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DOE RUN RESOURCES CORP
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10-K
Jun 2, 2:41 PM ET
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DOE RUN RESOURCES CORP 10-K
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Contents
192
CLAUSE ONE: DEFINITIONS
1.2 Unless expressly stated otherwise or if the context requires it, the following rules shall be observed for the interpretation of this Credit Line Agreement: (a) the singular includes the plural and vice versa; (b) the reference to any gender includes the other gender; (c) the reference to any agreement (including this Credit Line Agreement and Exhibits thereof), document or instrument as amended or regulated from time to time in agreement with the terms contained in each one of them and, if applicable, the terms contained in this Credit Line Agreement; (d) unless the context demands an interpretation to the contrary, the reference to any Clause, Section or Exhibit means the Clause, Section or Exhibit of this Credit Line Agreement; (e) “Including” (and, therefore “includes”) means that it includes without being limited to the generality of the description that precedes the use of said term; (f) any reference to a “Party” or “Parties” in this Credit Line Agreement must be understood to be made to a party or the parties of this Credit Line Agreement, as applicable, and; (g) any reference to “default” on this Agreement and the Financing Documents refers to default on any obligation by any of the Parties, without the other parties being obliged to demand compliance of said obligation or becoming a cause for invoking a delayed action by said Party. Provided prevailing legislations allows it, any default will be incurred automatically.
CLAUSE TWO: BACKGROUND
2.1 DRP is a private company engaged in mining, smelting, refining activities, sale of metals and related activities, including but not limited to the processing of minerals. In October 1997, DRP acquired Empresa Metalúrgica La Oroya S.A from its former owner the State-owned company Empresa Minera del Centro del Perú S.A, within the framework of the privatization
process carried out by the Government of the Republic of Peru. In December 1997, DRP took over Empresa Metalúrgica La Oroya S.A. by merger.
2.2 By virtue of Public Deed dated June 18, 1998, issued in Lima before Public Notary, Aníbal Corvetto Romero, Banco de Crédito del Peru gave DRP a Credit Line in Foreign Currency for up to US$40,000,000.00, to finance DRP foreign trade operations and/or domestic sales.
2.3 DRR Restructuring Plan includes as one of its precedent conditions for the closing that the Credit Line Agreement must have been signed to substitute the agreement referred to in Subclause 2.2 hereof.
CLAUSE THREE: OBJECT OF THE CONTRACT
3.1 DRP requires working capital financing for its foreign trade operation and/or domestic sales, purchase of concentrates, raw materials, supplies, inventory, spare parts, other operating costs and other working capital needs which is why it has requested the Banks, through the AGENT, a Credit Line of up to US$ 58,000,000.00 (FIFTY-EIGHT MILLION AND 00/100 US DOLLARS) and, the Banks complying with the request made, hereby agree to grant it, subject to the maximum amounts that each Bank may have assumed by virtue of their respective Commitments, and under the terms and conditions of this Credit Line Agreement.
3.2 The Credit Line granted under this agreement will be made up of the two sub-lines indicated hereinbelow:
3.2.1 Revolving Credit Line: It is granted in that lesser of (i) US$45,000,000.00 (FORTY-FIVE MILLION AND 00/100 US DOLLARS) and (ii) the Base Amount of the Loan, provided they are within the legal limits for banking operations set forth in the General Law of the Financial System and the Insurance System and Organic Law of the Banking and Insurance Superintendency (Law No. 26702) or any other that should replace it in the future.
3.2.2 Indirect Credit Line: It is granted up to a maximum amount of US$13,000,000.00 (THIRTEEN MILLION and 00/100 US DOLLARS), to be used in the following manner: (i) up to US$5,000,000.00 (FIVE MILLION and 00/100 US DOLLARS) shall be destined to the issue of bank letters of guaranty to the benefit of the Peruvian National Customs Superintendency – CUSTOMS, for purposes of guaranteeing operations involving the temporary admission of mineral; (ii) up to US$8,000,000.00 (EIGHT MILLION and 00/100 US DOLLARS) shall be destined to the issue of letters of guaranty of faithful compliance to the benefit of the National Tax Administration Superintendency – SUNAT to guarantee applications related to the Value Added Tax – VAT; and (iii) up to US$5,000,000.00 (FIVE MILLION AND 00/100 US DOLLARS) shall be destined to the issue of letters of credit, which shall be available under the Indirect Credit Line until DRP is in receipt of the respective shipping documents representing the ownership title transfer, which amount is different from and in addition to the US$5,000,000.00 referred to in Clause 3.2.1 hereof.
