that such audit and/or inspection does not entail the
disclosure of proprietary information of third parties, prohibited or limited by
contract or by Applicable Law, or considered by the Issuer to be confidential
and not relevant to the Bondholders; provided further that in the event that the
Issuer refuses to allow such audit and/or inspection, the Issuer shall provide
the Common Representative with a written explanation for such refusal within
[15] Business Days of the Common Representative's request.
(e) Adopt resolutions directing the Common Representative to deliver to the
Issuer a Notice of Ordinary Default.
(f) Take any other action that is required by Applicable Law or which, with
the prior written consent of the Issuer, affects all Bondholders equally.
(g) Adopt internal regulations for the General Meeting, if determined by
such meeting to be appropriate.
(h) All additional powers set forth in this Indenture and those granted
pursuant to Applicable Law.
Section 10.02 Powers of the Special Meeting. Any duly called and installed
Special Meeting of a specific Issue shall have the following powers:
(a) Adopt (i) any of the resolutions described in Section 8.03 or Section
8.04, as the case may be, including, without limitation, directing the Common
Representative to (x) extend the cure period, if any, relating to the applicable
Default or (y) schedule a General Meeting at which Bondholders of all Issues
shall vote as to whether to direct the Common Representative to deliver the
applicable Notice of Indenture Event of Default to the Issuer (with a copy
thereof to the Administrative Agent) in order to commence the voting process
relating to the potential exercise of remedies pursuant to Article V of the
Master Security Agreement and/or the Completion Guarantee and (ii) any
resolution directing the Common Representative to deliver to the Issuer (with a
copy thereof to the Administrative Agent) a notice that an Event of Default has
ceased to exist.
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(b) Approve the actions of the Common Representative with respect to such
Issue.
(c) Adopt internal regulations for the Special Meeting, if determined by
such meeting to be appropriate.
(d) To the extent permitted by Applicable Law, and with the consent of the
Issuer, agree to amend the terms and conditions of the Issue set forth in this
Indenture and/or the applicable Supplemental Indenture.
(e) Arrange for the listing of the Bonds of such Issue in a centralized
trading mechanism other than a Session of the Lima Stock Exchange; provided that
the Bondholders of such Issue shall be responsible for the payment of all costs
and expenses relating to such a listing change.
(f) Adopt resolutions instructing the Common Representative to schedule a
General Meeting at which the Bondholders of all Issues shall vote as to whether
to direct the Common Representative to request the performance of audits and
inspections of the Issuer, subject to the restrictions of Section 10.01(d).
(g) All additional powers set forth in this Indenture and those granted
pursuant to Applicable Law.
Section 10.03 Notice of a General Meeting or Special Meeting.
(a) A General Meeting shall be scheduled by the Common Representative or
the Board of Directors of the Issuer when (i) required pursuant to the terms of
this Indenture and/or the applicable Supplemental Indenture; (ii) requested,
through a letter recorded by a Notary Public indicating the matters to be
discussed at such General Meeting, by on or more Bondholders representing no
less than twenty percent (20%) of the aggregate face value of the
then-outstanding Bonds; or (iii) deemed necessary by the Common Representative
or the Board of Directors of the Issuer.
(b) A Special Meeting of a specific Issue shall be scheduled by the Common
Representative or the Board of Directors of the Issuer when (i) required
pursuant to the terms of this Indenture and/or the applicable Supplemental
Indenture; (ii) requested, through a letter recorded by a Notary Public
indicating the matters to be discussed at such Special Meeting, by one more
Bondholders representing no less than twenty percent (20%) of the aggregate face
value of the then-outstanding Bonds of such Issue; or (iii) deemed necessary by
the Common Representative or the Board of Directors of the Issuer.
(c) Unless otherwise provided in this Indenture and/or the applicable
Supplemental Indenture, any General Meeting or Special Meeting, as the case may
be, shall be held within no less than [five (5)] Business Days and no more than
[thirty (30)] Business Days following: (i) in the case of a General Meeting or
Special Meeting, as the case may be, requested by one or more Bondholders as
provided herein, the date of such request; or, (ii) in the case of any other
event for scheduling a General Meeting or Special Meeting as provided in this
Indenture and/or the applicable Supplemental Indenture, the date of such event.
68
(d) The Common Representative shall provide the first notice of any General
Meeting or Special Meeting scheduled pursuant to this Section 10.03, through the
publication of two notices, one in the official gazette "El Peruano" and the
other in any high-circulation newspaper in Lima, indicating the date, time and
place for the first call of such meeting and the business to be transacted
thereat (it being understood that the Common Representative shall not be
required to take any other action for such purpose and that the Bondholders
shall not object to the sufficiency of notices published as described herein).
The notices described herein shall be published no less than [three (3)]
calendar days prior to the first call of the General Meeting or Special Meeting,
as the case may be, and shall contain the contemplated date for the second call,
which shall be ten (10) calendar days after the day of the first call, in the
event that the Bondholders attending the General Meeting or Special Meeting, as
the case may be, fail to satisfy the quorum requirements of this Indenture in
the first call. If the published notice does not indicate the date of the second
call, then an additional notice shall be published for such second call, which
notice shall meet the formalities set forth in this Section 10.03(d).
Section 10.04 Quorum, Installation and Resolutions.
(a) The Common Representative shall chair any General Meeting except as
otherwise provided in this Indenture or as otherwise determined by one or more
Bondholders present at a General Meeting that represent a simple majority of the
aggregate face value of the then-outstanding Bonds. The person designated by the
chairman of the General Meeting shall act as secretary.
(b) The Common Representative shall chair any Special Meeting except as
otherwise provided in this Indenture or as otherwise determined by one or more
Bondholders present at a Special Meeting that represent a simple majority of the
aggregate face value of the then-outstanding Bonds of the applicable Issue. The
person designated by the chairman of the Special Meeting shall act as secretary.
(c) For purposes of calculating the quorum requirements and majorities
applicable to a General Meeting or Special Meeting, as the case may be, the face
value of the then-outstanding Bonds shall be used. Therefore, each Bondholder
attending a General Meeting or Special Meeting, as the case may be, shall
represent an aggregate face value resulting from multiplying the number of Bonds
held in such Bondholder's name by the face value of such Bonds.
(d) (i) The required quorum for a General Meeting to be duly installed on
first notice shall be Bondholders representing at least a simple majority of the
aggregate face value of the then-outstanding Bonds.
(ii) The required quorum for a General Meeting to be duly installed on
second notice shall be those Bondholders present at such General Meeting,
either in person or by proxy.
(e) (i) The required quorum for a Special Meeting to be duly installed on
first notice shall be Bondholders representing at least a simple majority of the
aggregate face value of the then-outstanding Bonds of the specific Issue.
69
(ii) The required quorum for a Special Meeting to be duly installed on
second notice shall be those Bondholders present at such Special Meeting,
either in person or by proxy.
(f) Notwithstanding the provisions of this Indenture, any General Meeting
or Special Meeting, as the case may be, shall be deemed called and duly
installed without prior notice provided that, (i) in the case of a General
Meeting, all Bondholders and (ii) in the case of a Special Meeting, all
Bondholders of a specific Issue, are present, either in person or by proxy, and
unanimously consent to hold the meeting and the business to be transacted at
such meeting.
(g) (i) Except as set forth in clause (ii) below, the resolutions of a
General Meeting or Special Meeting, as the case may be, shall be adopted
pursuant to the voting majorities set forth in Section 323 of the General
Corporate Law.
(ii) Notwithstanding the foregoing, the voting majorities set forth in
Sections 323 of the General Corporate Law shall be altered in the following
circumstances:
(A) The approval of Bondholders representing no less than
sixty-six and two thirds percent (66 2/3%) of the aggregate face value
of the then-outstanding Bonds of the applicable Issue shall be
required in order to approve any resolution of a Special Meeting made
pursuant to Section 8.03 (other than Section 8.03(b)) or Section 8.04
(other than Section 8.04(b)) of this Indenture.
(B) The approval of Bondholders representing no less than
sixty-six and two thirds percent (66 2/3%) of the aggregate face value
of the then-outstanding Bonds shall be required in order to approve
any resolution of a General Meeting made pursuant to Section 8.03
(other than Section 8.03(b)) or Section 8.04 (other than Section
8.04(b)) of this Indenture, as the case may be.
(C) With respect to Section 8.03(b) and Section 8.04(b), the
approval of Bondholders representing no less than sixty-six and two
thirds percent (66 2/3%) of (1) the aggregate face value of the
then-outstanding Bonds of the applicable Issue (for the first call of
the Special Meeting) or (2) the aggregate face value of the
then-outstanding Bonds of the applicable Issue duly represented at the
Special Meeting (for the second call of the Special Meeting) shall be
required in order to approve any resolution of a Special Meeting
scheduled pursuant to Section 8.03(b) or Section 8.04(b) of this
Indenture.
(D) With respect to Section 8.03(b) and Section 8.04(b), the
approval of Bondholders representing no less than sixty-six and two
thirds percent (66 2/3%) of the aggregate face value of (1) the
then-outstanding Bonds (for the first call of the General Meeting) or
(2) the aggregate face value of the then-outstanding Bonds duly
represented (for the second call of the General
70
Meeting) shall be required in order to approve any resolution of a
General Meeting scheduled pursuant to Section 8.03(b) or Section
8.04(b) of this Indenture.
(E) The unanimous approval of the Bondholders representing the
aggregate face value of the then-outstanding Bonds of each affected
Issue shall be required in order to approve the transfer or assignment
by the Issuer of its rights and obligations under this Indenture,
whether in whole or in part.
(F) The approval of Bondholders representing no less than sixty
percent (60%) of the aggregate face value of the then-outstanding
Bonds shall be required in order to agree on the removal of Common
Representative and the appointment of a Successor Representative, each
pursuant to Section 9.11 of this Indenture.
(iii) Any resolution approved by the Bondholders of a specific Issue
that amends any terms and conditions of this Indenture or the applicable
Supplemental Indenture, or modifies in any manner the rights of the
Bondholders of such Issue shall not affect the rights of Bondholders of any
other Issue under this Indenture or the applicable Supplemental Indentures.
(h) For the purposes of determining the Bondholders who shall be permitted
to attend the General Meeting or Special Meeting, as the case may be, those
holders listed on the register kept by CAVALI two (2) Business Days prior to the
date set for the General Meeting or Special Meeting, as the case may be, shall
be considered Bondholders who are entitled to attend such meeting. In connection
with the due installation of the General Meeting or Special Meeting, as the case
may be, and the adoption of resolutions, the provisions in Section 323 of the
General Corporate Law shall apply to the extent that such provisions do not
conflict with the provisions of this Indenture.
(i) The Bondholders identified pursuant to Section 10.04(h) above may
attend the General Meeting and shall be entitled to vote thereat; provided that
those Bondholders that have a conflict of interest with respect to decisions or
resolutions that are voted on at such General Meeting shall refrain from voting
on such matters.
(j) The Bondholders of a specific Issue identified pursuant to Section
10.04(h) above may attend any Special Meeting of such Issue and shall be
entitled to vote thereat; provided that those Bondholders that have a conflict
of interest with respect to decisions or resolutions that are voted on at such
Special Meeting shall refrain from voting on such matters.
(k) The Bondholders entitled to attend a General Meeting or Special
Meeting, as the case may be, may be represented through a simple proxy form
indicating the act for which such appointment is made. Any permanent delegation
of authority must be made by a public instrument.
71
(l) (i) The resolutions adopted at a General Meeting or Special Meeting, as
the case may be, shall be recorded in a duly legalized minutes book, and the
minutes shall be signed by the chairman and secretary of such meeting.
(ii) When a General Meeting or Special Meeting, as the case may be, is
not chaired by the Common Representative, recording of the minutes in the
minutes book kept by the Common Representative, as well as the contents
thereof, shall be under the sole responsibility of the person chairing such
meeting.
ARTICLE XI
ISSUER'S INDEMNIFICATION
Section 11.01 Claims Indemnified. The Issuer shall indemnify and hold
harmless all of the Common Representative and any of its affiliates, officers,
directors, employees, agents or representatives (each, an "INDEMNITEE" and,
collectively, the "INDEMNITEES") from any legal action claim (whether in-court,
out-of-court or administrative), penalty, loss or liability, or expenditure,
including reasonable attorneys fees and personal defense costs (hereinafter, a
"CLAIM") resulting or arising from any of the activities of the Common
Representative contemplated in this Indenture and/or the Supplemental
Indentures.
Section 11.02 Claims Excluded. Any Claim that is the result of the gross
negligence or willful misconduct of the Indemnitee, which such gross negligence
or willful misconduct shall be determined by a Court of Arbitration in
accordance with Article XII of this Indenture, shall be excluded from the
Issuer's agreement to indemnify any Indemnitee under Section 11.01 above.
Section 11.03 Claim Procedure. (a) Each Indemnitee shall provide the Issuer
with written notice of any Claim against it together with a statement of such
Indemnitee stating in reasonable detail the basis for the indemnification sought
thereby. Further, each Indemnitee shall keep the Issuer informed of the status
of any Claim against it.
(b) Promptly after the Issuer receives notification of a Claim pursuant to
subsection (a), the Issuer shall notify the applicable Indemnitee as to whether
it intends to pay, object to, compromise or defend any matter involving the
asserted liability of such Indemnitee. In the event that the Issuer elects to
defend a Claim against an Indemnitee, (i) such Indemnitee shall promptly grant
to the legal advisors designated by the Issuer the powers required to take on
such defense and (ii) the Issuer shall be responsible for the payment of all
costs and expenses relating to such defense, including the retention of legal
advisors; provided that the Indemnitee shall be entitled to retain its own legal
advisors; provided further that the Issuer shall be responsible for the payment
of the reasonable fees and expenses of the Indemnitee's legal advisors.
(c) No Indemnitee may compromise or settle a Claim without the prior
written consent of the Issuer, which consent shall not be unreasonably withheld,
unless such Indemnitee waives its rights to indemnification hereunder.
72
Section 11.04 Issuer's Rights Under Applicable Law. The provisions of this
Article XI are not exclusive or limiting, and are not intended to preclude or
limit any right to which the Issuer may be entitled under Applicable Law to
exercise against any Indemnitee for damages that such Indemnitee may cause the
Issuer due to its gross negligence or willful misconduct.
ARTICLE XII
ARBITRATION
Section 12.01 Resolution of Disputes Through Arbitration. (a) It being the
intent of the parties hereto that any conflicts or disputes that may arise in
relation to the performance of this Indenture or of the Supplemental Indentures,
as well as any matter related to the Program, be resolved as expeditiously as
possible, each of the parties hereby agrees that any lawsuit, dispute, claim or
disagreement in connection with the interpretation, performance, validity,
termination, effectiveness of, or arising from or in relation to, this
Indenture, the Supplemental Indentures or any other document materially relevant
to the Program that cannot be resolved by mutual agreement of the parties to
such dispute within fifteen (15) Business Days following the date on which one
of the parties to such dispute notifies the other in writing of the existence of
such dispute, then it shall be settled by arbitration of law (arbitraje de
derecho) according to the procedures set forth in this Article XII and
Applicable Law.
(b) The arbitration proceedings regulated in this Article XII shall also
apply to the resolution of any conflict or dispute between the Issuer and
Bondholders and the Common Representative or any of them that may arise in
relation to the performance of this Indenture and/or the Supplemental
Indentures, as well as any matter related to the Program, provided that any
individual Bondholder may elect to resolve conflicts or disputes related to the
collection of payment of principal or interest of the Bonds through a summary
proceeding (proceso ejecutivo) as long as such an election by the individual
Bondholder is not in any manner inconsistent with any resolution with respect to
the same conflict or dispute reached at a Special Meeting or the General
Meeting, as the case may be, convened in accordance with Section 8.03 or Section
8.04 of this Indenture.
Section 12.02 Arbitration Procedure. The aforementioned arbitration shall
be conducted according to the following procedures:
(a) The arbitration shall take place in the city of Lima, by the
establishment of a court of arbitration (the "COURT OF ARBITRATION") which shall
consist of three (3) members to be appointed as follows: (i) each party shall
appoint an arbitrator of its choice and (ii) the two chosen arbitrators shall
appoint a third arbitrator, which such arbitrator shall preside over the Court
of Arbitration. Each of the parties hereby expressly authorize the arbitrators
to decide on the specific matter or matters subject to arbitration.
(b) In the event that (i) either party fails to appoint an arbitrator as
provided in Section 12.02(a) above within fifteen (15) Business Days following
receipt of a notice informing such party of its obligation to appoint an
arbitrator or (ii) the two arbitrators
73
chosen by the parties fail to appoint the final arbitrator within fifteen (15)
Business Days following the appointment of the second chosen arbitrator, any of
the parties may request the appointment of an arbitrator by the National and
International Settlement and Arbitration Center of the Lima Chamber of Commerce
(Centro de Conciliacion y Arbitraje Nacional e Internacional de xx Xxxxxx de
Comercio de Lima).
(c) In the event that the appointment of a substitute arbitrator becomes
necessary under any circumstance, such substitute arbitrator shall be appointed
pursuant to the procedure set forth in Section 12.02(b) above.
(d) In the event that any party deems it necessary to seek the intervention
of ordinary judges and courts in an arbitration proceeding commenced pursuant to
this Article XII, including, without limitation, to request injunctive relief in
connection with such arbitration proceeding or execution of the arbitration
award, each of the parties hereby expressly submits to the jurisdiction of the
judges and courts of the judicial district of Lima, waiving the jurisdiction of
its respective place of business.
(e) Any arbitration proceeding commenced pursuant to this Article XII shall
not exceed a period of sixty (60) Business Days following the date of
appointment of the last arbitrator and, to the extent not otherwise established
herein, shall be governed by the provisions of the National Arbitration
Regulations of the Center of National and International Settlement and
Arbitration of the Lima Chamber of Commerce or, otherwise, by Law No
26572, as amended or supplemented, as the case may be.
(f) Any arbitration award shall be final and binding on the parties, and
each of the parties hereby waives its right to file any appeal relating to such
arbitration award other than for clarification thereof.
(g) All costs and expenses incurred in the course of any arbitration
proceeding commenced pursuant to this Article XII shall be borne by the party
against whom the arbitration award is granted, including, without limitation,
the reasonable fees of such legal counsel and experts that each party may engage
in connection with such arbitration proceeding.
(h) Nothing in this Article XII shall limit the provisions of Article IX of
the Master Security Agreement.
ARTICLE XIII
MISCELLANEOUS
Section 13.01 Statement of Equivalence. Each of the parties hereto
expressly agrees that the respective considerations granted pursuant to this
Indenture are in strict equivalence, whereby this Indenture is entered in full
reciprocity of the obligations taken on by the parties hereto.
Section 13.02 Notices. (a) All notices and other communications relating to
this Indenture and the Supplemental Indentures shall be made in writing and in
Spanish, and
74
shall be sent to the addresses and facsimile numbers indicated below, or to such
other addresses and facsimile numbers as the party who desires to change them
indicates to the other parties to this Agreement by written notice and the date
on which such change shall become effective. All such notices shall be deemed
effectively given (i) on the delivery date, if hand-delivered; (ii) on the date
of receipt thereof, if sent by mail (with receipt acknowledgment); or (iii) on
the date of receipt thereof, if sent by facsimile (with written confirmation of
receipt, which confirmation may be by facsimile).
(b) For the purposes of this Section 13.02, the parties indicate the
following addresses and facsimile numbers:
IF TO THE ISSUER: Sociedad Minera Cerro Verde S.A.A.
Xx. Xxxxxxx Xxxxxx 000
Xxxxxxx - Xxxxxxxx
Xxxx
Attention: General Manager
Telephone: (054) 283-363
Facsimile: (054) 283-376
with a copy to PDC, at:
Xxxxxx Dodge Tower
0 Xxxxx Xxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxx 00000
X.X.X.
Attention: Treasurer
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Telex: 6502331665
IF TO THE STRUCTURING ENTITY: Citibank del Peru S.A.
Xx. Xxxxxxx x Xxxxxxx 000, Xxxx 0
Xxx Xxxxxx - Xxxx
Xxxx
Attention: Xxxxxxx Xxxxxxx Lung
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
75
IF TO THE COMMON REPRESENTATIVE: Citicorp Peru S.A. S.A.B.
Xx. Xxxxxxx x Xxxxxxx 000, Xxxx 0
Xxx Xxxxxx - Xxxx
Xxxx
Attention: Xxxxxx Xxxx Xxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Section 13.03 Interpretation. In this Indenture, except to the extent that
the context otherwise requires:
(a) The section headings and the table of contents are for convenience of
reference only and shall not modify, define, expand or limit any of the terms or
provisions hereof.
(b) Unless otherwise specified, all references herein to numbered articles,
sections and clauses are to articles, sections and clauses of this Indenture.
(c) Unless otherwise specified, (i) all references to an article shall
include all section therein, (ii) all references to a section shall include all
sub-sections therein, and (iii) all references to a clause shall include all
sub-clauses therein.
(d) Except as otherwise set forth herein or in the Supplemental Indentures,
any accounting term used in this Indenture or the Supplemental Indentures shall
have the meaning and scope pertaining thereto under Peruvian GAAP.
Section 13.04 Severability. In the event that, due to a final and binding
decision issued by the competent legal authority, one or more provisions
contained herein are declared null or unenforceable, Section 224 of the Civil
Code shall apply. In such event, the parties shall negotiate and agree on the
provisions necessary to substitute those declared null or unenforceable;
provided that the validity, legality and enforceability of the remaining
provisions shall not in any way be affected or impaired by such declaration.
Section 13.05 Governing Law. This Indenture and the Supplemental
Indentures are subject to the legal rules and provisions in force in the
Republic of Peru.
Section 13.06 Public Instrument. This Indenture shall be entered as a
public instrument and any and all notary's fees and expenses arising therefrom
shall be borne by the Issuer.
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The Notary Public is requested to add any clauses required by law.
Lima, _______________, 2005
The ISSUER
-------------------------------------
__________, General Manager
Sociedad Minera Cerro Verde S.A.A.
-------------------------------------
__________, Financial Manager
Sociedad Minera Cerro Verde S.A.A.
The intervening STRUCTURING ENTITY
-------------------------------------
_________________________
Attorney-in-Fact
The COMMON REPRESENTATIVE
-------------------------------------
_________________________
Citicorp Peru S.A. S.A.B.
77
Schedule A
Committed Amounts
Schedule B
Mining Concessions
Schedule 6.04
Core Governmental Approval
Schedule 6.05
Taxes
Schedule 6.09
Mining Benefits and Concessions
Schedule 6.10
[Environmental Matters]
Schedule 6.11
[Labor Matters]
Schedule 6.12
[Consents]
EXHIBIT E
Form of Debt Service Coverage Ratio Certificate
I, [NAME OF AUTHORIZED OFFICER], do hereby certify that I am the duly
elected and qualified [title of Authorized Officer] of SOCIEDAD MINERA CERRO
VERDE S.A.A., a sociedad anonima abierta organized under the laws of Peru (the
"BORROWER"), acting as Borrower under the Master Participation Agreement among
the Borrower, the Senior Facility Lenders, the Lead JBIC Arrangers, and the
Administrative Agent, dated _________ (the "MASTER PARTICIPATION AGREEMENT") and
that as such I am authorized to execute and deliver this certificate on behalf
of the Borrower. Capitalized terms used herein without definition shall have the
respective meanings specified in Schedule Z to the Master Participation
Agreement.
This certificate is delivered pursuant to Section 7.05(f) of the Master
Participation Agreement.
I certify to the Administrative Agent, for and on behalf of the Senior
Facility Lenders, that the Debt Service Coverage Ratio as of the last day of the
Calculation Period ending on _____________ is as follows:
__________________
IN WITNESS WHEREOF, I have hereunto signed my name this __ day of _______,
20__.
SOCIEDAD MINERA CERRO VERDE S.A.A.
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
EXHIBIT F
FORM OF TRANSFEREE ACCESSION, ASSIGNMENT AND ASSUMPTION AGREEMENT
Reference is made to the Master Participation Agreement between the
Borrower, Japan Bank for International Cooperation, Sumitomo Mitsui Banking
Corporation, The Bank of Tokyo-Mitsubishi, Ltd., KfW, Calyon New York Branch,
The Royal Bank of Scotland plc, The Bank of Nova Scotia and Mizuho Corporate
Bank Ltd., dated September 30, 2005 (as amended from time to time, the "Master
Participation Agreement" or "MPA") and the Senior Facility Loan Agreement
between the Assignor and the Borrower dated September 30, 2005 (as amended from
time to time, the "Loan Agreement"). Capitalized terms used but not defined
herein shall have the meanings assigned to them in Schedule Z to the Master
Security Agreement dated as of September 30, 2005 among Sociedad Minera Cerro
Verde S.A.A., Japan Bank for International Cooperation, Sumitomo Mitsui Banking
Corporation, The Bank of Tokyo-Mitsubishi, Ltd., KfW, Calyon New York Branch,
The Royal Bank of Scotland plc, The Bank of Nova Scotia, Mizuho Corporate Bank,
Ltd., Citibank, N.A., and Citibank del Peru (as amended from time to time, the
"Master Security Agreement" or "MSA"). The rules of interpretation as set forth
in Section 1.02 of the MPA are incorporated by reference as if set forth at
length herein.
1. ___________ (the "Assignor") hereby sells and assigns to _____________
(the "Assignee") without recourse to the Assignor, and the Assignee hereby
purchases and assumes from the Assignor without recourse to the Assignor, the
interests set forth on Schedule A hereto (the "Assigned Interest") in the
Assignor's rights and obligations under the Assigned Agreements (as defined
below) or any other instrument or document furnished pursuant thereto,
including, without limitation, [a portion of] the Advances which are outstanding
on the Assignment Date (as defined below) as listed in Schedule A hereto, but
excluding accrued interest and fees to and excluding the Assignment Date.
2. The assignment and assumption executed hereby is made pursuant to and in
accordance with Section 12.13(c) of the MPA.
3. This executed and delivered Transferee Accession, Assignment and
Assumption Agreement becomes effective upon the later of (a) the acknowledgement
by the Administrative Agent or (b) the consent of the Borrower, if applicable
(the "Assignment Date").
4. Upon effectiveness of this Transferee Accession, Assignment and
Assumption Agreement, the Assignee shall be a party to and be bound by the
provisions of the Loan Agreement, the Master Participation Agreement, the Master
Security Agreement, the Completion Guarantee and the Transfer Restriction
Agreement (the "Assigned Agreements"), and, to the extent of the Assigned
Interest, have the rights, obligations and benefits of the Assignor thereunder
and under any other instrument or
document furnished pursuant thereto holding the Advances (or portion(s) thereof)
set forth on Schedule A hereto.
5. The Assignor shall, to the extent of the Assigned Interest and
obligations assumed hereby, relinquish its rights and be released from its
obligations under the Assigned Agreements and any other instrument or document
furnished pursuant thereto, it being understood that the Assignor shall continue
to enjoy all rights of indemnification that have occurred prior to the
Assignment Date.
6. The Assignor (a) makes no representation or warranty and assumes no
responsibility with respect to any statements, warranties or representations
made in or in connection with the Assigned Agreements or the execution,
legality, validity, enforceability, genuineness, sufficiency or value of the
Assigned Agreements or any other instrument or document furnished pursuant
thereto and (b) makes no representation or warranty and assumes no
responsibility with respect to the financial condition of the Borrower or the
performance or observance by the Borrower of any of their obligations under the
Assigned Agreements or any other instrument or document furnished pursuant
thereto.
7. The Assignee (a) represents and warrants that (i) it has full power and
authority to execute and deliver this Transferee Accession, Assignment and
Assumption Agreement and that this Transferee Accession, Assignment and
Assumption Agreement has been duly authorized, executed and delivered by it and
constitutes a valid and legally binding agreement, enforceable in accordance
with its terms and (ii) there is no provision of law, statute, regulation, rule,
order, injunction, decree, writ or judgment, no provision of its organizational
documents and no provision of any mortgage, indenture, contract or agreement
binding on it or affecting its properties, which would prohibit, conflict with
or in any way prevent its execution, delivery, or performance of the terms of
this Agreement, (b) confirms that it has received a copy of the Assigned
Agreements and such other documents and information as it has deemed appropriate
to make its own credit analysis and decision to enter into this Transferee
Accession, Assignment and Assumption Agreement, (c) agrees that it will,
independently and without reliance upon the Trustee, the Administrative Agent,
the Assignor, any other Senior Facility Lender or any other Person and based on
such documents and information as it shall deem appropriate at the time,
continue to make its own credit decisions in taking or not taking action under
the Assigned Agreements or any other instruments or documents furnished pursuant
thereto, (d) appoints and authorizes the Trustee, the Administrative Agent, the
Onshore Collateral Agent and the Offshore Collateral Agent, respectively (the
"Agents"), to take such action as agent on its behalf and to exercise such
powers and discretion under the Assigned Agreements or any other instrument or
document furnished pursuant thereto as are delegated to the Agents by the terms
thereof, together with such powers as are incidental thereto, (e) agrees that it
will be bound by the provisions of, and will perform in accordance with their
terms all of the obligations which by the terms of the
2
Assigned Agreements or any other instrument or document furnished pursuant
thereto are required to be performed by it as the assignee of the Assignor's
obligations, (f) agrees that the Borrower shall not be required to assume any
obligations or costs under the Financing Documents, including any Indemnified
Taxes or Other Taxes or any withholding tax liability, with respect to the
Assignee in excess of such obligations or costs the Borrower is required to
assume under the Financing Documents with respect to the Assignor, (g) agrees
that the Parent Companies shall not be required to assume any obligations or
costs under the Financing Documents, including any Indemnified Taxes or Other
Taxes or any withholding tax liability, with respect to the Assignee in excess
of the obligations or costs the Parent Companies are required to assume under
the Financing Documents with respect to the Assignor, and (h) specifies as its
lending offices (and address for notices) the offices set forth beneath its name
on the signature pages hereof.
8. From and after the Assignment Date, the Trustee and the Administrative
Agent, as applicable, shall make all payments under the Assigned Agreements or
any other instrument or document furnished pursuant thereto in respect of the
interest assigned hereby (including, without limitation, all payments of
principal, interest, fees or other amounts) to the Assignee. The Assignor and
the Assignee shall make all appropriate adjustments in payments under the
Assigned Agreements or any other instrument or document furnished pursuant
thereto for periods prior to the Assignment Date directly between themselves.
9. Pursuant to Section 2.08(d) of the MPA, upon the occurrence of the
Assignment Date, the Promissory Note of the Assignor may be cancelled, in which
case the Borrower shall, upon the written request of the Assignor, issue new
Promissory Notes to the Assignor and Assignee, in each case in principal amounts
reflecting their Advances as set forth in Schedule A.
10. (a) This Agreement shall be binding upon and inure to the benefit of
the parties hereto and their respective successors and permitted assigns; (b)
the representations and warranties and agreements made herein by the Assignee
are also made for the benefit of the Senior Facility Lenders, the Agents, the
Parent Companies and the Borrower, and the Assignee agrees that the Senior
Facility Lenders, the Agents, the Parent Companies and the Borrower are entitled
to rely upon such representations and warranties, (c) any future assignment of
this Agreement shall be in accordance with the terms and conditions set forth in
Section 12.13(c) MPA and (d) no party to this Agreement may amend any of its
rights or obligations hereunder without the prior written consent of the other
party hereto, the acknowledgement thereof by the Administrative Agent and the
consent of the Borrower, if applicable, provided that such amendment shall
comply in all events with the conditions set forth in Section 12.13(c) MPA.
11. THIS ASSIGNMENT AND ACCEPTANCE SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
3
12. This agreement may be executed in any number of counterparts, each of
which shall be deemed to be an original and shall be binding upon all parties
hereto, and their successors and assigns.
13. If any provision of this agreement shall be held to be invalid, illegal
or unenforceable, the validity, legality and enforceability of the remaining
provisions in such jurisdiction and the validity, legality and enforceability of
such provision in any other jurisdiction shall not in any way be affected or
impaired.
[SIGNATURES TO FOLLOW]
4
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed as of the day and year first above written.
[ASSIGNOR]
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
[ASSIGNEE]
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
ACKNOWLEDGED AS OF ___________:
CALYON NEW YORK BRANCH, as Administrative Agent
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
CONSENTED TO AS OF ___________:
SOCIEDAD MINERA CERRO VERDE S.A.A.
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
5
SCHEDULE A
Date of Assignment: ______________________________
Legal Name of Assignor: __________________________
Legal Name of Assignee: __________________________
Assignee's Address for Notices: __________________
Amount of Assigned Advances: _____________________
Assignor's Total Advances Outstanding as of the Assignment Date: _______________
Assignee's Total Advances Outstanding as of the Assignment Date: _______________
6
Exhibit G
Form of New Party Accession Agreement
EXHIBIT G-1
FORM OF NEW PARTY ACCESSION AGREEMENT
This NEW PARTY ACCESSION AGREEMENT, dated as of __ (the "Agreement"), is made
among __ (the "Replacement Lender"), Calyon New York Branch, as administrative
agent for the Senior Facility Lenders (the "Administrative Agent") and Sociedad
Minera Cerro Verde S.A.A., a sociedad anonima abierta listed on the Lima Stock
Exchange and organized under the laws of the Republic of Peru (the "Borrower").
RECITALS
A. On September 30, 2005 the Borrower, Japan Bank for International
Cooperation, Sumitomo Mitsui Banking Corporation, The Bank of Tokyo-Mitsubishi,
Ltd., KfW, Calyon New York Branch, The Royal Bank of Scotland plc, The Bank of
Nova Scotia and Mizuho Corporate Bank Ltd. have entered into a Master
Participation Agreement (as amended from time to time, the "Master Participation
Agreement" or "MPA"), which sets forth various terms for the financing of the
development of the Sulfide Project;
B. On September 30, 2005 the Borrower entered into a Master Security
Agreement among the Borrower, Japan Bank for International Cooperation, Sumitomo
Mitsui Banking Corporation, The Bank of Tokyo-Mitsubishi, Ltd., KfW, Calyon New
York Branch, The Royal Bank of Scotland plc, The Bank of Nova Scotia, Mizuho
Corporate Bank, Ltd., Citibank, N.A. as trustee and offshore collateral agent,
and Citibank del Peru, as onshore collateral agent (as amended from time to
time, the "Master Security Agreement" or "MSA").
C. On September 30, 2005, the Borrower entered into a Completion Guarantee
among the Parent Companies, Japan Bank for International Cooperation, Sumitomo
Mitsui Banking Corporation, The Bank of Tokyo-Mitsubishi, Ltd., KfW, Calyon New
York Branch, The Royal Bank of Scotland plc, The Bank of Nova Scotia and Mizuho
Corporate Bank, Ltd. (as amended from time to time, the "Completion Guarantee").
D. On __ [JBIC] [KfW] has [suspended] [cancelled] [terminated] its
Commitment and on __ the Borrower and the Replacement Lender, a __ have entered
into a Replacement Loan Agreement.
NOW, THEREFORE, in consideration of the agreements and obligations set
forth herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby agree as
follows:
1. Accession.
a. Accession. As of the date hereof, the Replacement Lender shall
become a party to the Master Participation Agreement, the Master
Security Agreement, the Transfer Restrictions Agreement and the
Completion Guarantee and shall have all of the rights and obligations
of the Suspending Lender under the Master Participation Agreement, the
Master Security Agreement, the Transfer Restrictions Agreement, the
Completion Guarantee and any other instruments and documents furnished
pursuant thereto.
b. Compliance. This accession to the Master Participation Agreement,
the Master Security Agreement, the Transfer Restrictions Agreement and
the Completion Guarantee is made pursuant to and in accordance with
Section 12.02 of the MPA, Section 9.01(b) of the MSA, Section 4.02 of
the Transfer Restrictions Agreement and Section 9.02(b) of the
Completion Guarantee.
2. Additional Actions of the Replacement Lender. As of the date hereof the
Replacement Lender (a) represents and warrants that (i) it has full power and
authority to execute and deliver this Agreement and that this Agreement has been
duly authorized, executed and delivered by it and constitutes a valid and
legally binding agreement, enforceable in accordance with its terms and (ii)
there is no provision of law, statute, regulation, rule, order, injunction,
decree, writ or judgment, no provision of its organizational documents and no
provision of any mortgage, indenture, contract or agreement binding on it or
affecting its properties, which would prohibit, conflict with or in any way
prevent its execution, delivery, or performance of the terms of this Agreement;
(b) confirms that it has received a copy of such documents and information as it
has deemed appropriate to make its own credit analysis and decision to enter
into this Agreement; (c) agrees that it will, independently and without reliance
upon the Borrower, the Administrative Agent, any Senior Lender or any other
Person and based on such documents and information as it shall deem appropriate
at the time, continue to make its own credit decisions in taking or not taking
action under the Master Participation Agreement, the Master Security Agreement,
the Transfer Restrictions Agreement, the Completion Guarantee or any other
instruments and documents furnished pursuant thereto; (d) appoints and
authorizes the Administrative Agent, the Trustee, the Onshore Collateral Agent
and the Offshore Collateral Agent (the "Agents"), pursuant to and in accordance
with Article VI of the MSA, to take such actions as agents on its behalf and to
exercise such powers under the Master Participation Agreement, the Master
Security Agreement, the Completion Guarantee, the Transfer Restrictions
Agreement or any other instruments and documents furnished pursuant thereto as
are delegated to the Agents by the terms thereof, in each case, together with
such powers as are incidental thereto and (e) agrees that it will be bound by
the provisions of, and will perform in
2
accordance with their terms all of the obligations which by the terms of the
Master Participation Agreement, the Master Security Agreement, the Transfer
Restrictions Agreement and the Completion Guarantee or any other instrument or
document furnished pursuant thereto are required to be performed by it as a
Senior Lender.
3. Terms of Replacement Loan Agreement. Borrower hereby certifies that the
terms and conditions of the Replacement Loan Agreement regarding disbursement
proceedings, repayment and prepayment obligations, place, date and time of
payments, currency, assignment and the Administrative Agent, are no less
favorable to the Borrower then the terms and conditions of the replaced [JBIC]
[KfW] Senior Facility Loan Agreement.
4. No Voting Rights. In the event that the Replacement Lender is a Parent
Company or any Affiliate thereof, the Replacement Lender acknowledges that it is
not entitled to any voting rights under the Master Participation Agreement, the
Master Security Agreement, the Transfer Restrictions Agreement and the
Completion Guarantee or any other instrument or document furnished pursuant
thereto.
5. Governing Law. THIS AGREEMENT SHALL BE GOVERNED IN ALL RESPECTS BY THE
LAWS OF THE STATE OF NEW YORK.
6. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original and shall be
binding upon all parties hereto, and their successors and assigns.
7. Severability. If any provision of this Agreement shall be held to be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions in such jurisdiction and the validity, legality and
enforceability of such provision in any other jurisdiction shall not in any way
be affected or impaired.
8. Definitions and Interpretation. Capitalized terms used but not defined
herein shall have the meanings assigned to them in Schedule Z of the MSA. The
rules of interpretation as set forth in Section 1.02 of the MPA are incorporated
by reference as if set forth at length herein.
9. Notices. Any notice, request, demand, consent, designation, direction,
instruction, certificate, report or other communication to be given hereunder
shall be given in the English language and will be duly given when delivered in
writing or sent by electronic mail confirmed by facsimile transmission (with
written confirmation of receipt, which confirmation may be by facsimile
transmission) (provided that a notice sent by electronic mail shall be duly
given only at the time the facsimile transmission confirming the same is sent)
or facsimile transmission (with written confirmation of receipt, which
confirmation may be by facsimile transmission) to a party at its address and
facsimile transmission numbers as indicated below or to such other address as
may be furnished for
3
this purpose by such party (any such communication that is not in writing shall
be confirmed in writing):
If to the Replacement Lender, at: __
If to the Administrative Agent, at:
CALYON New York Branch
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxx Xxxxxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
If to the Borrower, at:
x/x Xxxxxxx Xxxxxx Xxxxx Xxxxx
Xxxxxxxx (Arequipa/Peru), Casilla Postal #299
Shipping: Xx. Xxxxxxx Xxxxxx #000
Xxxxxxx, Xxxxxxxx, Xxxxxxxx of Peru
Attention: General Manager
Telephone: (054) 283-363
Facsimile: (054) 283-376
[SIGNATURES TO FOLLOW]
4
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the date first above stated.
[REPLACEMENT LENDER]
By
-------------------------------------
Name:
----------------------------------
Title:
---------------------------------
SOCIEDAD MINERA CERRO VERDE S.A.A.,
in its capacity as Borrower
By
----------------------------------
Name:
-------------------------------
Title:
------------------------------
CALYON New York Branch, in its
capacity as Administrative Agent
By
----------------------------------
Name:
-------------------------------
Title:
------------------------------
5
EXHIBIT G-2
FORM OF NEW PARTY ACCESSION AGREEMENT
This NEW PARTY ACCESSION AGREEMENT, dated as of __ (the "Agreement"), is made
among __ (the "Bridge Loan Provider"), Calyon New York Branch, as administrative
agent for the Senior Facility Lenders (the "Administrative Agent") and Sociedad
Minera Cerro Verde S.A.A., a sociedad anonima abierta listed on the Lima Stock
Exchange and organized under the laws of the Republic of Peru (the "Borrower").
RECITALS
A. On September 30, 2005 the Borrower, Japan Bank for International
Cooperation, Sumitomo Mitsui Banking Corporation, The Bank of Tokyo-Mitsubishi,
Ltd., KfW, Calyon New York Branch, The Royal Bank of Scotland plc, The Bank of
Nova Scotia and Mizuho Corporate Bank Ltd. have entered into a Master
Participation Agreement (as amended from time to time, the "Master Participation
Agreement" or "MPA"), which sets forth various terms for the financing of the
development of the Sulfide Project;
B. On September 30, 2005 the Borrower entered into a Master Security
Agreement among the Borrower, Japan Bank for International Cooperation, Sumitomo
Mitsui Banking Corporation, The Bank of Tokyo-Mitsubishi, Ltd., KfW, Calyon New
York Branch, The Royal Bank of Scotland plc, The Bank of Nova Scotia, Mizuho
Corporate Bank, Ltd., Citibank, N.A. as trustee and offshore collateral agent,
and Citibank del Peru, as onshore collateral agent (as amended from time to
time, the "Master Security Agreement" or "MSA").
C. On September 30, 2005 the Borrower entered into a Completion Guarantee
among the Parent Companies, Japan Bank for International Cooperation, Sumitomo
Mitsui Banking Corporation, The Bank of Tokyo-Mitsubishi, Ltd., KfW, Calyon New
York Branch, The Royal Bank of Scotland plc, The Bank of Nova Scotia and Mizuho
Corporate Bank, Ltd. (as amended from time to time, the "Completion Guarantee").
D. On __ [JBIC] [KfW] has [suspended] [cancelled] [terminated] its
Commitment and on __ the Borrower and the Bridge Loan Provider, a __ have
entered into a Bridge Loan Agreement.
NOW, THEREFORE, in consideration of the agreements and obligations set
forth herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby agree as
follows:
1. Accession.
a. Accession. As of the date hereof, the Bridge Loan Provider shall
become a party to the Master Participation Agreement, the Master
Security Agreement, the Transfer Restrictions Agreement and the
Completion Guarantee and shall have all of the rights and obligations
of the Suspending Lender under the Master Participation Agreement, the
Master Security Agreement, the Transfer Restrictions Agreement, the
Completion Guarantee and any other instruments and documents furnished
pursuant thereto.
b. Compliance. This accession to the Master Participation Agreement,
the Master Security Agreement, the Transfer Restrictions Agreement and
the Completion Guarantee is made pursuant to and in accordance with
Section 12.02 of the MPA, Section 9.01(b) of the MSA, Section 4.02 of
the Transfer Restrictions Agreement and Section 9.02(b) of the
Completion Guarantee.
2. Additional Actions of the Bridge Loan Provider. As of the date hereof
the Bridge Loan Provider (a) represents and warrants that (i) it has full power
and authority to execute and deliver this Agreement and that this Agreement has
been duly authorized, executed and delivered by it and constitutes a valid and
legally binding agreement, enforceable in accordance with its terms and (ii)
there is no provision of law, statute, regulation, rule, order, injunction,
decree, writ or judgment, no provision of its organizational documents and no
provision of any mortgage, indenture, contract or agreement binding on it or
affecting its properties, which would prohibit, conflict with or in any way
prevent its execution, delivery, or performance of the terms of this Agreement;
(b) confirms that it has received a copy of such documents and information as it
has deemed appropriate to make its own credit analysis and decision to enter
into this Agreement; (c) agrees that it will, independently and without reliance
upon the Borrower, the Administrative Agent, any Senior Lender or any other
Person and based on such documents and information as it shall deem appropriate
at the time, continue to make its own credit decisions in taking or not taking
action under the Master Participation Agreement, the Master Security Agreement,
the Transfer Restrictions Agreement, the Completion Guarantee or any other
instruments and documents furnished pursuant thereto; (d) appoints and
authorizes the Administrative Agent, the Trustee, the Onshore Collateral Agent
and the Offshore Collateral Agent (the "Agents"), pursuant to and in accordance
with Article VI of the MSA, to take such actions as agents on its behalf and to
exercise such powers under the Master Participation Agreement, the Master
Security Agreement, the Completion Guarantee, the Transfer Restrictions
Agreement or any other instruments and documents furnished pursuant thereto as
are delegated to the Agents by the terms thereof, in each case, together with
such powers as are incidental thereto and (e) agrees that it will be bound by
the provisions of, and will perform in
2
accordance with their terms all of the obligations which by the terms of the
Master Participation Agreement, the Master Security Agreement, the Transfer
Restrictions Agreement and the Completion Guarantee or any other instrument or
document furnished pursuant thereto are required to be performed by it as a
Senior Lender.
3. Terms of Bridge Loan Agreement. Borrower hereby certifies that the terms
and conditions of the Bridge Loan Agreement regarding repayment and prepayment
obligations, place and time of payments, currency, assignment and the
Administrative Agent, if applicable, are not less favorable to the Borrower than
the terms and conditions of the bridged [KfW] [JBIC] Senior Facility Loan
Agreement.
4. No Voting Rights. In the event that the Bridge Loan Provider is a Parent
Company or any Affiliate thereof, the Bridge Loan Provider acknowledges that it
is not entitled to any voting rights under the Master Participation Agreement,
the Master Security Agreement, the Transfer Restrictions Agreement and the
Completion Guarantee or any other instrument or document furnished pursuant
thereto.
5. Governing Law. THIS AGREEMENT SHALL BE GOVERNED IN ALL RESPECTS BY THE
LAWS OF THE STATE OF NEW YORK.
6. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original and shall be
binding upon all parties hereto, and their successors and assigns.
7. Severability. If any provision of this Agreement shall be held to be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions in such jurisdiction and the validity, legality and
enforceability of such provision in any other jurisdiction shall not in any way
be affected or impaired.
8. Definitions and Interpretation. Capitalized terms used but not defined
herein shall have the meanings assigned to them in Schedule Z of the MSA. The
rules of interpretation as set forth in Section 1.02 of the MPA are incorporated
by reference as if set forth at length herein.
9. Notices. Any notice, request, demand, consent, designation, direction,
instruction, certificate, report or other communication to be given hereunder
shall be given in the English language and will be duly given when delivered in
writing or sent by electronic mail confirmed by facsimile transmission (with
written confirmation of receipt, which confirmation may be by facsimile
transmission) (provided that a notice sent by electronic mail shall be duly
given only at the time the facsimile transmission confirming the same is sent)
or facsimile transmission (with written confirmation of receipt, which
confirmation may be by facsimile transmission) to a party at its address and
facsimile transmission numbers as indicated below or to such other address as
may be furnished for
3
this purpose by such party (any such communication that is not in writing shall
be confirmed in writing):
If to the Bridge Loan Provider, at: __
If to the Administrative Agent, at:
CALYON New York Branch
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxx Xxxxxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
If to the Borrower, at:
x/x Xxxxxxx Xxxxxx Xxxxx Xxxxx
Xxxxxxxx (Arequipa/Peru), Casilla Postal #299
Shipping: Xx. Xxxxxxx Xxxxxx #000
Xxxxxxx, Xxxxxxxx, Xxxxxxxx of Peru
Attention: General Manager
Telephone: (054) 283-363
Facsimile: (054) 283-376
[SIGNATURES TO FOLLOW]
4
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the date first above stated.
[BRIDGE LOAN PROVIDER]
By
-------------------------------------
Name:
----------------------------------
Title:
---------------------------------
SOCIEDAD MINERA CERRO VERDE S.A.A.,
in its capacity as Borrower
By
----------------------------------
Name:
-------------------------------
Title:
------------------------------
CALYON NEW YORK BRANCH, in its
capacity as Administrative Agent
By
----------------------------------
Name:
-------------------------------
Title:
------------------------------
5
Exhibit H-1
Form of Consent to Assignment - Operator's Agreement
================================================================================
CONSENT AND AGREEMENT
Dated as of September 30, 2005
made by and between
XXXXXX XXXXXX DODGE DEL PERU S.A.C.
(a Peruvian sociedad anonima abierta)
and
CITIBANK, N.A.,
as Offshore Collateral Agent
================================================================================
This CONSENT AND AGREEMENT, dated as of September 30, 2005 (this
"Consent"), made by and between XXXXXX XXXXXX DODGE DEL PERU S.A.C., a Peruvian
sociedad anonima abierta (the "Consenting Party") and CITIBANK, N.A., in its
capacity as Offshore Collateral Agent under the Master Security Agreement (the
"Offshore Collateral Agent").
WITNESSETH
WHEREAS, the Borrower has entered into certain Financing Documents with the
Senior Lenders pursuant to which the Senior Lenders have agreed to extend the
Senior Loans to the Borrower and the Borrower has agreed to repay such Senior
Loans;
WHEREAS, as a condition to the Senior Lenders extending Senior Loans to the
Borrower, the Borrower has collaterally assigned its right, title and interest
in the Operator's Agreement to the Offshore Collateral Agent for the benefit and
on behalf of the Senior Lenders; and
WHEREAS, as a further condition to the Senior Lenders extending Senior Loans to
the Borrower, the Borrower shall deliver a consent to such collateral assignment
from the counterparty to the Operator's Agreement.
NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the Consenting Party and the Offshore
Collateral Agent agree as follows:
1. Definitions. Each capitalized term used herein and not otherwise defined
herein shall have the definition assigned to such term in Schedule Z to the
Master Security Agreement dated as of September 30, 2005 among Sociedad Minera
Cerro Verde S.A.A., Japan Bank for International Cooperation, Sumitomo Mitsui
Banking Corporation, The Bank of Tokyo-Mitsubishi, Ltd., KfW, Calyon New York
Branch, The Royal Bank of Scotland plc, The Bank of Nova Scotia, Mizuho
Corporate Bank, Ltd., Citibank, N.A., and Citibank del Peru (as amended from
time to time, the "Master Security Agreement" or "MSA"). The rules of
interpretation set forth in Section 1.02 of the Master Participation Agreement
are incorporated herein as if set forth herein.
2. Representations and Warranties. The Consenting Party hereby represents
and warrants that:
(a) It is an entity duly organized, validly existing and is in good
standing under the laws of the place in which it is organized.
(b) It has full power and authority to execute and deliver the
Operator's Agreement and this Consent and to perform its obligations
thereunder
and hereunder in accordance with the terms provided therein and herein and
will not require any additional consent or approval of its board of
directors, any of its shareholders or any other Person which it has not
already obtained.
(c) Each of the Operator's Agreement and this Consent has been duly
authorized, executed and delivered by it and constitutes a valid and
legally binding agreement, enforceable in accordance with its terms,
subject to bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and similar laws of general applicability relating to or
affecting creditors' rights and to general equity principles.
(d) All Governmental Approvals and other third party approvals which
are necessary for (i) the execution and delivery by it of the Operator's
Agreement and this Consent, (ii) the performance of its obligations
thereunder and hereunder and (iii) the exercise by the Offshore Collateral
Agent of the rights and remedies with respect to the Operator's Agreement
(other than Governmental Approvals, if any, required to transfer the
Operator's Agreement to the Offshore Collateral Agent or its assignees)
have been obtained and are in full force and effect.
(e) There is no provision of law, statute, regulation, rule, order,
injunction, decree, writ or judgment, no provision of its organizational
documents and no provision of any mortgage, indenture, contract or
agreement binding on it or affecting its properties, which would prohibit,
conflict with or in any way prevent its execution, delivery, or performance
of the terms of the Operator's Agreement or this Consent.
(f) There is no action, suit, proceeding or investigation, at law or
in equity, or before any Governmental Authority or other Person, pending
or, to the best knowledge of the Consenting Party, threatened, against or
affecting it or its assets that (i) questions the validity of the
Operator's Agreement or this Consent or any action taken or to be taken
pursuant hereto or thereto, or (ii) in any case or in the aggregate would
reasonably be expected to result in a material adverse effect on the
ability of the Consenting Party to perform its obligations hereunder or
thereunder.
(g) The Consenting Party is not in default under any material covenant
or obligation under the Operator's Agreement and no such default has
occurred prior to the date hereof. To the best knowledge of the Consenting
Party, the Borrower is not in default under any material covenant or
obligation under the Operator's Agreement and no such default has occurred
prior to the date hereof. The Consenting Party and, to the best of its
knowledge, the Borrower, have complied with all conditions precedent to the
respective obligations of such party to perform under the Operator's
Agreement. The Operator's Agreement, as of the
2
date hereof, is in full force and effect, has not been amended, and none of
the Borrower's rights under the Operator's Agreement have been waived.
3. Consent and Agreement. The Consenting Party hereby acknowledges and
agrees that, notwithstanding any other provision in the Operator's Agreement:
(a) Pursuant to the Master Security Agreement, the Borrower has
granted, transferred and assigned to the Offshore Collateral Agent, as
collateral agent for the benefit of Senior Lenders named in the Master
Security Agreement, all right, title and interest which Borrower now has or
which shall hereafter arise in and to the Operator's Agreement and all
claims resulting from any failure of performance or compliance with any of
the provisions of the Operator's Agreement, together with full power and
authority, in its own name or in the name of Borrower or otherwise, to
enforce and request payment under the Operator's Agreement and to collect,
receive and give receipts and releases for such amounts.
(b) The Consenting Party hereby irrevocably consents to and accepts
the grant, transfer and assignment by the Borrower to the Offshore
Collateral Agent for the benefit of and on behalf of the Senior Lenders of
all of Borrower's right, title and interest in the Operator's Agreement and
all claims resulting from any failure of performance or compliance with any
of the provisions of the Operator's Agreement, together with full power and
authority, in the name of the Borrower, to enforce the Operator's Agreement
against the Consenting Party, it being understood and agreed that any
enforcement by the Offshore Collateral Agent shall not require any further
consent from the Consenting Party or constitute a default under the
Operator's Agreement. The Consenting Party hereby irrevocably further
agrees for the benefit of the Offshore Collateral Agent and the Senior
Lenders in case of a default under the Operator's Agreement by the
Borrower, to accept performance by a Person designated by the Offshore
Collateral Agent (or one or more of its representatives or assignees (the
"Designee"), as instructed by the Administrative Agent) and neither the
Offshore Collateral Agent nor its Designee shall be subject to any defense
arising from the Borrower's failure to perform, provided that the
Designee's performance shall in all other respects be in accordance with
the provisions of the Operator's Agreement. In no event shall any grant,
transfer, assignment or acceptance of performance pursuant to this Section
3(b) change or modify Borrower's obligations to the Consenting Party
thereunder.
(c) The Consenting Party shall deliver to the Offshore Collateral
Agent at the address specified in Section 5(j), or at such other address as
the Offshore Collateral Agent may designate in writing from time to time to
the Consenting Party, concurrently with delivery thereof to the Borrower, a
copy of any material notice, request, demand or other document given by the
Consenting
3
Party in connection with the Operator's Agreement, along with notice of any
material breach, termination or claim of termination under the Operator's
Agreement for which notice to the Borrower is required under the Operator's
Agreement.
(d) The Consenting Party will not, without the prior written consent
of the Supermajority Facility Lenders, take any action to (i) except as
expressly provided in the Operator's Agreement, cancel or terminate, or
suspend performance under, the Operator's Agreement or consent to or accept
any cancellation, termination or suspension thereof, (ii) exercise any of
its rights set forth in the Operator's Agreement to cancel or terminate, or
suspend or discontinue performance or withhold deliveries under, the
Operator's Agreement unless the Consenting Party shall have delivered to
the Offshore Collateral Agent and each Senior Lender written notice stating
that it intends to exercise such right on a date not less than 30 days
after the date of such notice, specifying the nature of the default giving
rise to such right (and, in the case of a payment default, specifying the
amount thereof) and permitting the Offshore Collateral Agent or its
Designee on behalf of the Senior Lenders to cure such default by making a
payment in the amount in default or by performing or causing to be
performed the obligation in default (or if such default is not capable of
being cured within said time, then diligently and continuously pursuing all
reasonable actions necessary to effect cure), (iii) amend, supplement or
otherwise modify the Operator's Agreement (as in effect on the date hereof)
unless such amendment or modification would be permitted by Section 7.12 of
the Master Participation Agreement or (iv) petition, request or take any
other legal or administrative action which seeks, or may reasonably be
expected, to rescind, terminate or suspend or amend or modify the
Operator's Agreement or any part thereof, other than to enforce rights to
which the Consenting Party is entitled pursuant to clause (i) or (ii) of
this paragraph. In furtherance of the foregoing clause (ii), the Consenting
Party agrees that, notwithstanding anything contained in the Operator's
Agreement to the contrary, upon the occurrence of a default under the
Operator's Agreement that cannot by its nature be cured by the payment of
money, the Consenting Party will not cancel or terminate the Operator's
Agreement if, and for so long as, the Offshore Collateral Agent shall be
diligently seeking to institute foreclosure proceedings, or to acquire the
Borrower's interest in the Operator's Agreement, and the Consenting Party
shall grant the Offshore Collateral Agent a reasonable period of time to
cure such default upon the occurrence of such foreclosure or acquisition.
(e) In the event that (i) the Operator's Agreement is rejected by a
trustee or debtor-in-possession in any bankruptcy or insolvency proceeding
involving the Borrower or (ii) the Operator's Agreement is terminated as a
result of any bankruptcy or insolvency proceeding involving the Borrower
and, if within
4
60 days after notice by the Consenting Party to the Offshore Collateral
Agent of such rejection or termination, the Offshore Collateral Agent or
its Designee shall so request and shall certify in writing to the
Consenting Party that such party intends to perform the obligations of the
Borrower as and to the extent required under the Operator's Agreement and
such Designee is sufficiently creditworthy to perform the obligations of
the Borrower under the Operator's Agreement, the Consenting Party will
execute and deliver to the Offshore Collateral Agent or such Designee a new
Operator's Agreement which shall be for the balance of the remaining term
under the original Operator's Agreement before giving effect to such
rejection or termination and shall contain the same conditions, agreements,
terms, provisions and limitations as the agreements, terms, provisions and
limitations as the original Operator's Agreement (except for any
requirements which have been fulfilled by the Borrower and the Consenting
Party prior to such rejection or termination). References in this Consent
and Agreement to such "Operator's Agreement" shall be deemed also to refer
to such new Operator's Agreement.
(f) The Consenting Party and the Borrower hereby further acknowledge
and agree that the Consenting Party will not, without the prior written
consent of the Supermajority Facility Lenders, sell, assign, transfer or
otherwise dispose of (by operation of law or otherwise) any part of its
interest in the Operator's Agreement; provided, that in no event shall the
Consenting Party sell, assign, transfer or otherwise dispose of any part of
its interest in the Operator's Agreement to any Person unless such Person
is a wholly-owned direct or indirect subsidiary of Xxxxxx Dodge Corporation
or is another entity satisfactory to the Supermajority Facility Lenders.
(g) In the event that the Designee succeeds to the Borrower's interest
under the Operator's Agreement, whether by foreclosure or otherwise, the
Designee may elect (but shall not be required to) by written notice of
assumption delivered to the Consenting Party to assume liability for all of
the Borrower's obligations under the Operator's Agreement (and the
Consenting Party shall not be obligated to recognize any such succession
until it has received such written notice of assumption); provided, however
that such liability shall not include any liability for claims of the
Consenting Party against the Borrower arising from the Borrower's failure
to perform during the period prior to the Offshore Collateral Agent's or
such Designee's succession to the Borrower's interest in and under the
Operator's Agreement. Except as otherwise set forth in the immediately
preceding sentence, the Designee shall not be liable for the performance or
observance of any of the obligations or duties of the Borrower under the
Operator's Agreement, nor shall the grant of a security interest in the
Operator's Agreement by the Borrower to the Offshore Collateral Agent on
behalf of the Senior Lenders give
5
rise to any duties or obligations whatsoever on the part of the Offshore
Collateral Agent owing to the Consenting Party.
(h) Upon the exercise by the Offshore Collateral Agent on behalf of
the Senior Lenders of any of the remedies set forth in the Master Security
Agreement, the Offshore Collateral Agent may, to the extent permitted by
Article V of the Master Security Agreement, assign its rights and interests
and the rights and interests of the Borrower under the Operator's Agreement
to any purchaser or transferee of the Offshore Collateral, if such
purchaser or transferee shall (i) assume all of the obligations of the
Borrower under the Operator's Agreement and (ii) be, in the reasonable
opinion of the Consenting Party, sufficiently creditworthy to perform the
obligations of the Borrower under the Operator's Agreement. Upon such
assignment and assumption, the Senior Lenders shall be relieved of all
obligations under the Operator's Agreement arising after such assignment
and assumption.
(i) In the event that the Designee shall assume or be liable for any
obligation under the Operator's Agreement (as contemplated in clause (g)
above or otherwise), such liability shall be limited solely to such party's
interest in the Offshore Collateral (and no officer, director, employee,
shareholder or agent thereof shall have any liability with respect
thereto).
4. Payment Arrangements. The Consenting Party hereby agrees that it shall
make, or cause to be made by any person making payment on its behalf, all
payments due or to become due from it under the Operator's Agreement by wire
transfer in U.S. Dollars of same day funds directly to Proceeds Account account
no.105487, in the name of Citibank N.A., at Citibank N.A. or such other account
or accounts at such other bank or banks as are designate from time to time by
the Offshore Collateral Agent.
5. Miscellaneous.
(a) This Consent shall be binding upon the Consenting Party, its
successors and assigns and shall inure, together with the rights and
remedies of the Offshore Collateral Agent hereunder, to the benefit of the
Borrower and the Offshore Collateral Agent on behalf of the Senior Lenders
and their respective successors, transferees and assigns.
(b) This Consent and the obligations of the Consenting Party hereunder
shall terminate and be of no further force and effect on the date on which
the Consenting Party receives a notice from the Offshore Collateral Agent
stating that all of the Borrower's obligations under the Master Security
Agreement shall have terminated in accordance with the terms thereof.
6
(c) No amendment, modification or waiver of any provision of this
Consent shall be effective unless the same shall be in writing and signed
by the parties hereto and then such waiver shall be effective only in the
specific instance and for the specific purpose for which it was given.
(d) THIS CONSENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK.
(e) The Consenting Party hereby irrevocably consents and agrees, for
the benefit of the Offshore Collateral Agent, that any legal action, suit
or proceeding against it with respect to its obligations, liabilities or
any other matter under or arising out of or in connection with this Consent
may be brought in any Federal or State court located in New York County in
the City of New York and hereby irrevocably accepts and submits to the
non-exclusive jurisdiction of such court with respect to any such action,
suit or proceeding. The Consenting Party hereby waives any objection which
it may now or hereafter have to the laying of venue of any of the aforesaid
actions, suits or proceedings, brought in any such court and hereby further
waives and agrees not to plead or claim in any such court that any such
action, suit or proceeding brought therein has been brought in an
inconvenient forum.
(f) Each party hereto hereby waives, to the fullest extent permitted
by applicable law, any and all right to trial by jury in any legal
proceeding arising out of or relating to this Consent or the transactions
contemplated hereby.
(g) If any provision of this Consent shall be held to be invalid,
illegal or unenforceable, the validity, legality and enforceability of the
remaining provisions in such jurisdiction and the validity, legality and
enforceability of such provision in any other jurisdiction shall not in any
way be affected or impaired.
(h) The headings used in this Consent are for convenience only and
will not affect the construction or interpretation of any of the terms of
this Consent.
(i) This Consent may be executed in any number of counterparts, all of
which taken together shall constitute one and the same instrument, and any
of the parties hereto may execute this Consent by signing any such
counterpart.
(j) Any notice, request, demand, consent, designation, direction,
instruction, certificate, report or other communication to be given
hereunder shall be given in the English language and will be duly given
when delivered in writing or facsimile transmission (with written
confirmation of receipt, which confirmation may be by facsimile
transmission) to a party at its address and
7
facsimile transmission numbers as indicated below or to such other address
as may be furnished for this purpose by such party (any such communication
that is not in writing shall be confirmed in writing), provided that any
notice, request, demand, consent, designation, direction, instruction,
certificate, report or other communication sent to the Offshore Collateral
Agent shall be deemed effective upon actual receipt thereof:
If to the Offshore Collateral Agent, at
Citibank N.A.
Citibank Agency & Trust
000 Xxxxxxxxx Xxxxxx
00xx Xxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxx Xxxxx
Telephone: 000 000 0000
Facsimile: 000 000 0000
If to the Consenting Party, at
Xxxxxx Xxxxxx Dodge del Peru S.A.C.
Av. Camino Real 348
Torre El Xxxxx, Oficina 1401
Xxx Xxxxxx, Xxxx 00, Xxxx
[SIGNATURES TO FOLLOW]
8
IN WITNESS WHEREOF, the undersigned by its officer duly authorized has
caused this Consent to be duly executed and delivered as of the day and year
first above written.
XXXXXX XXXXXX DODGE DEL PERU S.A.C.
By
-------------------------------------
Name:
----------------------------------
Title:
---------------------------------
CITIBANK, N.A., as Offshore Collateral
Agent
By
-------------------------------------
Name:
----------------------------------
Title:
---------------------------------
Acknowledged and Agreed:
SOCIEDAD MINERA CERRO VERDE S.A.A.
By
----------------------------------
Name:
-------------------------------
Title:
------------------------------
9
Exhibit H-2
Form of Consent to Assignment - Engineering Agreement
================================================================================
CONSENT AND AGREEMENT
Dated as of September 30, 2005
made by and between
FLUOR CANADA LTD.
as Consenting Party
and
CITIBANK, N.A.,
as Offshore Collateral Agent
================================================================================
This CONSENT AND AGREEMENT, dated as of September 30, 2005 (this
"Consent"), made by and between FLUOR CANADA LTD., a Canadian corporation(the
"Consenting Party") and CITIBANK, N.A., in its capacity as Offshore Collateral
Agent under the Master Security Agreement (the "Offshore Collateral Agent").
WITNESSETH
WHEREAS, the Borrower has entered into certain Financing Documents with the
Senior Lenders pursuant to which the Senior Lenders have agreed to extend the
Senior Loans to the Borrower and the Borrower has agreed to repay such Senior
Loans;
WHEREAS, as a condition to the Senior Lenders extending Senior Loans to the
Borrower, the Borrower has collaterally assigned its right, title and interest
in the Engineering Agreement No. CV 12913, dated as of December 14, 2004 (the
"Engineering Agreement"), between the Borrower and the Consenting Party to the
Offshore Collateral Agent for the benefit and on behalf of the Senior Lenders;
and
WHEREAS, as a further condition to the Senior Lenders extending Senior
Loans to the Borrower, the Borrower shall deliver a consent to such collateral
assignment from the counterparty to the Engineering Agreement.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Consenting Party and the
Offshore Collateral Agent agree as follows:
1. Definitions and Interpretation.
(a) Each capitalized term used herein shall have the meaning assigned
to such term in Annex A hereto.
(b) Interpretation. In this Consent, except to the extent that the
context otherwise requires:
(i) Section headings are for convenience of reference only and
shall not affect the interpretation of this Consent;
(ii) unless otherwise specified, references to Sections, clauses
and Annexes are references to Sections and clauses of this Consent;
(iii) references to any document or agreement, including this
Consent, shall be deemed to include references to such document or
agreement as amended, supplemented or replaced and in effect from time
to time in accordance with its terms and subject to compliance with
the requirements set forth herein and therein;
(iv) references to any party to this Consent or any other
document or agreement or to any other person shall include its
successors and permitted assigns;
(v) when used in this Consent, the words "including", "includes"
and "include" shall be deemed to be followed in each instance by the
words "without limitation";
(vi) when used in this Consent, the words "herein", "hereby",
"hereunder", "hereof", "hereto", "hereinbefore", and "hereinafter",
and words of similar import, shall refer to this Consent in its
entirety and not to any particular section, subsection, paragraph,
sub-paragraph, clause or other subdivision, exhibit, schedule or
appendix of this Consent; and
(vii) when used herein, the singular shall include the plural,
the plural shall include the singular and the use of any gender shall
include all genders, unless the context requires otherwise.
2. Representations and Warranties. The Consenting Party hereby represents
and warrants that:
(a) It is an entity duly organized, validly existing and is in good
standing under the laws of the place in which it is organized.
(b) It has full power and authority to execute and deliver this
Consent and to perform its obligations hereunder in accordance with the
terms provided herein and will not require any additional consent or
approval of its board of director, any of its shareholders or any other
Person which it has not already obtained.
2
(c) This Consent has been duly authorized, executed and delivered by
it and constitutes a valid and legally binding agreement, enforceable in
accordance with its terms, subject to bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and similar laws of general
applicability relating to or affecting creditors' rights and to general
equity principles.
(d) All Governmental Approvals and other third party approvals which
are necessary for (i) the execution and delivery by it of this Consent,
(ii) the performance of its obligations hereunder and (iii) the exercise by
the Offshore Collateral Agent of the rights and remedies with respect to
the Engineering Agreement (other than Governmental Approvals, if any,
required to transfer the Engineering Agreement to the Offshore Collateral
Agent or its assignees) have been obtained and are in full force and
effect.
(e) There is no provision of law, statute, regulation, rule, order,
injunction, decree, writ or judgment, no provision of its organizational
documents and no provision of any mortgage, indenture, contract or
agreement binding on it or affecting its properties, which would prohibit,
conflict with or in any way prevent its execution, delivery, or performance
of the terms of this Consent.
(f) There is no action, suit, proceeding or investigation, at law or
in equity, or before any Governmental Authority or other Person, pending
or, to the best knowledge of the Consenting Party, threatened, against or
affecting it or its assets that (i) questions the validity of this Consent
or any action taken or to be taken pursuant hereto or thereto, or (ii) in
any case or in the aggregate would reasonably be expected to result in a
material adverse effect on the ability of the Consenting Party to perform
its obligations hereunder.
(g) The Consenting Party is not in default under any material covenant
or obligation under the Engineering Agreement and no such default has
occurred prior to the date hereof. To the best knowledge of the Consenting
Party, the Borrower is not in default under any material covenant or
obligation under the Engineering Agreement and no such default has occurred
prior to the date hereof. The Consenting Party and, to the best of its
knowledge, the Borrower, have complied with all conditions precedent to the
respective obligations of such party to perform under the Engineering
Agreement. The Engineering Agreement, as of the date hereof, is in full
force and effect, has not been amended, and none of the Borrower's rights
under the Engineering Agreement have been waived.
3. Consent and Agreement. The Consenting Party hereby acknowledges and
agrees that, notwithstanding any other provision in the Engineering Agreement:
(a) Pursuant to the Master Security Agreement, the Borrower has
granted, transferred and assigned to the Offshore Collateral Agent, as
collateral
3
agent for the benefit of Senior Lenders named in the Master Security
Agreement, all right, title and interest which Borrower now has or which
shall hereafter arise in and to the Engineering Agreement and all claims
resulting from any failure of performance or compliance with any of the
provisions of the Engineering Agreement, together with full power and
authority, in its own name or in the name of Borrower or otherwise, to
enforce and request payment under the Engineering Agreement and to collect,
receive and give receipts and releases for such amounts.
(b) The Consenting Party hereby irrevocably consents to and accepts
the grant, transfer and assignment by the Borrower to the Offshore
Collateral Agent for the benefit of and on behalf of the Senior Lenders of
all of Borrower's right, title and interest in the Engineering Agreement
and all claims resulting from any failure of performance or compliance with
any of the provisions of the Engineering Agreement, together with full
power and authority, in the name of the Borrower, to enforce the
Engineering Agreement against the Consenting Party, it being understood and
agreed that any enforcement by the Offshore Collateral Agent shall not
require any further consent from the Consenting Party or constitute a
default under the Engineering Agreement. The Consenting Party hereby
irrevocably further agrees for the benefit of the Offshore Collateral Agent
and the Senior Lenders in case of a default under the Engineering Agreement
by the Borrower, to accept performance by a Person designated by the
Offshore Collateral Agent (or one or more of its representatives or
assignees (the "Designee"), as instructed by the Administrative Agent) and
neither the Offshore Collateral Agent nor its Designee shall be subject to
any defense arising from the Borrower's failure to perform, provided that
the Designee's performance shall in all other respects be in accordance
with the provisions of the Engineering Agreement.
(c) The Consenting Party shall deliver to the Offshore Collateral
Agent at the address specified in Section 5(j), or at such other address as
the Offshore Collateral Agent may designate in writing from time to time to
the Consenting Party, concurrently with delivery thereof to the Borrower, a
copy of any material notice, request, demand or other document given by the
Consenting Party in connection with the Engineering Agreement, along with
notice of any material breach, termination or claim of termination under
the Engineering Agreement for which notice to the Borrower is required
under the Engineering Agreement.
(d) In the event that the Designee succeeds to the Borrower's interest
under the Engineering Agreement, whether by foreclosure or otherwise, the
Designee may elect (but shall not be required to) by written notice of
assumption delivered to the Consenting Party to assume liability for all of
the Borrower's
4
obligations under the Engineering Agreement (and the Consenting Party shall
not be obligated to recognize any such succession until it has received
such written notice of assumption); provided, however that such liability
shall not include any liability for claims of the Consenting Party against
the Borrower arising from the Borrower's failure to perform during the
period prior to the Offshore Collateral Agent's or such Designee's
succession to the Borrower's interest in and under the Engineering
Agreement. Except as otherwise set forth in the immediately preceding
sentence, the Designee shall not be liable for the performance or
observance of any of the obligations or duties of the Borrower under the
Engineering Agreement, nor shall the grant of a security interest in the
Engineering Agreement by the Borrower to the Offshore Collateral Agent on
behalf of the Senior Lenders give rise to any duties or obligations
whatsoever on the part of the Offshore Collateral Agent owing to the
Consenting Party.
(e) Upon the exercise by the Offshore Collateral Agent on behalf of
the Senior Lenders of any of the remedies set forth in the Master Security
Agreement, the Offshore Collateral Agent may, to the extent permitted by
Article V of the Master Security Agreement, assign its rights and interests
and the rights and interests of the Borrower under the Engineering
Agreement to any purchaser or transferee of the Offshore Collateral, if
such purchaser or transferee shall (i) assume all of the obligations of the
Borrower under the Engineering Agreement and (ii) be, in the reasonable
opinion of the Consenting Party, sufficiently creditworthy to perform the
obligations of the Borrower under the Engineering Agreement. Upon such
assignment and assumption, the Senior Lenders shall be relieved of all
obligations under the Engineering Agreement arising after such assignment
and assumption.
(f) In the event that the Designee shall assume or be liable for any
obligation under the Engineering Agreement (as contemplated in clause (d)
above or otherwise), such liability shall be limited solely to such party's
interest in the Offshore Collateral (and no officer, director, employee,
shareholder or agent thereof shall have any liability with respect
thereto).
(g) In no event shall any grant, transfer, assignment or acceptance of
performance pursuant to this Section 3 change, modify or increase
Borrower's obligations to the Consenting Party or the Consenting Party's
obligations to the Borrower under the Engineering Agreement and any related
agreement.
4. Payment Arrangements. The Consenting Party hereby agrees that it shall
make, or cause to be made by any person making payment on its behalf, all
payments due or to become due from it under the Engineering Agreement by wire
transfer in U.S. Dollars of same day funds directly to Proceeds Account account
no.105487, in the name of Citibank N.A., at Citibank N.A. or such other account
or accounts at such other bank or banks as are designate from time to time by
the Offshore Collateral Agent.
5
5. Miscellaneous.
(a) This Consent shall be binding upon the Consenting Party, its
successors and assigns and shall inure, together with the rights and
remedies of the Offshore Collateral Agent hereunder, to the benefit of the
Borrower and the Offshore Collateral Agent on behalf of the Senior Lenders
and their respective successors, transferees and assigns.
(b) This Consent and the obligations of the Consenting Party hereunder
shall terminate and be of no further force and effect on the date on which
the Consenting Party receives a notice from the Offshore Collateral Agent
stating that all of the Borrower's obligations under the Master Security
Agreement shall have terminated in accordance with the terms thereof.
(c) No amendment, modification or waiver of any provision of this
Consent shall be effective unless the same shall be in writing and signed
by the parties hereto and then such waiver shall be effective only in the
specific instance and for the specific purpose for which it was given.
(d) THIS CONSENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAW OF THE STATE OF NEW YORK.
(e) The Consenting Party hereby irrevocably consents and agrees, for
the benefit of the Offshore Collateral Agent, that any legal action, suit
or proceeding against it with respect to its obligations, liabilities or
any other matter under or arising out of or in connection with this Consent
may be brought in any Federal or State court located in New York County in
the City of New York and hereby irrevocably accepts and submits to the
non-exclusive jurisdiction of such court with respect to any such action,
suit or proceeding. The Consenting Party hereby waives any objection which
it may now or hereafter have to the laying of venue of any of the aforesaid
actions, suits or proceedings, brought in any such court and hereby further
waives and agrees not to plead or claim in any such court that any such
action, suit or proceeding brought therein has been brought in an
inconvenient forum.
(f) Each party hereto hereby waives, to the fullest extent permitted
by applicable law, any and all right to trial by jury in any legal
proceeding arising out of or relating to this Consent or the transactions
contemplated hereby.
(g) If any provision of this Consent shall be held to be invalid,
illegal or unenforceable, the validity, legality and enforceability of the
remaining provisions in such jurisdiction and the validity, legality and
enforceability of such provision in any other jurisdiction shall not in any
way be affected or impaired.
6
(h) The headings used in this Consent are for convenience only and
will not affect the construction or interpretation of any of the terms of
this Consent.
(i) This Consent may be executed in any number of counterparts, all of
which taken together shall constitute one and the same instrument, and any
of the parties hereto may execute this Consent by signing any such
counterpart.
(j) Any notice, request, demand, consent, designation, direction,
instruction, certificate, report or other communication to be given
hereunder shall be given in the English language and will be duly given
when delivered in writing or facsimile transmission (with written
confirmation of receipt, which confirmation may be by facsimile
transmission) to a party at its address and facsimile transmission numbers
as indicated below or to such other address as may be furnished for this
purpose by such party (any such communication that is not in writing shall
be confirmed in writing), provided that any notice, request, demand,
consent, designation, direction, instruction, certificate, report or other
communication sent to the Offshore Collateral Agent shall be deemed
effective upon actual receipt thereof:
If to the Offshore Collateral Agent, at
Citibank N.A.
Citibank Agency & Trust
000 Xxxxxxxxx Xxxxxx
00xx Xxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxx Xxxxx
Telephone: 000 000 0000
Facsimile: 000 000 0000
If to the Consenting Party, at
Vasse Navaratnam
0000 Xxxx Xxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxx, Xxxxxxx Xxxxxxxx X0X 0X0
Xxxxxx
[SIGNATURES TO FOLLOW]
7
IN WITNESS WHEREOF, the undersigned by its officer duly authorized has
caused this Consent to be duly executed and delivered as of the day and year
first above written.
FLUOR CANADA LTD.
By
-------------------------------------
Name:
----------------------------------
Title:
---------------------------------
CITIBANK, N.A., as Offshore Collateral
Agent
By
-------------------------------------
Name:
----------------------------------
Title:
---------------------------------
Acknowledged and Agreed:
SOCIEDAD MINERA CERRO VERDE S.A.A.
By
----------------------------------
Name:
-------------------------------
Title:
------------------------------
8
ANNEX A
"Administrative Agent": Calyon.
"Borrower": Sociedad Minera Cerro Verde S.A.A., a sociedad anonima abierta
listed on the Lima Stock Exchange and organized under the laws of Peru.
"BVN": Compania de Minas Buenaventure S.A.A., a sociedad anonima abierta
organized under the laws of the Republic of Peru.
"Calyon": Calyon New York Branch, a licensed branch of a banking
corporation organized and existing under the laws of the French Republic.
"Completion Guarantee": the Completion Guarantee, dated as of the date
hereof, among the Parent Companies, the Borrower, the Senior Facility Lenders
and the Administrative Agent.
"Consent": the meaning given in the first paragraph hereto.
"Consenting Party": the meaning given in the first paragraph hereto.
"Designee": the meaning given in Section 3(b) hereof.
"Engineering Agreement" the meaning given in the Recitals hereto.
"Financing Documents": the Senior Lenders Financing Documents and the
Senior Facility Lenders Financing Documents.
"Governmental Approval": any authorization, consent, approval, license,
ruling, permit, concession, certification, exemption, filing (other than with
respect to the perfection of any security interest), variance, order, judgment,
decree, publication, notice to, declaration of or with or registration by or
with any Governmental Authority.
"JBIC": Japan Bank for International Cooperation, a Japanese government
financial institution organized under the laws of Japan.
"KfW": a public corporation formed under the laws of the Federal Republic
of Germany.
"Master Participation Agreement" or "MPA": the Master Participation
Agreement, dated as of September 30, 2005, among the Borrower, JBIC, Sumitomo
Mitsui Banking Corporation, the Bank of Tokyo-Mitsubishi Ltd., KfW, Calyon New
York Branch, RBS, Scotia Capital and Mizuho.
9
"Master Security Agreement" or "MSA": the Master Security Agreement, dated
as of September 30, 2005, among the MSA Parties.
"Mizuho": Mizuho Corporate Bank, Ltd., a banking institution organized
under the laws of Japan.
"MSA Parties": the Borrower, JBIC, Sumitomo Mitsui Banking Corporation, the
Bank of Tokyo-Mitsubishi, Ltd., KfW, Calyon, RBS, Scotia Capital, Mizuho and
Citibank, N.A.
"Offshore Collateral Agent": the meaning given in the first paragraph
hereto.
"Offshore Security Documents": the Master Security Agreement, and each
other agreement or document, filings, notices, arrangements or the like which
are required to establish and maintain the security interest in the Offshore
Collateral for the benefit of the Secured Parties.
"Onshore Security Documents": each of the following documents governed by
Peruvian law: (i) the mining mortgages (hipoteca minera), the civil mortgages
(hipoteca), the mining pledge (xxxxxx xxxxxx (equipment, machinery and movable
assets), the floating mining pledge (xxxxxx xxxxxx flotante (minerals and
Cathode and Concentrate in inventory), each granted pursuant to Section 3.01 of
the MSA, (ii) the conditional assignments of rights (cesion condicionada de
derechos) granted pursuant to Section 3.02(a)(ii) of the MSA, (iii) the Contrato
de Cuenta Escrow for Onshore Accounts executed pursuant to Section 3.05(b) of
the MSA, (iv) the pledge (prenda) for the SMCV Shares pursuant to Section 3.07
of the MSA, and (v) any other agreement or document, filings, notices,
arrangements or the like which are required to establish and maintain the
security interest in the Onshore Collateral for the benefit of the Senior
Lenders.
"Parent Companies": collectively, PDC, SMM, SC and BVN.
"PDC": Xxxxxx Dodge Corporation, a New York corporation.
"Person": any individual, corporation, partnership, joint venture,
association, joint stock company, trust, unincorporated organization or
government agency or political subdivision thereof.
"RBS": The Royal Bank of Scotland plc, a public limited company
incorporated under the laws of Scotland.
"SC": Sumitomo Corporation, a Japanese corporation.
"Scotia Capital": The Bank of Nova Scotia, a Canadian chartered bank,
organized under the laws of Canada.
10
"Security Documents": the Onshore Security Documents and the Offshore
Security Documents.
"Senior Facility Lenders": JBIC, KfW, Calyon, RBS, Scotia Capital, Mizuho
and their respective assignees.
"Senior Facility Lenders Financing Documents": the Master Participation
Agreement, each Senior Facility Loan Agreement, each Promissory Note, and the
Transfer Restrictions Agreement.
"Senior Facility Loans": loans provided by the Senior Facility Lenders as
set forth in the MPA, together with any Replacement Debt.
"Senior Lenders": prior to an issuance of Peruvian Bonds, each Senior
Facility Lender and after an issuance of Peruvian Bonds, collectively, each
Senior Facility Lender and, collectively, the Peruvian Bondholders, it being
understood that the Peruvian Bondholders shall collectively count as only one
Senior Lender.
"Senior Lenders Financing Documents": the Completion Guarantee and each
Security Document.
"Senior Loans": prior to an issuance of Peruvian Bonds, the Senior Facility
Loans and, after an issuance of Peruvian Bonds, collectively, the Senior
Facility Loans and the Peruvian Bonds.
"SMM": Sumitomo Metal Mining Co., Ltd., a Japanese corporation.
11
================================================================================
CONSENT AND AGREEMENT
Dated as of September 30, 2005
made by and between
FLUOR XXXXXX SUCURSAL DEL PERU
as Consenting Party
and
CITIBANK, N.A.,
as Offshore Collateral Agent
================================================================================
This CONSENT AND AGREEMENT, dated as of September 30, 2005 (this
"Consent"), made by and between FLUOR XXXXXX SUCURSAL DEL PERU, with its
principal place of business at Xx. Xxx Xxxxxxxx 000, Xxx 000-X, Xxx Xxxxxx,
Xxxx, Xxxx (the "Consenting Party") and CITIBANK, N.A., in its capacity as
Offshore Collateral Agent under the Master Security Agreement (the "Offshore
Collateral Agent").
WITNESSETH
WHEREAS, the Borrower has entered into certain Financing Documents with the
Senior Lenders pursuant to which the Senior Lenders have agreed to extend the
Senior Loans to the Borrower and the Borrower has agreed to repay such Senior
Loans;
WHEREAS, as a condition to the Senior Lenders extending Senior Loans to the
Borrower, the Borrower has collaterally assigned its right, title and interest
in the Construction Agreement No. CV 12915, dated as of December 14, 2004 (the
"Construction Agreement"), between the Borrower and the Consenting Party to the
Offshore Collateral Agent for the benefit and on behalf of the Senior Lenders;
and
WHEREAS, as a further condition to the Senior Lenders extending Senior
Loans to the Borrower, the Borrower shall deliver a consent to such collateral
assignment from the counterparty to the Construction Agreement.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Consenting Party and the
Offshore Collateral Agent agree as follows:
1. Definitions and Interpretation.
(a) Each capitalized term used herein shall have the meaning assigned
to such term in Annex A hereto.
(b) Interpretation. In this Consent, except to the extent that the
context otherwise requires:
(i) Section headings are for convenience of reference only and
shall not affect the interpretation of this Consent;
(ii) unless otherwise specified, references to Sections, clauses
and Annexes are references to Sections and clauses of this Consent;
(iii) references to any document or agreement, including this
Consent, shall be deemed to include references to such document or
agreement as amended, supplemented or replaced and in effect from time
to time in accordance with its terms and subject to compliance with
the requirements set forth herein and therein;
(iv) references to any party to this Consent or any other
document or agreement or to any other person shall include its
successors and permitted assigns;
(v) when used in this Consent, the words "including", "includes"
and "include" shall be deemed to be followed in each instance by the
words "without limitation";
(vi) when used in this Consent, the words "herein", "hereby",
"hereunder", "hereof", "hereto", "hereinbefore", and "hereinafter",
and words of similar import, shall refer to this Consent in its
entirety and not to any particular section, subsection, paragraph,
sub-paragraph, clause or other subdivision, exhibit, schedule or
appendix of this Consent; and
(vii) when used herein, the singular shall include the plural,
the plural shall include the singular and the use of any gender shall
include all genders, unless the context requires otherwise.