3.3 In the event that the Credit Line maximum term of use is extended pursuant to the provision set forth in Subclause 3.6 hereof, and after the one hundred and five (105) days counted from the Closing Date have elapsed, if the amount of US$58,000,000.00 (FIFTY-EIGHT MILLION AND 00/100 US DOLLARS) is not yet fully committed, the AGENT shall not syndicate any additional amount and, the difference between US$60,000,000 and the total amount of the Credit Line that has been committed up to the maturity date of said term shall be the amount of an additional borrowing that DRP may request and obtain with its own resources, aside from this Credit Line Agreement.
3.4 The Banks hereby agree to grant DRP, subject to the terms and conditions of this Credit Line Agreement, several loans and/or credits in US dollars during the period between the date on which the Precedent Conditions to Make a Disbursement are complied with and up to, but excluding, the Final Maturity Date, for a maximum amount of US$ 58,000,000.00 (FIFTY-EIGHT MILLION AND 00/100 US DOLLARS), under the clarifying terms mentioned in Subclause 3.2 of this same Clause. Subject to the conditions of this Credit Line Agreement and during said period DRP may borrow, repay and borrow again the total or part of the aforementioned amount or request the issue of bank letters or guarantee or letters of credit, as applicable.
3.5 The maximum usable amount of the Credit Line that the Banks grant DRP by virtue of this Credit Line Agreement shall be at all times the lesser of (i) US$58,000,000.00, and (ii) the Base amount of the Loan plus the maximum usable amount of the Indirect Credit Line. In the event that, as a consequence of the changes in the Base Amount of the loan, the used amount of the Credit Line exceeds the maximum authorized amount provided in this clause, the AGENT shall be entitled to demand DRP a prepayment (without any penalty whatsoever) of the amount that may be required for the used amount of the Credit Line to be equal or less than the maximum authorized amount, pursuant to the provisions set forth in this Subclause. DRP shall comply with making said prepayment within thirty (30) calendar days following the date on which it is requested by the AGENT.
3.6 The maximum term for the use of the Credit Line is sixty (60) days counted as of September 25, 2002. Accordingly, the Final Maturity Date shall be November 25, 2002. However, upon the termination of the aforementioned sixty (60) days period and solely provided the provisions set forth in Clause Nine and Subclause 11.25 of Clause Eleven of this Credit Line Agreement have been fully complied with, to the Banks’ satisfaction, the maximum term for the use of the Credit Line shall be three (3) years counted as of September 25, 2002. If that is the case, the Final Maturity Date shall be extended until September 23, 2005.
3.7 DRP hereby binds itself to use the funds from the first disbursement made pursuant to the terms of this Credit Line Agreement to repay the total amount that DRP may owe Banco de Credito, by virtue of the Foreign Currency Credit Line Agreement matter of Public Deed dated June 18, 1998.
3.8 DRP may request at any time the reduction of the maximum amount of the Credit Line mentioned in the preceding Subclause 3.2. Once the maximum amount of the Credit Line is reduced, it cannot be increased back to the original maximum amount without prior unanimous approval by the Eligible Banks.
3.9 Without prejudice to the provisions set forth in Clause Twelve and Thirteen, DRP hereby binds itself to repay the AGENT in full, all loans and/or credits that remain in force by virtue of this Credit Line as at the Final Maturity Date.
3.10 Banks, the AGENT and DRP hereby agree that this Credit Line Agreement shall go into effect on September 25, 2002, date when the first disbursement will be made. As of that moment, the credit line contract dated June 1998 referred to in Subclause 2.2 of Clause Two hereof shall automatically expire.