2. Representations and Warranties. The Consenting Party hereby represents
and warrants that:
(a) It is an entity duly organized, validly existing and is in good
standing under the laws of the place in which it is organized.
(b) It has full power and authority to execute and deliver this
Consent and to perform its obligations hereunder in accordance with the
terms provided herein and will not require any additional consent or
approval of its board of director, any of its shareholders or any other
Person which it has not already obtained.
(c) This Consent has been duly authorized, executed and delivered by
it and constitutes a valid and legally binding agreement, enforceable in
accordance with its terms, subject to bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and similar laws of general
applicability relating to or affecting creditors' rights and to general
equity principles.
(d) All Governmental Approvals and other third party approvals which
are necessary for (i) the execution and delivery by it of this Consent,
(ii) the performance of its obligations hereunder and (iii) the exercise by
the Offshore Collateral Agent of the rights and remedies with respect to
the Construction Agreement (other than Governmental Approvals, if any,
required to transfer the
2
Construction Agreement to the Offshore Collateral Agent or its assignees)
have been obtained and are in full force and effect.
(e) There is no provision of law, statute, regulation, rule, order,
injunction, decree, writ or judgment, no provision of its organizational
documents and no provision of any mortgage, indenture, contract or
agreement binding on it or affecting its properties, which would prohibit,
conflict with or in any way prevent its execution, delivery, or performance
of the terms of this Consent.
(f) There is no action, suit, proceeding or investigation, at law or
in equity, or before any Governmental Authority or other Person, pending
or, to the best knowledge of the Consenting Party, threatened, against or
affecting it or its assets that (i) questions the validity of this Consent
or any action taken or to be taken pursuant hereto or thereto, or (ii) in
any case or in the aggregate would reasonably be expected to result in a
material adverse effect on the ability of the Consenting Party to perform
its obligations hereunder.
(g) The Consenting Party is not in default under any material covenant
or obligation under the Construction Agreement and no such default has
occurred prior to the date hereof. To the best knowledge of the Consenting
Party, the Borrower is not in default under any material covenant or
obligation under the Construction Agreement and no such default has
occurred prior to the date hereof. The Consenting Party and, to the best of
its knowledge, the Borrower, have complied with all conditions precedent to
the respective obligations of such party to perform under the Construction
Agreement. The Construction Agreement, as of the date hereof, is in full
force and effect, has not been amended, and none of the Borrower's rights
under the Construction Agreement have been waived.
3. Consent and Agreement. The Consenting Party hereby acknowledges and
agrees that, notwithstanding any other provision in the Construction Agreement:
(a) Pursuant to the Master Security Agreement, the Borrower has
granted, transferred and assigned to the Offshore Collateral Agent, as
collateral agent for the benefit of Senior Lenders named in the Master
Security Agreement, all right, title and interest which Borrower now has or
which shall hereafter arise in and to the Construction Agreement and all
claims resulting from any failure of performance or compliance with any of
the provisions of the Construction Agreement, together with full power and
authority, in its own name or in the name of Borrower or otherwise, to
enforce and request payment under the Construction Agreement and to
collect, receive and give receipts and releases for such amounts.
(b) The Consenting Party hereby irrevocably consents to and accepts
the grant, transfer and assignment by the Borrower to the Offshore
Collateral
3
Agent for the benefit of and on behalf of the Senior Lenders of all of
Borrower's right, title and interest in the Construction Agreement and all
claims resulting from any failure of performance or compliance with any of
the provisions of the Construction Agreement, together with full power and
authority, in the name of the Borrower, to enforce the Construction
Agreement against the Consenting Party, it being understood and agreed that
any enforcement by the Offshore Collateral Agent shall not require any
further consent from the Consenting Party or constitute a default under the
Construction Agreement. The Consenting Party hereby irrevocably further
agrees for the benefit of the Offshore Collateral Agent and the Senior
Lenders in case of a default under the Construction Agreement by the
Borrower, to accept performance by a Person designated by the Offshore
Collateral Agent (or one or more of its representatives or assignees (the
"Designee"), as instructed by the Administrative Agent) and neither the
Offshore Collateral Agent nor its Designee shall be subject to any defense
arising from the Borrower's failure to perform, provided that the
Designee's performance shall in all other respects be in accordance with
the provisions of the Construction Agreement.
(c) The Consenting Party shall deliver to the Offshore Collateral
Agent at the address specified in Section 5(j), or at such other address as
the Offshore Collateral Agent may designate in writing from time to time to
the Consenting Party, concurrently with delivery thereof to the Borrower, a
copy of any material notice, request, demand or other document given by the
Consenting Party in connection with the Construction Agreement, along with
notice of any material breach, termination or claim of termination under
the Construction Agreement for which notice to the Borrower is required
under the Construction Agreement.
(d) In the event that the Designee succeeds to the Borrower's interest
under the Construction Agreement, whether by foreclosure or otherwise, the
Designee may elect (but shall not be required to) by written notice of
assumption delivered to the Consenting Party to assume liability for all of
the Borrower's obligations under the Construction Agreement (and the
Consenting Party shall not be obligated to recognize any such succession
until it has received such written notice of assumption); provided, however
that such liability shall not include any liability for claims of the
Consenting Party against the Borrower arising from the Borrower's failure
to perform during the period prior to the Offshore Collateral Agent's or
such Designee's succession to the Borrower's interest in and under the
Construction Agreement. Except as otherwise set forth in the immediately
preceding sentence, the Designee shall not be liable for the performance or
observance of any of the obligations or duties of the Borrower under the
Construction Agreement, nor shall the grant of a security interest in the
Construction Agreement by the Borrower to the Offshore Collateral Agent on
4
behalf of the Senior Lenders give rise to any duties or obligations
whatsoever on the part of the Offshore Collateral Agent owing to the
Consenting Party.
(e) Upon the exercise by the Offshore Collateral Agent on behalf of
the Senior Lenders of any of the remedies set forth in the Master Security
Agreement, the Offshore Collateral Agent may, to the extent permitted by
Article V of the Master Security Agreement, assign its rights and interests
and the rights and interests of the Borrower under the Construction
Agreement to any purchaser or transferee of the Offshore Collateral, if
such purchaser or transferee shall (i) assume all of the obligations of the
Borrower under the Construction Agreement and (ii) be, in the reasonable
opinion of the Consenting Party, sufficiently creditworthy to perform the
obligations of the Borrower under the Construction Agreement. Upon such
assignment and assumption, the Senior Lenders shall be relieved of all
obligations under the Construction Agreement arising after such assignment
and assumption.
(f) In the event that the Designee shall assume or be liable for any
obligation under the Construction Agreement (as contemplated in clause (d)
above or otherwise), such liability shall be limited solely to such party's
interest in the Offshore Collateral (and no officer, director, employee,
shareholder or agent thereof shall have any liability with respect
thereto).
(g) In no event shall any grant, transfer, assignment or acceptance of
performance pursuant to this Section 3 change, modify or increase
Borrower's obligations to the Consenting Party or the Consenting Party's
obligations to the Borrower under the Construction Agreement and any
related agreement.
4. Payment Arrangements. The Consenting Party hereby agrees that it shall
make, or cause to be made by any person making payment on its behalf, all
payments due or to become due from it under the Construction Agreement by wire
transfer in U.S. Dollars of same day funds directly to Proceeds Account account
no.105487, in the name of Citibank N.A., at Citibank N.A. or such other account
or accounts at such other bank or banks as are designate from time to time by
the Offshore Collateral Agent.
5. Miscellaneous.
(a) This Consent shall be binding upon the Consenting Party, its
successors and assigns and shall inure, together with the rights and
remedies of the Offshore Collateral Agent hereunder, to the benefit of the
Borrower and the Offshore Collateral Agent on behalf of the Senior Lenders
and their respective successors, transferees and assigns.
(b) This Consent and the obligations of the Consenting Party hereunder
shall terminate and be of no further force and effect on the date on
5
which the Consenting Party receives a notice from the Offshore Collateral
Agent stating that all of the Borrower's obligations under the Master
Security Agreement shall have terminated in accordance with the terms
thereof.
(c) No amendment, modification or waiver of any provision of this
Consent shall be effective unless the same shall be in writing and signed
by the parties hereto and then such waiver shall be effective only in the
specific instance and for the specific purpose for which it was given.
(d) THIS CONSENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAW OF THE STATE OF NEW YORK.
(e) The Consenting Party hereby irrevocably consents and agrees, for
the benefit of the Offshore Collateral Agent, that any legal action, suit
or proceeding against it with respect to its obligations, liabilities or
any other matter under or arising out of or in connection with this Consent
may be brought in any Federal or State court located in New York County in
the City of New York and hereby irrevocably accepts and submits to the
non-exclusive jurisdiction of such court with respect to any such action,
suit or proceeding. The Consenting Party hereby waives any objection which
it may now or hereafter have to the laying of venue of any of the aforesaid
actions, suits or proceedings, brought in any such court and hereby further
waives and agrees not to plead or claim in any such court that any such
action, suit or proceeding brought therein has been brought in an
inconvenient forum.
(f) Each party hereto hereby waives, to the fullest extent permitted
by applicable law, any and all right to trial by jury in any legal
proceeding arising out of or relating to this Consent or the transactions
contemplated hereby.
(g) If any provision of this Consent shall be held to be invalid,
illegal or unenforceable, the validity, legality and enforceability of the
remaining provisions in such jurisdiction and the validity, legality and
enforceability of such provision in any other jurisdiction shall not in any
way be affected or impaired.
(h) The headings used in this Consent are for convenience only and
will not affect the construction or interpretation of any of the terms of
this Consent.
(i) This Consent may be executed in any number of counterparts, all of
which taken together shall constitute one and the same instrument, and any
of the parties hereto may execute this Consent by signing any such
counterpart.
6
(j) Any notice, request, demand, consent, designation, direction,
instruction, certificate, report or other communication to be given
hereunder shall be given in the English language and will be duly given
when delivered in writing or facsimile transmission (with written
confirmation of receipt, which confirmation may be by facsimile
transmission) to a party at its address and facsimile transmission numbers
as indicated below or to such other address as may be furnished for this
purpose by such party (any such communication that is not in writing shall
be confirmed in writing), provided that any notice, request, demand,
consent, designation, direction, instruction, certificate, report or other
communication sent to the Offshore Collateral Agent shall be deemed
effective upon actual receipt thereof:
If to the Offshore Collateral Agent, at
Citibank N.A.
Citibank Agency & Trust
000 Xxxxxxxxx Xxxxxx
00xx Xxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxx Xxxxx
Telephone: 000 000 0000
Facsimile: 000 000 0000
If to the Consenting Party, at
Xxxxxx Xxxx
Xx. Xxx Xxxxxxxx 000, Xxx 000-X
Xxx Xxxxxx
Xxxx, Xxxx
[SIGNATURES TO FOLLOW]
7
IN WITNESS WHEREOF, the undersigned by its officer duly authorized has
caused this Consent to be duly executed and delivered as of the day and year
first above written.
FLUOR XXXXXX SUCURSAL DEL PERU
By
-------------------------------------
Name:
----------------------------------
Title:
---------------------------------
CITIBANK, N.A., as Offshore Collateral
Agent
By
-------------------------------------
Name:
----------------------------------
Title:
---------------------------------
Acknowledged and Agreed:
SOCIEDAD MINERA CERRO VERDE S.A.A.
By
----------------------------------
Name:
-------------------------------
Title:
------------------------------
8
ANNEX A
"Administrative Agent": Calyon.
"Borrower": Sociedad Minera Cerro Verde S.A.A., a sociedad anonima abierta
listed on the Lima Stock Exchange and organized under the laws of Peru.
"BVN": Compania de Minas Buenaventure S.A.A., a sociedad anonima abierta
organized under the laws of the Republic of Peru.
"Calyon": Calyon New York Branch, a licensed branch of a banking
corporation organized and existing under the laws of the French Republic.
"Completion Guarantee": the Completion Guarantee, dated as of the date
hereof, among the Parent Companies, the Borrower, the Senior Facility Lenders
and the Administrative Agent.
"Consent": the meaning given in the first paragraph hereto.
"Consenting Party": the meaning given in the first paragraph hereto.
"Designee": the meaning given in Section 3(b) hereof.
"Construction Agreement" the meaning given in the Recitals hereto.
"Financing Documents": the Senior Lenders Financing Documents and the
Senior Facility Lenders Financing Documents.
"Governmental Approval": any authorization, consent, approval, license,
ruling, permit, concession, certification, exemption, filing (other than with
respect to the perfection of any security interest), variance, order, judgment,
decree, publication, notice to, declaration of or with or registration by or
with any Governmental Authority.
"JBIC": Japan Bank for International Cooperation, a Japanese government
financial institution organized under the laws of Japan.
"KfW": a public corporation formed under the laws of the Federal Republic
of Germany.
"Master Participation Agreement" or "MPA": the Master Participation
Agreement, dated as of September 30, 2005, among the Borrower, JBIC, Sumitomo
Mitsui Banking Corporation, the Bank of Tokyo-Mitsubishi Ltd., KfW, Calyon New
York Branch, RBS, Scotia Capital and Mizuho.
9
"Master Security Agreement" or "MSA": the Master Security Agreement, dated
as of September 30, 2005, among the MSA Parties.
"Mizuho": Mizuho Corporate Bank, Ltd., a banking institution organized
under the laws of Japan.
"MSA Parties": the Borrower, JBIC, Sumitomo Mitsui Banking Corporation, the
Bank of Tokyo-Mitsubishi, Ltd., KfW, Calyon, RBS, Scotia Capital, Mizuho and
Citibank, N.A.
"Offshore Collateral Agent": the meaning given in the first paragraph
hereto.
"Offshore Security Documents": the Master Security Agreement, and each
other agreement or document, filings, notices, arrangements or the like which
are required to establish and maintain the security interest in the Offshore
Collateral for the benefit of the Secured Parties.
"Onshore Security Documents": each of the following documents governed by
Peruvian law: (i) the mining mortgages (hipoteca minera), the civil mortgages
(hipoteca), the mining pledge (xxxxxx xxxxxx (equipment, machinery and movable
assets), the floating mining pledge (xxxxxx xxxxxx flotante (minerals and
Cathode and Concentrate in inventory), each granted pursuant to Section 3.01 of
the MSA, (ii) the conditional assignments of rights (cesion condicionada de
derechos) granted pursuant to Section 3.02(a)(ii) of the MSA, (iii) the Contrato
de Cuenta Escrow for Onshore Accounts executed pursuant to Section 3.05(b) of
the MSA, (iv) the pledge (prenda) for the SMCV Shares pursuant to Section 3.07
of the MSA, and (v) any other agreement or document, filings, notices,
arrangements or the like which are required to establish and maintain the
security interest in the Onshore Collateral for the benefit of the Senior
Lenders.
"Parent Companies": collectively, PDC, SMM, SC and BVN.
"PDC": Xxxxxx Dodge Corporation, a New York corporation.
"Person": any individual, corporation, partnership, joint venture,
association, joint stock company, trust, unincorporated organization or
government agency or political subdivision thereof.
"RBS": The Royal Bank of Scotland plc, a public limited company
incorporated under the laws of Scotland.
"SC": Sumitomo Corporation, a Japanese corporation.
"Scotia Capital": The Bank of Nova Scotia, a Canadian chartered bank,
organized under the laws of Canada.
10
"Security Documents": the Onshore Security Documents and the Offshore
Security Documents.
"Senior Facility Lenders": JBIC, KfW, Calyon, RBS, Scotia Capital, Mizuho
and their respective assignees.
"Senior Facility Lenders Financing Documents": the Master Participation
Agreement, each Senior Facility Loan Agreement, each Promissory Note, and the
Transfer Restrictions Agreement.
"Senior Facility Loans": loans provided by the Senior Facility Lenders as
set forth in the MPA, together with any Replacement Debt.
"Senior Lenders": prior to an issuance of Peruvian Bonds, each Senior
Facility Lender and after an issuance of Peruvian Bonds, collectively, each
Senior Facility Lender and, collectively, the Peruvian Bondholders, it being
understood that the Peruvian Bondholders shall collectively count as only one
Senior Lender.
"Senior Lenders Financing Documents": the Completion Guarantee and each
Security Document.
"Senior Loans": prior to an issuance of Peruvian Bonds, the Senior Facility
Loans and, after an issuance of Peruvian Bonds, collectively, the Senior
Facility Loans and the Peruvian Bonds.
"SMM": Sumitomo Metal Mining Co., Ltd., a Japanese corporation.
11
Exhibit H-3
Form of Consent to Assignment - Shareholders Agreement
================================================================================
CONSENT AND AGREEMENT
Dated as of September 30, 2005
made by and among
SMM CERRO VERDE NETHERLANDS B.V.
(a Dutch corporation)
SUMITOMO METAL MINING CO., LTD.
(a Japanese corporation)
SUMITOMO CORPORATION
(a Japanese corporation)
SUMMIT GLOBAL MANAGEMENT II B.V.
(a Dutch corporation)
COMPANIA DE MINAS BUENAVENTURA S.A.A.
(a Peruvian sociedad anonima abierta)
CYPRUS CLIMAX METALS COMPANY
(a Delaware corporation)
XXXXXX DODGE CORPORATION
(a New York corporation)
and
CITIBANK, N.A., as Offshore Collateral Agent
================================================================================
This CONSENT AND AGREEMENT, dated as of September 30, 2005 (this
"Consent"), made by and among SMM CERRO VERDE NETHERLANDS B.V., a Dutch
corporation (the "Sumitomo Participant"), SUMITOMO METAL MINING CO., LTD., a
Japanese corporation ("SMM"), SUMITOMO CORPORATION, a Japanese corporation
("SC"), SUMMIT GLOBAL MANAGEMENT II B.V., formerly known as Summit Global
Management B.V., a Dutch corporation ("SGM"), CYPRUS CLIMAX METALS COMPANY, a
Delaware corporation (the "PD Participant"), XXXXXX DODGE CORPORATION, a New
York corporation ("PDC"), COMPANIA DE MINAS BUENAVENTURA S.A.A., a Peruvian
sociedad anonima abierta ("BVN", and, together with the Sumitomo Participant,
SMM, SC, SGM, the PD Participant, and PDC, the "Consenting Parties" and each a
"Consenting Party") and CITIBANK, N.A., in its capacity as Offshore Collateral
Agent under the Master Security Agreement (the "Offshore Collateral Agent").
WITNESSETH
WHEREAS, the Borrower has entered into certain Financing Documents with the
Senior Lenders pursuant to which the Senior Lenders have agreed to extend the
Senior Loans to the Borrower and the Borrower has agreed to repay such Senior
Loans;
WHEREAS, as a condition to the Senior Lenders extending Senior Loans to the
Borrower, the Borrower has collaterally assigned its right, title and interest
in the Shareholders Agreement to the Offshore Collateral Agent for the benefit
and on behalf of the Senior Lenders; and
WHEREAS, as a further condition to the Senior Lenders extending Senior Loans to
the Borrower, the Borrower shall deliver a consent to such collateral assignment
from the counterparties to the Shareholders Agreement.
NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the Consenting Parties and the Offshore
Collateral Agent agree as follows:
1. Definitions. Each capitalized term used herein and not otherwise defined
herein shall have the definition assigned to such term in Schedule Z to the
Master Security Agreement dated as of September 30, 2005 among Sociedad Minera
Cerro Verde S.A.A., Japan Bank for International Cooperation, Sumitomo Mitsui
Banking Corporation, The Bank of Tokyo-Mitsubishi, Ltd., KfW, Calyon New York
Branch, The Royal Bank of Scotland plc, The Bank of Nova Scotia, Mizuho
Corporate Bank, Ltd., Citibank, N.A., and Citibank del Peru (as amended from
time to time, the "Master Security Agreement" or "MSA"). The rules of
interpretation set forth in Section 1.02 of the Master Participation Agreement
are incorporated herein as if set forth herein.
2. Representations and Warranties. Each Consenting Party hereby represents
and warrants with respect to itself that:
(a) It is an entity duly organized, validly existing and is in good
standing under the laws of the place in which it is organized.
(b) It has full power and authority to execute and deliver the
Shareholders Agreement and this Consent and to perform its obligations
thereunder and hereunder in accordance with the terms provided therein and
herein and will not require any additional consent or approval of its board
of directors, any of its shareholders or any other Person which it has not
already obtained.
(c) Each of the Shareholders Agreement and this Consent has been duly
authorized, executed and delivered by it and constitutes a valid and
legally binding agreement, enforceable in accordance with its terms,
subject to bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and similar laws of general applicability relating to or
affecting creditors' rights and to general equity principles.
(d) All Governmental Approvals and other third party approvals which
are necessary for (i) the execution and delivery by it of the Shareholders
Agreement and this Consent, (ii) the performance of its obligations
thereunder and hereunder and (iii) the exercise by the Offshore Collateral
Agent of the rights and remedies with respect to the Shareholders Agreement
(other than Governmental Approvals, if any, required to transfer the rights
and remedies of the Borrower in the Shareholders Agreement to the Offshore
Collateral Agent or its assignees) have been obtained and are in full force
and effect.
(e) There is no provision of law, statute, regulation, rule, order,
injunction, decree, writ or judgment, no provision of its organizational
documents and no provision of any mortgage, indenture, contract or
agreement binding on it or affecting its properties, which would prohibit,
conflict with or in any way prevent its execution, delivery, or performance
of the terms of the Shareholders Agreement or this Consent.
(f) There is no action, suit, proceeding or investigation, at law or
in equity, or before any Governmental Authority or other Person, pending
or, to the best knowledge of such Consenting Party, threatened, against or
affecting it or its assets that (i) questions the validity of the
Shareholders Agreement or this Consent or any action taken or to be taken
pursuant hereto or thereto, or (ii) in any case or in the aggregate would
reasonably be expected to result in a material adverse effect on the
ability of such Consenting Party to perform its obligations hereunder or
thereunder.
2
(g) Such Consenting Party is not in default under any material
covenant or obligation under the Shareholders Agreement and no such default
has occurred prior to the date hereof. To the best knowledge of such
Consenting Party, the Borrower is not in default under any material
covenant or obligation under the Shareholders Agreement and no such default
has occurred prior to the date hereof. Such Consenting Party and, to the
best knowledge of such Consenting Party, the Borrower, have complied with
all conditions precedent to the respective obligations of such party to
perform under the Shareholders Agreement. The Shareholders Agreement, as of
the date hereof, is in full force and effect, has not been amended, and
none of the Borrower's rights under the Shareholders Agreement have been
waived.
3. Consent and Agreement. Each Consenting Party hereby acknowledges and
agrees that, notwithstanding any other provision in the Shareholders Agreement:
(a) Pursuant to the Master Security Agreement, the Borrower has
granted, transferred and assigned to the Offshore Collateral Agent, as
collateral agent for the benefit of Senior Lenders named in the Master
Security Agreement, all right, title and interest which Borrower now has or
which shall hereafter arise in and to the Shareholders Agreement and all
claims resulting from any failure of performance or compliance with any of
the provisions of the Shareholders Agreement, together with full power and
authority, in its own name or in the name of Borrower or otherwise, to
enforce and request payment under the Shareholders Agreement and to
collect, receive and give receipts and releases for such amounts.
(b) The Consenting Parties hereby irrevocably consent to and accept
the grant, transfer and assignment by the Borrower to the Offshore
Collateral Agent for the benefit of and on behalf of the Senior Lenders of
all of Borrower's right, title and interest in the Shareholders Agreement
and all claims resulting from any failure of performance or compliance with
any of the provisions of the Shareholders Agreement, together with full
power and authority, in the name of the Borrower, to enforce the
Shareholders Agreement against the Consenting Parties, it being understood
and agreed that any enforcement by the Offshore Collateral Agent shall not
require any further consent from the Consenting Parties or constitute a
default under the Shareholders Agreement. The Consenting Parties hereby
irrevocably further agree for the benefit of the Offshore Collateral Agent
and the Senior Lenders in case of a default under the Shareholders
Agreement by the Borrower, to accept performance by a Person designated by
the Offshore Collateral Agent (or one or more of its representatives or
assignees (the "Designee"), as instructed by the Administrative Agent) and
neither the Offshore Collateral Agent nor its Designee shall be subject to
any defense arising from the Borrower's failure to perform, provided that
the Designee's performance shall in
3
all other respects be in accordance with the provisions of the Shareholders
Agreement. In no event shall any grant, transfer, assignment or acceptance
of performance pursuant to this Section 3(b) change or modify Borrower's
obligations to the Consenting Parties thereunder.
(c) The Consenting Parties shall deliver to the Offshore Collateral
Agent at the address specified in Section 5(j), or at such other address as
the Offshore Collateral Agent may designate in writing from time to time to
the Consenting Parties, concurrently with delivery thereof to the Borrower,
a copy of any material notice, request, demand or other document given by
the Consenting Parties in connection with the Shareholders Agreement, along
with notice of any material breach, termination or claim of termination
under the Shareholders Agreement for which notice to the Borrower is
required under the Shareholders Agreement.
(d) The Consenting Parties will not, without the prior written consent
of the Supermajority Facility Lenders, take any action to amend, supplement
or otherwise modify the Shareholders Agreement (as in effect on the date
hereof) unless such amendment or modification would be permitted by Section
7.12 of the Master Participation Agreement.
(e) The Consenting Parties and the Borrower hereby further acknowledge
and agree that the Consenting Parties will not sell, assign, transfer or
otherwise dispose of (by operation of law or otherwise) any part of its
interest in the Shareholders Agreement other than pursuant to a Transfer in
accordance with the Transfer Restrictions Agreement.
(f) In the event that the Designee succeeds to the Borrower's interest
under the Shareholders Agreement, whether by foreclosure or otherwise, the
Designee may elect (but shall not be required to) by written notice of
assumption delivered to the Consenting Parties to assume liability for all
of the Borrower's obligations under the Shareholders Agreement (and the
Consenting Parties shall not be obligated to recognize any such succession
until they have each received such written notice of assumption); provided,
however that such liability shall not include any liability for claims of
the Consenting Parties against the Borrower arising from the Borrower's
failure to perform during the period prior to the Offshore Collateral
Agent's or such Designee's succession to the Borrower's interest in and
under the Shareholders Agreement. Except as otherwise set forth in the
immediately preceding sentence, the Designee shall not be liable for the
performance or observance of any of the obligations or duties of the
Borrower under the Shareholders Agreement, nor shall the grant of a
security interest in the Shareholders Agreement by the Borrower to the
Offshore Collateral Agent on behalf of the Senior Lenders give rise to any
duties or obligations whatsoever on the part of the Offshore Collateral
Agent owing to any of the Consenting Parties.
4
(g) Upon the exercise by the Offshore Collateral Agent on behalf of
the Senior Lenders of any of the remedies set forth in the Master Security
Agreement, the Offshore Collateral Agent may, to the extent permitted by
Article V of the Master Security Agreement, assign its rights and interests
and the rights and interests of the Borrower under the Shareholders
Agreement to any purchaser or transferee of the Offshore Collateral, if
such purchaser or transferee shall (i) assume all of the obligations of the
Borrower under the Shareholders Agreement and (ii) be, in the reasonable
opinion of the Consenting Parties, sufficiently creditworthy to perform the
obligations of the Borrower under the Shareholders Agreement. Upon such
assignment and assumption, the Senior Lenders shall be relieved of all
obligations under the Shareholders Agreement arising after such assignment
and assumption.
(h) In the event that the Designee shall assume or be liable for any
obligation under the Shareholders Agreement (as contemplated in clause (f)
above or otherwise), such liability shall be limited solely to such party's
interest in the Offshore Collateral (and no officer, director, employee,
shareholder or agent thereof shall have any liability with respect
thereto).
4. Payment Arrangements. The Consenting Parties hereby agree that they
shall make, or cause to be made by any person making payment on its behalf, all
payments due or to become due from it under the Shareholders Agreement by wire
transfer in U.S. Dollars of same day funds directly to Proceeds Account account
no. 105487, in the name of Citibank N.A., at Citibank N.A. or such other account
or accounts at such other bank or banks as are designate from time to time by
the Offshore Collateral Agent.
5. Miscellaneous.
(a) This Consent shall be binding upon each Consenting Party, its
successors and assigns and shall inure, together with the rights and
remedies of the Offshore Collateral Agent hereunder, to the benefit of the
Borrower and the Offshore Collateral Agent on behalf of the Senior Lenders
and their respective successors, transferees and assigns.
(b) This Consent and the obligations of the Consenting Parties
hereunder shall terminate and be of no further force and effect on the date
on which the Consenting Parties receive a notice from the Offshore
Collateral Agent stating that all of the Borrower's obligations under the
Master Security Agreement shall have terminated in accordance with the
terms thereof.
(c) No amendment, modification or waiver of any provision of this
Consent shall be effective unless the same shall be in writing and signed
by all of
5
the parties hereto and then such waiver shall be effective only in the
specific instance and for the specific purpose for which it was given.
(d) THIS CONSENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK.
(e) The Consenting Parties hereby irrevocably consent and agree, for
the benefit of the Offshore Collateral Agent, that any legal action, suit
or proceeding against them with respect to their obligations, liabilities
or any other matter under or arising out of or in connection with this
Consent may be brought in any Federal or State court located in New York
County in the City of New York and hereby irrevocably accept and submit to
the non-exclusive jurisdiction of such court with respect to any such
action, suit or proceeding. The Consenting Parties hereby waive any
objection which they may now or hereafter have to the laying of venue of
any of the aforesaid actions, suits or proceedings, brought in any such
court and hereby further waive and agree not to plead or claim in any such
court that any such action, suit or proceeding brought therein has been
brought in an inconvenient forum.
(f) Each party hereto hereby waives, to the fullest extent permitted
by applicable law, any and all right to trial by jury in any legal
proceeding arising out of or relating to this Consent or the transactions
contemplated hereby.
(g) If any provision of this Consent shall be held to be invalid,
illegal or unenforceable, the validity, legality and enforceability of the
remaining provisions in such jurisdiction and the validity, legality and
enforceability of such provision in any other jurisdiction shall not in any
way be affected or impaired.
(h) The headings used in this Consent are for convenience only and
will not affect the construction or interpretation of any of the terms of
this Consent.
(i) This Consent may be executed in any number of counterparts, all of
which taken together shall constitute one and the same instrument, and any
of the parties hereto may execute this Consent by signing any such
counterpart.
(j) Any notice, request, demand, consent, designation, direction,
instruction, certificate, report or other communication to be given
hereunder shall be given in the English language and will be duly given
when delivered in writing or facsimile transmission (with written
confirmation of receipt, which confirmation may be by facsimile
transmission) to a party at its address and facsimile transmission numbers
as indicated below or to such other address as may be furnished for this
purpose by such party (any such communication that is
6
not in writing shall be confirmed in writing), provided that any notice,
request, demand, consent, designation, direction, instruction, certificate,
report or other communication sent to the Offshore Collateral Agent shall
be deemed effective upon actual receipt thereof:
If to the Offshore Collateral Agent, at
Citibank N.A.
Citibank Agency & Trust
000 Xxxxxxxxx Xxxxxx
00xx Xxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxx Xxxxx
Telephone: 000 000 0000
Facsimile: 000 000 0000
If to the Consenting Parties, at
SMM Cerro Verde Netherlands B.V.
c/o Sumitomo Metal Mining Co., Ltd.
00-0, 0-Xxxxx, Xxxxxxxxx
Xxxxxx-xx, Xxxxx 000
Xxxxx
Attention: General Manager, Mineral Resources Division
Telecopier: (00)-0-0000-0000
with a copy to:
Sumitomo Metal Mining America Inc.
Corresponsalia En Chile
Xxxxx xx Xxxx 0000, Xxxx 0
Xxx Xxxxxx, Xxxxxxxx, Xxxxx
Attention: General Manager
Telecopier: (00)-0-000-0000
and:
Sumitomo Corporation Del Peru X.X.
Xx. San Xxxxxx No. 864 Ofi. 000
Xxxxxxxxxx, Xxxx, Xxxx
Attention: President
Telecopier: (00)-0-000-0000
7
Sumitomo Metal Mining Co., Ltd.
00-0, 0-Xxxxx, Xxxxxxxxx
Xxxxxx-xx, Xxxxx 000
Xxxxx
Attention: General Manager, Mineral Resources Division
Telecopier (Fax): (00)-0-0000-0000
Sumitomo Corporation
0-0-00, Xxxxxx
Xxxx-xx, Xxxxx 000-0000
Xxxxx
Attention: General Manager, Nonferrous Metals and Raw Materials
Department
Telecopier (Fax): (00)-0-0000-0000
Summit Global Management II B.V.
c/o Sumitomo Corporation
0-0-00, Xxxxxx
Xxxx-xx, Xxxxx 000-0000
Xxxxx
Attention: General Manager, Nonferrous Metals and Raw Materials
Department
Telecopier (Fax): (00)-0-0000-0000
Cyprus Climax Metals Company
c/x Xxxxxx Dodge Mining Company
Xxx X. Xxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxx 00000
Attention: President
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
with a copy to:
Xxxxxx Dodge Corporation
Xxx X. Xxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxx 00000
Attention: General Counsel
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
8
Cia. De Minas Buenaventura S.A.A.
Xxxxxx Xxxxxxxx 790
Urb, Santa Catalina, Xxxx 00, Xxxx
Attention: President
Telecopier: (00)-0-000-0000
Xxxxxx Dodge Corporation
Xxx X. Xxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxx 00000
Attention: General Counsel
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
[SIGNATURES TO FOLLOW]
9
IN WITNESS WHEREOF, the undersigned by its officer duly authorized has
caused this Consent to be duly executed and delivered as of the day and year
first above written.
SMM CERRO VERDE NETHERLANDS B.V.
By
-------------------------------------
Name:
----------------------------------
Title:
---------------------------------
SUMITOMO METAL MINING CO., LTD.
By
-------------------------------------
Name:
----------------------------------
Title:
---------------------------------
SUMITOMO CORPORATION
By
-------------------------------------
Name:
----------------------------------
Title:
---------------------------------
SUMMIT GLOBAL MANAGEMENT II B.V.
By
-------------------------------------
Name:
----------------------------------
Title:
---------------------------------
10
CYPRUS CLIMAX METALS COMPANY
By
-------------------------------------
Name:
----------------------------------
Title:
---------------------------------
XXXXXX DODGE CORPORATION
By
-------------------------------------
Name:
----------------------------------
Title:
---------------------------------
COMPANIA DE MINAS BUENAVENTURA S.A.A.
By
-------------------------------------
Name:
----------------------------------
Title:
---------------------------------
CITIBANK, N.A., as Offshore Collateral
Agent
By
-------------------------------------
Name:
----------------------------------
Title:
---------------------------------
Acknowledged and Agreed:
SOCIEDAD MINERA CERRO VERDE S.A.A.
By
----------------------------------
Name:
-------------------------------
Title:
------------------------------
11
Exhibit I
Form of Consent to Assignment (Peruvian law agreement)
Lima, 29 de Septiembre de 2005
Senor Ingeniero
XXXXX XXXXXXXX
Gerente General - Sociedad Minera Cerro Verde S.A.A.
Presente.-
Ref. Cesion de Posicion Contractual
De nuestra consideracion:
Tenemos el agrado de dirigirnos a usted a fin de saludarlo y, al mismo tiempo,
dar respuesta a su solicitud para que vuestra representada pueda, de acuerdo a
los terminos que a continuacion se mencionan, ceder sus derechos y obligaciones
asumidos en el Contrato de Manipuleo, Carga y Transporte Bimodal de Concentrado,
suscrito con nuestra representada, a favor de Japan Bank for International
Cooperation, Sumitomo Mitsui Banking Cooperation, The Bank of Tokyo - Mitsubishi
Ltd., KFW, Calyon New York Branch, The Royal Bank of Scotland, The Bank of Nova
Scotia y Mizuho Corporate Bank Ltd.
Al respecto, por medio de la presente y en atencion a lo solicitado,
manifestamos nuestro consentimiento para que su representada ceda su posicion
contractual asumida en el Contrato de Manipuleo, Carga y Transporte Bimodal de
Concentrado, suscrito con nuestra representada, a favor de los referidos bancos
o de quienes estos designen. Dejamos expresa xxxxxxxxxx que nuestro
consentimiento a la cesion de posicion contractual surtira efectos unicamente en
caso se genere un evento cuya consecuencia permita a las entidades financieras
arriba mencionadas hacer efectiva la cesion de posicion contractual, cuyo
consentimiento se otorga por el presente instrumento.
Sin otro particular, quedamos de usted.
------------------------------------- ----------------------------------------
P. PERU RAIL S.A. Xxxxx Xxxxx
Xxxxxxx Xxxxxx Director Alterno
Director Financiero
(TRANSALTISA S.A. CORPORACION CERVESUR LOGO)
GG-027/2005
Xxxxxxxx, 00 de setiembre del 2005
Senores
SOCIEDAD MINERA CERRO VERDE S.A.A.
Asiento Xxxxxx Cerro Verde - Uchumayo
Casilla Postal 299
Arequipa
Ref.: Correos electronicos del 27 y del 30 de setiembre del 2005, enviados por
Xxxxx Xxxxxxxxxxx.
Att: Dra, Xxxxx Xxxxxxxxxxx.
De mi mayor consideracion:
Por medio de la presente y en atencion a lo solicitado en la comunicacion de la
referencia, dejamos expresa xxxxxxxxxx del otorgamiento de nuestro
consentimiento para que puedan Uds. si lo estiman necesario, ceder sus derechos
y obligaciones asumidos en el CONTRATO DE SERVICIO DE TRANSPORTE DE CATODOS DE
COBRE, MERCADERIAS Y ACIDO SULFURICO, a favor de Japan Bank for International
Cooperation, Sumitomo Mitsui Banking Cooperation, The Bank of Tokyo-Mitsubishi,
Ltd., KfW, CALYON New York Branch, The Royal Bank of Scotland plc, The Bank of
Nova Scotia and Mizuho Corporate Bank, Ltd.y/o sus representantes, agentes o
personas designadas.
Me valgo de la oportunidad para testimoniarles nuestra mas alta consideracion.
Atentamente
TRANSALTISA S.A. TRANSALTISA S.A.
/s/ Xxxxxx Xxxxxxx Xxxxxxx /s/ Xxxxx Xxxxxxxxx Xxxxxx
------------------------------------- ----------------------------------------
XXXXXX XXXXXXX XXXXXXX XXXXX XXXXXXXXX XXXXXX
Gerente General Gerente de Operaciones
c.c. Xxxxxxxx Xxxxx (e mail), Xxxxx Xxxxxxxxxxx (e mail), GO, GT, GA, JLeg.,
JfyS File
[Letterhead]
(CORPORACION CERVESUR LOGO)
Exhibit J
Form of Notice of Conditional Assignment
EXHIBIT J
FORM OF NOTICE OF CONDITIONAL ASSIGNMENT
Notarial Letter
Lima, [date]
Messrs.
[Name of the Company]
[Address of the Company]
Peru
Attention: [Name or title]
Ladies and gentlemen:
Reference is made to (i) the [name of the Agreement] (the "Agreement"), dated
__, entered into by and between Sociedad Minera Cerro Verde S.A.A. ("SMCV") and
[name of the Company] ("you") and (ii) [Section __ of the Agreement / your
letter dated __], whereby you consent that SMCV, at its sole discretion, may
assign, for the benefit and on behalf of the senior lenders of SMCV, as
described in Annex A (together with its successors and assigns, the "Senior
Lenders") its contractual position under the Agreement.
Pursuant to Article 1435 of the Civil Code, SMCV hereby gives you notice that it
has conditionally assigned in favor of [name of Onshore Collateral Agent]
(together with its successors and assigns, the "Assignee") for the benefit and
on behalf of the Senior Lenders, its contractual position under the Agreement.
Such conditional assignment to the Assignee shall become effective with respect
to you upon your receipt of a notice of effectiveness from the Assignee, without
the participation of SMCV, substantially in the form attached hereto as Annex B
(the "Notice of Effectiveness"), whereupon and thereafter the indicated
assignment to the Assignee shall be in full and force and effect vis-a-vis you.
You are hereby irrevocably instructed that, immediately after your receipt of
the Notice of Effectiveness and at all times thereafter, the rights and
obligations of SMCV under the Agreement shall be deemed assigned to the Assignee
pursuant to this assignment of contractual position ("cesion de posicion
contractual") in accordance with Article 1435 of the Civil Code.
Sincerely yours,
SOCIEDAD MINERA CERRO VERDE S.A.A.
-------------------------------------
By:
---------------------------------
Title:
------------------------------
Annex A
Senior Lenders
1. JAPAN BANK FOR INTERNATIONAL COOPERATION,
2. KFW
3. CALYON NEW YORK BRANCH
4. THE ROYAL BANK OF SCOTLAND PLC
5. THE BANK OF NOVA SCOTIA
6. MIZUHO CORPORATE BANK, LTD.,
7. SUMITOMO MITSUI BANKING CORPORATION
8. THE BANK OF TOKYO-MITSUBISHI, LTD.
2
Annex B
NOTICE OF EFFECTIVENESS
Notarial Letter
Lima, [date]
Messrs.
[Name of the Company]
[Address of the Company]
Peru
Attention: [Name or title]
Ladies and gentlemen:
Reference is made to (i) the [name of the Agreement] (the "Agreement"), dated
__, entered into by and between Sociedad Minera Cerro Verde S.A.A. ("SMCV") and
[name of the Company] ("you"), and (ii) SMCV's notarial letter (the "Notice of
Conditional Assignment"), dated __ and received by you on __, whereby SMCV gave
you notice pursuant to Article 1435 of the Civil Code that it had conditionally
assigned in favor of the undersigned (together with its successors and assigns,
the "Assignee"), for the benefit and on behalf of the senior lenders of SMCV, as
described in Annex A of the Notice of Conditional Assignment (together with its
successors and assigns, the "Senior Lenders"), it's contractual position under
the Agreement.
As stated by SMCV in the Notice of Conditional Assignment, such conditional
assignment shall become effective with respect to you upon your receipt of this
notice (this "Notice of Effectiveness"), whereupon and thereafter the indicated
assignment to the Assignee shall be in full force and effect vis-a-vis you. In
addition, as stated by SMCV in the Notice of Conditional Assignment, this Notice
of Effectiveness is being sent to you without the participation of the SMCV.
Therefore, upon your receipt of this Notice all of the rights and obligations
of SMCV pursuant to the Agreement shall be deemed assigned to the Assignee, for
the benefit and on behalf of the Senior Lenders of SMCV, whereupon and
thereafter this assignment of contractual position ("cesion de posicion
contractual") shall be in full force and effect vis-a-vis you in accordance with
Article 1435 of the Civil Code.
Sincerely yours,
[NAME OF ONSHORE COLLATERAL AGENT]
-------------------------------------
By:
---------------------------------
Title:
------------------------------
3
APPENDIX I-1
Legal opinion of Xxxxxxx, Xxxxx & Xxxxxxx Abogados
(Closing)
Appendix I-1
Form of Opinion of Xxxxxxx, Xxxxx & Xxxxxxx, Abogados
APPENDIX I-1
Legal opinion of Xxxxxxx, Xxxxx & Xxxxxxx Abogados
(Closing)
Lima, __
Japan Bank for International Cooperation
KfW
CALYON New York Branch
The Royal Bank of Scotland plc
The Bank of Nova Scotia
Mizuho Corporate Bank, Ltd.
Sumitomo Mitsui Banking Corporation, as Lead JBIC Arranger
The Bank of Tokyo-Mitsubishi, Ltd., as Lead JBIC Arranger
Ladies and Gentlemen:
We have acted as special Peruvian counsel to Sociedad Minera Cerro Verde S.A.A.
(the "Borrower") in connection with the following agreements:
(i) the Master Participation Agreement, dated __, among the Borrower, the
Senior Facility Lenders, the Lead JBIC Arrangers, the Global Coordinators,
the Lead Arrangers and the Administrative Agent;
(ii) the JBIC Loan Agreement, dated __, among the Borrower, JBIC and the JBIC
Facility Agent;
(iii) the KfW Loan Agreement, dated __, between the Borrower and KfW;
(iv) the Commercial Banks Loan Agreement, dated __, among the Borrower, the
Commercial Banks and the Administrative Agent;
(v) the Master Security Agreement, dated __, among the Borrower, the Senior
Facility Lenders, the Lead JBIC Arrangers, the Global Coordinators, the
Lead Arrangers, the Administrative Agent, the Trustee, the Offshore
Collateral Agent and the Onshore Collateral Agent;
(vi) the Promissory Notes, each dated __, issued by the Borrower in favor of
each of the Senior Facility Lenders;
(vii) the Mining Mortgage Agreement, dated __, between the Borrower and the
Onshore Collateral Agent;
(viii) the Mining Pledge Agreement, dated __, between the Borrower and the
Onshore Collateral Agent;
(ix) the Mining Floating Pledge Agreement, dated __, between the Borrower and
the Onshore Collateral Agent;
(x) the Conditional Assignment of Rights Agreement, dated __, between the
Borrower and the Onshore Collateral Agent;
(xi) the Escrow Accounts Agreement, dated __, among Banco de Credito del Peru,
as escrow agent, the Borrower and the Onshore Collateral Agent;
(xii) the Escrow Accounts Agreement, dated __, among Citibank del Peru S.A., as
escrow agent, the Borrower and the Onshore Collateral Agent;
(xiii) the Operator's Agreement;
(xiv) the Consent and Agreement, dated __, among the Operator, the Offshore
Collateral Agent and the Borrower;
(xv) each of the Power Supply Agreements;
(xvi) the SMM Concentrate Sales Agreement;
(xvii) the letter of amendment to the SMM Concentrate Sales Agreement, dated __,
between SMM and the Borrower;
(xviii) the Concentrate Sales Agreement, dated __, between PD Sales Company and
the Borrower (the "Concentrate Sales Agreement");
(xix) the Cathodes Sales Agreement, dated __, between PD Sales Company and the
Borrower;
(xx) the Parent Company Guarantee, dated __, between PDC and the Borrower in
connection with certain obligations of PD Sales Company;
(xxi) the Parent Company Guarantee, dated __, between PDC and the Borrower in
connection with certain obligations of the Operator;
(xxii) the Construction Agreement;
(xxiii) the Engineering Agreement;
2
(xxiv) the Port Services Agreement;
(xxv) each of the Transportation Agreements; [and]
(xxvi) the Consent and Agreement, dated __, among Fluor Canada Ltd., the
Offshore Collateral Agent and the Borrower[; and
(xxvii) the Mortgage Agreement, dated __, between the Borrower and the Onshore
Collateral Agent](23).
Unless otherwise expressly provided herein, all capitalized terms used but not
defined herein shall have the respective meanings given to such terms in
Schedule Z to the Master Security Agreement. The term "Offshore Agreements"
shall mean, collectively, the agreements described in (i) through (v), (xiii),
(xiv), (xvi) through (xxiii) and (xxvi) above. The term "Security Agreements"
shall mean, collectively, the agreements described in (vii) through (ix) [and
(xxvii)] above. The term "Agreements" shall mean, collectively, the agreements
described in (i) through [(xxvi) / (xxvii)] above. The term "Closing Opinion
Peruvian Governmental Approvals" shall mean, collectively, the Environmental
Impact Study and the permit described in opinions 20 and 21 below, respectively.
This opinion is delivered to you pursuant to Section 5.01(g)(i) of the Master
Participation Agreement.
In rendering this opinion, we have assumed, to the extent relevant with respect
to each of the Agreements, that (except as to the Borrower):
(a) the Agreements have been duly authorized by, have been executed and
delivered by, and constitute legal, valid, binding and enforceable obligations
of, all of the parties to such documents;
(b) all signatories to the Agreements have been duly authorized;
(c) all of the parties to the Agreements are duly organized and validly existing
and have the power and authority (corporate, limited liability company,
partnership or other) to execute, deliver and perform the Agreements; and
----------
(23) Include only if required to be executed prior to rendering this opinion in
accordance with the Master Participation Agreement.
3
(d) each Agreement which is governed by a law other that Peruvian law
constitutes the legal, valid and binding obligation of the Borrower, enforceable
against the Borrower in accordance with its terms, pursuant to such applicable
governing law.
In rendering this opinion, we also have assumed that, at the time of so doing,
the officials which executed the Closing Opinion Peruvian Governmental Approvals
were duly authorized and had the power and authority to execute the Closing
Opinion Peruvian Governmental Approvals on behalf of the relevant Peruvian
Governmental Authority.
In our examination, we have assumed the genuineness of all signatures, the
authenticity of all documents submitted to us as originals and the conformity
with authentic originals of all documents submitted to us as copies. In
addition, we have examined such corporate records, certificates and other
documents of the Borrower, and such questions of law, as we have considered
necessary or appropriate for the purposes of this opinion.
Based upon and subject to the foregoing and subject also to the comments and
qualifications set forth below, we are of the opinion that:
1. The Borrower is a sociedad anonima abierta listed on the Lima Stock
Exchange, duly incorporated, validly existing and in good standing under
the laws of Peru. The Borrower has all requisite power to own its property
and to carry on the Business to the extent and as contemplated by the
Agreements.
2. The Borrower has all requisite corporate power to execute and deliver, and
to incur and perform its obligations under, each of the Agreements.
3. The execution and delivery by the Borrower, and the incurrence and
performance by the Borrower, of its obligations under each of the
Agreements have been duly authorized by all necessary corporate action on
the part of the Borrower.
4. Each Agreement has been duly executed and delivered by the Borrower and
constitutes the legal, valid and binding obligation of the Borrower,
enforceable against the Borrower in accordance with its terms.
5. Under Peruvian conflict of laws principles, the stated choice of New York
law to govern the Offshore Agreements (other than each of the Construction
Agreements) and, if applicable, the Promissory Notes, and the stated choice
of Arizona law to govern the Construction Agreements, will be honored by
the courts of Peru, except for the limitations of (a) Article 2049 of the
Peruvian Civil Code, under which provisions of foreign law shall be
excluded if they are incompatible with international public policy or good
morals, (b) Article 2088 of the Peruvian Civil Code, under which the
creation, content and extinction of security interests on tangible assets
located in Peru is governed by Peruvian law,
4
and (c) Article 2.1 of the Insolvency System General Act, Law No. 27809,
under which any insolvency, bankruptcy, moratorium, fraudulent conveyance
or transfer involving entities domiciled in Peru shall be ruled by Peruvian
law.
6. No authorization, approval or consent, and no filing or registration with,
any Governmental Authority of Peru (except as has already been obtained or
accomplished and is in full force and effect) is required on the part of
the Borrower for (a) the execution or delivery of, or for the incurrence or
performance of any obligations under, any of the Agreements, (b) the
payment in Dollars by the Borrower when due (whether at stated maturity, by
acceleration or otherwise) of the Senior Facility Loans Obligations, and
(c) the granting by the Borrower of a first priority perfected Lien in
favor of the Onshore Collateral Agent, for the benefit and on behalf of the
Secured Parties, purported to be granted by or pursuant to the Security
Agreements.
7. The execution and delivery by the Borrower of, the incurrence and
performance thereby of its obligations under, and the consummation of the
other transactions contemplated by, any of the Agreements do not and will
not (a) violate any provision of the organizational documents of the
Borrower, (b) violate or conflict with any applicable law, rule, regulation
or decree of Peru, (c) violate or conflict with any treaty or other
international agreement to which Peru is subject, or (d) except for the
Liens created pursuant to the Security Agreements, result in the creation
or imposition of any Lien upon any Project Property pursuant to the terms
of any of the Agreements.
8. Each of the Agreements is in proper legal form for the enforcement thereof
against the Borrower in the courts of Peru, as applicable. No registration,
notarization or other formality (including, without limitation, payment of
any stamp or similar tax) is required to be accomplished in Peru (except as
has already been accomplished and is in full force and effect) for the
legality, validity, enforceability or admissibility in evidence of any of
the Agreements in Peru, as applicable.
Please note that the admissibility in evidence of the Agreements before any
Peruvian court requires such documents, if written in English or any
language other than Spanish, to be officially translated into Spanish by a
duly authorized public translator in Peru. Such translation may be done at
the time that enforcement is sought.
9. The Borrower is subject to civil and commercial law with respect to its
obligations under each of the Agreements, and the making and performance by
it of such Agreements constitute private and commercial acts, rather than
governmental or public acts. Neither the Borrower nor any of its
properties,
5
assets or revenues has any immunity from jurisdiction of any court or from
any legal process (whether through service, notice, attachment prior to
judgment, attachment in aid of execution, execution or otherwise).
10. The Security Agreements create a valid and fully perfected first priority
Lien in favor of the Onshore Collateral Agent, for the benefit and on
behalf of the Secured Parties, upon the properties and rights purported to
be covered thereby as security for the obligations of the Borrower,
superior in right to any other Lien (other than Permitted Liens), and
enforceable in Peru against the Borrower in accordance with its terms and
against any trustee in insolvency proceedings and any attaching creditor or
third party (including a judgment creditor), as may be limited by
bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance
or transfer or other similar laws relating to or affecting the rights of
creditors generally (and by the possible judicial application of foreign
laws or governmental action affecting the rights of creditors generally).
No authorization, registration, filing, notarization, recordation or other
formality in Peru (except as has already been obtained or accomplished and
is in full force and effect) is required to be obtained or accomplished,
and no fee, duty, or tax (except as has already been paid) is required to
be paid, in each case for the continued perfection and priority of such
Lien.
11. Under applicable law of Peru currently in effect, no stamp or other similar
taxes or levies, imposts, deductions, charges, compulsory loans or
withholdings whatsoever are or will be imposed, assessed, levied or
collected from the Borrower or the Senior Facility Lenders by Peru or any
political subdivision or taxing Governmental Authority thereof or therein
or on or in respect of any of the Agreements.
12. The submission by the Borrower to the non-exclusive jurisdiction of the
Federal or State Court located in New York County in the City of New York,
New York, and any appellate court from any thereof, with respect to matters
arising under or in connection with any of the Offshore Agreements (other
than each of the Construction Agreements) and, if applicable, the
Promissory Notes, and the submission by the Borrower to the non-exclusive
jurisdiction of the Federal or State Court located in the City of Phoenix,
Arizona, and any appellate court from any thereof, with respect to matters
arising under or in connection with any of the Construction Agreements,
pursuant to which the Borrower has so submitted in each case, is valid and
effective under the laws of Peru, except for the limitations of Article
2060 of the Peruvian Civil Code, under which such submission shall be
denied if the controversy concerns matters subject to the exclusive
jurisdiction of Peruvian courts (i.e., in rem rights related to real estate
located in Peru, criminal offences in Peru or when the parties have
expressly or implicitly submitted to
6
Peruvian jurisdiction), or if such submission would constitute an abuse of
law or would contravene Peruvian public policy.
The Borrower is generally subject to suit in Peru, and its submission to
the non-exclusive jurisdiction of the courts of the cities of Lima, Peru,
and Arequipa, Peru, as applicable, with respect to matters arising under or
in connection with any Agreement, is valid and effective.
13. A final, non-appealable judgment against the Borrower obtained in the
jurisdiction agreed to under the Offshore Agreements would be recognized,
conclusive and enforceable in the courts of Peru without re-examination on
the merits; provided that the following conditions and requirements are
met:
(a) there is a treaty between Peru and the country in which such judgment
has been rendered, and the provisions of such treaty shall apply;
(b) in the absence of a treaty, the reciprocity rule is applicable (such
reciprocity being presumed), under which a judgment given by a foreign
competent court will be admissible in the Peruvian courts and will be
enforceable thereby, except if according to such foreign law (i)
judgments issued by Peruvian courts are not admissible in such foreign
country, or (ii) judgments issued by Peruvian courts are subject to
re-examination by such foreign competent court of the issues dealt
therein;
(c) in either (a) or (b), (i) such judgment does not resolve matters which
are subject to exclusive jurisdiction of Peruvian courts, (ii) the
foreign competent court issuing the judgment holds jurisdiction under
the rules of international conflicts of law and general principles of
international procedural jurisdiction, (iii) the defendant against
whom the enforcement is sought has been summoned in accordance with
the laws of the place in which the action was brought up and a
reasonable time to appear before the foreign court as well as due
procedural guarantees to defend the case were granted to the
defendant, (iv) the foreign judgment has the authority of res judicata
under the laws of such foreign jurisdiction, (v) there are no pending
legal proceedings in Peru between the same parties which relate to the
same matters, started prior to the filing of the complaint that
concluded with such foreign judgment, (vi) such foreign judgment is
not compatible with other foreign judgments which meet the
admissibility and enforceability requirements established by Peruvian
law which have been previously issued with respect to the same subject
matter, and (vii) such foreign judgment is not contrary to public
policy or good morals.
7
As of this date, there is no treaty between Peru and the State of New York,
the State of Arizona or the United States of America on the enforcement of
foreign judgments. In addition, we have no reason to believe that any
obligation under the Agreements would be contrary to Peruvian public policy
and international treaties to which Peru is subject or generally accepted
principles of international law.
Assuming that the foreign final judgment complies with the standards set
forth in this opinion, and in the absence of any condition referred to
above which would render a foreign judgment unenforceable, the respective
parties would be entitled to enforce such judgment in Peru by proceedings
for the enforcement of a foreign final judgment under the laws of Peru.
14. The arbitration clause of each of the Master Participation Agreement, the
Operator's Agreement, the SMM Concentrate Sales Agreement, the Concentrate
Sales Agreement, the Cathodes Sales Agreement and each of the Construction
Agreements is valid and binding to refer any dispute contemplated
thereunder to arbitration, pursuant to and in accordance with the terms and
conditions in each case set forth therein. If applicable, a final arbitral
award rendered by the foreign arbitration tribunal designated in each case
therein would be recognized and enforced by the courts of Peru in
accordance with Article 2064 of the Peruvian Civil Code and the General
Arbitration Act, Law No. 26572, subject to the conditions and limitations
thereof.
15. The Senior Facility Lenders are not and will not be deemed resident,
carrying on business, subject to taxation as such or subject to
environmental liability in Peru solely by reason of the making of the
Senior Facility Loans or enforcement in Peru of any of the Agreements to
which they are a party.
16. There are no restrictions or requirements which limit the availability or
transfer of foreign currency for the purpose of the performance by the
Borrower of its obligations under the Agreements.
17. The obligations of the Borrower under (a) the Agreements rank and shall
rank at least pari passu in priority of payment and in all other respects
with all other unsecured and unsubordinated obligations of the Borrower
outstanding at any time, except obligations that are mandatorily preferred
by law, and (b) the Master Participation Agreement and the Senior Facility
Loan Agreements rank and shall rank senior to the obligations of the
Borrower in respect of the Subordinated Loans. No Person holding
indebtedness of the Borrower may obtain a preference or priority over the
obligations of the Borrower under the Senior Facility Lenders Financing
Documents solely by reason of the agreements or instruments evidencing such
indebtedness being executed before a notary or any other Person,
8
provided that we express no opinion with respect to the Transfer
Restrictions Agreement to which the Borrower is not a party.
18. Assuming that CT Corporation has, under the laws of the State of New York,
been duly appointed by the Borrower as its agent to receive service of
process in the State of New York, service of process made on CT Corporation
pursuant to such appointment will, under the laws of Peru, be considered
served personally on the Borrower and satisfy the conditions of Peruvian
law thereto.
19. The Core Mining Concessions and the mining concessions identified as
Tiabaya 4 and Tiabaya 10 are in full force and effect in all material
respects and the Borrower holds registered title thereto. There are no
liens, security interests, charges or encumbrances of any nature with
respect to the Core Mining Concessions and the mining concessions
identified as Tiabaya 4 and Tiabaya 10 registered in the relevant registry.
20. The Environmental Impact Study for the Sulfide Project, approved by the
General Directorate of Mining Environmental Affairs of the Ministry of
Energy and Mines by means of Directorial Resolution No. 438-2004-MEM/DGAAM,
dated September 27, 2004, is in full force and effect in all material
respects.
21. The permit for the expansion and construction of the Beneficiation
Concession in respect of the Sulfide Project by the Directorate of Mining
Promotion of the Ministry of Energy and Mines, dated October 26, 2004, is
in full force and effect in all material respects.
22. The SMCV Shares comprise all of the issued and outstanding shares of
capital stock of the Borrower held by the Shareholders at the date hereof
and consist of duly authorized, validly issued, fully paid and
non-assessable shares of Common Stock registered in CAVALI ICLV S.A. and/or
the share registry of the Borrower, as applicable, as follows:
[NUMBER OF SHARES AND APPROXIMATE PERCENTAGE OF OVERALL SHARES FOR EACH
SHAREHOLDER]
In addition, with respect to the Share Pledge Agreement, dated __, among each of
the Shareholders and the Onshore Collateral Agent (the "Share Pledge
Agreement"), and subject to the assumption that each of CCMC and the Sumitomo
Participant is duly incorporated, validly existing and in good standing under
the laws of the country or state of its incorporation, that each of them has all
requisite corporate power to execute and deliver the power of attorney to be
represented in Peru in respect of the Share Pledge Agreement and the
transactions thereunder and that the execution and delivery by each of them, and
incurrence and performance by each of them, of the Share Pledge Agreement
9
does not and will not (i) violate any provision of its respective organizational
documents nor (ii) violate or conflict with any applicable law, rule, regulation
or decree other than those of Peru, we are of the opinion that:
(A) Each of CCMC and the Sumitomo Participant has granted sufficient powers of
attorney for the execution and delivery by each of them, and the incurrence
and performance by each of them, of its obligations under the Share Pledge
Agreement.
(B) The Share Pledge Agreement constitutes the legal, valid and binding
obligation of each of CCMC and the Sumitomo Participant, enforceable
against each of them in accordance with its terms.
(C) The Lien created under the Share Pledge Agreement in favor of the Onshore
Collateral Agent, for the benefit and on behalf of the Secured Parties, in
respect of the SMCV Shares pledged by each of CCMC and the Sumitomo
Participant has been perfected and constitutes a valid and fully perfected
first priority Lien in favor of the Onshore Collateral Agent, for the
benefit and on behalf of the Secured Parties, upon such SMCV Shares,
subject to no other equal or prior pledges, liens, security interests,
rights of reversion, assignments or other encumbrances or rights of others
whatsoever registered with CAVALI ICLV S.A. and/or the share registry of
the Borrower, as applicable.
(D) The execution and delivery by the Shareholders of, the incurrence and
performance thereby of its obligations under, and the consummation of the
other transactions contemplated by, the Share Pledge Agreement do not and
will not (i) violate any provision of the organizational documents of the
Borrower, (ii) violate or conflict with any applicable law, rule,
regulation or decree of Peru, or (iii) violate or conflict with any treaty
or other international agreement to which Peru is subject.
(E) No authorization, approval or consent, and no filing or registration with,
any Governmental Authority of Peru is required on the part of either of
CCMC or the Sumitomo Participant for the execution or delivery of, or for
the incurrence or performance of any obligations under, the Share Pledge
Agreement.
(F) The Share Pledge Agreement is in proper legal form for the enforcement
thereof against either of CCMC or the Sumitomo Participant in the courts of
Peru, as applicable. No registration, notarization or other formality
(including, without limitation, payment of any stamp or similar tax) is
required to be accomplished in Peru for the legality, validity,
enforceability or admissibility in evidence of the Share Pledge Agreement
in Peru, as applicable.
10
(G) Under applicable law of Peru currently in effect, no stamp or other similar
taxes or levies, imposts, deductions, charges, compulsory loans or
withholdings whatsoever are or will be imposed, assessed, levied or
collected from CCMC, the Sumitomo Participant or the Senior Facility
Lenders by Peru or any political subdivision or taxing Governmental
Authority thereof or therein or on or in respect of the Share Pledge
Agreement.
(H) The submission by each of CCMC and the Sumitomo Participant to the
non-exclusive jurisdiction of the courts of the city of Lima, Peru, with
respect to matters arising under or in connection with the Share Pledge
Agreement is valid and effective.
We express no opinion with respect to the ability of the Borrower to create and
perfect the industrial pledge referred to in Section 3.09(b)(ii) of the Master
Security Agreement.
The foregoing opinions are limited to matters involving the laws of Peru and we
do not express any opinion as to the law of any other jurisdiction. Our opinions
set forth herein are based upon the facts in existence and laws in effect as of
the date hereof and we expressly disclaim any obligation to update our opinions
herein with respect to any changes in such facts or laws that may come to our
attention after delivery of this opinion.
We provide this opinion to you in our capacity as Peruvian counsel to the
Borrower and this opinion may not be relied for any purpose other than in
connection with the transactions contemplated by the Agreements without, in each
instance, our prior written consent.
Very truly yours,
11
Appendix I-2
Form of Opinion of Debevoise & Xxxxxxxx LLP
APPENDIX I-2
[Letterhead of Debevoise & Xxxxxxxx LLP]
[Date of Closing or Initial Borrowing]
To Each of the Addressees
Listed on Schedule I Attached Hereto:
CERRO VERDE FINANCING
Ladies and Gentlemen:
We have acted as special New York counsel to Sociedad Minera Cerro Verde
S.A.A., a sociedad anonima abierta (the "Borrower"), Xxxxxx Dodge Corporation, a
New York corporation ("PDC") and Cyprus Climax Metals Company (the "PD
Participant"), in connection with the Master Participation Agreement, dated as
of September __, 2005 (the "Master Participation Agreement"), among the
Borrower, Japan Bank for International Cooperation ("JBIC"), Sumitomo Mitsui
Banking Corporation ("SMBC"), The Bank of Tokyo-Mitsubishi, Ltd. ("BOT-M"), KfW,
Calyon New York Branch(as Senior Facility Lender, Lead Arranger and Global
coordinator) ("Calyon"), The Royal Bank of Scotland plc ("RBS"), The Bank of
Nova Scotia ("Scotia"), Mizuho Corporate Bank, Ltd. ("Mizuho"), and Calyon (as
Administrative Agent) (the "Administrative Agent") and the transactions
contemplated thereby. [In this connection, although we have not acted as counsel
for Compania de Minas BuenaVentura S.A.A. ("BVN"), we are also rendering, at the
request of BVN, certain opinions concerning its involvement in the transactions
contemplated by the Master Participation Agreement.](24)
Capitalized terms used herein and not otherwise defined herein shall have
the meanings assigned to them in Schedule Z to the Master Security Agreement.
----------
(24) Should D&P not be able to include in its closing opinion the bracketed
portions of this form of opinion, equivalent opinions will need to be
delivered in form and substance satisfactory to the Majority Facility
Lenders from a reputable law firm acceptable to the Majority Facility
Lenders.
In connection therewith, we have examined the following documents and
agreements (collectively, the "Transaction Documents");
(i) the Master Participation Agreement;
(ii) the Master Security Agreement, dated as of September __, 2005 (the
"Master Security Agreement"), among the Borrower, JBIC, SMBC, BOT-M, KfW,
Calyon, RBS, Scotia, Mizuho, the Administrative Agent, Citibank N.A. (the
"Offshore Collateral Agent") and Citibank Del Peru S.A. (the "Onshore
Collateral Agent");
(iii) the Completion Guarantee, dated as of September __, 2005 (the
"Completion Guarantee"), among Sumitomo Metal Mining Co. Ltd ("SMM"),
Sumitomo Corporation ("SC"), BVN, Xxxxxx Dodge Corporation ("PDC"), JBIC,
SMBC, BOT-M., KfW, Calyon, RBS, Scotia, Mizuho, and the Administrative
Agent;
(iv) the Transfer Restrictions Agreement, dated as of September __, 2005
(the "Transfer Restrictions Agreement"), among SMM Cerro Verde Netherlands,
B.V. ("SMMBV"), BVN, PD Participant, SC, SMM, PDC, JBIC, SMBC, BOT-M, KfW,
Calyon, RBS, Scotia, Mizuho and the Administrative Agent;
(v) the KfW Loan Agreement, dated as of September __, 2005 (the "KfW Loan
Agreement"), between the Borrower and KfW;
(vi) the Commercial Banks Loan Agreement, dated as of September __, 2005
(the "Commercial Banks Loan Agreement"), among the Borrower, Calyon, RBS,
Scotia, Mizuho and the Administrative Agent;
(vii) the JBIC Loan Agreement, dated as of September __, 2005 (the "JBIC
Loan Agreement"), between the Borrower, JBIC and SMBC;
(viii) the PD Concentrate Sales Agreement, dated as of September __, 2005
(the "PD Concentrate Sales Agreement"), between Xxxxxx Dodge Sales Company
Incorporated (the "PD Buyer") and the Borrower;
(ix) the PD Cathodes Sales Agreement, dated as of September __, 2005 (the
"PD Cathodes Sales Agreement" and, together with the PD Concentrate Sales
Agreement, the "PD Offtake Agreements"), between the PD Buyer and the
Borrower;
(x) the Parent Company Guarantee, dated as of September __, 2005 (the "PD
Offtake Guarantee"), between PDC and the Borrower with respect to the
obligations of the PD Buyer under the PD Offtake Agreements;
2
(xi) the Operator's Agreement, dated as of June 1, 2005 (the "Operator's
Agreement") between the Borrower and Xxxxxx Xxxxxx Dodge del Peru S.A.C.
(the "Operator");
(xii) the Consent and Agreement, dated as of September __, 2005 (the
"Operator Consent"), between Operator and the Offshore Collateral Agent;
(xiii) the Parent Company Guarantee, dated as of September __, 2005 (the
"PD Operator Guarantee"), between PDC and the Borrower with respect to the
obligations of the Operator under the Operator's Agreement;
(xiv) The Share Pledge Agreement, dated as of __, 2005 (the Share Pledge
Agreement"), among SMMBV, BVN, the PD Participant and the Onshore
Collateral Agent; and
(xv) the Consent and Agreement, dated as of September __, 2005 (the
"Shareholder Consent"), among SMMBV, SMM, SC, Summit Global Management II
B.V., BVN, the PD Participant, PDC and the Offshore Collateral Agent.
We refer herein to (i) the Master Participation Agreement, the Master
Security Agreement, the KfW Loan Agreement, the JBIC Loan Agreement, the
Commercial Banks Loan Agreement, the PD Concentrate Sales Agreement, the PD
Cathodes Sales Agreement and the Operator's Agreement as the "Borrower
Transaction Documents", (ii) the Completion Guarantee, the Transfer Restrictions
Agreement, the PD Offtake Guarantee, the PD Operator Guarantee and the
Shareholder Consent as the "PD Transaction Documents", (iii) the Transfer
Restrictions Agreement, the Shareholder Consent and the Share Pledge as the "PD
Participant Transaction Documents", (iv) the Transfer Restrictions Agreement and
the Shareholder Consent as the "PD Participant New York Transaction Documents",
(v) the Operator's Agreement and the Operator Consent as the "Operator
Transaction Documents", (vi) the PD Concentrate Sales Agreement and the PD
Cathodes Sales Agreement as the "PD Buyer Transaction Documents" and (vii) the
Completion Guarantee, the Transfer Restrictions Agreement and the Shareholder
Consent as the "BVN Transaction Documents."
We have also examined and relied on such corporate documents and records of
the PD Parties [and BVN] and such other instruments and certificates of public
officials, officers and representatives of the PD Parties [and BVN] and other
Persons and such questions of law as we have deemed necessary or appropriate for
the purposes of this opinion. With respect to all Peruvian law matters that
relate to the Borrower and the Operator, we have, with your permission, assumed
the accuracy of and relied upon, respectively, the opinions of Estudio Xxxxxxx,
Xxxxx & Xxxxxxx Abogados, special Peruvian counsel to the Borrower and the
opinions of Estudio Xxxxxxx, Xxxxx & Xxxxxxx Abogados, special Peruvian counsel
to the Operator, and have made no other
3
investigation of any corporate records, certificates or other documents relating
to either the Borrower or the Operator. [With respect to all Peruvian law
matters that relate to BVN, we have, with your permission, assumed the accuracy
of and relied upon the opinions of Estudio Xxxxxxx Xxxxxx Xxxxx Abogados,
special Peruvian counsel to BVN, and have made no other investigation of any
corporate records, certificates or other documents relating to BVN.]
Based upon and subject to the foregoing and the assumptions, qualifications
and limitations hereinafter set forth, we are of the opinion that:
1. (a) PDC is validly existing and in good standing under the laws of the
State of New York.
(b) The PD Participant is validly existing and in good standing under the
laws of the State of Delaware.
(c) The PD Buyer is validly existing and in good standing under the laws of
the State of Delaware.
2. (a) PDC has the corporate power and authority to execute, deliver and
perform its obligations under the PD Transaction Documents.
(a) The PD Participant has the corporate power and authority to execute,
deliver and perform its obligations under the PD Participant Transaction
Documents.
(b) The PD Buyer has the corporate power and authority to execute, deliver
and perform its obligations under the PD Buyer Transaction Documents.
3. (a) PDC has taken all necessary corporate action to authorize its
execution and delivery of and performance of its obligations under the PD
Transaction Documents.
(b) The PD Participant has taken all necessary corporate action to
authorize its execution and delivery of and performance of its obligations under
the PD Participant Transaction Documents.
(c) The PD Buyer has taken all necessary corporate action to authorize its
execution and delivery of and performance of its obligations under the PD Buyer
Transaction Documents.
4. (a) Each of the Borrower Transaction Documents constitutes the valid and
binding obligation of the Borrower, enforceable against the Borrower in
accordance with its terms.
(b) Each of the PD Transaction Documents constitutes the valid and binding
obligation of PDC, enforceable against PDC in accordance with its terms.
4
(c) Each of the PD Participant New York Transaction Documents constitutes
the valid and binding obligation of the PD Participant, enforceable against the
PD Participant in accordance with its terms.
(d) Each of the Operator Transaction Documents constitutes the valid and
binding obligation of the Operator, enforceable against the Operator in
accordance with its terms.
(e) Each of the PD Buyer Transaction Documents constitutes the valid and
binding obligation of the PD Buyer, enforceable against the PD Buyer in
accordance with its terms.
(f) [Each of the BVN Transaction Documents constitutes the valid and
binding obligation of BVN, enforceable against BVN in accordance with its
terms.]
5. The Master Security Agreement is effective to create a valid security
interest in favor of the Offshore Collateral Agent, for the benefit of the
Senior Facility Lenders, as security for the Senior Facility Loan Obligations in
all of the collateral described therein that is of the type in which a security
interest can be created under Article 9 (the "Article 9 Collateral") of the
Uniform Commercial Code of the State of New York as in effect on the date hereof
(the "UCC") to the extent the UCC is applicable to the creation of such security
interest.
* * *
In rendering the foregoing opinion, we have assumed that: (i) (a) the
Transaction Documents have been duly authorized, executed and delivered by the
respective parties thereto other than PDC, PD Participant and PD Buyer, (b) each
party to each Transaction Document has been duly organized and, other than PDC,
PD Participant and PD Buyer, is an existing legal entity in good standing under
the laws of its jurisdiction of organization and (c) each of the Transaction
Documents is in consideration for, or relates to, an obligation arising out of a
transaction covering in the aggregate not less than US$1,000,000 and (ii) all
copies of documents reviewed by us are in conformity with the originals thereof,
and that there have been no amendments to such originals, and that any
signatures thereon are genuine and affixed by persons with authority to do so.
Our opinions set forth above are subject to the effects of (i) bankruptcy,
insolvency, fraudulent conveyance, fraudulent transfer, reorganization and
moratorium laws and other similar laws relating to or affecting creditors'
rights or remedies generally, (ii) general equitable principles (whether
considered in a proceeding in equity or at law), (iii) concepts of good faith,
diligence, reasonableness and fair dealing, and standards of materiality, (iv)
limitations on the validity or enforceability of indemnification, contribution
or exculpation under applicable law (including court decisions) or public policy
and (v) possible judicial action giving effect to foreign laws or foreign
5
governmental or judicial action affecting or relating to the rights or remedies
of creditors. In addition, applicable laws and interpretations may affect the
validity or enforceability of certain provisions of the Transaction Documents,
but such limitations do not, in our opinion, make the remedies provided for
therein inadequate for the practical realization of the principal benefits
intended to be provided thereby (subject to the other qualifications expressed
herein).
We express no opinion as to (A) the perfection of any security interest
created under any of the Transaction Documents and (B) the creation, validity or
perfection of any security interest, or the validity, binding effect or
enforceability of any Transaction Document, to the extent that such Transaction
Document grants or purports to grant (i) a security interest (a) that is not
governed by the UCC (including but not limited to any such security interest
with respect to (X) copyrights, copyright licenses, patents, patent licenses,
trademarks and trademark licenses or (Y) insurance policies), (b) in commercial
tort claims, letter-of-credit rights, fixtures, cooperative interests, farm
products, as-extracted collateral or timber to be cut, (ii) in any property the
terms of or governing which void or prohibit, or are violated by, the granting
of such security interest or (iv) in any claim against the United States, (iii)
a mortgage or other interest in real property, or (c) an agricultural lien.
Without limiting the foregoing, we express no opinion as to the validity,
binding effect or enforceability of any provision of any Transaction Document
that purports to (i) prohibit any Person from transferring its respective rights
in the collateral described in the Transaction Documents or any proceeds
thereof, as contemplated by Section 9-401 of the UCC, (ii) permit the Onshore
Collateral Agent or the Offshore Collateral Agent to vote or otherwise exercise
any rights with respect to any of the collateral under the Transaction Documents
absent compliance with the requirements of applicable laws and regulations as to
the voting of or other exercise of rights with respect to such collateral, (iii)
waive, release or vary any defense, right or privilege of, or any duties owing
to, any Person to the extent that such waiver, release or variation may be
limited by Section 1-102(3), 9-602 or 9-603 of the UCC or other provisions of
applicable law, (iv) grant a right to collect any amount that a court determines
to constitute post-judgment interest, or a penalty or forfeiture, (v) grant any
right of set-off with respect to any contingent or unmatured obligation, or to
permit any Person purchasing a participation from a Lender to exercise set-off
rights with respect to such participation, (vi) maintain or impose any
obligation to pay any amount in U.S. dollars where a final judgment concerning
such obligation is rendered in another currency, (vii) constitute a waiver of
inconvenient forum or improper venue, (viii) relate to the subject matter
jurisdiction of a court to adjudicate any controversy, (ix) provide for
liquidated damages or otherwise specify or limit damages, liabilities or
remedies, or (x) provide that the parties to any Transaction Document shall
engage in negotiations to replace any illegal, prohibited or unenforceable
provision. In addition, the enforceability of any provision in any Transaction
Document to the effect that (i) the terms thereof may not be waived or modified
except in writing,
6
(ii) the express terms thereof supersede any inconsistent course of performance
or usage of trade or (iii) certain determinations made by one party shall have
conclusive effect, may be limited under certain circumstances. We wish to call
to your attention that the enforceability of waivers of immunity is subject to
the limitations imposed by the U.S. Foreign Sovereign Immunities Act of 1976, as
amended.
Our opinions set forth in paragraph 5 above are limited to Articles 8 and 9
of the UCC and therefore do not address (i) laws of jurisdictions other than New
York, (ii) laws of New York other than Articles 8 and 9 of the UCC or (iii)
collateral of a type not subject to Article 9 of the UCC. We express no opinion
as to what law governs perfection of any security interest granted by the
Transaction Documents. We have assumed with your permission that (i) none of the
Secured Parties has waived, subordinated or agreed with any third party to any
modification of the perfection or priority of any security interest granted by
the Transaction Documents, (ii) the Borrower has sufficient rights in the
collateral described in the Transaction Documents for the security interests
granted thereby to attach. We express no opinion as to the title or any other
interest of the Borrower in or to any of the collateral described in the
Transaction Documents. No security interest will exist with respect to
after-acquired property of the Borrower until the Borrower has rights therein
within the meaning of Section 9-203 of the UCC.
We express no opinion as to the validity, perfection or priority of such
security interests: (i) with respect to collateral sold, exchanged or otherwise
disposed of by the Borrower; (ii) to the extent such security interests may be
affected by (x) Xxxxxxx 000 xx xxx Xxxxxx Xxxxxx Bankruptcy Code, under which a
bankruptcy court has discretion as to the extent to which post-petition proceeds
may be subject to a lien arising from a security agreement entered into by the
debtor before the commencement of the case, or (y) Section 547(b) of the United
States Bankruptcy Code, relating to the power to avoid a preference; (iii) with
respect to proceeds, to the extent of limitations under Section 9-315 of the UCC
on the perfection of a security interest in proceeds; (iv) as to any collateral
acquired by the party granting such security interest more than four months
after such party changes its name so as to make the relevant financing
statements seriously misleading, unless amendments to such financing statements
indicating the new name of such party are properly filed before the expiration
of such four months; (v) as to any collateral acquired by any Person following
any change in the jurisdiction of organization (within the meaning of Section
9-102(a)(50) of the UCC) of the Borrower unless a new financing statement is
properly filed in the applicable new jurisdiction within the time specified in
Section 9-316 of the UCC; (vi) as to any property subject to a statute,
regulation or treaty of the United States, whose requirements for a security
interest's obtaining priority over the rights of a lien creditor with respect to
such property preempt Section 9-310(a) of the UCC; (vii) as to any goods that
are an accession to, or commingled or processed with, other goods, to the extent
limited by Section 9-335 or 9-
7
336 of the UCC; or (viii) as to goods of any kind, such as motor vehicles,
subject to certificate of title statutes.
We call to your attention that (A) the UCC requires periodic filing of
continuation statements in order to maintain the effectiveness of financing
statements filed pursuant thereto, (B) Section 8-107 of the UCC may in certain
circumstances limit the rights of a secured party in respect of any unauthorized
endorsement with respect to certificated securities constituting collateral
under the Transaction Documents not registered in the name of or issued to the
Agent and not originally issued in bearer form, (C) under certain circumstances
Section 9-408 of the UCC limits the enforcement of security interests in
promissory notes, health-care-insurance receivables and general intangibles and
(D) the perfection of the security interests granted by the Transaction
Documents may be limited by (i) rights under Article 2 of the UCC of a seller of
goods as to which the debtor does not yet have possession, (ii) the right of
reservation of a seller of goods under Section 2-505 of the UCC, (iii) the right
of reclamation of a seller of goods on credit under Section 2-702 of the UCC,
(iv) rights of buyers and lessees in the ordinary course to take goods free of
such security interests to the extent provided in Sections 9-320 and 9-321 of
the UCC, (v) rights of licensees in the ordinary course of business to license
general intangibles free of such security interest to the extent provided in
Section 9-321 of the UCC and (vi) rights of a purchaser of chattel paper and
instruments to claim priority over such security interests to the extent
provided in Section 9-330 of the UCC.
We express no opinion as to the priority of the security interests
purported to be created by the Transaction Documents. Without limiting the
foregoing, we express no opinion as to the priority of any security interest (i)
as against any claims or liens in favor of the United States or any state
thereof, or any federal or state agency, instrumentality or political
subdivision, including but not limited to liens for payment of federal, state or
local taxes that are given priority by operation of law, liens under Title IV of
the Employee Retirement Security Act of 1974, as amended, or claims arising
under 31 U.S.C. Section 3713, (ii) as against any rights of a person in
possession of proceeds consisting of money or "instruments" (as defined in
Section 9-102(a)(47) of the UCC), (iii) as against liens under Section 4-208 of
the UCC, relating to security interests of a collecting bank, (iv) as against
liens granted under Section 364(d) of the United States Bankruptcy Code,
relating to liens granted by a court after the commencement of a case or (v)
that has been perfected by "control" under Sections 8-106, 9-104, 9-105, 9-106
or 9-107 of the UCC, as against any other security interest in the same property
that has also been perfected by "control."
Without limiting the foregoing, we express no opinion as to: (i) any
provisions in the Transaction Documents which are too vague to have a clear
remedy, such as obligations to consult, discuss, coordinate or negotiate with
respect to specified matters or any provisions in the Transaction Documents
which constitute an agreement to agree in the future; (ii) any provision in the
PD Offtake Agreements setting forth specifications
8
for products, forecasting and sampling procedures, pricing formulae and any
other similar provisions, including any provision in the exhibits to such
agreements; and (iii) any provision for payment of damages to the extent such
provision would be considered void as a penalty or not reasonable in light of
the anticipated or actual harm caused by the breach, the difficulties of proof
of loss and the inconvenience or nonfeasibility of otherwise obtaining an
adequate remedy.
We express no opinion as to the laws of any jurisdiction other than the
laws of the State of New York, the Delaware General Corporation Law and the
Federal laws of the United States of America, in each case that in our
experience are generally applicable to transactions of this type. In particular
(and without limiting the generality of the foregoing) we express no opinion as
to (a) the laws of any country (other than the Federal laws of the United States
of America), (b) the effect of such laws (whether limiting, prohibitive or
otherwise) on any of the rights or obligations of the Borrower or of any other
party to or beneficiary of any of the Transaction Documents, or (c) whether the
choice of the law of the State of New York as the governing law in any
Transaction Document would be given effect by any court or governmental
authority other than a New York State court. We have assumed, with your
permission, that the execution and delivery of each of the Transaction Documents
by each of the parties thereto and the performance of their respective
obligations thereunder will not be illegal or unenforceable or violate any
fundamental public policy under, and that no such party has entered therein with
the intent of avoiding or a view to violating, applicable law (other than the
laws of the State of New York and Federal laws of the United States of America).
In giving the foregoing opinion, we express no opinion as to the effect (if any)
of any law of any jurisdiction (except the State of New York) in which any
Lender is located that limits the rate of interest that such Lender may charge
or collect.
The opinions expressed herein are solely for your benefit and, without our
prior consent, neither our opinions nor this opinion letter may be disclosed to
or relied upon by any other person.
This opinion letter is limited to the matters stated and no opinion is
implied or may be inferred beyond the matters expressly stated herein. The
opinions expressed herein are rendered only as of the date hereof, and we assume
no responsibility to advise you of facts, circumstances, events or developments
which hereafter may be brought to our attention and which may alter, affect or
modify the opinions expressed herein.
Very truly yours,
9
Schedule I
ADDRESSEES
Japan Bank for International Cooperation
Sumitomo Mitsui Banking Corporation
The Bank of Tokyo-Mitsubishi, Ltd.
KfW
Calyon
The Royal Bank of Scotland Plc
Scotia Capital
Mizuho Corporate Bank, Ltd.
10
Appendix I-3
Form of Opinion of Estudio Xxxx Echecopar Xxxxxx,
Special Peruvian Counsel to the Senior Facility Lenders
APPENDIX I-3
[FORM OF OPINION OF ESTUDIO ECHECOPAR]
Lima, [Closing Date], 0000
Xxxxx Bank for International Cooperation
Sumitomo Mitsui Banking Corporation
The Bank of Tokyo-Mitsubishi
KfW
The Royal Bank of Scotland plc
The Bank of Nova Scotia
Mizuho Corporate Bank, Ltd.
CALYON New York Branch, for itself and as Administrative Agent
Re: Sociedad Minera Cerro Verde S.A.A.
Ladies and Gentlemen:
This opinion is furnished to you pursuant to Section 5.01(g)(iii) of the
Master Participation Agreement dated as of September 30, 2005 (as amended from
time to time, the "Master Participation Agreement" or "MPA") among Sociedad
Minera Cerro Verde S.A.A., a sociedad anonima abierta listed on the Lima Stock
Exchange and organized under the laws of Peru (the "Borrower"), Japan Bank for
International Cooperation, Sumitomo Mitsui Banking Corporation, The Bank of
Tokyo-Mitsubishi, Ltd., KfW, The Royal Bank of Scotland plc, The Bank of Nova
Scotia, Mizuho Corporate Bank Ltd. and CALYON New York Branch, in its individual
capacity and as Administrative Agent for the Senior Facility Lenders. All
capitalized terms used but not defined herein have the respective meanings
assigned to such terms in Schedule Z of the Master Security Agreement as defined
in the MPA). For purposes of this opinion, the term "Obligor" shall mean,
collectively, the Borrower, the Parent Companies, the Shareholders and the
Operator.
We have acted as special Peruvian counsel to the Senior Facility Lenders in
connection with the preparation, execution and delivery of, and the initial
Senior Facility Loans made under, the Master Participation Agreement and the
other Financing Documents to which the Borrower or any Senior Facility Lender is
a party.