4.1 Commitments: As of the date on which the Precedent Conditions to Make the first disbursement are complied with in accordance with this Credit Line Agreement and up to but excluding the Final Maturity Date, each one of the Banks that has assumed a Commitment hereby irrevocably binds itself to make one or several disbursements for a total aggregate principal amount equivalent to its respective Commitment. Each Bank’s obligation to make a disbursement is subject, in each case, to the fulfilment of each one of the Precedent Conditions to Make the Disbursements.
4.2 Amount: The amount of the individual loans requested by DRP shall not be less than US$1,000,000.00, unless the amount available from the Revolving Credit Line is less than said sum, and must be in amounts that are multiples of US$ 200,000.00. However, the parties hereby acknowledge the fact that said amounts could be lower if as a result of the execution of a letter of credit or of a bank letter of guaranty the indirect credit becomes a loan.
4.3 Disbursements: Each disbursement made under the Revolving Credit Line shall be made on the Disbursement Date indicated in the Disbursement Request. Disbursement Requests must be submitted by DRP to the AGENT at no later than 5:00 P.M. on the third business day before the desired Disbursement Date.
4.4 Terms: Provided the term of use of the Credit Line allows it, having in mind the agreements included in Clause Three, Subclause 3.5, the loans shall have terms of 1, 3 or 6 months, according to what DRP opts for, which must be notified in writing to the AGENT in the respective Disbursement Request.
4.5 Interest Rate: The compensatory interest rate that the disbursements shall accrue under the Revolving Credit Line during the term of use of the Credit Line shall be LIBOR at 1, 3 or 6 months (depending on the disbursement term requested by DRP) plus 3.5%. LIBOR at 1, 3 or 6 months is the interest rate offered for the same term, deposits of Eurodollars in the London interbanking market, which rate is recorded daily at 11:00 A.M., and appears on the LIBOR page of the REUTERS informative system monitor (adjusted if required to 1/16 of the 1% higher that is closer). The parties hereby agree and establish that the interest rate agreed upon for this loan has a floating nature as per the variations of the LIBOR rate; therefore, the AGENT shall fix the rate that corresponds to each loan two (2) days in advance of the date foreseen for the disbursement of the respective loan, taking into consideration the LIBOR rate that appears on the REUTERS Monitor on said date. The amount of interest to be paid by DRP at the end of said term shall be established based on the foregoing.
4.6 Promissory Notes: Each disbursement made under the Revolving Credit Line shall be instrumented by the issue by DRP of a promissory note in favor of each Bank, prorated based on the percentage of their respective Commitments of the total amount of each disbursement, using for this purpose the promissory note format, which as Exhibit IV, forms an integral part of this Credit Line Agreement. Each one of the Banks hereby binds itself to abstain from endorsing said promissory notes in favor of third parties, unless said endorsement is made as a result of an assignment or participation within the framework of the provisions set forth in Clause Sixteen of this Credit Line Agreement. The parties hereby declare that the Form of the promissory can be changed by the AGENT at any time.
5.1 Commitments: As of the date on which the Precedent Conditions to Make the first disbursement are complied with in accordance with this Credit Line Agreement and up to but excluding the Final Maturity Date, each one of the Banks that has assumed a Commitment hereby binds itself to issue one or several letters or credit and/or letters of guaranty for a total aggregate principal amount equivalent to its respective Commitment. The obligation of each Bank to grant an indirect credit is also subject, in each case, to the fulfilment of each one of the Precedent Conditions to Make the Disbursement.
5.2 Issue of Letters of Credit: Provided DRP requests it in writing by means of a signed Disbursement Request submitted to the AGENT three (3) business days in advance, one of the Banks selected by DRP, must, as part of the credits granted to DRP by virtue of the Indirect Credit Line referred to in this agreement, issue Letters of Credit for the payment of the raw materials, concentrates or materials imported by DRP.