In rendering the opinions below, we have examined originals or copies
certified to our satisfaction of the following agreements and documents
(collectively, as amended, supplemented or modified, the "Transaction
Documents"):
(a) Master Participation Agreement;
(b) Master Security Agreement;
(c) Completion Guarantee;
(d) JBIC Loan Agreement;
(e) JBIC Loan Funding Agreement;
(f) JBIC Political Risk Guarantee;
(g) KfW Loan Agreement;
(h) Commercial Banks Loan Agreement;
(i) Transfer Restrictions Agreement;
(j) Each Promissory Note to which the Borrower is a party on the date
hereof;
(k) Construction Agreement;
(l) Engineering Agreement;
(m) Operator's Agreement;
(n) Each of PDC Guarantee and the Parent Company Guarantee, dated as
of September 30, 2005, between Xxxxxx Dodge Corporation and the
Borrower;
(o) SMM Concentrate Sales Agreement and Amendment No. 1 thereto dated
as of [September 30, 2005];
(p) PD Concentrate Sales Agreement;
(q) PD Cathodes Sales Agreement;
(r) Power Supply Agreement (110 MW), dated December 31, 2004, between
the Borrower and ElectroPeru S.A. ("Power Supply I Agreement");
(s) Power Supply Agreement (46 MW), dated December 31, 2004, between
the Borrower and ElectroPeru S.A. ("Power Supply II Agreement");
(t) Power Supply Agreement, dated December 29, 2004, between the
Borrower and Empresa de Generacion Electrica de Arequipa S.A.
("Power Supply III Agreement");
2
(u) Port Services Agreement;
(v) Transportation Agreement (Contrato de Manipuleo, Carga y
Transporte Bi-modal de Concentrado), dated as of June 11, 2005,
between the Borrower and Peru Rail S.A. (the "Peru Rail
Agreement");
(w) Transportation Agreement (Contrato de Servicios de Transporte de
Catodos de Cobre, Mercaderias y Acido Sulfurico), dated as of
June 2, 2003, between the Borrower and Transaltisa S.A. (as
amended pursuant to the Primera Clausula Adicional al Contrato de
Servicios de Transporte, dated as of August 6, 2004, by and
between the Borrower and Transaltisa S.A.) (the "Transaltisa
Agreement");
(x) each of the following Onshore Security Documents:
(i) Mining Mortgage (hipoteca minera) over all Core Mining
Concessions and the mining concessions identified as Tiabaya
4 and Tiabaya 10 (the "Material Concessions"), owned or to
be owned by the Borrower;
(ii) Mining Pledge (xxxxxx xxxxxx) of all equipment, machinery
and movable assets owned or to be owned by the Borrower in
accordance with Section 3.01 of the Master Security
Agreement;
(iii) Floating Mining Pledge (xxxxxx xxxxxx flotante) of (x) all
minerals extracted from the Core Mining Concessions and (y)
all Cathode and Concentrate in inventory extracted from the
Core Mining Concessions;
(iv) Master Conditional Assignment of Rights (cesion condicionada
de derechos) of all of the Borrower's credit rights under
the Domestic Sales Agreements;
(v) Contrato de Cuenta Escrow among Banco de Credito del Peru,
as escrow agent, the Borrower and the Onshore Collateral
Agent;
(vi) Xxxxxxxx xx Xxxxxx Xxxxxx xxxxx Xxxxxxxx xxx Xxxx S.A., as
escrow agent, the Borrower and the Onshore Collateral Agent;
3
(vii) Share Pledge Agreement;
(viii) The form of Industrial Pledge (prenda industrial) of all
non-mining equipment, machinery and movable non-mining
assets (if any) to be owned by the Borrower in accordance
with Section 3.09(b)(ii) of the Master Security Agreement;
and
(ix) The form of Real Estate Mortgage (hipoteca civil) of all
non-mining real estate (if any) to be owned by the Borrower
in accordance with Section 3.09(b)(i) of the Master Security
Agreement.
(y) the Consents to Assignment for each of the following documents:
(i) Power Supply I Agreement;
(ii) Power Supply II Agreement;
(iii) Power Supply III Agreement;
(iv) Peru Rail Agreement;
(v) Transaltisa Agreement;
(vi) Port Services Agreement;
(vii) Operator's Agreement;
(viii) Construction Agreements; and
(ix) Shareholders Agreement.
The agreements and documents referred to in clauses (a) through (q),
are referred to herein collectively as the "U.S. Transaction
Documents". The agreements and documents referred to in clauses (r)
through (y), are referred to herein collectively as the "Peruvian
Transaction Documents". The agreements and documents referred to in
clauses (k) and (l) are referred to herein collectively as the
"Arizona Transaction Documents".
In addition, we have examined such certificates of officers of the
Obligors, certificates and records of governmental officials, corporate records
and other documents, approvals and such questions of law as we have considered
necessary or appropriate for the purposes of this opinion.
4
In our examination, we have assumed the genuineness of all signatures, the
authenticity of all documents submitted to us as originals and the conformity
with authentic original documents of all documents submitted to us as copies.
When relevant facts were not independently established, we have relied upon
certificates of governmental officials and appropriate representatives of the
Obligors, and upon representations made in or pursuant to the Transaction
Documents.
In rendering the opinions expressed below, we have assumed (without
investigation on our part), with respect to all of the documents referred to in
this opinion letter, that, except to the extent set forth in the opinions
expressed below, as to all parties except the Borrower:
(a) such documents have been duly authorized by, and, except as to
the Obligors, have been duly executed and delivered by, and
constitute legal, valid, binding and enforceable obligations of,
all of the parties to such documents;
(b) all signatories to such documents have been duly authorized; and
(c) all of the parties to such documents are duly organized and
validly existing and have the power and authority (corporate,
partnership or other) to execute, deliver and perform such
documents.
Based upon and subject to the foregoing and to the comments and
qualifications set forth below, and having considered such questions of law as
we have deemed necessary as a basis for the opinions expressed below, we are of
the opinion that:
1. The Borrower is a sociedad anonima abierta listed on the Lima Stock
Exchange, duly incorporated and validly existing under the laws of the Republic
of Peru. The Borrower has all requisite power to own its property and to carry
on the Business to the extent and as contemplated by the Transaction Documents.
2. The Borrower has full power and authority to enter into each of the
Transaction Documents in which it is named a party, and has full power and
authority to incur the obligations, to grant to the Senior Facility Lenders, the
Administrative Agent and the Collateral Agents, as security for the Senior
Facility Loans Obligations, the security interests in the Collateral purported
to be granted by it in or pursuant to the Master Security Agreement and the
Onshore Security Documents and to incur and perform the obligations provided for
in the Transaction Documents in which it is named as a party.
3. Each Transaction Document in which the Borrower has been named as a
party has been duly executed and delivered by the Borrower, and constitutes the
legal
5
valid and binding obligation of the Borrower, enforceable against the Borrower
in accordance with the terms therein.
4. Each Transaction Document to which the Borrower is named as a party has
been duly authorized by all requisite action (including by resolution of the
Board of Directors [and Shareholders' Meeting] of the Borrower adopted on [ ]).
Each Peruvian Transaction Document constitutes the legal, valid and binding
obligation of the Obligor party thereto, enforceable against such Obligor in
accordance with its terms, except (i) that Peruvian courts will disregard the
waiver of protest and (ii) as may be limited by bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance or transfer or other similar
laws relating to or affecting the rights of creditors generally. Each promissory
note when duly executed and delivered by the Borrower for value in the form
annexed to the applicable Senior Facility Loan Agreement, will constitute the
legal, valid and binding obligation of the Borrower, enforceable against the
Borrower in accordance with its terms, except as may be limited by bankruptcy,
insolvency, reorganization, moratorium, fraudulent conveyance or transfer or
other similar laws relating to or affecting the rights of creditors generally.
5. The choice of the law of the State of New York to govern the
interpretation of each New York Transaction Document or the law of the State of
Arizona to govern the interpretation of each Arizona Transaction Document would
be upheld as a valid choice of law in any action on the document brought to the
courts of Peru, except where the application of said laws are incompatible with
international public order or good customs.
6. (a) All authorizations, approvals and consents from, and registrations,
filings and recordations by or with, governmental authorities in Peru or any
political subdivision thereof which are necessary for:
(i) the execution, delivery and performance by the Borrower of each
of the Financing Documents to which it is a party, the incurrence
by the Borrower of the Senior Facility Loans Obligations, (ii)
the payment by the Borrower when due (whether at stated maturity,
by acceleration or otherwise) of the Senior Facility Loans
Obligations, (iii) the granting by the Borrower to the Secured
Parties, the Administrative Agent or the Collateral Agents, as
the case may be, of the security interests in the Collateral
purported to be granted by or pursuant to the Master Security
Agreement and the Onshore Security Documents and (iv) the
performance by the Borrower of its other obligations under the
Financing Documents, and
(ii) the execution, delivery and performance by each Obligor, other
than the Borrower, of each of the Peruvian Transaction Documents
to which it is a party,
6
have been obtained or made and are in full force and effect.
(b) With respect to the Master Participation Agreement and the other
Financing Documents, no registration or approval of the financial terms of the
Senior Facility Loans Obligations to be incurred thereunder is required and no
action in Peru is required in respect of the ability of the Borrower to obtain
Dollars when and as necessary to pay the Senior Facility Loans Obligations when
due or the creation and maintenance of the Collateral as contemplated by the
Master Security Agreement and the Onshore Security Documents.
(c) All filings, registrations and recordations by or with governmental
authorities in Peru or any political subdivision thereof that are necessary or
advisable with respect to (i) the validity or enforceability in Peru of the
obligations of the Borrower or the rights and remedies of any Senior Facility
Lender, under any of the Peruvian Transaction Documents to which they are party,
or (ii) the admissibility in evidence in a court in Peru of any of the
Transaction Documents, have been made.
(d) Directorial Resolution No. 438-2004 dated September 27, 2004 which
approves the Enviromental Impact Study; Directorial Resolution No. 1027-2004
dated October 26, 2004 which approves the Beneficiation Concession Expansion and
Construction; and Supreme Decree No. 003-2004-AG dated January 28, 2004 that
reserves water rights in favor of the Borrower are in full force and effect.
7. No income, stamp or other taxes or levies, imposts, deductions, charges,
compulsory loans or withholdings whatsoever are or will be, under applicable law
in Peru currently in effect, imposed, assessed or levied upon or collected from
the Borrower by Peru or any political subdivision or taxing authority thereof or
therein or on or in respect of the Financing Documents, the Senior Loans made
thereunder or the Promissory Notes or any payments of principal, interest or
commissions under any thereof, except for (a) the 4.99% withholding tax
currently imposed by Peruvian tax legislation which 4.99% withholding tax rate
will be applied so long as (i) the interest rate borne by the Senior Loans does
not exceed Libor plus 7% or Prime plus 6%, (ii) there is no economic linkage
between the Borrower and the Senior Lender to whom such interest is paid and
(iii) the proceeds, if in cash, of the Senior Loans are received in Peru by the
Borrower and (b) the 19% VAT imposed on interest paid to non-banking or
non-financial or non-credit institutions. Any portion of the interest rates
applying to the Senior Loans that exceed the rates specified in clause (i) above
will be subject to taxation at a 30% withholding tax rate. If the conditions
specified in clauses (ii) or (iii) above are not satisfied, interest on the
relevant Senior Loans will be subject to taxation at a 30% withholding tax rate.
For this purpose, all expenses and commissions, premiums and any other sum
payable in addition to interest agreed upon, paid to the foreign beneficiary,
will also be considered as interest.
7
8. The execution and delivery by the Borrower of, the performance and
incurrence by the Borrower of its obligations and liabilities under, and the
consummation by the Borrower of the other relevant transactions contemplated by
the Transaction Documents to which the Borrower is a party, do not and will not
(a) violate any provision of the charter or by-laws of the Borrower, (b) violate
any provision of the Peruvian Corporation Law, (c) violate or conflict with any
and applicable treaty, law, rule or regulation of Peru or any political
subdivision thereof, (d) violate any order, writ, injunction or decree of any
court or governmental or regulatory authority or agency or any arbitral award
applicable to the Borrower of which we have knowledge (after due inquiry) or (e)
result in a breach of, constitute a default under, require any consent under, or
result in the acceleration or required prepayment of any indebtedness pursuant
to the terms of, any agreement or instrument, of which we have knowledge (after
due inquiry) to which the Borrower is a party or by which the Borrower is bound
or to which it is subject, or (except for the Permitted Liens created pursuant
to the Master Participation Agreement and the Onshore Security Documents) result
in the creation or imposition of any lien upon any property of the Borrower
pursuant to the terms of any such agreement or instrument.
9. The execution and delivery by the Operator, each Parent Company and each
Shareholder of, the performance and incurrence by such Obligor of its
obligations and liabilities under, and the consummation by such Obligor of the
other transactions contemplated by the Peruvian Transaction Documents to which
such Obligor is a party do not and will not violate any applicable treaty, law,
rule or regulation of Peru or any political subdivision thereof.
10. To our knowledge (after due inquiry), (a) there are no actions, suits
or legal or arbitral proceeding, or any proceedings or investigation, at law or
equity, by or before any Peruvian governmental or regulatory authority or
agency, now pending, or threatened against or affecting the Borrower or any of
its properties, or any existing default by the Borrower under any applicable
order, writ, injunction or decree of any Peruvian governmental or regulatory
authority to be applicable to the Borrower, other than as disclosed in writing
to the Senior Facility Lenders on or prior to the date hereof and (b) there are
no competing existing claims to the Material Concessions reported in El Peruano
within the twelve month period immediately preceding the date of this Opinion or
registered in the Book of Mining Rights of the Public Records Office.
11. The SMCV Shares comprise all of the issued and outstanding shares of
capital stock of the Borrower held by or on behalf of the Shareholders as of the
date hereof and consist of duly authorized, validly issued, fully paid and
non-assessable shares of Common Stock held as follows: [DESCRIBE TYPE & NUMBER
OF SHARES FOR EACH SHAREHOLDER.] The SMCV Shares have been duly and validly
issued and are fully paid and non assessable and are duly registered in CAVALI
ICLV S.A. and/or the share registry of the Borrower, as applicable, in the name
of the Shareholders.
8
12. (a) The Borrower has good and valid title to the real and personal
property and water rights informed by the Borrower to be owned by it. There are
no liens, security interests, charges or encumbrances of any nature registered
in the relevant registry, and to the best of our knowledge (after due inquiry)
no averse or competing claims, against said properties of the Borrower except
Permitted Liens and any action, suit or proceeding referred to in paragraph 10
hereinabove.
(b) Each of the Material Concessions is validly granted to and owned by the
Borrower, is duly registered in the name of the Borrower, and is subject to no
defects, irregularities, easements, restrictions on use, liens or encumbrances
(other than Permitted Liens created pursuant to the Master Participation
Agreement and the Onshore Security Documents) or rights of others. Currently, no
Person other than the Borrower and the Onshore Collateral Agent has any right,
title or interest, in, to or under the Material Concessions.
13. The obligations of the Borrower to the Senior Lenders under the Master
Participation Agreement, Promissory Notes and other Transaction Documents will
at all times rank in right of payment (a) pari passu with or senior to all other
obligations of the Borrower, except for claims in Peru for employee benefits and
social security contributions and (b) senior to the obligations of the Borrower
in respect of the Subordinated Loans. No Person holding indebtedness of the
Borrower may obtain a preference or priority over the obligations of the
Borrower under the Transaction Documents solely by reason of the agreements or
instruments evidencing such indebtedness being executed before a notary or any
other Person.
14. Each of the Onshore Security Documents to which the Borrower is a party
purported to create a garantia real pursuant to the laws of Peru creates in Peru
a valid and fully perfected first and prior security interest in and lien upon
the properties, rights and revenues purported to be covered thereby as security
for the Senior Loans Obligations, subject to no other equal or prior mortgages,
pledges, liens, security interests, rights of reversion, assignments or other
encumbrances or rights of others whatsoever, enforceable in Peru against the
Borrower and except for claims in Peru for employee benefits and social security
contributions against any trustee, receiver or intervenor in bankruptcy, any
attaching creditor and all other third parties, in accordance with its terms;
and no further authorization, registration, filing, notarization, recordation or
other formality in Peru is required to be obtained or accomplished, and no fee,
duty or tax is required to be paid, for the maintenance, preservation and
continued perfection and priority of such security interests and liens.
15. The Share Pledge Agreement in respect of SMCV Shares creates in Peru a
valid and fully perfected first rank security interest in and lien upon the SMCV
Shares as security for the Senior Facility Loans Obligations, subject to no
other equal or prior mortgages, pledges, liens, security interests, rights of
reversion, assignments or other encumbrances or rights of others whatsoever,
enforceable in Peru against the Shareholder
9
party thereto and against any trustee, receiver or intervenor in bankruptcy, any
attaching creditor and all other third parties, in accordance with its terms;
and no further authorization, registration, filing, notarization, recordation or
other formality in Peru is required to be obtained or accomplished, and no fee,
duty or tax is required to be paid, for the maintenance, preservation and
continued perfection and priority of such security interests and liens.
16. The Borrower is subject to civil and commercial law with respect to its
obligations under each of the Transaction Documents, and the making and
performance by it of such Transaction Documents constitute private and
commercial acts, rather than governmental or public acts. Neither of the
Borrower nor any Obligor nor any of their respective assets, properties or
revenues, has in Peru any immunity from jurisdiction of any court or from any
legal process in Peru (whether through service, notice, attachment prior to
judgment, attachment in aid of execution, execution or otherwise).
17. Each of the Transaction Documents is in proper legal form for the
effectiveness and enforcement thereof in the courts of Peru, except that an
official translation to Spanish of each Transaction Document which is not
executed in the Spanish language would be required for purposes of enforcement
proceedings in Peru.
18. (a) The submission by the Borrower to the non-exclusive jurisdiction of
any Federal or State Court located in the Borough of Manhattan, The City of New
York, with respect to matters arising under or in connection with any
Transaction Document (other than the Peruvian Transaction Documents) is valid
and effective under the laws of Peru. The submission by the Borrower to the
non-exclusive jurisdiction of any court located in the City of Phoenix, State of
Arizona with respect to matters arising under or in connection with any
Transaction Documents (other than the New York Transaction Document and the
Peruvian Transaction Documents) is valid and effective under the laws of Peru.
(b) The Borrower is generally subject to suit in Peru, and its submission
to the non-exclusive jurisdiction of the courts of the city of Lima, Peru, with
respect to matters arising under or in connection with any Transaction Document,
is valid and effective.
(c) A final judgment against the Borrower for the payment of money obtained
in any such court in the State of New York pursuant to service of process on an
agent of the Borrower in the manner specified in the Master Participation
Agreement (other than the Onshore Security Documents) providing for such service
of process would be recognized, conclusive and enforceable in the courts of Peru
without reconsideration on the merits provided that: (i) there is in effect a
treaty between the country where said foreign court sits and the Republic of
Peru regarding the recognition and enforcement of foreign judgments or, in the
absence of such treaty and (ii) the following requirements are met:
10
(A) the judgment does not resolve matters under the exclusive
jurisdiction of Peruvian courts;
(B) such court had jurisdiction under its own conflicts of law
rules and under general principles of international
procedural jurisdiction;
(C) the defendant was served in accordance with the laws of the
place where the procedure took place, was granted a
reasonable opportunity to appear before such foreign court,
and was guaranteed due process rights;
(D) the judgment has the status of res judicata in the
jurisdiction of the court rendering such judgment;
(E) there is no pending litigation in Peru between the same
parties for the same dispute, which shall have been
initiated before the commencement of the proceeding that
concluded with the foreign judgment;
(F) the judgment is not incompatible with another judgment which
fulfills the requirements of recognition and enforceability
established by Peruvian law which was rendered first;
(G) the judgment is not contrary to public order or good morals;
and
(H) it is not proven that such foreign court denies enforcement
of Peruvian judgments or engages in a review of the merits
thereof.
We have no reason to believe that any obligation under the Transaction
Documents would be contrary to Peruvian public policy and international treaties
binding upon Peru or generally accepted principles of international law.
Assuming such a foreign final judgment complied with the standards set
forth in this paragraph 18(c), and in the absence of any condition referred to
above which would render a foreign judgment unenforceable, the Secured Parties
would be entitled to enforce such judgment in Peru by proceedings for the
enforcement of a foreign final judgment under the laws of Peru.
19. The subordination terms set out in Exhibit A to the Completion
Guarantee are enforceable in Xxxx.
00
00. Under the law of Peru, a foreign corporation is not required solely as
a lender holding Indebtedness, or liens under any security agreement covering
personal property, to procure a certificate of authority to transact business or
otherwise qualify to do business in Peru. As such, none of the Secured Parties
nor the Administrative Agent, solely by reason of the making of the extensions
of credit contemplated by the Financing Documents or the execution and delivery
by the Borrower or the Obligors of the Financing Documents, will (a) be required
to qualify to do business in Peru or to comply with the requirements of any
foreign registration or qualification law of Peru, (b) be subject to taxation by
Peru or any political subdivision of Peru or (c) be required, preceding
enforcement of the Financing Documents, to make any filing with any court or
other judicial or administrative body in or of Peru in order to carry out any of
the transactions contemplated by the Financing Documents.
21. Pursuant to Legislative Resolution Xx. 00000, Xxxx has ratified, and
has enacted all legislation necessary under the laws of Peru to implement the
Convention on the Recognition and Enforcement of Foreign Arbitral, adopted in
June 10th, 1958 in New York. We are not aware of any public policy of Peru that
would prevent the recognition and enforcement of any arbitral award rendered
pursuant to the Master Participation Agreement, Master Security Agreement or any
other Financing Document. The arbitration provisions in Section 12.17 of the
Master Participation Agreement and Section 9.16 of the Completion Guarantee are
valid and binding to refer any dispute contemplated thereunder to arbitration,
pursuant to and in accordance with the terms and conditions set forth in such
Sections.
22. The Senior Facility Lenders are not and will not be deemed resident,
carrying on business, subject to taxation as such or subject to environmental
liability in Peru solely by reason of the making of the Senior Facility Loans or
enforcement in Peru of any of the Transaction Documents to which they are a
party.
23. There are no restrictions or requirements which limit the availability
or transfer of foreign currency for the purpose of the performance by the
Borrower of its obligations under the Transaction Documents.
24. Under the laws of Peru, the perfection of non-possessory security
interests over the Proceeds Account or the rights of the Borrower under the SMM
Concentrate Sales Agreement, the PD Concentrate Sales Agreement, the PD Cathode
Sales Agreement, the Construction Agreements, the Operator's Agreement and the
Shareholders Agreement, do not require filing, recording or registration as a
condition or result of such security interest being created.
The foregoing opinions are limited to matters involving the laws of Peru
and we do not express any opinion as to the laws of any other jurisdiction.
Unless otherwise indicated, our opinions are based upon the facts in existence
and the laws in effect as of the date hereof and we disclaim any obligation to
update our opinions with respect to any
12
changes in such facts or laws that may come to our attention after delivery of
this opinion.
At the request of our clients, this opinion letter is provided to you by us
in our capacity as counsel to the Senior Facility Lenders, and this opinion
letter may not be relied upon by any Person for any purpose other than in
connection with the transactions contemplated by the Transaction Documents
without, in each instance, our prior written consent.
Very truly yours,
13
Appendix I-4
Form of Opinion of Milbank, Tweed, Xxxxxx & XxXxxx LLP
APPENDIX I-4
[Form of opinion of Milbank, Tweed, Xxxxxx & XxXxxx LLP]
[__________], 0000
Xxxxx Bank for International Cooperation
Sumitomo Mitsui Banking Corporation
The Bank of Tokyo-Mitsubishi, Ltd.
KfW
The Royal Bank of Scotland plc
The Bank of Nova Scotia
Mizuho Corporate Bank, Ltd.
CALYON New York Branch, in its own capacity and as Administrative Agent
Re: Sociedad Minera Cerro Verde S.A.A.
Ladies and Gentlemen:
We have acted as special New York counsel to Japan Bank for
International Cooperation ("JBIC"), Sumitomo Mitsui Banking Corporation ("SMBC")
in its own capacity and as JBIC Agent, The Bank of Tokyo-Mitsubishi, Ltd.
("BOT-M"), KfW, The Royal Bank of Scotland plc ("RBS"), The Bank of Nova Scotia
("Scotia Capital"), Mizuho Corporate Bank, Ltd. ("Mizuho") and CALYON New York
Branch ("Calyon"), in it own capacity and as Administrative Agent (in such
capacity, the "Administrative Agent"), in connection with the execution and
delivery of Master Participation Agreement dated as of September 30, 2005 (the
"Master Participation Agreement" ) among Sociedad Minera Cerro Verde S.A.A., a
sociedad anonima abierta organized under the laws of Peru (the "Borrower"),
JBIC, SMBC, BOT-M, KfW, Calyon in its own capacity and as Administrative Agent,
RBS, Scotia Capital and Mizuho. Capitalized terms used and not otherwise defined
herein have the meanings given to them in Schedule Z to the Master Security
Agreement (as defined in the Master Participation Agreement). As used herein,
"UCC" means the Uniform Commercial Code as in effect in the State of New York.
In rendering the opinions expressed below, we have examined the
following agreements and documents (collectively referred to as the "New York
Documents"):
(i) the Master Participation Agreement;
(ii) the Master Security Agreement;
(iii) the Completion Guarantee;
(iv) the Transfer Restrictions Agreement;
(v) the KfW Loan Agreement; and
(vi) the Commercial Banks Loan Agreement.
We have assumed for purposes of our opinions hereinafter set forth
that the New York Documents have been duly authorized, executed and delivered
by, and (except to the extent set forth below as to the Borrower, SMM, SC, the
Sumitomo Participant, BVN, PDC and CCMC) constitute the legal, valid, binding
and enforceable obligations of, the respective parties thereto; that each of the
respective parties thereto is duly organized and validly existing under the laws
of the jurisdiction of its organization and has full power, authority and legal
right to make and perform each New York Document to which it is a party, and
that all authorizations, approvals or consents of (including without limitation
all foreign exchange control approvals), and all filings or registrations with,
any governmental or regulatory authority or agency required for the making and
performance of each of the New York Documents by the respective parties thereto
have been obtained or made and are in effect; and that the making and
performance of each of the New York Documents by the respective parties thereto
do not, in the case of any such party, contravene, and such agreements are not
invalid or unenforceable under, the law of the jurisdiction (other than the
State of New York) of organization of such party.
In rendering the opinions expressed below, we have examined such
documents and papers as we have deemed necessary as a basis for the opinions
hereinafter expressed. In such examination we have assumed the genuineness of
all signatures, the authenticity of documents submitted to us as originals and
the conformity with the authentic original documents of all documents submitted
to us as copies. With respect to certain matters of fact, we have relied upon
representations of the parties to the New York Documents, including, without
limitation, the representations set forth in the New York Documents.
Based upon and subject to the foregoing and subject also to the
comments and qualifications set forth below, and having considered such
questions of law as we have deemed necessary as a basis for the opinions
expressed below, we are of the opinion that:
1. The Master Participation Agreement constitutes the valid and
binding obligation of the Borrower, enforceable in accordance with its terms,
except as may be limited by bankruptcy, insolvency, reorganization, fraudulent
conveyance or transfer, moratorium or other similar laws relating to or
affecting the rights of creditors generally, and to the possible judicial
application of foreign laws or governmental action affecting the rights of
creditors generally, and except as the enforceability of the Master
2
Participation Agreement is subject to the application of general principles of
equity (regardless of whether considered in a proceeding in equity or at law),
including without limitation (i) the possible unavailability of specific
performance, injunctive relief or any other equitable remedy and (ii) concepts
of materiality, reasonableness, good faith and fair dealing.
2. The Master Security Agreement constitutes the valid and binding
obligation of the Borrower, enforceable in accordance with its terms, except as
may be limited by bankruptcy, insolvency, reorganization, fraudulent conveyance
or transfer, moratorium or other similar laws relating to or affecting the
rights of creditors generally, and to the possible judicial application of
foreign laws or governmental action affecting the rights of creditors generally,
and except as the enforceability of the Master Security Agreement is subject to
the application of general principles of equity (regardless of whether
considered in a proceeding in equity or at law), including without limitation
(i) the possible unavailability of specific performance, injunctive relief or
any other equitable remedy and (ii) concepts of materiality, reasonableness,
good faith and fair dealing.
3. Each of the KfW Loan Agreement and Commercial Banks Loan Agreement
constitutes the valid and binding obligation of the Borrower, enforceable in
accordance with its terms, except as may be limited by bankruptcy, insolvency,
reorganization, fraudulent conveyance or transfer, moratorium or other similar
laws relating to or affecting the rights of creditors generally, and to the
possible judicial application of foreign laws or governmental action affecting
the rights of creditors generally, and except as the enforceability of each of
such agreements is subject to the application of general principles of equity
(regardless of whether considered in a proceeding in equity or at law),
including without limitation (i) the possible unavailability of specific
performance, injunctive relief or any other equitable remedy and (ii) concepts
of materiality, reasonableness, good faith and fair dealing.
4. The Completion Guarantee constitutes the valid and binding
obligation of each of SMM, SC, BVN and PDC, enforceable in accordance with its
terms, except as may be limited by bankruptcy, insolvency, reorganization,
fraudulent conveyance or transfer, moratorium or other similar laws relating to
or affecting the rights of creditors generally, and to the possible judicial
application of foreign laws or governmental action affecting the rights of
creditors generally, and except as the enforceability of the Completion
Guarantee is subject to the application of general principles of equity
(regardless of whether considered in a proceeding in equity or at law),
including without limitation (i) the possible unavailability of specific
performance, injunctive relief or any other equitable remedy and (ii) concepts
of materiality, reasonableness, good faith and fair dealing.
5. The Transfer Restrictions Agreement constitutes the valid and
binding obligation of each of the SMM Participant, BVN, CCMC, SMM, SC and PDC,
3
enforceable in accordance with its terms, except as may be limited by
bankruptcy, insolvency, reorganization, fraudulent conveyance or transfer,
moratorium or other similar laws relating to or affecting the rights of
creditors generally, and to the possible judicial application of foreign laws or
governmental action affecting the rights of creditors generally, and except as
the enforceability of the Transfer Restrictions Agreement is subject to the
application of general principles of equity (regardless of whether considered in
a proceeding in equity or at law), including without limitation (i) the possible
unavailability of specific performance, injunctive relief or any other equitable
remedy and (ii) concepts of materiality, reasonableness, good faith and fair
dealing.
6. The Master Security Agreement is effective to create in favor of
the Offshore Collateral Agent for the benefit of the Secured Parties, as
security for the Secured Obligations, valid security interests (to the extent
the UCC is applicable thereto) in the right, title and interest of the Borrower
(a) in, to and under the SMM Concentrate Sales Agreement, the PD Concentrate
Sales Agreement and the PD Cathodes Sales Agreement, (b) in the Proceeds
Account, (c) in and to each of the Construction Agreements, the Operator's
Agreement and the Shareholders Agreement. We note that (i) that such security
interest will continue in such collateral after disposition thereof and in any
proceeds (as defined in Section 9-102(a)(64) of the UCC) thereof only to the
extent provided in Section 9-315 of the UCC and (ii) in the case of property
which becomes collateral after the date hereof, the security interests therein
referred to above will not attach or be enforceable until such time as the
debtor or other grantor has rights in such property, and Section 552 of the
Federal Bankruptcy Code limits the extent to which property acquired by a debtor
or other grantor after the commencement of a case under the Federal Bankruptcy
Code may be subject to a security interest arising from a security agreement
entered into by the debtor or other grantor before the commencement of such
case. We express no opinion herein as to whether the Borrower has any right,
title or interest in or to any of the properties or rights in which security
interests are, or are purported to be, granted by the Master Security Agreement,
or as to the perfection of any such security interest (except expressly set
forth in paragraph 7 below) or as to the priority of any such security interest.
7. The security interest created by the Master Security Agreement in
the Borrower's right, title and interest, if any, in and to the Proceeds Account
is perfected by execution and delivery of the Master Security Agreement by the
parties thereto. As to security interests referred to in paragraph 6 hereof
created by the Master Security Agreement that are not so perfected, (a) if Peru
constitutes a filing jurisdiction as hereinafter defined (as to which we express
no opinion), and the Borrower's place of business or (if it has more than one
place of business) chief executive office is in Peru, under Section 9-301 of the
UCC the local law of Peru governs perfection, the effect of perfection or
non-perfection and the priority of such security interest, and (b) if Peru does
not constitute such a filing jurisdiction, (i) the Borrower will be deemed to be
located in
4
the District of Columbia for purposes of Article 9 of the UCC, (ii) under
Section 9-301 of the UCC the local law of the District of Columbia governs
perfection, the effect of perfection or non-perfection and the priority of the
security interest created in the Borrower's rights, title and interest in and to
the collateral described by the Master Security Agreement and (iii) pursuant to
Section 9-501 of the Uniform Commercial Code as in effect in the District of
Columbia, the filing of an appropriate financing statement in the Recorder of
Deeds of the District of Columbia will cause such security interests to be
perfected. As used herein, "filing jurisdiction" means a jurisdiction whose law
generally requires information concerning the existence of a non-possessory
security interest to be made generally available in a filing, recording or
registration system as a condition or result of the security interest's taking
priority over the rights of a lien creditor (as defined in Section 9-102(a)(52)
of the UCC) with respect to the collateral referred to in paragraph 6 hereof.
Our opinions in paragraphs 2 and 6 above are subject to possible
limitations on the exercise of remedial or procedural provisions contained in
the Master Security Agreement, but such limitations do not, in our opinion (but
subject to the other comments and qualifications set forth in this opinion
letter), make the remedies and procedures that would be afforded to the Offshore
Collateral Agent or the Secured Parties inadequate for the practical realization
of the benefits intended to be provided by the Master Security Agreement. We
further point out that provisions of the New York Documents which permit the
Offshore Collateral Agent, the Secured Parties or a Senior Facility Lender to
take actions or make determinations or require payments under indemnity and
similar provisions may be subject to a requirement that such actions be taken
and such determinations be made on a reasonable basis and in good faith and may
be limited by laws limiting the enforceability of provisions exculpating or
exempting a party from, or requiring indemnification of a party for, liability
for its own action or inaction, to the extent such action or inaction involves
gross negligence, recklessness or willful or unlawful conduct.
The foregoing opinions are also subject to the following comments and
qualifications:
(a) We express no opinion as to (i) the provisions of Section
12.16(a) of the Master Participation Agreement, and similar provisions of
any of the other New York Documents, to the extent such provisions relate
to the subject matter jurisdiction of United States Federal courts to
adjudicate any matter under or arising out of or in connection with the New
York Documents or Senior Facility Loans Obligations or to a waiver of
inconvenient forum with respect to proceedings in any United States Federal
Court located in New York County in the City of New York; (ii) Section
10.04(b) of the Master Participation Agreement, and similar provisions of
any of the other New York Documents; (iii) the provisions of Section 12.24
of the Master Participation Agreement, and similar provisions of any of the
other New York Documents, to the extent such
5
provisions relate to immunity acquired after the date of the execution and
delivery of the New York Documents; or (iv) the enforceability of
provisions of the New York Documents which prohibit transfers of rights in
property subject to a security interest thereunder.
(b) We express no opinion as to (i) the enforceability of any
provision of a New York Document calling for payments to be made without
set-off or counterclaim for any reason whatsoever; (ii) Section 13.08 of
the KfW Loan Agreement and Section 11.11 of the Commercial Banks Loan
Agreement; or (iii) any promissory note provided for in any Senior Facility
Loan Agreement.
(c) We express no opinion as to the creation or perfection of any
security interest in any portion of the Collateral to the extent that,
pursuant to Section 9-109(c) or (d) of the UCC, Article 9 of the UCC does
not apply thereto.
(d) We express no opinion as to the enforceability of provisions
in the New York Documents to the effect that terms may not be waived or
modified except in writing may be limited under certain circumstances.
(e) We express no opinion with respect to the effect of the laws
of any jurisdiction in which any Senior Facility Lender is located (other
than New York) that limits the interest, fees or other charges it may
impose for the loan or use of money or other credit.
(f) For purposes of paragraph 7 above, we assume that each
endorsement, instruction and entitlement order, as such terms are defined
in Section 8-102(a) of the UCC, is effective in accordance with Section
8-107 of the UCC; we express no opinion as to the effect of any rule
adopted by any clearing corporation, as defined in Section 8-102(a) of the
UCC, governing rights and obligations among such clearing corporation and
its participants; our opinion with respect to any security entitlement is
subject to Part 5 of Article 8 of the UCC; and we express no opinion as to
the creation, perfection or priority of any security interest in any
obligations of the Government of the United States or any agency or
instrumentality thereof except for obligations subject to the Revised
Book-Entry Rules as defined in Annex 1 hereto.
With respect to our opinion in paragraphs 1 through 6 above, we note
that under Section 12.17 of the Master Participation Agreement, and under
provisions of the Completion Guarantee, certain particular disputes arising
thereunder are to be settled by arbitration. Although there can be no assurance
that the arbitrators will apply principles of New York law in resolving any such
dispute or in rendering any award and, if they do not, the failure to apply
principles of New York law will not be a basis for a court vacating such award,
we have, with your permission, nevertheless assumed in rendering
6
our opinions above that the arbitrators will properly apply principles of New
York law in arriving at their award.
We wish to point out that the acquisition by the Borrower after the
initial extension of credit under the New York Documents of an interest in
property that becomes subject to the lien of the Master Security Agreement may
constitute a voidable preference under Section 547 of the Bankruptcy Code.
This opinion is provided to you by us as special New York counsel to
the addressees noted above pursuant to Section 5.01(g)(iv) of the Master
Participation Agreement and may not be relied upon by any other person or for
any purpose other than in connection with the transactions contemplated by the
New York Documents without, in each instance, our prior written consent.
We are members of the bar of the State of New York and we do not
herein express any opinion as to any matters governed by any laws other than the
laws of the State of New York, the federal laws of the United States, and for
purposes of paragraph 7(iii) above, the Uniform Commercial Code as in effect in
the District of Columbia, and we do not express any opinion as to the law of any
other jurisdiction. Without limiting the foregoing, we do not hold ourselves out
as experts on, or purport to advise on, the laws of Peru.
Very truly yours,
RSB/JJG/JAM
7
Annex 1
Revised Book-Entry Rules
The term "Revised Book-Entry Rules" means 31 C.F.R. Section 357 (Treasury bills,
notes and bonds; 12 C.F.R. Section 615 (book-entry securities of the Farm Credit
Administration); 12 C.F.R. Sections 910 and 912 (book-entry securities of the
Federal Home Loan Bank); 24 C.F.R. Section 81 (book-entry securities of the
Federal National Mortgage Association and the Federal Home Loan Mortgage
Corporation); 12 C.F.R. Section 1511 (book-entry securities of the Resolution
Funding Corporation; and 31 C.F.R. Section 354 (book-entry securities of the
Student Loan Marketing Association).
8
Appendix I-5
Form of Opinion of Xxxxx, Xxxxxx & Xxxxxx, LLP,
Special New York Counsel to the Trustee
APPENDIX I-5
__, 2005
TO THE PARTIES LISTED ON
THE ATTACHED SCHEDULE I
Re: Cerro Verde - Project Finance
Ladies and Gentlemen:
We have acted as special counsel to Citibank, N.A., as Trustee and Offshore
Collateral Agent for the benefit of the Secured Parties (the "Trustee") in
connection with the execution of the Master Security Agreement, dated as of
September 30, 2005 (the "Agreement"), among Sociedad Minera Cerro Verde S.A.A.,
as Borrower, Japan Bank for International Cooperation, as a Senior Facility
Lender, Sumitomo Mitsui Banking Corporation, as a Lead JBIC Arranger and Global
Coordinator, The Bank of Tokyo-Mitsubishi, Ltd., as a Lead JBIC Arranger, KfW,
as a Senior Facility Lender, CALYON New york Branch, as a Senior Facility
Lender, Lead Arranger and Global Coordinator, The Royal Bank of Scotland plc, as
a Senior Facility Lender and Lead Arranger, The Bank of Nova Scotia, as a Senior
Facility Lender and Lead Arranger, Mizuho Corporate Bank, Ltd., as a Senior
Facility Lender and Lead Arranger, CALYON New York Branch, as Administrative
Agent, Citibank del Peru S.A., as Onshore Collateral Agent and Citibank N.A., as
Offshore Collateral Agent and the Trustee.
Capitalized terms used and not otherwise defined herein have the meanings
assigned to them in the Agreement.
In rendering the opinions set forth below, we have examined the originals,
or copies certified to our satisfaction, of such agreements, documents,
certificates and other statements of government officials and corporate officers
of the Trustee and other papers as we deemed relevant and necessary as a basis
for such opinions and have relied as to factual matters on representations,
warranties and other statements therein. In such examination, we have assumed
the genuineness of all signatures (other than the Trustee) and the authenticity
of all documents submitted to us as originals and the conformity with the
originals of all documents submitted to us as copies. We have also assumed the
due authorization, execution and delivery of instruments and agreements by the
parties (other than the Trustee) thereto, and the authority and existence of
such parties other than the Trustee.
Based upon and subject to the foregoing, we are of the opinion that as of
the date hereof:
1. The Trustee has (a) been duly incorporated, is validly existing
and in good standing as a national banking association under the
laws of the United States of America, (b) the corporate power and
authority to enter into, and to take all action required of it
under, and to incur and perform all obligations provided for in
the Agreement and (c) taken all necessary corporate action to
authorize the execution and delivery of the Agreement and the
performance of its obligations thereunder.
2. The Agreement has been duly authorized and duly executed and
delivered by the Trustee.
3. The Agreement constitutes a valid and binding obligation of the
Trustee, enforceable against the Trustee, in accordance with its
terms, except as the enforceability thereof may be limited by (i)
bankruptcy, insolvency, reorganization or other similar laws
affecting the enforcement of creditors' rights generally, as such
laws would apply in the event of a bankruptcy, insolvency or
reorganization or similar occurrence affecting the Trustee, as
the case may be, and (ii) general principles of equity
(regardless of whether such enforceability is considered in a
proceeding in equity or at law).
4. The execution and delivery of the Agreement by the Trustee and
the performance by the Trustee of its terms do not conflict with
or result in a violation of (i) any law or regulation governing
the banking or trust powers of the Trustee or (ii) any of the
terms, conditions or provisions of the constitutive documents of
the Trustee.
5. No approval, consent, authorization or other action by, or filing
with, any governmental authority or agency having jurisdiction
over the banking or trust powers of the Trustee is required in
connection with the execution, delivery and performance by the
Trustee of the terms of the Agreement.
6. The Trustee has duly accepted the trusts intended to be created
by the Agreement.
We are members of the New York Bar and do not hold ourselves out as experts
on, nor do we express any opinion as to, the laws of any jurisdiction other than
the laws
2
of the State of New York and the Federal laws of the United States. This opinion
is for your benefit and may not be disclosed to or relied upon by any other
person without our prior written consent.
Very truly yours,
3
SCHEDULE I
Citibank, N.A., as Trustee and Offshore Collateral Agent
Citibank del Peru S.A., as Onshore Collateral Agent
Sociedad Minera Cerro Verde S.A.A., as Borrower
Japan Bank for International Cooperation, as a Senior Facility Lender
Sumitomo Mitsui Banking Corporation, as a Lead JBIC Arranger and Global
Coordinator
The Bank of Tokyo-Mitsubishi, Ltd., as a Lead JBIC Arranger
KfW, as a Senior Facility Lender
CALYON New York Branch, as a Senior Facility Lender, Lead Arranger and Global
Coordinator
The Royal Bank of Scotland plc, as a Senior Facility Lender and Lead Arranger
The Bank of Nova Scotia, as a Senior Facility Lender and Lead Arranger
Mizuho Corporate Bank, Ltd., as a Senior Facility Lender and Lead Arranger
CALYON New York Branch, as Administrative Agent
4
Appendix I-6
Form of Opinion of Xxxxxxx, Xxxxx & Xxxxxxx, Abogados (Operator Opinion)
APPENDIX I-6
Legal opinion of Xxxxxxx, Xxxxx & Xxxxxxx Abogados
(Operator)
Lima, __
Japan Bank for International Cooperation
KfW
CALYON New York Branch
The Royal Bank of Scotland plc
The Bank of Nova Scotia
Mizuho Corporate Bank, Ltd.