5.3 Amount of the Letters of Credit: The amount of the letters of credit requested by DRP cannot be less than US$100,000.00, unless the amount available in the Indirect Credit Line is lower than said amount or a different amount is approved by the Bank issuing the letter of credit.
5.4 Terms of the Letters of Credit: Provided the term of use of the Credit Lines allows it, and bearing in mind the matters agreed upon in Clause Three, Subclause 3.6 hereof, the Letters of Credit shall have the terms requested by DRP and approved by the AGENT, which actually should not exceed the 6-month term, and the renewal or extension of this term is subject to prior approval by the issuing Bank.
5.5 Repayment of the Letters of Credit: At the time of the payment in cash of a Letter of Credit issued by virtue of the provisions set forth in this Clause, the Banks shall finance DRP the amount owed, prorated in function of the percentage of their respective Commitments, by
granting a loan for a term of up to three (3) months under the terms and conditions set forth in Clause Four and the rest of the Clauses hereof; unless DRP requests the AGENT to make an immediate collection of the payment of the amount paid in the letter of credit, and for this purpose as of this date DRP hereby authorizes the AGENT to debit its current account or in any other of its account(s) the corresponding amount, pursuant to the provisions set forth in Clause Six.
5.6 Issue of Bank Letters of Guaranty: Provided DRP requests it in writing by signing and submitting to the AGENT a Disbursement Request, one of the Banks selected by DRP must, as part of the credits granted to DRP by virtue of the Indirect Credit Line referred to hereof, issue (i) bank letters of guaranty of payment to the benefit of the National Customs Superintendency of Peru - CUSTOMS and (ii) bank letters of guaranty of Faithful Compliance to the benefit of the National Tax Administration Superintendency – SUNAT.
5.7 Terms of the Bank Letters of Guaranty: Provided that the term of use of the Credit Line allows its, taking into consideration what is agreed upon in Clause Three, Subclause 3.6 hereof, the bank letters of guaranty shall have the terms requested by DRP and approved by the AGENT.
5.8 Payment of the Bank Letters of Guaranty: The parties hereby recognize that the payment of the bank letters of guaranty shall be made immediately by the issuing Bank and upon the sole request by the beneficiary. This is the reason why its is hereby clearly expressed that any objection and exception to their execution, even if pertinent, must be made directly by DRP against the executing beneficiaries, hereby holding the Bank harmless from any liability for making the requested payment immediately. Only after the Bank has honored its bank letter of guaranty, it shall notify DRP thereof, and the requests that DRP may make to the Bank to suspend, withhold or reject the payment demanded by the beneficiary shall have no effect whatsoever.
CLAUSE SIX: PAYMENT OF THE CREDIT LINE
6.1 Payment of the Credit Line: A condition of this Credit Line Agreement and especially regarding payment of the principal and compensatory or delayed payment interest and other applicable expenses, fees, services and taxes, is that all payments must be made in the same currency that each loan was agreed upon and granted, pursuant to the provisions set forth in Article 1237 of the Civil Code. For this purpose DRP shall place at the disposal of the AGENT, proportionally to the account of the corresponding Banks, at no later than 12:00 P.M. on each Maturity Date or on any other date on which a payment must be made to the AGENT or to the Banks, sufficient funds to make the total payments and DRP hereby authorizes the AGENT as of this date to debit the owed amount to any of the accounts that it maintains in domestic or foreign currency at any of the AGENT’s Branches in the country or abroad, or that any funds or securities in any currency whatsoever, which the AGENT may have in its power be credited or handed over to it, without need to obtain prior authorization or future consent. The AGENT shall also be entitled to withhold and apply to the amortization and/or payment of what DRP may owe the Banks, any amount, deposit or security of any nature whatsoever, that by any reason it may have in its power and that is destined to be credited or handed over to it.
6.2 Prepayments: The amounts of the principal that DRP owes the Banks concerning the Credit Line may be totally or partially prepaid by DRP at any time, free from any penalty or fee to this respect. When making a total or partial prepayment, DRP must notify the AGENT in writing, two business days before the date on which the former will make the prepayment, stating the amount of the prepayment.
6.3 Taxes: All of the payments that the AGENT receives with respect to the disbursements made under this Credit Line Agreement shall be made free from any tax or any other lien that may have the effect of reducing the total amount to be received by each Bank pursuant to what was stipulated under this Credit Line Agreement. Consequently, DRP shall assume all costs so
that each Bank shall receive a sum equal to that agreed upon, without any deduction. Under no circumstance shall DRP be held liable for, nor shall it assume the payment of any tax whatsoever on the income that the Banks or the AGENT obtain as a result of their participation in this Credit Line Agreement.
CLAUSE SEVEN: FEES
7.1 Underwriting Fee: DRP will pay as Underwriting Fees, the following amounts:
7.1.1 0.75% of the amount resulting from the summation of: (i) US$40,000,000.00 and (ii) the syndicated amount as of the Closing Date, payable by DRP to the AGENT on the date the Precedent Conditions to Make the Disbursements are fulfilled or on September 25, 2002, whichever occurs first. Said fee shall be shared between the Banks, prorated based on the percentage that each one of its Commitments represents based on the total Commitments assumed on the Closing Date; and
7.1.2 0.75% of the amount that exceeds the summation of: (i) US$40,000,000.00 and (ii) the syndicated amount as of the Closing Date, payable by DRP to the AGENT on the date said excess amount is syndicated. Said fee shall be distributed to the Banks that sign this Credit Line Agreement after the Closing Date, based on the amount of their respective Commitment.
7.2 Structuring Fee: DRP shall pay the AGENT a Structuring Fee in the amounts agreed upon between the AGENT and DRP, which appear on the letter dated September 16, 2002. The Structuring Fee shall be paid on the dates and in the forms stipulated in said letter.
7.3 Agency Fee: DRP shall pay the AGENT an Agency Fee amounting to US$ 30,000.00 (THIRTY THOUSAND AND 00/100 US DOLLARS) per year, during the term of use of the Credit Line, including any extension of the same, which shall be paid in advance on the Closing Date and on each anniversary of the Closing Date.
7.4 Commitment Fee: DRP shall pay the AGENT a Commitment Fee during the term of use of the Credit Line amounting to the equivalent of 0.375% per year of the average unused portion of the total amount of the Commitments of the Eligible Banks, which shall be computed taking into account the daily unused portions as of the date on which the Precedent Conditions to Make the Disbursements are complied with or as of September 25, 2002, whichever occurs first, of which a quarterly average shall be obtained on which the aforesaid rate shall be applied. This Fee shall be paid on a lapsed quarter within the first ten (10) calendar days of the following quarter. For purposes of the calculation, the face amount of the letters of credit and bank letters of guaranty referred to in Clause Five shall be regarded to be the “amount used” of the Credit Line. The Commitment Fee shall be shared between the Banks, prorated based on the percentage that each one of their Commitments represents as regards the Credit Line syndicated total.
7.5 Fee for the Issue of a Letter of Credit: DRP shall pay the AGENT, as Fee for the Issue of a Letter of Credit, the following amounts:
7.5.1 Against the issue of the Letter of Credit, a sum equivalent to 0.25% per quarter, of the amount of the letter of credit payable by DRP to the AGENT on the issue date of the letter of credit. This fee shall be handed over to the Bank that issued the letter of credit; and
7.5.2 Against receipt of the shipping documents, a sum equivalent to 0.25% flat of the amount of the respective letter of credit, payable by DRP to the AGENT on the date of receipt of the shipping documents. This fee shall be handed over to the Bank that issued the letter of credit.
7.6 Fee for the Issue of a Bank Letter of Guaranty: DRP shall pay the AGENT, as Fee for the Issue of Bank Letters of Guaranty, a sum equivalent to 1.5% per year of the total amount of the respective bank letter of guaranty. This fee shall be handed over to the Bank that issued the bank letter of guaranty.