Sumitomo Mitsui Banking Corporation, as Lead JBIC Arranger
The Bank of Tokyo-Mitsubishi, Ltd., as Lead JBIC Arranger
Ladies and Gentlemen:
We have acted as special Peruvian counsel to Xxxxxx Xxxxxx Dodge del Peru S.A.C.
(the "Operator") in connection with the following agreements:
(i) the Operator's Agreement; and
(ii) the Consent and Agreement, dated __, among the Operator, the Offshore
Collateral Agent and the Borrower (the "Consent and Agreement" and,
together with the Operator's Agreement, the "Agreements").
Unless otherwise expressly provided herein, all capitalized terms used but not
defined herein shall have the respective meanings given to such terms in
Schedule Z to the Master Security Agreement, dated __, among the Borrower, the
Senior Facility Lenders, the Lead JBIC Arrangers, the Global Coordinators, the
Lead Arrangers, the Administrative Agent, the Trustee, the Offshore Collateral
Agent and the Onshore Collateral Agent.
This opinion is delivered to you pursuant to Section 5.01(g)(vii) of the Master
Participation Agreement.
In rendering this opinion, we have assumed, to the extent relevant with respect
to each of the Agreements, that:
(a) the Consent and Agreement has been duly authorized by, has been executed
and delivered by, and constitutes legal, valid, binding and enforceable
obligations of, the Offshore Collateral Agent;
(b) all signatories to the Consent and Agreement on behalf of the Offshore
Collateral Agent have been duly authorized;
(c) the Offshore Collateral Agent is duly organized and validly existing and
has the power and authority (corporate, limited liability company,
partnership or other) to execute, deliver and perform the Consent and
Agreement; and
(d) each Agreement which is governed by a law other that Peruvian law
constitutes the legal, valid and binding obligation of the Operator,
enforceable against the Operator in accordance with its terms, pursuant to
such applicable governing law.
In our examination, we have assumed the genuineness of all signatures, the
authenticity of all documents submitted to us as originals and the conformity
with authentic originals of all documents submitted to us as copies. In
addition, we have examined such corporate records, certificates and other
documents of the Borrower and the Operator, an executed copy of each of the
Master Participation Agreement and the Master Security Agreement, and such
questions of law, as we have considered necessary or appropriate for the
purposes of this opinion.
Based upon and subject to the foregoing and subject also to the comments and
qualifications set forth below, we are of the opinion that:
1. The Operator is a sociedad anonima cerrada duly incorporated, validly
existing and in good standing under the laws of Peru.
2. The Operator has all requisite corporate power to execute and deliver, and
to incur and perform its obligations under, each of the Agreements.
3. The execution and delivery by the Operator, and the incurrence and
performance by the Operator, of its obligations under each of the
Agreements have been duly authorized by all necessary corporate action on
the part of the Operator.
4. Each Agreement has been duly executed and delivered by the Operator and
constitutes the legal, valid and binding obligation of the Operator,
enforceable against the Operator in accordance with its terms.
5. Under Peruvian conflict of laws principles, the stated choice of New York
law to govern the Agreements will be honored by the courts of Peru, except
for the limitations of (a) Article 2049 of the Peruvian Civil Code, under
which provisions of foreign law shall be excluded if they are
2
incompatible with international public policy or good morals, (b) Article
2088 of the Peruvian Civil Code, under which the creation, content and
extinction of security interests on tangible assets located in Peru is
governed by Peruvian law, and (c) Article 2.1 of the Insolvency System
General Act, Law No. 27809, under which any insolvency, bankruptcy,
moratorium, fraudulent conveyance or transfer involving entities domiciled
in Peru shall be ruled by Peruvian law.
6. No authorization, approval or consent, and no filing or registration with,
any Governmental Authority of Peru (except as has already been obtained or
accomplished and is in full force and effect) is required on the part of
the Operator (a) for the execution or delivery of, or for the incurrence or
performance of any obligations under, any of the Agreements, or (b) to
create or to perfect the security interest in the Operator's Agreement and
the proceeds thereof purported to be granted by the Borrower for the
benefit of the Secured Parties under Section 3.03 of the Master Security
Agreement.
7. The execution and delivery by the Operator of, the incurrence and
performance thereby of its obligations under, and the consummation of the
other transactions contemplated by, any of the Agreements do not and will
not (a) violate or conflict with any provision of the organizational
documents of the Operator, (b) violate or conflict with any applicable law,
rule, regulation or decree of Peru, (c) violate or conflict with any treaty
or other international agreement to which Peru is subject, or (d) result in
the creation or imposition of any Lien upon any of its properties pursuant
to the terms of any of the Agreements.
8. Each of the Agreements is in proper legal form for the enforcement thereof
against the Operator in the courts of Peru, as applicable. No registration,
notarization or other formality (including, without limitation, payment of
any stamp or similar tax) is required to be accomplished in Peru (except as
has already been accomplished and is in full force and effect) for the
legality, validity, enforceability or admissibility in evidence of any of
the Agreements in Peru, as applicable.
Please note that the admissibility in evidence of the Agreements before any
Peruvian court requires such documents to be officially translated into
Spanish by a duly authorized public translator in Peru. Such translation
may be done at the time that enforcement is sought.
3
9. The submission by the Operator to the non-exclusive jurisdiction of the
Federal or State Court located in New York County in the City of New York,
and any appellate court from any thereof, with respect to matters arising
under or in connection with any of the Agreements, is valid and effective
under the laws of Peru, except for the limitations of Article 2060 of the
Peruvian Civil Code, under which such submission shall be denied if the
controversy concerns matters subject to the exclusive jurisdiction of
Peruvian courts (i.e., in rem rights related to real estate located in
Peru, criminal offences in Peru or when the parties have expressly or
implicitly submitted to Peruvian jurisdiction), or if such submission would
constitute an abuse of law or would contravene Peruvian public policy.
10. A final, non-appealable judgment against the Operator obtained in the
jurisdiction agreed to under the Agreements would be recognized, conclusive
and enforceable in the courts of Peru without re-examination on the merits;
provided that the following conditions and requirements are met:
(a) there is a treaty between Peru and the country in which such judgment
has been rendered, and the provisions of such treaty shall apply;
(b) in the absence of a treaty, the reciprocity rule is applicable (such
reciprocity being presumed), under which a judgment given by a foreign
competent court will be admissible in the Peruvian courts and will be
enforceable thereby, except if according to such foreign law (i)
judgments issued by Peruvian courts are not admissible in such foreign
country, or (ii) judgments issued by Peruvian courts are subject to
re-examination by such foreign competent court of the issues dealt
therein;
(c) in either (a) or (b), (i) such judgment does not resolve matters which
are subject to exclusive jurisdiction of Peruvian courts, (ii) the
foreign competent court issuing the judgment holds jurisdiction under
the rules of international conflicts of law and general principles of
international procedural jurisdiction, (iii) the defendant against
whom the enforcement is sought has been summoned in accordance with
the laws of the place in which the action was brought up and a
reasonable time to appear before the foreign court as well as due
procedural guarantees to defend the case were granted to the
defendant, (iv) the foreign judgment has the authority of res judicata
under the laws of such foreign jurisdiction, (v) there are no pending
legal proceedings in Peru between the
4
same parties which relate to the same matters, started prior to the
filing of the complaint that concluded with such foreign judgment,
(vi) such foreign judgment is not compatible with other foreign
judgments which meet the admissibility and enforceability requirements
established by Peruvian law which have been previously issued with
respect to the same subject matter, and (vii) such foreign judgment is
not contrary to public policy or good morals.
As of this date, there is no treaty between Peru and the State of New York
or the United States of America on the enforcement of foreign judgments. In
addition, we have no reason to believe that any obligation under the
Agreements would be contrary to Peruvian public policy and international
treaties to which Peru is subject or generally accepted principles of
international law.
Assuming that the foreign final judgment complies with the standards set
forth in this opinion, and in the absence of any condition referred to
above which would render a foreign judgment unenforceable, the respective
parties would be entitled to enforce such judgment in Peru by proceedings
for the enforcement of a foreign final judgment under the laws of Peru.
The foregoing opinions are limited to matters involving the laws of Peru and we
do not express any opinion as to the law of any other jurisdiction. Our opinions
set forth herein are based upon the facts in existence and laws in effect as of
the date hereof and we expressly disclaim any obligation to update our opinions
herein with respect to any changes in such facts or laws that may come to our
attention after delivery of this opinion.
This opinion may not be relied upon by any Person other than you or for any
purpose other than in connection with the transactions contemplated by the
Master Participation Agreement without, in each instance, our prior written
consent.
Very truly yours,
5
Appendix I-7
Form of Opinion of Xxxxxxx, Xxxxx & Xxxxxxx, Abogados (ElectroPeru S.A. Opinion)
6
APPENDIX I-7
Legal opinion of Xxxxxxx, Xxxxx & Xxxxxxx Abogados
(ElectroPeru)
Lima, __
Japan Bank for International Cooperation
KfW
CALYON New York Branch
The Royal Bank of Scotland plc
The Bank of Nova Scotia
Mizuho Corporate Bank, Ltd.
Sumitomo Mitsui Banking Corporation, as Lead JBIC Arranger
The Bank of Tokyo-Mitsubishi, Ltd., as Lead JBIC Arranger
Ladies and Gentlemen:
We have reviewed an executed copy of each of the following agreements:
(i) the Power Supply Agreement (110 MW) (the "PSA"), dated December 31, 2004,
between Sociedad Minera Cerro Verde S.A.A. (the "Borrower") and ElectroPeru
S.A. ("ElectroPeru"); and
(ii) the Power Supply Agreement (46 MW), dated December 31, 2004, between the
Borrower and ElectroPeru (together with the PSA, the "Agreements").
Unless otherwise expressly provided herein, all capitalized terms used but not
defined herein shall have the respective meanings given to such terms in
Schedule Z to the Master Security Agreement, dated __, among the Borrower, the
Senior Facility Lenders, the Lead JBIC Arrangers, the Global Coordinators, the
Lead Arrangers, the Administrative Agent, the Trustee, the Offshore Collateral
Agent and the Onshore Collateral Agent.
This opinion is delivered to you pursuant to Section 5.01(g)(vii) of the Master
Participation Agreement.
In our examination, we have assumed the genuineness of all signatures, the
authenticity of all documents submitted to us as originals and the conformity
with authentic originals of all documents submitted to us as copies. In
addition, we have examined such corporate records, certificates and other
documents of the Borrower and ElectroPeru, and such questions of law, as we have
considered necessary or appropriate for the purposes of this opinion.
Based upon and subject to the foregoing and subject also to the comments and
qualifications set forth below, we are of the opinion that:
1. As of December 31, 2004, the execution and delivery by ElectroPeru, and the
incurrence and performance by ElectroPeru, of its obligations under each of
the Agreements had been duly authorized by all necessary corporate action
on the part of ElectroPeru.
2. As of December 31, 2004, each of the Agreements constituted, and as of the
date hereof each of the Agreements constitutes, the legal, valid and
binding obligation of ElectroPeru, enforceable against ElectroPeru in
accordance with its terms.
3. Each of the Agreements is in proper legal form for the enforcement thereof
against ElectroPeru in the courts of Peru. No registration, notarization or
other formality (including, without limitation, payment of any stamp or
similar tax) is required to be accomplished in Peru (except as has already
been accomplished and is in full force and effect) for the legality,
validity, enforceability or admissibility in evidence of each of the
Agreements in Peru. We have no evidence that the filing of each of the
Agreements required to be made by ElectroPeru pursuant to Article 8 of the
Electricity Concessions Act, Law Decree No. 25844, has been made but such
filing does not affect the legality, validity, enforceability or
admissibility in evidence of the Agreements in Peru.
The foregoing opinions are limited to matters involving the laws of Peru and we
do not express any opinion as to the law of any other jurisdiction. Unless
otherwise indicated, our opinions set forth herein are based upon the facts in
existence and laws in effect as of the date hereof and we expressly disclaim any
obligation to update our opinions herein with respect to any changes in such
facts or laws that may come to our attention after delivery of this opinion.
This opinion may not be relied upon by any Person other than you or for any
purpose other than in connection with the transactions contemplated by the
Master Participation Agreement without, in each instance, our prior written
consent.
Very truly yours,
2
Appendix I-8
Form of Opinion of Xxxxxxx, Xxxxx & Xxxxxxx, Abogados (EGASA Opinion)
APPENDIX I-8
Legal opinion of Xxxxxxx, Xxxxx & Xxxxxxx Abogados
(EGASA)
Lima, __
Japan Bank for International Cooperation
KfW
CALYON New York Branch
The Royal Bank of Scotland plc
The Bank of Nova Scotia
Mizuho Corporate Bank, Ltd.
Sumitomo Mitsui Banking Corporation, as Lead JBIC Arranger
The Bank of Tokyo-Mitsubishi, Ltd., as Lead JBIC Arranger
Ladies and Gentlemen:
We have reviewed an executed copy of the Power Supply Agreement (the "PSA"),
dated December 29, 2004, between Sociedad Minera Cerro Verde S.A.A. (the
"Borrower") and Empresa de Generacion Electrica de Arequipa S.A. - EGASA
("EGASA").
Unless otherwise expressly provided herein, all capitalized terms used but not
defined herein shall have the respective meanings given to such terms in
Schedule Z to the Master Security Agreement, dated __, among the Borrower, the
Senior Facility Lenders, the Lead JBIC Arrangers, the Global Coordinators, the
Lead Arrangers, the Administrative Agent, the Trustee, the Offshore Collateral
Agent and the Onshore Collateral Agent.
This opinion is delivered to you pursuant to Section 5.01(g)(vii) of the Master
Participation Agreement.
In our examination, we have assumed the genuineness of all signatures, the
authenticity of all documents submitted to us as originals and the conformity
with authentic originals of all documents submitted to us as copies. In
addition, we have examined such corporate records, certificates and other
documents of the Borrower and EGASA, and such questions of law, as we have
considered necessary or appropriate for the purposes of this opinion.
Based upon and subject to the foregoing and subject also to the comments and
qualifications set forth below, we are of the opinion that:
1. As of December 29, 2004, the execution and delivery by EGASA, and the
incurrence and performance by EGASA, of its obligations under the PSA had
been duly authorized by all necessary corporate action on the part of
EGASA.
2. As of December 29, 2004, the PSA constituted, and as of the date hereof the
PSA constitutes, the legal, valid and binding obligation of EGASA,
enforceable against EGASA in accordance with its terms.
3. The PSA is in proper legal form for the enforcement thereof against EGASA
in the courts of Peru. No registration, notarization or other formality
(including, without limitation, payment of any stamp or similar tax) is
required to be accomplished in Peru (except as has already been
accomplished and is in full force and effect) for the legality, validity,
enforceability or admissibility in evidence of the PSA in Peru. We have no
evidence that the filing of the PSA required to be made by EGASA pursuant
to Article 8 of the Electricity Concessions Act, Law Decree No. 25844, has
been made but such filing does not affect the legality, validity,
enforceability or admissibility in evidence of the PSA in Peru.
The foregoing opinions are limited to matters involving the laws of Peru and we
do not express any opinion as to the law of any other jurisdiction. Unless
otherwise indicated, our opinions set forth herein are based upon the facts in
existence and laws in effect as of the date hereof and we expressly disclaim any
obligation to update our opinions herein with respect to any changes in such
facts or laws that may come to our attention after delivery of this opinion.
This opinion may not be relied upon by any Person other than you or for any
purpose other than in connection with the transactions contemplated by the
Master Participation Agreement without, in each instance, our prior written
consent.
Very truly yours,
Appendix I-9
Form of Opinion of Xxxxxxxx & Xxxxxxxx LLP (Financing Documents)
APPENDIX I-9
[__], 200[5]
The Institutions named in Schedule I hereto,
as Senior Facility Lenders.
CALYON New York Branch,
as Administrative Agent for the Senior Lenders,
0000 Xxxxxx xx xxx Xxxxxxxx,
Xxx Xxxx, Xxx Xxxx 00000.
Ladies and Gentlemen:
In connection with (i) the Completion Guarantee, dated as of September
[30], 2005 (the "Completion Guarantee"), among Sumitomo Metal Mining Co., Ltd.,
a Japanese corporation ("SMM"), Sumitomo Corporation, a Japanese corporation
("SC"), Compania de Minas Buenaventura S.A.A., a Peruvian sociedad anonima
abierta ("BVN"), Xxxxxx Dodge Corporation, a New York corporation ("PDC"), Japan
Bank for International Cooperation, a Japanese government financial institution
organized under the laws of Japan ("JBIC"), Sumitomo Mitsui Banking Corporation,
a stock corporation organized under the laws of Japan ("SMBC"), The Bank of
Tokyo-Mitsubishi, Ltd., a banking institution organized under the laws of Japan
("BOT-M"), KfW, a public
The Institutions named in Schedule I hereto
CALYON New York Branch -3-
corporation formed under the laws of the Federal Republic of Germany ("KfW"),
CALYON New York Branch, a licensed branch of a banking corporation organized
under the laws of the French Republic ("CALYON"), The Royal Bank of Scotland
plc, a public limited company incorporated under the laws of Scotland ("RBS"),
The Bank of Nova Scotia, a Canadian chartered bank, organized under the laws of
Canada ("Scotia Capital"), Mizuho Corporate Bank, Ltd., a banking institution
organized under the laws of Japan ("Mizuho"), and CALYON, as Administrative
Agent for the Senior Lenders (the "Administrative Agent"), (ii) the Transfer
Restriction Agreement, dated as of September [30], 2005 (the "Transfer
Restriction Agreement"), among SMM Cerro Verde Netherlands B.V., a Dutch
corporation (the "Sumitomo Participant"), BVN, Cyprus Climax Metals Company, a
corporation organized under the laws of the State of Delaware ("CCMC"), SMM, SC,
PDC, JBIC, SMBC, BOT-M, KfW, CALYON, RBS, Scotia Capital, Mizuho and the
Administrative Agent, and (iii) the Consent and Agreement, dated as of September
[30], 2005 (the "Consent"), among the Sumitomo Participant, SMM, SC, Summit
Global Management II B.V, a Dutch corporation ("SGM"), BVN, CCMC, PDC and
Citibank, N.A., a national banking association organized under the laws of the
United States of America, as Offshore Collateral Agent, we, as special New York
counsel to SMM, SC, the Sumitomo Participant and SGM, have examined such
corporate records, certificates and other documents and such questions of law as
we have considered necessary or appropriate
The Institutions named in Schedule I hereto
CALYON New York Branch -4-
for the purposes of this opinion. Capitalized terms used herein and not
otherwise defined shall have the meanings assigned to them in the Completion
Guarantee.
Upon the basis of such examination, it is our opinion that each of the
Completion Guarantee, the Transfer Restriction Agreement and the Consent (the
"Agreements") constitutes a valid and legally binding obligation of each of SMM,
SC, SGM and the Sumitomo Participant enforceable in accordance with its terms,
subject to bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and similar laws of general applicability relating to or affecting
creditors' rights and to general equity principles.
We express no opinion as to:
(i) Section 19.3(a) of the Completion Guarantee, Section 4.08(a) of
the Transfer Restriction Agreement and Section 5(e) of the Consent, to the
extent that each such Section relates to the waiver of inconvenient forum
with respect to proceedings in any United States Federal Court located in
the Borough of Manhattan, The City of New York;
(ii) Section 19.3(a) of the Completion Guarantee, Section 4.08(a) of
the Transfer Restriction Agreement and Section 5(e) of the Consent insofar
as such provisions relate to subject matter jurisdiction of any United
States Federal court;
The Institutions named in Schedule I hereto
CALYON New York Branch -5-
(iii) any provision of the Completion Guarantee purporting to provide
indemnification to any person to the extent inconsistent with public policy
or otherwise contrary to law;
(iv) any provision of the Agreements insofar as such provision is
invalid, not binding or unenforceable under the laws of the jurisdiction
(other than the State of New York) under which a party to such agreement is
organized; and
(v) the validity or binding effect of any waiver under any of the
Agreements or any consent thereunder, relating to the rights of any of SMM,
SC, the Sumitomo Participant or SGM or duties owing to any of them existing
as a matter of law except to the extent that they may so waive or consent
under applicable law.
We note that provisions of the Agreements that permit persons named
therein to take action or make determinations may be subject to a requirement
that such action be taken or such determinations be made on a reasonable basis
or in good faith.
We also note that:
(i) provisions of the Agreements that (A) prohibit or restrict parties
thereto from transferring their respective rights in the collateral or any
proceeds thereof or from creating, attaching, perfecting or enforcing a
security interest in such collateral except as specified therein, (B)
impose a consent requirement on
The Institutions named in Schedule I hereto
CALYON New York Branch -6-
such transfer or pledge, or (C) provide that such transfer or pledge may
give rise to a default, breach, right of recoupment, claim, defense,
termination, right of termination or remedy may be unenforceable by virtue
of Sections 9-401, 9-406 and/or 9-408 of the UCC as in effect on the date
hereof in the State of New York;
(ii) certain remedial and other provisions of the Agreements (A) may
be subject to the right of account debtors, the terms of the contracts with
such account debtors and any claims or defenses of such account debtors
arising under or outside such contracts and (B) may be unenforceable in
whole or in part under applicable law, provided that the inclusion of such
provisions does not, in our opinion (but subject to the other comments and
qualifications set forth in this opinion letter), make the remedies and
procedures that will be afforded to the Senior Lenders inadequate for the
practical realization of the benefits purported to be provided to the
Senior Lenders by the Agreements; and
(iii) the enforceability of Section 9.14 of the Completion Guarantee,
Section 4.09 of the Transfer Restriction Agreement and Section 5(c) of the
Consent to the effect that terms may not be waived or modified except in
writing may be limited under certain circumstances.
In rendering the foregoing opinion, we have assumed without
independent verification that:
The Institutions named in Schedule I hereto
CALYON New York Branch -7-
(i) each party to each Agreement has been duly organized and is an existing
legal entity in good standing under the laws of its jurisdiction of
organization;
(ii) each Agreement has been duly authorized, executed and delivered by the
respective parties thereto;
(iii) the signatures on all documents examined by us are genuine; and
(iv) each of the Agreements is in consideration for, or relates to, an
obligation arising out of a transaction covering in the aggregate not less
than US$1,000,000.
The foregoing opinion is limited to the Federal laws of the United
States and the laws of the State of New York, and we are expressing no opinion
as to the effect of the laws of any other jurisdiction.
With your approval, we have relied as to certain matters upon
information obtained from public officials, officers of SMM, SC, SGM and the
Sumitomo Participant and other sources believed by us to be responsible.
This opinion is being delivered to you pursuant to Section 5.01(g)(ix)
of the Master Participation Agreement solely for your benefit and is not to be
made available to, nor may it be relied upon, by any other person, firm or
entity.
Very truly yours,
APPENDIX I-9
Schedule I
Japan Bank for International Cooperation,
4 - 1, Ohtemachi 1 - Chome,
Xxxxxxx - Xx,
Xxxxx 000 - 0000,
Xxxxx.
Sumitomo Mitsui Banking Corporation,
0-0, Xxxxxxxxx 0-xxxxx,
Xxxxxxx-xx,
Xxxxx,
Xxxxx (Zip: 100-0006).
The Bank of Tokyo-Mitsubishi, Ltd.,
0-0-0, Xxxxxxxxxx, Xxxxxxx-Xx,
Xxxxx 000-0000,
Xxxxx.
KfW,
CALYON New York Branch,
The Royal Bank of Scotland plc,
The Bank of Nova Scotia,
Mizuho Corporate Bank, Ltd.,
c/o CALYON New York Branch, as Administrative Agent for the Senior Lenders,
0000 Xxxxxx xx xxx Xxxxxxxx,
Xxx Xxxx, Xxx Xxxx 00000.
Appendix I-10
Form of Opinion of Xxxxxxxx & Xxxxxxxx LLP (Offtake Agreements)
APPENDIX I-10
[__], 000[0]
Xxxxx Bank for International Cooperation,
Sumitomo Mitsui Banking Corporation,
The Bank of Tokyo-Mitsubishi, Ltd.,
KfW,
CALYON New York Branch,
The Royal Bank of Scotland plc,
The Bank of Nova Scotia,
Mizuho Corporate Bank, Ltd.,
c/o CALYON New York Branch,
as Administrative Agent for the Senior Lenders,
0000 Xxxxxx xx xxx Xxxxxxxx,
Xxx Xxxx, Xxx Xxxx 00000.
Ladies and Gentlemen:
In connection with the Concentrate Sales Agreement, dated as of June 1,
2005, as amended by Amendment No. 1, dated as of September [30], 2005 (as so
amended, the "Concentrate Sales Agreement"), between Sumitomo Metal Mining Co.,
Ltd., a Japanese corporation ("SMM"), and Sociedad Minera Cerro Verde S.A.A., a
sociedad anonima abierta organized under the laws of the Republic of Peru
("Cerro Verde"), we, as special New York counsel to SMM, have examined such
corporate records, certificates and other documents and such questions of law as
we have considered necessary or appropriate for the purposes of this opinion.
Japan Bank for International Cooperation,
Sumitomo Mitsui Banking Corporation,
The Bank of Tokyo-Mitsubishi, Ltd.,
KfW,
CALYON New York Branch,
The Royal Bank of Scotland plc,
The Bank of Nova Scotia,
Mizuho Corporate Bank, Ltd.,
c/o CALYON New York Branch,
as Administrative Agent for the Senior Lenders, -2-
Upon the basis of such examination, it is our opinion that the Concentrate
Sales Agreement constitutes a valid and legally binding obligation of SMM
enforceable in accordance with its terms, subject to bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium and similar laws of general
applicability relating to or affecting creditors' rights and to general equity
principles.
We express no opinion as to:
(i) Section 17.1 of the Concentrate Sales Agreement, to the extent
that such Section relates to a waiver of inconvenient forum with respect to
proceedings in any United States Federal Court located in the Borough of
Manhattan, The City of New York;
(ii) Section 17.1 or 23.1(d) of the Concentrate Sales Agreement
insofar as such provisions relate to subject matter jurisdiction of any United
States Federal court;
(iii) the enforceability of any provisions of the Concentrate Sales
Agreement providing for payment to be made without any set-off, defense or
counterclaim;
(iv) the validity or binding effect of any waiver under the
Concentrate Sales Agreement or any consent thereunder, relating to the rights
SMM or duties owing
Japan Bank for International Cooperation,
Sumitomo Mitsui Banking Corporation,
The Bank of Tokyo-Mitsubishi, Ltd.,
KfW,
CALYON New York Branch,
The Royal Bank of Scotland plc,
The Bank of Nova Scotia,
Mizuho Corporate Bank, Ltd.,
c/o CALYON New York Branch,
as Administrative Agent for the Senior Lenders, -3-
to it existing as a matter of law except to the extent they may so waive or
consent under applicable law;
(v) any provision of the Concentrate Sales Agreement insofar as such
provision is invalid, not binding or unenforceable under the laws of the
jurisdiction (other than the State of New York) under which a party to such
agreement is organized; and
(vi) the enforceability of SMM's obligations for any default interest
charges or late charges.
We note that provisions of the Concentrate Sales Agreement that permit
persons named therein to take action or make determinations may be subject to a
requirement that such action be taken or such determinations be made on a
reasonable basis or in good faith
We also note that:
(i) the enforceability of Section 24.1 of the Concentrate Sales Agreement
to the effect that terms may not be waived or modified except in writing may be
limited under certain circumstances; and
Japan Bank for International Cooperation
Sumitomo Mitsui Banking Corporation
The Bank of Tokyo-Mitsubishi, Ltd.
KfW,
CALYON, New York Branch
The Royal Bank of Scotland plc,
The Bank of Nova Scotia,
Mizuho Corporate Bank, Ltd.
c/o CALYON, New York Branch
as Administrative Agent for the Senior Lenders. -4-
(ii) certain remedial and other provisions of the Concentrate Sales
Agreement (A) may be subject to the right of account debtors, the terms of the
contracts with such account debtors and any claims or defenses of such account
debtors arising under or outside such contracts and (B) may be unenforceable in
whole or in part under applicable law, provided that the inclusion of such
provisions does not, in our opinion (but subject to the other comments and
qualifications set forth in this opinion letter), make the remedies and
procedures that will be afforded to the Senior Project Lenders (as defined in
the Concentrate Sales Agreement) inadequate for the practical realization of the
benefits purported to be provided to the Senior Project Lenders by the
Concentrate Sales Agreement.
The foregoing opinion is limited to the Federal laws of the United States
and the laws of the State of New York, and we are expressing no opinion as to
the effect of the laws of any other jurisdiction.
We have relied as to certain matters upon information obtained from public
officials, officers of SMM and other sources believed by us to be responsible,
and we have assumed, without independent verification that:
Japan Bank for International Cooperation
Sumitomo Mitsui Banking Corporation
The Bank of Tokyo-Mitsubishi, Ltd.
KfW,
CALYON, New York Branch
The Royal Bank of Scotland plc,
The Bank of Nova Scotia,
Mizuho Corporate Bank, Ltd.
c/o CALYON, New York Branch
as Administrative Agent for the Senior Lenders. -5-
(i) each party to the Concentrate Sales Agreement has been duly
organized and is an existing legal entity in good standing under the laws of its
jurisdiction of organization;
(ii) the Concentrate Sales Agreement have been duly authorized,
executed and delivered by each party thereto;
(iii) the signatures on all documents examined by us are genuine;
(iv) each of the parties to the Concentrate Sales Agreement intends to
be bound thereby within the meaning of Section 2-305 of the Uniform Commercial
Code as in effect on the date hereof in the State of New York; and
(v) the Concentrate Sales Agreement is in consideration for, or
relates to, an obligation arising out of a transaction covering in the aggregate
not less than US$1,000,000.
This opinion is being delivered to you pursuant to Section 24.6 of the
Concentrate Sales Agreement and Section 5.01(g)(x) of the Master Participation
Agreement, dated as of September [30], 2005, among Sociedad Minera Cerro Verde
S.A.A., a sociedad anomina abierta listed on the Lima Stock Exchange and
organized under the laws of
Japan Bank for International Cooperation
Sumitomo Mitsui Banking Corporation
The Bank of Tokyo-Mitsubishi, Ltd.
KfW,
CALYON, New York Branch
The Royal Bank of Scotland plc,
The Bank of Nova Scotia,
Mizuho Corporate Bank, Ltd.
c/o CALYON, New York Branch
as Administrative Agent for the Senior Lenders. -6-
Peru, Japan Bank for International Cooperation, a Japanese government financial
institution organized under the laws of Japan, Sumitomo Mitsui Banking
Corporation, a stock corporation organized under the laws of Japan, The Bank of
Tokyo-Mitsubishi, Ltd., a banking institution organized under the laws of Japan,
KfW, a public corporation formed under the laws of the Federal Republic of
Germany, CALYON New York Branch, a licensed branch of a banking corporation
organized under the laws of the French Republic, The Royal Bank of Scotland plc,
a public limited company incorporated under the laws of Scotland, The Bank of
Nova Scotia, a Canadian chartered bank, organized under the laws of Canada,
Mizuho Corporate Bank, Ltd., a banking institution organized under the laws of
Japan, and
CALYON New York Branch, as administrative agent for the senior lenders, solely
for your benefit and is not to be made available to, nor may it be relied upon,
by any other person, firm or entity.
Very truly yours,
Appendix I-11
Form of Opinion of Sakai & Nimura (Offtake Agreements)
APPENDIX I-11
SAKAI & MIMURA
9TH FLOOR, OTEMACHI TATEMONO TORANOMON XXXX.
0-00 XXXXXXXXX 0-XXXXX
XXXXXX-XX, XXXXX 000-0000 XXXXX
TELEPHONE: x00-0-0000-0000
FACSIMILE: x00-0-0000-0000
E-MAIL: xxxxx.x@xxxxxxxx.xxx
xxx.xxxxxxxx.xxx
[_____________], 0000
Xxxxx Bank for International Cooperation
Sumitomo Mitsui Banking Corporation
The Bank of Tokyo-Mitsubishi
KfW
The Royal Bank of Scotland plc
The Bank of Nova Scotia
Mizuho Corporate Bank, Ltd.
CALYON New York Branch, for itself and as Administrative Agent
Re: Concentrate Sales Agreement between Sumitomo Metal Mining Co., Ltd.
("Buyer") and Sociedad Minera Cerro Verde S.A.A. ("Seller") dated as of
June 1, 2005 (as amended by the Letter of Amendment to the SMM Concentrate
Sales Agreement ("Amendment No. 1"), dated as of September 30, 2005; the
"Agreement");
Opinion of Buyer's Counsel under Section 24.6 of the Agreement.
Dear Sirs:
We have acted as counsel in Japan for Buyer in connection with the captioned
matter, and have been asked to provide the legal opinion ("Opinion") required
under Section 24.6 of the Agreement in respect of Buyer. Capitalized terms used
and not otherwise defined herein have the meanings given to them in the MPA.
In connection with this Opinion, we have reviewed and/or relied on copies or
certified copies of the following:
SAKAI & MIMURA
a) the Master Participation Agreement dated as of September 30, 2005, among
Seller, Japan Bank for International Cooperation ("JBIC"), Sumitomo Mitsui
Banking Corporation ("SMBC"), The Bank of Tokyo-Mitsubishi, Ltd. ("BOT-M"),
KfW, The Royal Bank of Scotland plc ("RBS"), The Bank of Nova Scotia
("Scotia Capital"), Mizuho Corporate Bank Ltd. ("Mizuho") and CALYON New
York Branch, in its individual capacity and as Administrative Agent for the
Senior Facility Lenders ("Calyon");
b) the Master Security Agreement dated as of September 30, 2005, among Seller,
JBIC, SMBC, BOT-M, KfW, RBS, Scotia Capital, Mizuho, Calyon, Citibank del
Peru S.A., as Onshore Collateral Agent and Citibank, N.A., as Trustee and
Offshore Collateral Agent; and
c) the Agreement and the signature pages for the Agreement, together with the
stamped and signed notarial certificate of the signature of the
representative director of Buyer,
d) the articles of incorporation of Buyer,
e) the internal regulations of the board of directors of Buyer,
f) the company registration of Buyer dated September 22, 2005,
g) an excerpt from the minutes of a meeting of the board of directors of Buyer
[dated March 8, 2005], passing a resolution approving the execution of the
Agreement and delegating final approval of contents to the executive
officer in charge of the Mineral Resources Division.
h) such other corporate records, agreements and instruments, certificates and
other material as we have deemed necessary or desirable, and
i) such statements and confirmations from officers of Buyer, and such other
matters of fact and law, as we have deemed appropriate for the purposes of
this Opinion.
In giving this Opinion, we have assumed (but not independently verified):
1) That the Agreement has been duly authorized, executed and delivered by each
of the parties thereto (except in the case of Buyer) in the same form as
reviewed by us;
2) That the Agreement is legal and valid under the law of the State of New
York, by which it is stated to be governed, and that the transactions
contemplated by the Agreement that are to be performed in the Republic of
Peru, where Seller is located, are legal under the laws of the Republic of
Peru; and
SAKAI & MIMURA
3) That all copies reviewed by us are in conformity with the originals
thereof, and that any signatures thereon are genuine and affixed (except in
the case of Buyer) by persons with authority to do so.
We are qualified to practice law in Japan, and we do not express any opinion
with respect to the laws of any other jurisdiction, and this opinion is limited
to matters of Japanese law under the laws of Japan in force as of the date
hereof. Particularly, we expressly offer no opinion as to the laws of the State
of New York, which is the governing law under the Agreement.
Based on the above, and subject to the qualifications and limitations set out
below, we are of the opinion that:
1) Buyer is a corporation duly organized, and is validly existing under the
laws of Japan where Buyer was incorporated;
2) Buyer has full power and authority to own its properties and conduct the
business in which it is engaged, and to execute, deliver and perform, and
incur the obligations provided in the Agreement;
3) The Agreement has been duly authorized, executed and delivered by Buyer and
constitutes the legal, valid and binding obligation of Buyer, enforceable
in accordance with its terms; and
4) All authorizations, licenses, approvals (including without limitation,
foreign exchange approvals) and consents from, and filings and
registrations with, governmental authorities in Japan which are necessary
for the execution, delivery and performance of the Agreement by Buyer have
been obtained and are in full force and effect.
5) The making and performance by Buyer of the Agreement do not and will not
(i)violate any provision of law, statute, rule, order, injunction, decree,
writ, judgment or regulation or any provision of its organizational
documents as currently in effect or (ii)result in the breach of, or
constitute a default or require any consent under, or result in the
creation of any lien or encumbrance upon, any of its properties, revenues
or assets pursuant to, any indenture, mortgage, contract or other agreement
or instrument to which Buyer is now a party or by which it or its
properties may now be bound or affected.
6) Assuming that the Agreement is legal, valid, binding and enforceable under
the laws of the State of New York:
(a) The choice of the laws of the State of New York to govern the
Agreement is a valid choice of law under the laws of Japan, and a
court in Japan would uphold such choice of law, in regard to
substantive law issues, in a suit on the Agreement brought in a court
in Japan.
SAKAI & MIMURA
(b) Under the Agreement, Buyer has validly submitted to the jurisdiction
of the State and Federal courts located in the Borough of Manhattan,
the City of New York for the purposes specified in Section 17.1 of the
Agreement.
7) If any final judgment of a foreign court is rendered with respect to the
Agreement, the judgment would be recognized and enforced by the courts of
Japan without re-examination or re-litigation on the merits thereof,
subject to the conditions stipulated in Article 118 of the Code of Civil
Procedure of Japan that:
(a) the foreign court's jurisdiction is allowed by laws and ordinances or
by treaty;
(b) the defeated party has received service (except for service by
publication of notice or any similar means) of summons or any other
necessary orders to commence procedures or has responded in the action
without receiving service thereof;
(c) the contents of the judgment and the procedures of the litigation are
not contrary to the public order or morals of Japan; and
(d) there is reciprocity.
8) An arbitral award will be enforceable in Japan, pursuant to a request for
and receipt of an enforcement decision made in the competent court in
Japan, unless any one of the following under Article 45 of the Arbitration
Law of Japan is applicable (with respect to the grounds described in items
(a) through (g), this shall be limited to where either of the parties has
proven the existence of the ground in question):
(a) the arbitration agreement is not valid due to limits to a party's
capacity;
(b) the arbitration agreement is not valid for a reason other than limits
to a party's capacity under the law to which the parties have agreed
to subject it (or failing any indication thereon, the law of the
country under which the place of arbitration falls);
(c) a party was not given notice as required by the provisions of the law
of the country under which the place of arbitration falls (or where
the parties have otherwise reached an agreement on matters concerning
the provisions of the law that do not relate to public policy, such
agreement) in the proceedings to appoint arbitrators or in the
arbitral proceedings;
(d) a party was unable to defend itself in the arbitral proceedings;
(e) the arbitral award contains decisions on matters beyond the scope of
the arbitration agreement or the claims in the arbitral proceedings;
(f) the composition of an arbitral tribunal or the arbitral proceedings
were not in accordance with the provisions of the law of the country
under which the place of arbitration falls (or where the parties have
otherwise reached an
SAKAI & MIMURA
agreement on matters concerning the provisions of the law that do not
relate to public policy, such agreement);
(g) according to the law of the country under which the place of
arbitration falls (or where the law of a country other than the
country under which the place of arbitration falls was applied to the
arbitral proceedings, such country), the arbitral award has not yet
become binding, or the arbitral award has been set aside or suspended
by a court of such country;
(h) the claims in the arbitral proceedings relate to a dispute that cannot
constitute the subject of an arbitration agreement under the laws of
Japan; or
(i) the content of the arbitral award would be contrary to the public
policy or good morals of Japan.
9) Assuming that CT Corporation System has, under the laws of the State of New
York, been duly appointed by Buyer as its agent to receive service of
process in the State of New York, service of process made on CT Corporation
System pursuant to such appointment will, under the laws of Japan, be
considered served personally on Buyer and satisfy the condition of Article
118 of the Code of Civil Procedure of Japan in regard to a judgment
rendered by a New York court.
10) Assignment by Seller of its rights to receipt of payments under Article 15
of the Agreement is valid and enforceable against Buyer under the laws of
Japan; provided that in order to fully perfect the effectiveness of such
assignment against third persons, either the notice by Seller to Buyer of
such assignment must be made by a date-certified writing (proved by
notarization or contents-certified mail), or recordation with the competent
registry must be made.
The opinions expressed above are subject to the following qualifications and
limitations:
(i) Nothing in this Opinion should be taken as indicating that the remedies of
specific performance or injunction (being in some instances discretionary
remedies of the court) would necessarily be available with respect to any
particular provision of the Agreement in any particular instance.
(ii) Enforcement of the Agreement against Buyer will be subject to (i)
applicable bankruptcy, insolvency, moratorium, or other similar laws
affecting the enforcement of creditor rights generally, (ii) laws imposing
duties to act in good faith or in a commercially reasonable manner, and
(iii) laws respecting or affecting the procedural or remedial provisions of
the Agreement.
This Opinion is provided solely in connection with the Agreement, in respect of
the matters specifically set out above, and is not to be used in relation to any
other matter or fact situation.
SAKAI & MIMURA
Sincerely yours,
SAKAI & MIMURA
Xxxxxxxx Xxxxx
Managing Partner
Appendix I-12
Form of Opinion of Sakai & Nimura (Financing Documents)
APPENDIX I-12
SAKAI & MIMURA
9TH FLOOR, OTEMACHI TATEMONO TORANOMON XXXX.
0-00 XXXXXXXXX 0-XXXXX
XXXXXX-XX, XXXXX 000-0000 XXXXX
TELEPHONE: x00-0-0000-0000
FACSIMILE: x00-0-0000-0000
E-MAIL: xxxxx.x@xxxxxxxx.xxx
xxx.xxxxxxxx.xxx
[__________], 2005
CALYON, New York Branch
as Administrative Agent under the Master Participation Agreement,
[Address]
Japan Bank for International Cooperation
4-1, Xxxxxxxxx 0-Xxxxx, Xxxxxxx - Xx
Xxxxx, 000-0000 Xxxxx
Sumitomo Mitsui Banking Corporation
1-2, Yurakucho 1-chome, Xxxxxxx-xx
Xxxxx, 000-0000 Xxxxx
The Bank of Tokyo-Mitsubishi, Ltd.
0-0-0, Xxxxxxxxxx, Xxxxxxx-Xx
Xxxxx, 000-0000 Xxxxx
KfW,
CALYON, New York Branch
The Royal Bank of Scotland plc,
The Bank of Nova Scotia,
Mizuho Corporate Bank, Ltd.
c/o CALYON, New York Branch
as Administrative Agent for the Senior Lenders
[Address]
Re: Opinion for Sumitomo Metal Mining Co., Ltd. ("SMM") and Sumitomo
Corporation ("SC") (also referred to as "Parent Company" or, collectively,
SAKAI & MIMURA
"Parent Companies") in respect of (1) Completion Guarantee, (2) Transfer
Restrictions Agreement, (3) the Shareholders Agreement and (4) Consent and
Agreement (collectively, "Opinion Agreements"), in connection with the
Sulfide Project concerning Sociedad Minera Cerro Verde S.A.A.
Dear Sirs:
We have acted as counsel in Japan for Parent Companies in connection with the
captioned matter, and have been asked to provide the legal opinion ("Opinion")
required under Section 5.01 (g)(vi) of the Master Participation Agreement dated
as of September 30, 2005 (the "Master Participation Agreement"), among Seller,
Japan Bank for International Cooperation, Sumitomo Mitsui Banking Corporation,
The Bank of Tokyo-Mitsubishi, Ltd., KfW, The Royal Bank of Scotland plc, The
Bank of Nova Scotia, Mizuho Corporate Bank, Ltd. and CALYON New York Branch, in
its individual capacity and as Administrative Agent for the Senior Facility
Lenders, in respect of the Parent Companies. Capitalized terms used herein and
not otherwise defined shall have the meanings assigned to such terms in the
Master Participation Agreement.
In connection with this Opinion, we have reviewed and/or relied on copies or
certified copies of the following:
a) Opinion Agreements
- the Completion Guarantee
- the Transfer Restrictions Agreement
- the Shareholders Agreement
- the Consent and Agreement
b) Documents and materials in regard to SMM
- the company registration of SMM dated September 22, 2005
- the articles of incorporation of SMM
- the internal regulations of the board of directors of SMM
- an excerpt from the minutes of a meeting of the board of directors of
SMM dated April 28, 2005, passing a resolution approving the
execution, delivery and performance of the Completion Guarantee
- internal approval of SMM dated [__], 2005, approving the execution of
the Transfer Restrictions Agreement and the Consent and Agreement
- an excerpt from the minutes of a meeting of the board of directors of
SMM dated March 8, 2005, passing a resolution approving the execution
of the Shareholders Agreement
- such other corporate records, agreements and instruments, certificates
and other material as we have deemed necessary or desirable
- such statements and confirmations from officers of SMM (but without
independent verification), and such other matters of fact and law, as
we have deemed appropriate for the purposes of this Opinion
c) Documents and materials in regard to SC
SAKAI & MIMURA
- the company registration of SC dated September 20, 2005
- the articles of incorporation of SC
- the internal regulations of the board of directors of SC
- a certified excerpt from the minutes of a meeting of the board of
directors of SC dated December 22, 2004, passing a resolution
approving the project for the acquisition of the shares of Sociedad
Minera Cerro Verde S.A.A. through the joint venture company with SMM
- the internal approval of the Mineral Resources and Energy Business
Unit of SC dated March 22, 2005, approving the execution of the
Shareholders Agreement and transactions thereunder in the forms
presented to the Unit
- the internal approval of the Mineral Resources and Energy Business
Unit of SC dated May 17, 2005, approving the execution of the Opinion
Agreements and transactions thereunder in the forms presented to the
Unit
- the internal rules of the Mineral Resources and Energy Business Unit
setting the scope of decisions and standards for affixing seal and/or
signature by the Unit
- such other corporate records, agreements and instruments, certificates
and other material as we have deemed necessary or desirable
- such statements and confirmations from officers of SC (but without
independent verification), and such other matters of fact and law, as
we have deemed appropriate for the purposes of this Opinion
In giving this Opinion, we have assumed (but not independently verified):
1) That the Opinion Agreements have been duly authorized, executed and
delivered by all parties thereto (except in the case of SMM and SC) in the
same form as reviewed by us;
2) That the Opinion Agreements are legal and valid under the law of the State
of New York, by which they are stated to be governed, and that all of the
actions under the Opinion Agreements that are to be performed in the
Republic of Peru, where Sociedad Minera Cerro Verde S.A.A. is located, are
legal under the laws of the Republic of Peru; and
3) That all copies reviewed by us are in conformity with the originals
thereof.
We are qualified to practice law in Japan, and we do not express any opinion
with respect to the laws of any other jurisdiction, and this opinion is limited
to matters of Japanese law under the laws of Japan in force as of the date
hereof. Particularly, we expressly offer no opinion as to the laws of the State
of New York, which is the governing law under the Opinion Agreements.
Based on the above, and subject to the qualifications and limitations set out
below, we are of the opinion that:
SAKAI & MIMURA
1. Each Parent Company is a corporation duly organized, and validly existing
under the laws of Japan and has all requisite power and authority to own
its property and conduct its business.
2. Each Parent Company has full power and authority to enter into each of the
Opinion Agreements to which it is party and to incur and perform the
obligations provided for therein.
3. Each Opinion Agreement has been duly authorized, executed and delivered by
each Parent Company thereto and constitute the valid and legally binding
obligation of each Parent Company thereto, enforceable in accordance with
its terms.
4. All authorizations, approvals and consents from and filings and
registrations with, governmental authorities in Japan which are necessary
for the execution, delivery and performance of each Opinion Agreement by
each Parent Company have been obtained and are in full force and effect.
5. There is no provision of law, statute, regulation, rule, order, injunction,
decree, writ or judgment, or the charter or constitutive documents of each
Parent Company, and no provision of any mortgage, indenture, contract or
agreement binding on each Parent Company or affecting any of its respective
properties, which would prohibit, conflict with or in any way prevent the
execution, delivery, or performance by each Parent Company of any of the
Opinion Agreements to which it is a party. Except as provided in the
Opinion Agreements, the execution, delivery and performance of the Opinion
Agreements will not result in the creation or imposition of any lien,
security interest, charge or encumbrance of any nature upon the property of
each Parent Company. The making and performance by the Parent Companies of
the Opinion Agreements do not and will not (i) violate any provision of law
or regulation or any provision of its organizational documents as currently
in effect or (ii) result in the breach of, or constitute a default or
require any consent under any indenture or other agreement or instrument to
which any of the Parent Companies are now a party or by which it or its
properties may now be bound or affected.
(a) Assuming that the Opinion Agreements are executed outside Japan, no
documentary, stamp or similar tax, imposition or charge need to be
paid on any Opinion Agreement in Japan.
(b) No documentary, stamp or similar tax, imposition or charge need be
paid in order to ensure the legality, validity, enforceability or
admissibility in evidence of a Opinion Agreement in Japan.
(c) It is not necessary for the validity or enforceability of the
obligations of the Parent Companies under the Opinion Agreements to
file or register or record the Opinion Agreements in any public office
in Japan.
SAKAI & MIMURA
6. The Opinion Agreements are in proper legal form under the laws of Japan for
enforcement thereof against the Parent Companies and it is not necessary,
for the legality, validity, enforceability of or admissibility into
evidence of the Opinion Agreements that it be filed or recorded with any
court or other authority in Japan or that any Opinion Agreement be written,
executed and delivered in Japanese pursuant to the laws of Japan; provided
that items offered into evidence in a legal proceeding in Japan may require
a Japanese translation be attached thereto.
7. The choice of the laws of the State of New York to govern the Opinion
Agreements is a valid choice of law under the laws of Japan, and a court in
Japan would uphold such choice of law, in regard to substantive law issues,
in a suit on such Opinion Agreement in Japan.
8. Under each Opinion Agreement each Parent Company thereto has validly
submitted to the jurisdiction of the State of New York for the purposes
specified therein. A final and conclusive judgment rendered by a State or
Federal court in the State of New York having jurisdiction and venue over
each Parent Company, and which is not subject to appeal and is enforceable
in the United States of America, may be enforced against each Parent
Company in Japan without a review of the merits, provided that the
following requirements under Article 118 of the Code of Civil Procedure of
Japan are met:
(a) The foreign court's jurisdiction is allowed by laws and ordinances or
by treaty;
(b) the defeated party has received service (except for service by
publication of notice or any similar means) of summons or any other
necessary orders to commence procedures or has responded in the action
without receiving service thereof;
(c) the contents of the judgment and the procedures of the litigation are
not contrary to the public order or morals of Japan; and
(d) there is reciprocity.
9. An arbitral award will be enforceable in Japan, pursuant to a request for
and receipt of an enforcement decision made in the competent court in
Japan, unless any one of the following under Article 45 of the Arbitration
Law of Japan is applicable (with respect to the grounds described in items
(a) through (g), this shall be limited to where either of the parties has
proven the existence of the ground in question):
(a) the arbitration agreement is not valid due to limits to a party's
capacity;
(b) the arbitration agreement is not valid for a reason other than limits
to a party's capacity under the law to which the parties have agreed
to subject it (or failing any indication thereon, the law of the
country under which the place of arbitration falls);
SAKAI & MIMURA
(c) a party was not given notice as required by the provisions of the law
of the country under which the place of arbitration falls (or where
the parties have otherwise reached an agreement on matters concerning
the provisions of the law that do not relate to public policy, such
agreement) in the proceedings to appoint arbitrators or in the
arbitral proceedings;
(d) a party was unable to defend itself in the arbitral proceedings;
(e) the arbitral award contains decisions on matters beyond the scope of
the arbitration agreement or the claims in the arbitral proceedings;
(f) the composition of an arbitral tribunal or the arbitral proceedings
were not in accordance with the provisions of the law of the country
under which the place of arbitration falls (or where the parties have
otherwise reached an agreement on matters concerning the provisions of
the law that do not relate to public policy, such agreement);
(g) according to the law of the country under which the place of
arbitration falls (or where the law of a country other than the
country under which the place of arbitration falls was applied to the
arbitral proceedings, such country), the arbitral award has not yet
become binding, or the arbitral award has been set aside or suspended
by a court of such country;
(h) the claims in the arbitral proceedings relate to a dispute that cannot
constitute the subject of an arbitration agreement under the laws of
Japan; or
(i) the content of the arbitral award would be contrary to the public
policy or good morals of Japan.
10. Assuming that CT Corporation System has, under the laws of the State of New
York been duly appointed by the Parent Companies as their agent to receive
service of process in the State of New York, service of process made on CT
Corporation System pursuant to such appointment will, under the laws of
Japan, be considered served personally on the Parent Companies and satisfy
the condition of Article 118 of the Code of Civil Procedure of Japan in
regard to a judgment rendered by a New York court.
11. There is no action, suit or proceeding pending against or affecting either
Parent Company or any of their properties in any court or before any
governmental authority in Japan and no existing default by either Parent
Company under any applicable order, or injunction or decree of any court or
governmental authority in Japan, in each case that could be expected to
have a material adverse effect on or that questions the legality, validity
or enforceability of any of the Opinion Agreements.
12. Neither of the Parent Companies nor any of their assets have any immunity
(or rights to claim that they have immunity) from jurisdiction of any court
or from any legal process (whether through service, notice, attachment
prior to
SAKAI & MIMURA
judgment, attachment in aid of execution, execution or otherwise).
The opinions expressed above are subject to the following qualifications and
limitations:
(i) Nothing in this Opinion should be taken as indicating that the remedies of
specific performance or injunction (being in some instances discretionary
remedies of the court) would necessarily be available with respect to any
particular provision of the Opinion Agreements in any particular instance.
(ii) Enforcement of the Opinion Agreements against Parent Companies will be
subject to (i) applicable bankruptcy, insolvency, moratorium, or other
similar laws affecting the enforcement of creditor rights generally, (ii)
laws imposing duties to act in good faith or in a commercially reasonable
manner, and (iii) laws respecting or affecting the procedural or remedial
provisions of the Agreement.
This Opinion is provided solely in connection with the Opinion Agreements, in
respect of the matters specifically set out above, and is not to be used in
relation to any other matter or fact situation.
Sincerely yours,
SAKAI & MIMURA
Xxxxxxxx Xxxxx
Managing Partner
Appendix I-13
Form of Opinion of Xxxxx & Overy LLP
APPENDIX I-13
To: XXXXX & XXXXX LLP
CALYON New York Branch, Apollolaan 15
As Administrative Agent under the 1077 AB Amsterdam The Netherlands
Master Participation Agreement
[address to follow]
XX Xxx 00000
Xxxxx Bank for International 1070 AK Amsterdam The Netherlands
Cooperation,
4-1, Ohtemachi 1 - Chome Tel x00 00 000 0000
Chiyoda-ku Fax x00 00 000 0000
Tokyo 000 - 0000
Xxxxx
Sumitomo Mitsui Xxxxxxx Xxxxxxxxxxx,
0-0, Xxxxxxxxx 0 - Xxxxx
Xxxxxxx-xx
Xxxxx
Xxxxx
The Bank of Tokyo-Mitsubishi, Ltd,
0-0-0, Xxxxxxxxxx, Xxxxxxx-xx
Xxxxx
Xxxxx
KfW,
[address to follow]
CALYON New York Branch,
The Royal Bank of Scotland plc,
[address to follow]
The Bank of Nova Scotia,
[address to follow]
Mizuho Corporate Bank, Ltd.,
[address to follow]
Amsterdam, [__] September, 2005
Our ref 10023-14195 AMBA:227861.3
VDS/XXXX
RE: OPINIONS TO BE PROVIDED IN CONNECTION WITH SMM CERRO VERDE NETHERLANDS B.V.
AND SUMMIT GLOBAL MANAGEMENT II B.V. FOR THE CERRO VERDE PROJECT FINANCING
Xxxxx & Xxxxx LLP is a limited liability partnership registered in England and
Wales with registered number OC306763. A list of the members of Xxxxx & Overy
LLP and their professional qualifications is open to inspection at our London
office, Xxx Xxx Xxxxxx, Xxxxxx XX0X 0XX, and at our Amsterdam office. Any
reference to a partner or compagnon in connection with Xxxxx & Xxxxx LLP should
be regarded as a reference to a member, consultant or employee of Xxxxx & Overy
LLP.
Xxxxx & Xxxxx LLP or an affiliated undertaking has an office in each of:
Amsterdam, Antwerp, Bangkok, Beijing, Bratislava, Brussels, Budapest, Dubai,
Frankfurt, Hamburg, Hong Kong, London, Luxembourg, Madrid, Milan, Moscow, New
York, Paris, Prague, Rome, Shanghai, Singapore, Tokyo, Turin and Warsaw.
Dear Sirs, Madam,
1. We have acted as legal advisers in the Netherlands to SMM Cerro Verde
Netherlands B.V. (the SUMITOMO PARTICIPANT) and to Summit Global Management
II B.V. (SGM and together with the Sumitomo Participant referred to as the
DUTCH COMPANIES and each a DUTCH COMPANY), (i) in connection with the
Sumitomo Participant entering into the Transfer Restrictions Agreement
dated September [_] 2005 between the Sumitomo Participant and the other
parties thereto as mentioned therein (the TRANSFER RESTRICTIONS AGREEMENT),
(ii) the Dutch Companies entering into the Consent and Agreement dated
September [_] 2005 between the Dutch Companies and the other parties
thereto as mentioned therein (the CONSENT), and (iii) the Sumitomo
Participant entering into the Share Pledge Agreement dated September [__]
2005 between the Sumitomo Participant and the other parties thereto as
mentioned therein (the SHARE PLEDGE). The Transfer Restrictions Agreement,
the Consent and the Share Pledge are herein collectively referred to as the
AGREEMENTS and individually as an AGREEMENT. Capitalised terms defined in
the Agreements have the same meaning when used in this opinion unless the
context requires otherwise.
2. We have examined:
(a) a copy of the executed Agreements;
(b) a copy of an excerpt of the registration of the Sumitomo Participant
in the relevant Trade Register (the TRADE REGISTER) dated 20 September
2005 and confirmed by telephone by the Trade Register to be correct on
the date hereof (the SUMITOMO PARTICIPANT EXCERPT);
(c) a copy of the articles of association (statuten) of the Sumitomo
Participant dated 23 May 2005 as, according to the Excerpt, deposited
with the Trade Register as being in force on the date hereof (the
SUMITOMO PARTICIPANT ARTICLES);
(d) a copy of the deed of incorporation (akte van oprichting) of the
Sumitomo Participant dated 21 April 2005 (the SUMITOMO PARTICIPANT
DEED OF INCORPORATION);
(e) a copy of an excerpt of the registration of SGM in the relevant Trade
Register (the TRADE REGISTER) dated 20 September 2005 and confirmed by
telephone by the Trade Register to be correct on the date hereof (the
SGM EXCERPT and together with the Sumitomo Participant Excerpt the
EXCERPTS);
(f) a copy of the articles of association (statuten) of SGM dated 30 March
2004 as, according to the Excerpt, deposited with the Trade Register
as being in force on the date hereof (the SGM ARTICLES and together
with the Sumitomo Participant Articles the ARTICLES);
(g) a copy of the deed of incorporation (akte van oprichting) of SGM dated
24 April 2003 (the SGM DEED OF INCORPORATION and together with the
Sumitomo Participant Deed of Incorporation the DEEDS OF INCORPORATION
and each a DEED OF INCORPORATION);
(h) a copy of a written resolution of the management board (bestuur) of
the Sumitomo Participant dated [_] (the SUMITOMO PARTICIPANT BOARD
RESOLUTION);
(i) a copy of a written resolution of the management board (bestuur) of
SGM dated [_] (the SGM BOARD RESOLUTION);
(j) a copy of the executed power of attorney issued by the Sumitomo
Participant dated [_] authorising G.A.J.S. Xxxxx, J.P.C. Cunza, E.L.L.
Xxxxxxxx and L.E.P. Xxxxxxxx acting individually to execute and
deliver the Share Pledge Agreement on behalf of the Sumitomo
Participant (the SHARE PLEDGE POWER OF ATTORNEY);
We have not examined any other agreement, deed or document entered into by
or affecting the Dutch Companies or any other corporate records of the
Dutch companies and have not made any other inquiry concerning it.
3. We assume:
(a) the genuineness of all signatures;
(b) the authenticity and completeness of all documents submitted to us as
originals and the completeness and conformity to originals of all
documents submitted to us as copies;
(c) that the documents referred to in paragraph 2 above (other than the
Agreements) were at their date, and have through the date hereof
remained, accurate and in full force and effect and that the
Agreements have through the date hereof remained in existence in the
form in which they were presented to us;
(d) that each Deed of Incorporation is a valid notarial deed (authentieke
akte), the contents thereof were correct and complete as of the date
thereof and there were no defects in the incorporation of each Dutch
Company (not appearing on the face of each Deed of Incorporation) on
the basis of which a court might dissolve each Dutch Company or deem
it never to have existed;
(e) that each Dutch Company has not been dissolved (ontbonden), granted a
moratorium (surseance verleend) or declared bankrupt (failliet
verklaard) (although not constituting conclusive evidence thereof,
this assumption is supported by (i) the contents of the Excerpts and
(ii) information obtained by telephone today from the insolvency
office (afdeling insolventie) of the court in Amsterdam);
2
(f) that the general meeting of shareholders of the Sumitomo Participant
has not submitted any resolutions of the management board to its
approval pursuant to Article 16(1) of the Sumitomo Participant
Articles and that the general meeting of shareholders of SGM has not
submitted any resolutions of the management board to its approval
pursuant to Article 11(4) of the SGM Articles; we note that if any
such approval were required but not given, this will not affect the
legality, validity, binding effect or enforceability of the Agreements
as executed by the Dutch Companies;
(g) that the Share Pledge Power of Attorney has been executed and
delivered on behalf of the Sumitomo Participant by Xxxxxx Xxx and that
the Share Pledge has been executed and delivered by any one of the
following: G. A. J. S. Xxxxx, J. P. C. Cunza, E. L. L. Xxxxxxxx and L.
E. P. Xxxxxxxx;
(h) that the Agreements other than the Share Pledge have been executed and
delivered on behalf of the Sumitomo Participant by [_] and on behalf
of SGM by [_];
(i) that the Agreements constitute legal, valid, binding and enforceable
obligations of the Dutch Companies that are a party thereto in
accordance with their terms under the law by which they are expressed
to be governed;
(j) that, insofar as any obligation of any Dutch Company under the
Agreements falls to be performed in, or is otherwise affected by the
laws of, any jurisdiction other than the laws of the Netherlands, its
performance would not be illegal or ineffective under the laws of that
jurisdiction;
(k) that any law, other than Dutch law, which may apply to the Share
Pledge Power of Attorney or to the Agreements (or the transactions
contemplated thereby) would not be such as to affect any conclusion
stated in this opinion;
(l) that each security right created by the Share Pledge has been validly
created and can be enforced against each asset described therein as
security for the payment and performance of the obligations and
liabilities expressed to be secured thereby under the laws by which it
is expressed to be governed;
(m) that at the time a security right becomes effective pursuant to the
Share Pledge, title to each asset which is made subject to that
security right is held by the Sumitomo Participant;
(n) that each Dutch Company has its centre of main interests within the
meaning of the Council Regulation (EC) No. 1346/2000 of 29 May 2000 on
Insolvency Procedures (the REGULATION) in the Netherlands and that it
has not been subjected to any one or more of the insolvency and
winding-up proceedings listed in Annex A or Annex B to the Regulation
in any EU Member State, other than the Netherlands, on the date of
execution of the Agreements;
3
4. This opinion is limited to the laws of the Netherlands currently in force
(unpublished case law not included) excluding tax law (except as
specifically referred to herein), the laws of the EU (insofar as not
implemented in Dutch law or directly applicable in the Netherlands) and
competition or procurement laws.
We express no opinion as to matters of fact. We assume that there are no
facts not disclosed to us which would affect the conclusions in this
opinion.
This opinion is limited to the Agreements and the matters contemplated
therein and does not relate to any other agreement or matter. Nothing in
this opinion should be taken as expressing an opinion in respect of any
representation, warranty or other statement contained in the Agreements.
5. Based on the foregoing and subject to the qualifications set out below, we
are of the opinion that:
(a) STATUS
Each Dutch Company is duly incorporated and validly existing as a
private company with limited liability (besloten vennootschap met
beperkte aansprakelijkheid) under Dutch law.
(b) POWERS AND AUTHORITY
Each Dutch Company has the corporate power and authority to enter
into, incur and perform the obligations expressed to be assumed by it
under each Agreement to which it is a party and has taken all
necessary corporate action to authorise the execution and delivery of
such Agreement. The Sumitomo Participant has all requisite power and
authority to own its assets and conduct its business as set out in the
objects and purposes clause of the Sumitomo Participant Articles. The
Sumitomo Participant has the corporate power and authority to issue
the Share Pledge Power of Attorney and has taken all necessary
corporate action to authorise the execution and delivery of such Share
Pledge Power of Attorney.
(c) DUE EXECUTION
Each Agreement has been duly authorised, executed and delivered by the
Dutch Company that is a party thereto. The Share Pledge Power of
Attorney has been duly authorised, executed and delivered by the
Sumitomo Participant.
(d) APPLICATION OF PROPER LAW
The choice of law as contained in the Agreements would be upheld as a
valid choice of law by Dutch courts and applied by those courts in
proceedings in relation to the Agreements as the governing law
thereof, except (i) to the extent that any term of an Agreement or any
provision of the law applicable to that Agreement is manifestly
incompatible with Dutch public policy and (ii) that
4
mandatory provisions of Dutch law may be given effect if and insofar
as, under Dutch law those provisions must be applied irrespective of
the chosen law.
(e) LEGAL VALIDITY
Subject to the opinion given under (d) above, each of the Agreements
constitutes a legal, valid, binding and enforceable obligation of each
Dutch Company in accordance with its terms and each Agreement is in
proper form for its enforcement in Dutch courts.
(f) NON-CONFLICT WITH LAWS
The execution by each Dutch Company of each Agreement to which it is a
party does not and its performance of such Agreement will not (i)
conflict with or result in a violation of any provision of the
relevant Articles or the provisions of any published law, rule or
regulation of general application of the Netherlands, and (ii) result
in, or require the creation or imposition of, any lien, charge or
encumbrance (other than under the Agreements) on any of its properties
or revenues by operation of any law, rule or regulation referred to
(i) above.
(g) CONSENTS
No authorisations, approvals, consents, licences, exemptions, filings,
registrations, notarisations or other requirements of governmental,
judicial or public bodies or authorities of or in the Netherlands are
required in connection with each Dutch Company's entry into or
performance of the Agreements to which it is a party or for its
validity or enforceability against the relevant Dutch Company, except
for notice requirements to the Dutch Central Bank pursuant to the Act
on Foreign Financial Relations (Wet financiele betrekkingen
buitenland) 1994 and regulations promulgated thereunder. Failure to
observe these requirements does not affect the validity or
enforceability of the Agreements.
(h) PARI PASSU RANKING
The obligations of each Dutch Company under the Agreements to which it
is a party will rank at least pari passu with all its other unsecured
obligations other than those preferred by statute, and with the
exception of any rights of set-off or counterclaim which may be
asserted by or against each Dutch Company.
(i) STAMP DUTIES
No stamp or registration fee or duty or similar taxes or charges are
payable in the Netherlands in connection with the execution or
enforcement of the Agreements.
(j) NO IMMUNITY
5
Each Dutch Company is subject to civil and commercial law with respect
to its obligations under the Agreements to which it is a party, the
entry into and performance of the Agreements to which it is a party by
the relevant Dutch Company constitute private and commercial acts and
neither of the Dutch Companies nor any of its assets located in the
Netherlands enjoys any right of immunity from set-off, suit,
attachment prior to judgment, execution or other legal process in
respect of its obligations under the Agreements to which it is a
party.
(k) SUBMISSION TO JURISDICTION
The submission to jurisdiction by the Dutch Companies contained in the
Agreements is valid and binding on the Dutch Companies and not subject
to revocation. This submission does not preclude that claims for
provisional measures in summary proceedings may be brought before a
competent Dutch court.
(l) ENFORCEMENT OF FOREIGN JUDGMENTS
There is no treaty between the United States of America and the
Netherlands regarding the recognition and enforcement of judicial
decisions. There is also no such treaty between Peru and the
Netherlands. In the absence of such treaties,, a judgement rendered by
a court in New York County in the City of New York or by a court in
Xxxx-Xxxxxxx will not be enforced by Dutch courts. In order to obtain
a judgement which is enforceable in the Netherlands, the claim must be
relitigated before a competent Dutch court. If and to the extent that
the Dutch court finds that the jurisdiction of the relevant foreign
courts has been based on grounds which are internationally acceptable
and that proper legal procedures have been observed, the Dutch court
would, in principle, give binding effect to the final judgement of the
relevant foreign courts unless such judgement contravenes principles
of Dutch public policy.
(m) NO RESIDENCY
It is not a condition to the ability of any Secured Party to bring a
legal action in a Dutch court against the Dutch Companies in respect
of any Agreement that such Secured Party has complied with any
requirements in the Netherlands necessary to enable it to do or carry
on business in the Netherlands. The Secured Parties are not and will
not be deemed resident, carrying on business, subject to taxation as
such or subject to environmental liability in the Netherlands solely
by reason of the execution, delivery, performance or enforcement of
any of the Agreements to which they are a party.
(n) APPOINTMENT OF AGENT
6
Assuming that CT Corporation System has, under the laws of the State
of New York, been duly appointed by the Dutch Companies as their agent
to receive service of process in the State of New York, service of
process made on CT Corporation System pursuant to such appointment
will, under the laws of the Netherlands, be considered served
personally on the Dutch Companies for the purpose of proceedings in
the State of New York if such service of process has been validly made
under the law of the State of New York.
(o) PROPER FORM
Each of the Agreements is in proper legal form under the laws of the
Netherlands for the enforcement thereof in accordance with its terms
against the Dutch Companies and, to ensure the legality,
enforceability and admissibility in evidence of each of the Agreements
in the Netherlands, it is not necessary that any of the Agreements or
any other documents be filed or recorded with any court or other
authority in the Netherlands or that any stamp or similar tax be paid
on or in respect of any of the Agreements or that any of the
Agreements be written, executed and delivered in Dutch pursuant to the
laws of the Netherlands.
6. This opinion is subject to the following qualifications:
(a) This opinion is limited by all bankruptcy (faillissement), moratorium
(surseance van betaling), fraudulent conveyance (Actio Pauliana) or
similar laws affecting creditors' rights generally, provided that the
security rights created by the Share Pledge Agreement will not be
affected by a bankruptcy or moratorium of the Sumitomo Participant
except as set forth in qualifications (b), (c) and (d) below.
(b) Under the Dutch Bankruptcy Code, a receiver in bankruptcy can require
the holder of a security right in an asset which forms part of the
bankrupt estate to foreclose such security right within a reasonable
period of time. If that holder fails to do so, the receiver may sell
the assets himself, in the manner provided for in the Dutch Bankruptcy
Code. In the latter case, the holder of the security right concerned
may only realise its claim by submission thereof in the bankruptcy and
will receive payment, if any, only through distribution of the
proceeds of that sale less the holder's share in the bankruptcy costs
and subject to the satisfaction of higher ranking claims of creditors.
Furthermore, under the Dutch Bankruptcy Code, foreclosure by the
holder of a security right in an asset which forms part of or which is
in the control of the bankrupt estate or which is owned or controlled
by a company which has been granted a moratorium, as the case may be,
may be prevented by the bankruptcy judge (in case of bankruptcy) or by
the court (in case of a moratorium), in each case for a maximum period
of four months.
(c) The validity of the Share Pledge Agreement may be affected by the
provisions of section 42 of the Dutch Bankruptcy Code. These
provisions grant to the receiver in bankruptcy of a company the right
to challenge the validity of a security right granted by that company
if (i) that security right is granted by the company
7
without a legal obligation to do so, (ii) the rights of the creditors
(including future creditors) are thereby prejudiced and (iii) there is
knowledge on the part of the company and the party to which or for
whose benefit the security right is granted that the rights of the
creditors would be prejudiced thereby).
(d) Under Dutch bankruptcy law, assets that are acquired or come into
existence after bankruptcy or moratorium of the Sumitomo Participant,
may not be subject to the security rights created by the Share Pledge
Agreement and will therefore form part of the bankrupt estate. A right
that is exercisable or a receivable that becomes due and payable after
bankruptcy or moratorium will only be deemed to exist prior to the
bankruptcy or moratorium if it is not subject to an act of the
creditor or debtor thereof.
(e) As used in this opinion, the term ENFORCEABLE means that the
obligations referred to are of a type enforced by Dutch courts. It is
not certain, however, that each such obligation will be enforced in
accordance with its terms in every circumstance, the enforcement being
subject, inter alia, to the nature of the available remedies. We do
not express any opinion as to whether specific performance or
injunctive relief would be available in respect of any obligations of
each Dutch Company under the Agreements to which it is a party.
(f) The enforcement in the Netherlands of the Agreements and foreign
judgments will be subject to the rules of civil procedure as applied
by Dutch courts.
(g) A Dutch court may decline jurisdiction if concurrent proceedings are
being brought elsewhere.
(h) Under Dutch law, each power of attorney (volmacht) or mandate
(lastgeving), whether or not irrevocable, granted by each Dutch
Company in the Agreements, will terminate by force of law and without
notice, upon bankruptcy of each Dutch Company and cease to have effect
upon each Dutch Company having been granted a moratorium. The
foregoing applies to any appointment of a service of process agent by
the Dutch Companies.
(i) Generally with respect to the enforcement by Dutch courts of security
rights created under a law other than Dutch law (hereafter to be
referred too as FOREIGN SECURITY RIGHTS), there is no conclusive case
law in the Netherlands. The foreclosure and ranking of security rights
and preferred rights in the Netherlands will be subject to Dutch law
which has a fixed system and mandatory ranking of those rights.
Provided that a foreign security right has been validly created and is
enforceable under the law by which it is expressed to be governed and
complies with the Dutch conflict of laws rules as set out below and
subject to (i) the exceptions to the validity of a choice of law as
set forth in our opinion contained in paragraph 5, sub-paragraph (d),
and (ii) the other qualifications contained in this opinion,
8
that foreign security right will be recognised in the Netherlands. If
recognised, the foreign security right will be enforced, and have the
same ranking, as the Dutch security right which, in content and
purpose, most closely resembles it. This means that the secured party
may not have more rights than it would have had if Dutch law had
governed the security right concerned. We therefore do not opine on
the enforceability in the Netherlands of the remedies afforded to the
secured party and the powers and discretions awarded to a receiver, if
any, in respect of a foreign security right under the law governing
that right.
Under Dutch conflict of laws rules a security right in a registered
share in a company must constitute a legal, valid, binding and
enforceable security right under the laws of the jurisdiction under
which that company is incorporated.
7. In this opinion, Dutch legal concepts are expressed in English terms and
not in their original Dutch terms. The concepts concerned may not always be
identical to the concepts described by the English terms as such terms may
be understood under the laws of other jurisdictions. This opinion is given
on the express basis, accepted by each person who is entitled to rely on
it, that this opinion and all rights, obligations or liability in relation
to it are governed by Dutch law and that any action or claim in relation to
it can only be brought exclusively before the courts of Amsterdam, the
Netherlands.
8. This opinion is given exclusively in connection with the Agreements and for
no other purpose. This opinion is given for the sole benefit of its
addressees and may not be relied upon by any other person without our prior
written consent.
Yours faithfully,
------------------------------------
Xxxxx & Xxxxx
9
Appendix I-14
Form of Opinion of Estudio Xxxxxxx Xxxxxx Xxxxx, Abogados
APPENDIX I-14
ESTUDIO
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ABOGADOS
XXXXXXXXX XXXXXXX XXXXXX XXXXX XXXXXXX XXXXXX XXXXX
XXXXX XXXXXXXXX XXXXXXXX (1902 - 1997)
XXXX XXXXXX XXXXXXX XXXXX
XXXXXXX GASTANETA ALAYZA AV. EL XXXXXXX No 380
XXXX XXXXXXXXX XXXXXX XXXX 00, XXXX
XXXXX XXXXXXXXX XXXXXX TELEFS.: (00-0) 000-0000 000-0000
XXXXXX XXXXXXXXX XXXXXXXX XX XXXXXXXX FAX: (00-0) 000-0000 440-6393
XXXXXXX XXXXXXXX XXXXXXXX DEL RIEGO xxxxxxxxxx@xxxxxxxxxxx.xxx.xx
DIEGO CALMET XXXXXX xxx.xxxxxxxxxxx.xxx.xx
XXXXXXX XXXXXXXX XXXXX
XXXXX XXXXXX XXXXXX MEMBER OF MERITAS
XXXX XXXXX XXXXXXX XXXXX
XXXXX XXXXX XXXXXXXXX
XXXXXXX XXXXXXXXX XXXX
XXXXX GRISOLLE FONTANA
XXXXXXX XXXXXXXX XXXXXXXXXXX
XXXXXXX XXXXX XXXXXXX
XXXXX XXXXXXX XXXX
[__________________], 2005.
To: Japan Bank for International Cooperation
KfW
CALYON New York Branch
The Royal Bank of Scotland plc
The Bank of Nova Scotia
Mizuho Corporate Bank, Ltd.
Sumitomo Mitsui Banking Corporation
The Bank of Tokyo-Mitsubishi
Ladies and Gentlemen:
We have acted as Peruvian counsel to Compania de Minas Buenaventura S.A.A.
("Buenaventura") in connection with (i) the Completion Guarantee dated as of
September [30], 2005 (the "Completion Guarantee") among Sumitomo Metal Mining
Co., Ltd. ("SMM"), Buenaventura, Xxxxxx Dodge Corporation ("PDC"), Japan Bank
for International Cooperation ("JBIC"), Sumitomo Mitsui Banking Corporation
("Sumitomo Mitsui"), The Bank of Tokyo-Mitsubishi, Ltd. ("BOT-M"), KfW, CALYON
New York Branch ("CALYON"), The Royal Bank of Scotland plc ("RBS"), The Bank of
Nova Scotia ("Scotia Capital") and Mizuho Corporate Bank, Ltd. ("Mizuho"); (ii)
the Share Pledge Agreement dated as of September 30, 2005 (the "Share Pledge
Agreement")
ESTUDIO
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ABOGADOS
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among SMM Cerro Verde Netherlands B.V. ("Sumitomo"), Buenaventura, Cyprus Climax
Metals Company ("Cyprus") and Citibank del Peru S.A. ("Citibank-Peru"); (iii)
the Transfer Restrictions Agreement dated as of September 30, 2005 (the
"Transfer Restrictions Agreement") among Sumitomo, Buenaventura, Cyprus, SMM,
SC, PDC, JBIC, Sumitomo Mitsui, BOT-M, KfW, CALYON, RBS, Scotia Capital and
Mizuho; (iv) the Shareholders Agreement dated as of June 1, 2005 (the
"Shareholders Agreement") among Sumitomo, SMM, SC, Summit Global Management B.V.
("Summit"), Buenaventura, Cyprus, PCD and Sociedad Minera Cerro Verdi S.A.A.
("Cerro Verde"); and (v) the Consent and Agreement dated as of September 30,
2005 (the "Consent") among Sumitomo, SMM, SC, Summit, Buenaventura, Cyprus, PCD
and Cerro Verde. The Completion Guarantee, the Share Pledge Agreement, the
Shareholders Agreement, the Consent and the Transfer Restrictions Agreement are
hereinafter called, jointly, the "Financing Agreements". Capitalized terms used
herein and not otherwise defined herein, shall have the meanings assigned to
such terms in the Completion Guarantee.
In connection with the opinions hereinafter expressed, we have examined
originals or copies, whether certified or not, of such all public and corporate
records, resolutions, certificates and other documents and approvals of
Buenaventura as we have considered necessary or appropriate in rendering this
opinion.
In our examination, we have assumed the legal capacity of all individuals
executing the Financing Agreements, the genuineness of all signatures and the
conformity with authentic original documents of all documents submitted to us as
copies. When relevant facts were not independently established, we have relied
upon representations made in or pursuant to the Financing Agreements.
In giving the opinions below, we have further assumed (without
investigation on our part):
(i) the due organization and valid existence under the laws of its
jurisdiction of incorporation of each of the parties to the Financing
Agreements, except Buenaventura;
(ii) each of the parties to the Financing Agreements, other than
Buenaventura, has full power and authority to execute and deliver the
Financing Agreements; and
(iii) the execution and delivery of the Financing Agreements and the
performance by the parties thereto, other than Buenaventura, of their
obligations thereunder have been duly authorized by all requisite
action and the Financing Agreements are valid, binding and enforceable
under
ESTUDIO
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ABOGADOS
-3-
the laws of each jurisdiction in which any obligations thereunder are
to be performed or in which any party thereto has been formed or
organized.
Based upon the foregoing, having regard to legal considerations we deem
relevant and subject to the qualifications, limitations and assumptions set
forth herein, we are of the opinion that insofar as the laws of Peru are
concerned:
(1) Buenaventura is a sociedad anonima abierta duly organized, validly
existing and in good standing under the laws of Peru which has all
requisite power and authority to own its property and to conduct its
businesses as it is currently being conducted.
(2) Buenaventura has full power and authority to (i) enter into each of
the Financing Agreements, (ii) incur and perform the obligations
therein contained and (iii) grant to the Secured Parties the security
interests in its property purported to be covered by the Share Pledge
Agreement.
(3) There is no provision of any treaty, law, statute, regulation, rule,
order or decree in or of Peru or any political subdivision thereof,
nor award, decree or judgment of any court or governmental authority
of competent jurisdiction to which Buenaventura is subject, and no
provision of the organizational deed and bylaws of Buenaventura, (i)
which would prohibit, conflict with or in any way prevent the
execution, delivery or performance by Buenaventura of any of the
Financing Agreements or which would result in the creation or
imposition under the laws of Peru of any lien, security interest,
charge or encumbrance of any nature upon any property of Buenaventura
(except those created pursuant to the Share Pledge Agreement), (ii)
that violate or conflict with, constitute (with notice or lapse of
time, or both) a default under, or result in a breach of, any
indenture, mortgage, lien, material agreement or other material
contracts to which Buenaventura is a party or (iii) that violate or
result in a breach of any of the terms, conditions or provisions or
any order of any court arbitrator or governmental authority or
regulatory body or Peru or contravene any law or regulation of Peru;
except for application of Article 254 of the General Corporations Law
(Ley General de Sociedades No 26887) under which any agreement
regarding restrictions to the transfer of shares issued by a company
organized as a sociedad anonima abierta will not be enforceable
against such issuer.
(4) Each of the Financing Agreements has been duly authorized, executed
and delivered by Buenaventura and constitutes the valid and legally
binding obligation of Buenaventura enforceable against Buenaventura in
accordance with its terms, except for (i) limitations that may arise
from
ESTUDIO
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ABOGADOS
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bankruptcy, insolvency, moratorium, reorganization, fraudulent
conveyance or other similar laws that affect the rights of creditors
generally; and (ii) application of Article 2049 of the Peruvian Civil
Code under which provisions of a foreign law shall be excluded if they
are incompatible with international public order or good customs.
(5) All authorizations, approvals, consents, filings, registrations and
recordations that are necessary or advisable with respect to (i) the
execution, delivery and performance of each Financing Agreement by
Buenaventura, (ii) the validity or enforceability in Peru of the
obligations of Buenaventura under any of the Financing Agreements and
(iii) the admissibility in evidence in a court in Peru of the
Financing Agreements have been made, and all stamp and other duties or
taxes required to be paid thereon have been paid, except for the
admissibility in evidence of the Completion Guarantee and the Transfer
Restrictions Agreement, where the procedure described in paragraph
(12) below shall have to be followed. No further authorization or
approval of other action by, and no notice to or filing with, any
Peruvian governmental authority or any third party is required under
the laws of Peru for the execution, delivery or performance by
Buenaventura of any of the Financing Agreements.
(6) The Share Pledge Agreement has been executed through a notarized
Peruvian public deed and registered in the Share Pledge Registry
(Matricula de Acciones) of Sociedad Minera Cerro Verde S.A.A or the
Account Annotation (Anotacion en Cuenta) in CAVALI, as the case may
be, creating a valid and fully perfected first ranking security
interest upon the property purported to be covered thereby as security
for the payment in full of the Secured Obligations, subject to no
other equal or prior mortgages, pledges, liens, security interests,
rights of reversion, assignments or other encumbrances or rights of
others whatsoever enforceable in Peru against Buenaventura, any
attaching creditor and third parties, except limitations that may
arise from bankruptcy, insolvency, moratorium, reorganization,
fraudulent conveyance and or other similar laws that affect the rights
of creditors generally. No further approval, consent, authorization,
notarization or other formality in Peru, and no notice to or filing
with any Peruvian governmental authority or any third party, is
required to be obtained or accomplished, and no fee, duty or tax is
required to be paid, for the maintenance, preservation and continued
perfection and first priority nature of such security interest and
lien, or the remedies in respect of the collateral pursuant to the
Share Pledge Agreement, except obligations that are mandatorily
preferred by law, such as labour obligations.
ESTUDIO
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ABOGADOS
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(7) The choice of the law of the State of New York, United States of
America, set forth in Section 9.05 of the Completion Guarantee,
Section 4.03 of the Transfer Restrictions Agreement and Section 5(d)
of the Consent are legal, valid and binding, and will be recognized
and enforced by the Peruvian Courts, provided it is not incompatible
with international public order or good customs.We have no reason to
believe that any of the obligations under the Completion Guarantee,
the Transfer Restrictions Agreement and the Consent are contrary to
international public order or good customs, nor to Peruvian public
policy (including public conduct and good morals) or any international
treaties binding upon Peru or any of the generally accepted principles
of international law.
(8) The submission by Buenaventura to the non-exclusive jurisdiction of
any Federal or State Court located in New York County in the City of
New York, United States of America, set forth in Section 9.13(a) of
the Completion Guarantee, Section 4.08(a) of the Transfer Restrictions
Agreement and Section 5(d) of the Consent with respect to matters
arising under or in connection with the Completion Guarantee, the
Transfer Restrictions Agreement and the Consent is valid and effective
under the laws of Peru, provided that such submission is not an abuse
of law, is not contrary to Peruvian public order and the matter being
submitted to such foreign Court is not subject to the exclusive
jurisdiction of Peruvian Courts. In our opinion, the submission of the
Completion Guarantee, Transfer Restrictions Agreement and the Consent
to the non-exclusive jurisdiction of the Federal or State Courts
located in the New York County in the City of New York is not an abuse
of law, is not contrary to Peruvian public order and the matters
therein referred are not subject to the exclusive jurisdiction of
Peruvian Courts. However, if a claim is filed in a Peruvian Court, it
could be disallowed by such Court upon request of the defendant if a
claim on the same matter has been filed previously in a Federal or
State Court located in the New York County in the city of New York, to
avoid simultaneous or concurrent procedures and the risk of having
different judgments on the same matter.
(9) Assuming that CT Corporation System has, under the laws of the State
of New York, been duly appointed by Buenaventura as its agent to
receive service of process in the State of New York, service of
process made on CT Corporation System pursuant to such appointment
will, under the laws of Peru, be considered served personally on
Buenaventura and satisfy the conditions of Peruvian law.
(10) A final judgment against Buenaventura for the payment of money
obtained in any Court located in the New York County in the City of
New York
ESTUDIO
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ABOGADOS
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("New York"), would be recognized, conclusive and enforceable in the
Courts of Peru without reconsideration on the merits, so long as the
following conditions are met:
(1) if there is any treaty for the enforcement of judgments between Peru
and the United States of America, the provisions of such treaty will apply;
(2) in the absence of such treaty, the reciprocity principle is applicable,
pursuant to which a judgment given by the Courts of New York will be
admissible in the Courts of Peru and will be enforceable thereby, except if
according to the laws of New York as interpreted or applied by the Courts
of New York (i) judgments issued by Peruvian Courts are not admissible in
the Courts of New York or (ii) judgments issued by Peruvian Courts are
subject to reexamination by the Courts of New York, such reciprocity being
presumed under the laws of Peru (3) in either case: (i) such judgment does
not resolve matters which are subject to the exclusive jurisdiction of
Peruvian Courts; (ii) the Courts of New York is the competent jurisdiction
under its own conflict of law rules and general principles of procedural
jurisdiction; (iii) the defendant against whom the enforcement is sought
has been summoned in accordance with the laws of New York and a reasonable
term to appear before the Court as well as the procedural guarantees to
defend his case were granted to the defendant in accordance with the laws
of New York; (iv) the judgment has the authority of res judicata under the
laws of New York; (v) there are no pending legal proceedings between the
same parties related to the same matter, started prior to the filing of the
complaint that concluded with the judgment issued by the Courts of New
York; (vi) such judgment is not incompatible with another judgment meeting
the admissibility and enforceability requirements required by Peruvian law,
previously issued in respect of the same subject matter; and (vii) such
judgment is not contrary to public order and good customs.
(11) The submission by Buenaventura to the arbitration in accordance with
the UNCITRAL Arbitration Rules set forth in Section 9.16(a) of the
Completion Guarantee for the resolution of any dispute on the matters
expressly stated in such Section is valid and effective under the
Arbitration General Law No. 26572 (Ley General de Arbitraje) and shall
be enforceable in Peru without reconsideration of the merits.
(12) To ensure the enforceability or admissibility in evidence in Peru of
any document executed or granted outside Peru, including any document
containing a judgment issued by the Courts of a place outside Peru,
such document must be authenticated before the competent Consul of
Peru and before the Ministry of Foreign Affairs in Peru. In addition,
any document
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ABOGADOS
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written in any language other than Spanish must be officially
translated into Spanish by an official public translator in Peru prior
to its submission for consideration of any Peruvian authority or its
admission as evidence in any Courts of Peru, and such official Spanish
translation would prevail over its original version.
(13) There are no procedural bars to prevent the commencement of a
proceeding against Buenaventura by a party to a Financing Agreement in
a court of competent jurisdiction in Peru, pursuant to the terms of
each Financing Agreement and based upon its obligations under a
Financing Agreement and such courts would be prepared to accept
jurisdiction over any such action or proceeding, except that a court
in Peru may decline to accept jurisdiction over an action or
proceeding based on the principle of forum non conveniens as it is
applied in Peru or based upon proceedings brought on the same cause of
action in another jurisdiction and subject to Section 12.16(a) of the
Master Participation Agreement, Section 9.13(a) of the Completion
Guarantee, Section 4.08(a) of the Transfer Restrictions Agreement,
Section 5 of the Consent and Section 14.2 of the Share Pledge
Agreement.
(14) There are no actions, suits or proceedings including arbitral duly
served against, or to our knowledge (after due inquiry) threatened
against or affecting Buenaventura or any of its assets that could
reasonably be expected to materially and adversely affect its ability
to perform any of its obligations under the Financing Agreements or
that question the legality, validity and enforceability of the
Financing Agreements. Buenaventura is not in default with respect to
any order, judgment or decree of any governmental authority or
regulatory body or any arbitrator in Peru in a manner or to an extent
that could reasonably be expected to have such an effect and there are
no orders, judgments or decrees of any governmental authority,
regulatory body or any arbitrator in Peru outstanding against
Buenaventura or affecting its assets that could reasonably be expected
to materially and adversely affect its ability to perform any of its
obligations under the Financing Agreements.
(15) The obligations of Buenaventura under each of the Financing Agreements
rank pari passu with or senior to, in right of the payment, with all
other unsecured and unsubordinated obligations of Buenaventura, except
obligations that are mandatorily preferred by law.
(16) Buenaventura is subject to civil and commercial law with respect to
its obligations under each of the Financing Agreements, and the making
and performance by it of such Financing Agreements constitute private
and
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ABOGADOS
-8-
commercial acts, rather than governmental or public acts. Neither
Buenaventura nor any of its respective assets or properties has in
Peru any immunity from jurisdiction of any court or from any legal
process in Peru (whether through service, notice, attachment prior to
judgment, attachment in aid of execution, execution or otherwise).
(17) It is not a condition to the ability of any Secured Party to bring a
legal action in the courts of Peru against Buenaventura in respect of
any Financing Agreement that such Secured Party has complied with any
requirements in Peru necessary to enable it to do or carry on business
in Peru. The Secured Parties are not and will not be deemed resident,
carrying on business, subject to taxation as such or subject to
environmental liability in Peru solely by reason of the execution,
delivery, performance or enforcement of any of the Financing
Agreements to which they are a party.
(18) As of the date of this Legal opinion, Buenaventura owns [include
number of shares] of the Borrower, all of which are free and clear
form any pledge, lien or encumbrance, other than the Share Pledge
Agreement and the Transfer Restriction Agreement.
We are attorneys duly qualified to practice law in Peru and we express no
opinion herein as to any laws other than the laws of Peru as in effect on the
date hereof.
This opinion is furnished to you solely in connection with the transactions
described above and may not be relied upon by anyone other than you and your
counsel in connection with such transactions.
Very truly yours,
----------------------------------------
Xxxxxxx Xxxxx Moncloa
APPENDIX II
INSURANCE
(A) Insurance by the Borrower: The Borrower shall procure or cause another
Person to procure at Borrower's own expense and maintain in full force and
effect at all times on and after the Closing Date (unless otherwise
specified below) and continuing throughout the term of this Agreement
(unless otherwise specified below) insurance policies with insurance
companies (i) having a Best Insurance Reports rating of "A-" or better and
an financial size category of "VIII" or higher, or (ii) having a Standard &
Poor's financial strength rating of "BBB+" or higher, or (iii) reasonably
acceptable to the Administrative Agent, or (iv) of sound financial standing
and good repute which does not meet any of above subsections (i), (ii) or
(iii), subject to such insurers not constituting more that 10% of the total
amount at risk on any one policy. Such insurance policies shall contain
limits and coverage provisions sufficient to satisfy the requirements set
forth in each of the Project Documents, but in no event less than the
limits and coverage provisions set forth below. If an insurance company
cannot meet the requirements of the above subsections (i), (ii) or (iv),
the Administrative Agent may require that all or part of the risk be
reinsured and that an agreement be in effect that allows the Borrower or
Senior Facility Lenders direct access to any reinsurers for direct payment
of premiums and losses; provided that, the provisions of any such
reinsurance, including the rights of the Senior Facility Lenders and any
limitation on the rights of the Borrower or Senior Facility Lenders, with
regard to the reinsurers, shall be subject to the approval of the
Administrative Agent (which approval shall not be unreasonably withheld)
and (vi) any such reinsurers shall also be subject to the same financial
approval standards as outlined above in subsections (i), (ii) and (iv).
(1) General Liability Insurance: Liability insurance on an occurrence
basis against claims filed anywhere in the world and occurring
anywhere in the world for the Borrower's liability arising out of
claims for personal injury (including bodily injury and death) and
property damage. Such insurance shall provide coverage for
products-completed operations, contractual liability, independent
contractors and sudden and accidental pollution liability (which may
be written separately on a claims made basis) with a $1,000,000
minimum limit per occurrence for combined bodily injury and property
damage. A maximum deductible or self-insured retention of $100,000 per
occurrence shall be allowed.
(2) Automobile Liability Insurance: Automobile liability insurance for the
Borrower's liability arising out of claims for bodily injury and
property damage covering all owned (if any), leased, non-owned and
hired vehicles of the Borrower, including loading and unloading, with
a $1,000,000 minimum limit per accident for combined bodily injury and
property damage. A
1
maximum deductible or self-insured retention of $100,000 per
occurrence shall be allowed.
(3) Excess Liability Insurance: Excess liability insurance on an
occurrence basis covering claims (on at least a following form basis)
in excess of the underlying insurance described in the foregoing
subsections (1) and (2), with a $74,000,000 minimum limit per
occurrence except for insurance applicable to the Sulfide Project
where a $49,000,000 minimum limit is required.
The amounts of insurance required in the foregoing subsections (1),
(2) and this subsection (3) may be satisfied by Borrower purchasing
coverage in the amounts specified or by any combination of primary and
excess insurance, so long as the total amount of insurance meets the
requirements specified above.
(4) Aircraft Liability Insurance: Aircraft liability insurance if the
Borrower uses an aircraft (fixed wing or helicopter) that is owned,
operated or chartered by the Borrower, for liability arising out of
the operation of such aircraft. The insurance shall be provided for a
combined single limit not less than $15,000,000 each occurrence and
such limit shall apply to bodily injury (including passengers) and
property damage liability. In the event the Borrower charters
aircraft, the foregoing insurance and evidence of insurance may be
furnished by the owner of the aircraft with the Borrower included as
additional insured. In the event that a chartered aircraft hull is
insured, such insurance shall provide for an insurer's waiver of
subrogation in favor of Borrower.
(5) Construction All Risk Insurance: Property damage insurance on an "all
risk" basis covering the Sulfide Project and insuring the Borrower and
Senior Facility Lenders, as their interests may appear, including
coverage against loss or damage from the perils of earth movement
(including but not limited to earthquake, landslide, subsidence and
volcanic eruption), flood, sabotage, windstorm, boiler and machinery
accidents (excluding mobile equipment), strike, riot, civil commotion
and "terrorism". For purposes of this clause "terrorism" shall be
defined as an act, including but not limited to the use of force or
violence and/or the threat thereof, of any person or group(s) of
persons, whether acting alone or on behalf of or in connection with
any organization(s) or governments(s), committed for political,
religious, ideological or similar purposes including the intention to
influence any government and/or to put the public, or any section of
the public, in fear. The terrorism coverage may be insured under a
separate policy.
2
(a) Property Covered: The insurance policy shall provide coverage for
(i) the permanent structures, boilers, machinery, equipment
(excluding construction equipment), facilities, fixtures,
supplies (excluding consumables) and other properties
constituting a part of the Sulfide Project, (ii) free issue items
used in connection with the Sulfide Project, (iii) the inventory
of spare parts to be included in the Sulfide Project, (iv) all
preliminary works, temporary works and interconnection works and
(v) foundations and other property below the surface of the
ground (excluding piles).
(b) Additional Coverages: The insurance policy shall insure (i)
operational and performance testing for a period not less than 90
days, (ii) expediting expenses in an amount not less than 20% of
the loss subject to a maximum of $10,000,000, (iii) off-site
storage with a sub-limit of $10,000,000 and (iv) the removal of
debris with a sub-limit not less than 10 percent of the loss
amount, subject to a maximum of $10,000,000.
(c) Special Clauses: The insurance policy shall include (i) a 72 hour
flood/storm/earthquake clause, (ii) a 50/50 clause, (iii) an
other insurance clause making this insurance primary over any
other insurance, (iv) a currency clause requiring that loss
payments be paid in U.S. Dollars, (v) a clause stating that the
policy shall not be subject to cancellation by the insurer except
for non-payment of premium and (vi) an extension clause allowing
the policy period to be extended up to 3 months without
modification to the terms and conditions of the policy, excluding
premium costs.
(d) Prohibited Exclusions: The insurance policy shall not contain any
(i) coinsurance provisions, (ii) exclusion for loss or damage
resulting from freezing, mechanical breakdown, (iii) exclusion
for property covered under any guarantee or warranty arising out
of an insured peril, or (iv) exclusion for resultant damage
caused by wear and tear, deterioration, normal subsidence,
settling, cracking, expansion or contraction, faulty workmanship,
design or materials.
(e) Sum Insured: The insurance policy shall (i) be on a completed
value form, with no periodic reporting of values, (ii) insure the
Sulfide Project for an amount not less than $600,000,000, (iii)
value losses at replacement cost (excluding mobile equipment
which may be insured on an ACV basis), without deduction for
physical depreciation or obsolescence including custom duties,
taxes and fees, (iv) insure loss or damage from earth movement
and flood with a
3
sub-limit not less than $250,000,000 including Delayed Startup
Coverage, (v) insure terrorism in an amount not less than
$100,000,000 which may be insured under a separate policy and
(vi) insure SRCC perils in an amount not less than $25,000,000.
(f) Deductible: The insurance policy shall have no deductible greater
than 5% of the value at risk at the time of loss for earthquake
(subject to a maximum of $7,500,000) and $500,000 per occurrence
for all other coverage.
(g) Policy Expiration: The insurance policy shall remain in effect
until replaced by operational property damage insurance as
specified in Section (A)(9) below.
(6) Delayed Startup Insurance: Until the date of Start-up of Commercial
Production, delayed startup coverage covering the Sulfide Project and
insuring the Borrower and Senior Facility Lenders, as their interests
may appear, covering loss of income as a result of any loss or damage
insured by Section (5) above resulting in a delay in completion of the
Sulfide Project beyond its anticipated date of completion in an amount
not less than $315,000,000.
Such insurance shall (a) have a deductible of not greater than 60 days
aggregate for all occurrences during the construction period, (b)
include an interim payments clause allowing for the periodic payment
of a claim pending final determination of the full claim amount, (c)
cover loss sustained due to the loss of electrical or water supply in
an amount not less than $5,000,000, and (d) not contain any form of a
coinsurance provision or include a waiver of such provision, however,
this coinsurance provision shall not apply to the "average" clause.
Coverage shall remain in effect until replaced by business
interruption insurance as specified in Section (A)(10) below.
(7) Marine Cargo Insurance: Until the date of Start-up of Commercial
Production, cargo insurance insuring the Borrower and Senior Facility
Lenders, as their interests may appear, on a "warehouse to warehouse"
basis including land, air and marine transit insuring "all risks" of
loss or damage on a replacement cost basis plus freight and insurance
from the time the goods are in the process of being loaded for transit
until they are finally delivered to the Sulfide Project site including
shipment deviation, delay, forced discharge, re-shipment and
transshipment. Such insurance shall (a) include coverage for war,
strikes, theft, pilferage, non-delivery, charges of
4
general average sacrifice or contribution, salvage expenses, temporary
storage in route, consolidation, repackaging, refused and returned
shipments, jettison, washing and loss overboard of containers and
debris removal (b) contain a replacement by air extension clause, a
50/50 clause, a difference in conditions for C.I.F. shipments, an
errors and omissions clause, an import duty clause, a non-vitiation
clause (which shall be satisfied if Section (D)(4) "Separation of
Interests" is satisfied), (c) contain no exclusion for inadequate
packing, and (d) insure for the replacement value of the largest
single shipment plus freight and insurance, subject to a minimum limit
of $30,000,000 per conveyance. Such insurance shall have a maximum
deductible of $25,000 per conveyance.
(8) Marine Cargo Delayed Startup Insurance: Until the Completion Release
Date, delayed startup insurance insuring the Borrower and Senior
Facility Lenders, as their interest may appear, covering loss of
income due to a delay in the completion of the Project arising out of
an event insured by the marine cargo insurance. Such insurance shall
(a) include an interim payments clause allowing for the periodic
payment of a claim pending final determination of the full claim
amount and (b) loss, breakdown or damage to the hull, machinery or
equipment of the vessel or aircraft on which the insured property is
being transported, resulting in a delay in completion of the Sulfide
Project beyond their anticipated date of completion in an amount not
less than $315,000,000. Such insurance shall have a deductible of not
greater than 30 days per occurrence.
(9) Operational Property Damage Insurance: Property damage insurance on an
"all risk" basis, covering the Sulfide Operations (commencing at the
expiration of the construction all risk coverage) and the Current
Operations (commencing as of the Closing Date) (and collectively with
the Sulfide Operations, the "Facility"), insuring the Borrower and
Senior Facility Lenders, as their interests may appear, including
coverage against damage or loss caused by earth movement (including
but not limited to earthquake, sabotage, landslide, subsidence and
volcanic eruption), flood, windstorm, boiler and machinery accidents,
strike, riot, civil commotion and "terrorism". For purposes of this
clause "terrorism" shall be defined as an act, including but not
limited to the use of force or violence and/or the threat thereof, of
any person or group(s) of persons, whether acting alone or on behalf
of or in connection with any organization(s) or governments(s),
committed for political, religious, ideological or similar purposes
including the intention to influence any government and/or to put the
public, or any section of the public, in fear. Terrorism may be
insured under a separate policy.
5
(a) Property Insured: The property damage insurance shall provide
coverage for (i) all real and personal property constituting a
part of the Facility, (ii) the cost of recreating plans, drawings
or any other documents or computer system records, (iii)
electronic equipment and (iv) foundations and other property
below the surface of the ground.
(b) Additional Coverages: The property damage policy shall insure (i)
when needed, insured property prior to its being moved to or from
the Project site and while located away from the Project site,
including ocean marine and air transit coverage (if applicable)
with limits sufficient to insure the full replacement value of
the property or equipment (other than mobile equipment), (ii)
reasonable attorney's fees, engineering and other consulting
costs, and permit fees directly incurred in order to repair or
replace damaged insured property, (iii) increased cost of
construction and loss to undamaged property as the result of
enforcement of building laws or ordinances, (iv) debris removal
and (v) expediting expenses (defined as extraordinary expenses
incurred after an insured loss to make temporary repairs and
expedite the permanent repair of the damaged property in excess
of the business interruption even if such expense does not reduce
the business interruption loss).
(c) Special Clauses: The property damage policy shall include (i) a
72 hour clause for flood, windstorm and earthquakes, (ii) an
unintentional errors and omissions clause, (iii) a requirement
that the insurer pay losses within 60 days after receipt of an
acceptable proof of loss or partial proof of loss, (iv) an other
insurance clause making this insurance primary over any other
insurance (excluding the extended maintenance coverage provided
by the construction all risk policy) and (v)a clause requiring
payment in U.S. dollars.
(d) Sum Insured: The property damage policy shall (i) value property
damage losses at their repair or replacement cost (excluding
mobile equipment which may be insured at ACV), without deduction
for physical depreciation or obsolescence, including custom
duties, taxes and fees and (ii) insure the Facility in an amount
not less than $500,000,000 including the business interruption
coverage, including any improvements, equipment, spare parts and
supplies, without deduction for physical depreciation and/or
obsolescence. For those perils and coverages required to be
insured by this Section (9), sub-limits are allowed only for the
following coverages and subject to the following minimum limits.
6
- Professional fees - $1,000,000
- Undamaged property & building laws - $10,000,000
- Debris removal - lesser of 10% of the loss or $10,000,000
- Expediting expenses - $10,000,000
- Flood - $100,000,000
- Earthquake - $250,000,000
- Terrorism - $100,000,000
- Extra expenses - $100,000,000
- Property in transit - $10,000,000
- Pit walls and haul roads - $25,000,000
- Tailings dam - $25,000,000
(e) Deductibles: As respects this Appendix II the property damage
policy may have deductibles of not greater than $25,000,000 per
occurrence for property damage and business interruption
combined.
(f) Prohibited Exclusions: The property damage policy shall not
contain any (i) coinsurance provision, (ii) exclusion for loss or
damage resulting from freezing, mechanical breakdown, (iii)
exclusion for property covered under any guarantee or warranty
arising out of an insured peril or (iv) exclusion for resultant
damage caused by ordinary wear and tear, gradual deterioration,
normal subsidence, settling cracking, expansion or contraction,
faulty workmanship, design or materials.
(10) Business Interruption Insurance: Business interruption insurance,
covering the Sulfide Project (on or prior to the expiration of the
delayed startup coverage) and the Current Operations (collectively
with the Sulfide Operation the "Facility") insuring the Borrower and
Senior Facility Lenders, as their interests may appear, covering loss
of income sufficient to insure the Borrower's continuing normal
operating expenses including payroll and debt service for a period not
less than 15 months, arising from any loss required to be insured by
the operational property damage insurance section above in an amount
not less than $500,000,000, including the operational property damage
coverage.
Such insurance shall (a) include coverage for electrical or water
service interruption in an amount not less than $10,000,000 and (b)
include a clause allowing interim payments on account pending
finalization of the claim payment. Such insurance shall not contain
any coinsurance clause or include a waiver of such clause.
7
Such insurance shall be subject to a maximum deductible of $25,000,000
per occurrence.
(B) Amendment of Requirements:
(1) Amendment by the Administrative Agent: The Administrative Agent
(acting upon instructions from the Supermajority Facility Lenders) may
at any time recommend amending the minimum insurance requirements and
approved insurance companies of this Appendix II due to (i) new
information not known by the Senior Facility Lenders on the Closing
Date which poses a material risk to the Project or (ii) changed
circumstances after the Closing Date which in the reasonable judgment
of the Administrative Agent renders such coverage materially
inadequate.
The Administrative Agent shall provide notice to the Borrower along
with a report setting forth the reasoning for the proposed amendment.
The Administrative Agent and the Borrower shall negotiate the
recommendation promptly and in good faith. The resultant agreed
amended requirement(s) shall become effective on the next policy
anniversary or renewal date unless otherwise agreed.
(2) Amendment Due To Commercial Unfeasibility: In the event any insurance
or insurance related provisions (including the limits or deductibles
thereof) hereby required to be maintained shall not be reasonably
available and commercially feasible in the commercial insurance
market:
(i) the Borrower shall have the right to request in writing a waiver
from the requirement to maintain such insurance or to comply with
such insurance related provision, which request shall be
accompanied by a written report prepared by the Insurance
Advisor, certifying that such insurance is "not reasonably
available and commercially feasible" (and, in any case where the
required amount is not so available, certifying as to the maximum
amount which is so available) and explaining in detail the basis
for such conclusions;
(ii) the waiver shall be deemed to be granted if the Administrative
Agent acting upon instructions from the Majority Facility Lenders
does not object in writing to such request within 30 Business
Days of receipt of the notice requesting such waiver;
(iii) at any time after the effectiveness of any such waiver, but not
more often than once a year, the Administrative Agent (acting
upon
8
instructions from the Majority Facility Lenders) may request, and
the Borrower shall furnish to the Administrative Agent within
sixty (60) days after such request, supplemental reports
reasonably acceptable to the Administrative Agent from the
Insurance Advisor updating their prior report and reaffirming
such conclusion; and
(iv) any such waiver shall be effective only so long as such insurance
shall not be reasonably available and commercially feasible in
the commercial insurance market.
For purposes of this sub-section, insurance will be considered "not
reasonably available and commercially feasible" if it is obtainable
only at excessive costs which are not justified in terms of the risk
to be insured and is generally not being carried by or applicable to
projects or operations similar to the Sulfide Project or the Current
Operations because of such excessive costs.
(C) Borrower Conditions and Requirements:
(1) Loss Notification: The Borrower shall promptly notify the
Administrative Agent of any single loss or event reasonably likely to
give rise to a claim against an insurer for an amount in excess of
$10,000,000 covered by any insurance policy after application of the
deductible in the policy.
(2) Loss Adjustment and Settlement: A loss under the insurance policies
providing construction all risk, operational property damage, delayed
startup, marine cargo, marine cargo delayed startup or business
interruption, shall be adjusted with the insurance companies,
including the filing in a timely manner of appropriate proceedings, by
the Borrower, who shall consult in good faith with the Administrative
Agent if such loss is in excess of $10,000,000 after application of
the deductible in the policy. In addition the Borrower may in its
reasonable judgment consent to the settlement of any loss, provided
that in the event that the amount of the loss exceeds $35,000,000 the
terms of such settlement is concurred with by the Administrative
Agent.
(3) Compliance With Policy Requirements: The Borrower shall not
intentionally violate or permit to be violated any of the material
conditions, provisions or requirements of any insurance policy
required by this Appendix II, and without prejudice to Section B(2)
above, the Borrower shall use commercially reasonable efforts to
perform, satisfy and comply with, or cause to be performed, satisfied
and complied with, all conditions, provisions and requirements of all
insurance policies.
9
(4) Waiver of Subrogation: The Borrower hereby waives any and every claim
for recovery from the Senior Facility Lenders for any and all loss or
damage covered by any of the insurance policies to be maintained under
this Agreement to the extent that such loss or damage is recovered
under any such policy. If the foregoing waiver will preclude the
assignment of any such claim to the extent of such recovery, by
subrogation (or otherwise), to an insurance company (or other person),
the Borrower shall give written notice of the terms of such waiver to
each insurance company which has issued, or which may issue in the
future, any such policy of insurance (if such notice is required by
the insurance policy) and shall endeavor to cause each such insurance
policy to be properly endorsed by the issuer thereof to, or to
otherwise contain one or more provisions that, prevent the
invalidation of the insurance coverage provided thereby by reason of
such waiver. Multiple Insured Clause (Paragraph 7 deleted) shall apply
under CAR/DSU policy. Waiver of subrogation requirements shall not
apply to the construction liability policy.
(5) Evidence of Insurance: On the Closing Date and on an annual basis
prior to each policy anniversary, the Borrower shall furnish the
Administrative Agent with (1) evidence of insurance evidencing all of
the insurance required by the provisions of this Appendix II. Such
evidence of insurance shall be executed by each insurer or by an
authorized representative of each insurer where it is not practical
for such insurer to execute the evidence of insurance itself. Such
evidence of insurance shall identify the insurer, the type of
insurance, the insurance limits and the policy term and shall
specifically contain the special provisions enumerated for such
insurance required by this Appendix II. Upon request, the Borrower
will promptly furnish the Administrative Agent with copies of all
insurance policies, reinsurance policies, binders and cover notes or
other evidence of such insurance relating to the insurance required to
be maintained by the Borrower.
(6) Reports: On the Closing Date and annually thereafter within 10
business days of the property insurance renewal or anniversary, the
Borrower shall furnish the Administrative Agent with a report of a
broker not directly employed with the Borrower, signed by an officer
of the broker, stating that in the opinion of such broker, the
insurance then carried or to be renewed is in full force and effect
and is in accordance with the terms of this Appendix II and attaching
a schedule of insurance policies required by the provisions of this
Appendix II. The schedule of insurance shall include the name of the
insurance company, policy number, type of insurance, major limits of
liability and expiration date of the insurance policies.
10
In addition the Borrower will advise the Administrative Agent in
writing promptly of (1) failure to maintain insurance in compliance
with the minimum insurance required by this Appendix II and (2) any
default in the payment of any premium and of any other act or omission
on the part of the Borrower which may invalidate or render
unenforceable, in whole or in part, any insurance being maintained by
the Borrower pursuant to this Appendix II.
(D) Insurance Policy Conditions and Requirements
(1) Loss Survey: All policies of insurance required to be maintained
pursuant to this Appendix II, wherein more than one insurer provides
the coverage on any single policy, shall have clause (or a separate
agreement among the insurers) wherein all insurers have agreed upon
the employment of a single firm to survey and investigate all losses
on behalf of the insurers. Where the insurer(s) on any single policy
do not meet the financial rating requirements specified in this
Appendix II, the provisions of this clause shall also apply to all
reinsurers where the reinsurers and insurers will have agreed upon a
firm with authority to survey and investigate losses on behalf of all
insurers and reinsurers.
(2) Policy Cancellation and Change: All policies of insurance or
reinsurance required to be maintained pursuant to this Appendix II
shall be endorsed so that if at any time they are canceled (by any
party including the insured) so as to affect the interests of the
Senior Facility Lenders, such cancellation shall not be effective as
to the Senior Facility Lenders for 60 days (30 days for marine
cargo/DSU), except for non-payment of premium which shall be for 10
days, after notification to the Administrative Agent of written notice
from such insurer of such cancellation or reduction. Where it is
impossible for the Borrower to obtain agreement from insurers for such
notice, an agreement with its insurance broker to provide the notice
will be acceptable.
(3) Miscellaneous Policy Provisions: The portions of the insurance
policies providing the required construction all risk, operational
property damage, delayed startup, marine cargo, marine cargo delayed
startup or business interruption insurance shall (i) not include any
annual or term aggregate limits of liability except for the delayed
startup limit and the perils of flood, earth movement and terrorism,
(ii) have any aggregate limits of liability apply separately with
respect to the Facility excluding flood, (iii) not include a clause
requiring the payment of additional premium to reinstate the limits
after loss (excluding the construction all risk, delayed startup
insurance and the perils of flood, earth movement and terrorism
provided under the operational property and business interruption
insurance), (iv) include the
11
Senior Facility Lenders as additional insureds as their interest may
appear, (v) with the exception of the marine cargo/DSU, CAR and
delayed startup policy, include a clause requiring the insurer to make
final payment on any claim within 60 days after the submission of
proof of loss and its acceptance by the insurer and (vi) shall be
denominated and losses payable in Dollars.
(4) Separation of Interests: All policies shall insure the interests of
the Senior Facility Lenders regardless of any breach or violation by
the Borrower or any other party of warranties, declarations or
conditions contained in such policies, any action or inaction of the
Borrower or others, or any foreclosure relating to the Project or any
change in ownership of all or any portion of the Project. This section
does not apply to the marine cargo survey warranty. This requirement
can be met by the use of a mortgagee clause substantially similar to
form 438BFU or the multi-insured clause. The construction all risk
policy is subject to the multiple insured clause with paragraph 7
deleted.
(5) Liability Insurance Endorsements: All policies of liability insurance
required to be maintained by the Borrower shall be endorsed as
follows:
(a) To name the Senior Facility Lenders as additional insureds;
(b) To provide a severability of interests and/or cross liability
clause or a separation of insureds clause;
(c) Other than the automobile liability insurance, that the insurance
shall be primary and not excess to or contributing with any
insurance or self-insurance maintained by the Senior Facility
Lenders, and
(d) Maintain policies denominated and losses payable in Dollars (to
the extent permitted by Peruvian laws and regulations from time
to time).
(6) Payment of Loss Proceeds: The insurance policies providing
construction all risk, operational property damage, delayed startup,
marine cargo, marine cargo delayed startup or business interruption,
if issued outside of Peru or reinsurance policies if the primary
policies are issued within Peru, shall specify that the proceeds of
such policies shall be payable solely to the Trustee for deposit in
the Proceeds Account. All proceeds paid within Peru from such policies
shall be paid to the Onshore Collateral Agent for deposit into the
Onshore Dollars Account or the Onshore Nuevo Soles Account as
applicable.
12
(E) Failure to Maintain Insurance: In the event the Borrower fails, or fails to
cause the Contractor or the Operator, to take out or maintain the full
insurance coverage required by this Appendix II, the Administrative Agent,
upon 30 days' prior notice (unless the aforementioned insurance would lapse
within such period, in which event notice should be given as soon as
reasonably possible) to the Borrower of any such failure, may (but shall
not be obligated to) take out the required policies of insurance and pay
the premiums on the same. All amounts so advanced thereof by the
Administrative Agent shall become an additional obligation of the Borrower
to the Administrative Agent, and the Borrower shall forthwith pay such
amounts to the Administrative Agent, together with interest thereon at the
Past-Due Rate from the date so advanced.
(F) No Duty of Senior Facility Lenders to Verify or Review: No provision of
this Appendix II or any provision of the Credit Agreement or any Project
Document shall impose on the Senior Facility Lenders any duty or obligation
to verify the existence or adequacy of the insurance coverage maintained by
the Borrower, nor shall the Senior Facility Lenders be responsible for any
representations or warranties made by or on behalf of the Borrower to any
insurance company or underwriter. Any failure on the part of the Senior
Facility Lenders to pursue or obtain the evidence of insurance required by
this Agreement from the Borrower and/or failure of the Senior Facility
Lenders to point out any non-compliance of such evidence of insurance shall
not constitute a waiver of any of the insurance requirements in this
Agreement.
(G) Acceptable Policy Terms and Conditions: The portions of all policies of
insurance required to be maintained pursuant to this Appendix II shall
contain terms and conditions reasonably acceptable to the Administrative
Agent. If the requirements of this Appendix II are satisfied through a
global insurance policy maintained by PDC or any of its Affiliates, the
requirements of this Appendix II shall be required to be satisfied by such
policy only in so far as it relates to the Borrower.
(H) Delayed Effective Date: Notwithstanding the foregoing, until December 1,
2005, the Borrower will not be required to comply with the requirements to
(1) maintain terrorism insurance, (2) have a business interruption
indemnity period of 15 months but instead have an indemnity period of 12
months and (3) have the earthquake aggregate limit apply separately to the
Sulphide Facility.
(I) Delayed Implementation Date: Notwithstanding the foregoing, until the
suspension or termination of the Completion Guarantee for an Event of
Political Force Majeure pursuant to Section 5.01 of the Completion
Guarantee or Section 11.01 of the Master Participation Agreement, the
Borrower will not be required to comply with the payment of loss proceeds
requirement in Section (D)(6) of this
13
Appendix II as it applies to the construction all risk, delayed startup,
marine cargo and marine cargo delayed startup insurance.
14
Appendix III
Form of Annual Budget
SOCIEDAD MINERA CERRO VERDE S.A.A.
BALANCE SHEET
YEAR 2005
(IN THOUSAND U.S. DOLLARS)
PRELIM
2005 JAN-06 FEB-06 MAR-06 APR-06 MAY-06 JUN-06 JUL-06
------ ------ ------ ------ ------ ------ ------ ------
ASSETS
Cash and short-term investments, at
cost
Receivables, net
Inventories
Supplies
Prepaid Expenses
Current Assets
Property, plant and equipment, net
Other Assets
Total Assets
LIABILITIES
Accounts Payable and accrued expenses
Accrued Taxes
Short term-debt
Accrued Interest
Current Liabilities
Dividends payable
Long term-debt
Long term bank debt
Long term bond debt
Deferred Income Taxes
Other liabilities & deferred credits
SHAREHOLDER'S EQUITY
Common and pref. Shares,
Capital in Excess of Par
Reserves
Dividends
Retained earnings, Beginning of period
Transfer to Reserves
Net Income
Total shareholder's equity
Total liabilities and shareholder's
equity
AUG-06 SEP-06 OCT-06 NOV-06 DEC-06 2006 2007 2008
------ ------ ------ ------ ------ ---- ---- ----
ASSETS
Cash and short-term investments, at
cost
Receivables, net
Inventories
Supplies
Prepaid Expenses
Current Assets
Property, plant and equipment, net
Other Assets
Total Assets
LIABILITIES
Accounts Payable and accrued expenses
Accrued Taxes
Short term-debt
Accrued Interest
Current Liabilities
Dividends payable
Long term-debt
Long term bank debt
Long term bond debt
Deferred Income Taxes
Other liabilities & deferred credits
SHAREHOLDER'S EQUITY
Common and pref. Shares,
Capital in Excess of Par
Reserves
Dividends
Retained earnings, Beginning of period
Transfer to Reserves
Net Income
Total shareholder's equity
Total liabilities and shareholder's
equity
1
SOCIEDAD MINERA CERRO VERDE S.A.A.
STATEMENT OF INCOME AND EXPENSES
YEAR 2005
(IN THOUSAND U.S. DOLLARS)
PRELIM
2005 JAN-06 FEB-06 MAR-06 APR-06 MAY-06 JUN-06 JUL-06
------ ------ ------ ------ ------ ------ ------ ------
SALES AND OTHER OPERATING REVENUES
Copper Revenues, cathode
Copper Revenues, concentrate
Silver Revenues
Gold Revenues
Swaps
Eliminations
Swaps Eliminations
OPERATING COST AND EXPENSES
Cost of products sold
Treatment & Refining
Concentrate Shipping & Handling
Swaps Cost of Sales
Depreciation, depletion and
amortization
Selling and general adm.
expenses
OPERATING INCOME
Equity earning (losses)
EARNING FROM OPERATIONS
Interest expense
Capitalized Interest
Miscellaneous income and expense, net
INCOME BEFORE TAXES AND CUMULATIVE
EFFECT OF ACCOUNTING CHANGES
Provision for taxes
Employees participation
Income tax benefit
INCOME BEFORE CUMULATIVE EFFECT OF
ACCOUNTING CHANGES
Minority Interest
Cumulative effect of accounting
changes
NET INCOME
AUG-06 SEP-06 OCT-06 NOV-06 DEC-06 2006 2007 2008
------ ------ ------ ------ ------ ---- ---- ----
SALES AND OTHER OPERATING REVENUES
Copper Revenues, cathode
Copper Revenues, concentrate
Silver Revenues
Gold Revenues
Swaps
Eliminations
Swaps Eliminations
OPERATING COST AND EXPENSES
Cost of products sold
Treatment & Refining
Concentrate Shipping & Handling
Swaps Cost of Sales
Depreciation, depletion and
amortization
Selling and general adm.
expenses
OPERATING INCOME
Equity earning (losses)
EARNING FROM OPERATIONS
Interest expense
Capitalized Interest
Miscellaneous income and expense, net
INCOME BEFORE TAXES AND CUMULATIVE
EFFECT OF ACCOUNTING CHANGES
Provision for taxes
Employees participation
Income tax benefit
INCOME BEFORE CUMULATIVE EFFECT OF
ACCOUNTING CHANGES
Minority Interest
Cumulative effect of accounting
changes
NET INCOME
2
SOCIEDAD MIHERA CERRO VERDE S.A.A.
STATEMENT OF CASH FLOW
YEAR 2005
(IN THOUSAND U.S. DOLLARS)
PRELIM
2005 JAN-06 FEB-06 MAR-06 APR-06 MAY-06 JUN-06 JUL-06
------ ------ ------ ------ ------ ------ ------ ------
OPERATING ACTIVITIES
Net Income
Adjustments to reconcile net income cash flow
from operations:
Depreciation, depletion and amortization
Deferred income taxes
Changes in current assets and liabilities
Other
NET CASH PROVIDED BY OPERATING ACTIVITIES
INVESTING ACTIVITIES
Capital Outlays
Other
NET CASH USED IN INVESTING ACTIVITIES
FINANCING ACTIVITIES
Bank debt (Increase)
Bond debt (Increase)
Bank debt (Repayments)
Bond debt (Repayments)
Subordinated debt (Payment)
Issuance of Capital Stock
Ordinary Dividends
Debt issue costs
Other
NET CASH PROVIDED BY (USED IN)
FINANCING ACTIVITIES
INCREASE (OR DECREASE) IN CASH AND SHORT-TERM
INVESTMENTS...............................
CASH AND SHORT-TERM INVESTMENTS AT BEGINNING
OF PERIOD....................................
CASH AND SHORT-TERM INVESTMENTS AT BEGINNING
OF PERIOD....................................
AUG-06 SEP-06 OCT-06 NOV-06 DEC-06 2006 2007 2008
------ ------ ------ ------ ------ ---- ---- ----
OPERATING ACTIVITIES
Net Income
Adjustments to reconcile net income cash flow
from operations:
Depreciation, depletion and amortization
Deferred income taxes
Changes in current assets and liabilities
Other
NET CASH PROVIDED BY OPERATING ACTIVITIES
INVESTING ACTIVITIES
Capital Outlays
Other
NET CASH USED IN INVESTING ACTIVITIES
FINANCING ACTIVITIES
Bank debt (Increase)
Bond debt (Increase)
Bank debt (Repayments)
Bond debt (Repayments)
Subordinated debt (Payment)
Issuance of Capital Stock
Ordinary Dividends
Debt issue costs
Other
NET CASH PROVIDED BY (USED IN)
FINANCING ACTIVITIES
INCREASE (OR DECREASE) IN CASH AND SHORT-TERM
INVESTMENTS..................................
CASH AND SHORT-TERM INVESTMENTS AT BEGINNING
OF PERIOD....................................
CASH AND SHORT-TERM INVESTMENTS AT BEGINNING
OF PERIOD....................................
3
SOCIEDAD MINERA CERRO VERDE S.A.A.
CAPITAL EXPENDITURES
YEAR 2005
(IN THOUSAND U.S. DOLLARS)
PRELIM
2005 JAN-06 FEB-06 MAR-06 APR-06 MAY-06 JUN-06 JUL-06
------ ------ ------ ------ ------ ------ ------ ------
AREAS
Mine
Crushing & Conveying
Xxxxx
SX-EW
Concentrator
General Administration
Total Capital Expenditures
AUG-06 SEP-06 OCT-06 NOV-06 DEC-06 2006 2007 2008
------ ------ ------ ------ ------ ---- ---- ----
AREAS
Mine
Crushing & Conveying
Xxxxx
SX-EW
Concentrator
General Administration
Total Capital Expenditures
4
SOCIEDAD MINERA CERRO VERDE S.A.A.
KEY OPERATING STATISTICS
PRELIM
2005 JAN-06 FEB-06 MAR-06 APR-06 MAY-06 JUN-06 JUL-06
------ ------ ------ ------ ------ ------ ------ ------
PRODUCTION
MATERIAL MINED EX-PIT K dmt
MILL
ORE MILLED K dmt
CONCENTRATE PRODUCTION, PAYABLE METAL
Copper concentrate K dmt
Copper M lbs
Silver, contained in cu conc
(payable) M ozs
Molybdenum concentrate K dmt
Molybdenum (payable) M lbs
XXXXX
TOTAL MATERIAL LEACHED
Total Leached material Placed K dmt
Grade %
SX-EW
Flow rate gpm
PLS grade gpl
Cu harvested Klbs
Cu harvested, tonnes Kdmt
PRODUCTION SUMMARY
COPPER, PAYABLE METAL
Cathode M lbs
Concentrate M lbs
Total M lbs
Molybdenum M lbs
Silver, contained in cu conc (Mozs) M ozs
CASH OPERATING COSTS
Mine $000
Concentrator $000
Crushing & Xxxxx $000
SX-EW $000
General Administration $000
Total Direct Operating Costs $000
AUG-06 SEP-06 OCT-06 NOV-06 DEC-06 2006 2007 2008
------ ------ ------ ------ ------ ---- ---- ----
PRODUCTION
MATERIAL MINED EX-PIT
MILL
ORE MILLED
CONCENTRATE PRODUCTION, PAYABLE METAL
Copper concentrate
Copper
Silver, contained in cu conc
(payable)
Molybdenum concentrate
Molybdenum (payable)
XXXXX
TOTAL MATERIAL LEACHED
Total Leached material Placed
Grade
SX-EW
Flow rate
PLS grade
Cu harvested
Cu harvested, tonnes
PRODUCTION SUMMARY
COPPER, PAYABLE METAL
Cathode
Concentrate
Total
Molybdenum
Silver, contained in cu conc (Mozs)
CASH OPERATING COSTS
Mine
Concentrator
Crushing & Xxxxx
SX-EW
General Administration
Total Direct Operating Costs
5
SOCIEDAD MINERA CERRO VERDE S.A.A.
ASSUMPTIONS
PRELIM
2005 JAN-06 FEB-06 MAR-06 APR-O6 MAY-06 JUN-06 JUL-O6 AUG-06
------ ------ ------ ------ ------ ------ ------ ------ ------
PRICES
Copper
Silver
Molybdenum
XXXXX STATISTICS
ORE GRADE
Copper
CONCENTRATOR STATISTICS
ORE GRADE
Copper
Molybdenum
Silver
METAL RECOVERIES
Copper
Molybdenum
Silver
CONCENTRATE GRADE
Copper
Silver contained in copper conc
Molybdenum
SALES VOLUME, PAYABLE LBS
Copper concentrate
Copper cathode
Molybdenum
Silver, contained in cu conc (ozs)
PERSONNEL PLAN
Mine
Crushing & Conveying
Xxxxx
SX-EW
Concentrator
G&A
Total
SEP-06 OCT-06 NOV-06 DEC-06 2006 2007 2008
------ ------ ------ ------ ---- ---- ----
PRICES
Copper
Silver
Molybdenum
XXXXX STATISTICS
ORE GRADE
Copper
CONCENTRATOR STATISTICS
ORE GRADE
Copper
Molybdenum
Silver
METAL RECOVERIES
Copper
Molybdenum
Silver
CONCENTRATE GRADE
Copper
Silver contained in copper conc
Molybdenum
SALES VOLUME, PAYABLE LBS
Copper concentrate
Copper cathode
Molybdenum
Silver, contained in cu conc (ozs)
PERSONNEL PLAN
Mine
Crushing & Conveying
Xxxxx
SX-EW
Concentrator
G&A
Total
6