7.7 Additional Taxes: The aforementioned fees do not include the Value Added Tax or any other taxes that could be levied by law, which DRP is hereby obliged to pay. However, under no circumstance shall DRP be held liable for nor shall it have to pay the tax levied on the income that the Banks or the AGENT may obtain as a result of their participation in this Credit Line Agreement.
CLAUSE EIGHT: PRECEDENT CONDITIONS FOR THE CLOSING DATE
8.1 DRP’s Legal Capacity: The receipt by the AGENT of a legalized copy of the minutes of DRP’s General Partners Meeting authorizing the signing and execution of this Credit Line Agreement and of the Security Agreements and appointing their representatives for the signing of the same.
8.2 Financial Statements: The receipt by the AGENT of copies of the audited financial statements corresponding to the fiscal year closed at December 31, 2001 and the unaudited financial statements corresponding to the first quarter of fiscal year 2002, accompanied by a certification given by DRP, dated recently, that said financial statements have been prepared in a correct and complete manner in accordance with the Generally Accepted Accounting Principles (GAAP) in Peru.
8.3 Internal Approvals: The receipt by the AGENT of the approval of the conditions of the Credit Line given by the competent bodies of each one of the Banks.
8.4 Due Diligence: The conclusion, in a satisfactory manner for the Banks, of DRP’s due diligence by the AGENT. Said due diligence must include, but will not be limited to: (i) the examination of DRP’s insurance policies, and (ii) the examination by an independent technical consultant of: (a) the present condition of DRP’s inventories and fixed assets; (b) the execution
and progress of the Environmental Adjustment and Management Program (PAMA) and of any other investment commitment that DRP has assumed with the Peruvian Government, taking into consideration the deadline to complete PAMA corresponding to Cobriza (with the reservation that in this last case DRP shall abide by the provisions set forth in Supreme Decree No. 022-2002-EM); (c) the investments required by DRP to maintain its normal level of operations during the term of effect of the Credit Line, and (d) the investment plan included in the PAMA, pursuant to the provisions set forth in the prevailing agreements signed with the competent authorities, taking into consideration the present situation of the aforementioned Cobriza PAMA and the future amendments that may be made to the La Oroya PAMA.
8.5 Signing of a Subordinated Loan: The receipt by the AGENT of the Subordinated Loan duly signed by DRP and DRR, under terms satisfactory to the Banks.
8.6 Financing Documentation: The parties must have reached a final agreement on the term and conditions of the Financing Documents.
8.7 Non-existence of Litigations: The receipt by the AGENT of a certificate signed by DRP’s General Manager, or by the person who is carrying out his functions in his absence, stating that, except for what was disclosed to the AGENT before the signing of this agreement, there is no action, investigation, suit, written complaint or any judicial proceeding pending against DRP or its property filed with any court, government commission or committee, board, government agency or arbitrator, of which any of the members of the administration or management may be aware, and that may have a Material Adverse Effect on DRP.
8.8 Authorizations and Approvals: If required, that all government authorizations and approvals necessary to carry out DRP’s operations have been obtained and are in full force and effect, except those which absence (not obtained or expired) would not cause a Material Adverse Effect.
8.9 DRP’s Licenses: All substantial contracts, substantial concessions and licenses necessary to carry out DRP’s operations have been obtained and are in full force and effect, except those which absence (not obtained or expired) would not cause a Material Adverse Effect.
8.10 Insurance: The endorsement in favor of the AGENT, to the benefit of the Banks, of the insurance policies covering DRP’s assets and which have been issued by top-rank insurance companies, with the personal insurance levels and deductibles in force as of this date.
8.11 Non-existence of Government Action: That the Peruvian Government has not enacted legislation or taken any action whatsoever that, in the Banks’ Majority opinion and judgement, may limit exportation, by DRP, of its products.
8.12 Non-existence of Material Adverse Effect and Material Adverse Change: That no circumstance or situation has arisen that in the Banks’ Majority reasonable opinion and judgement, may cause a Material Adverse Change in, or may have a material adverse effect on: (i) the Peruvian financial system, (ii) the international financial system, (iii) the national or international capital markets; (iv) Peru’s political and economic climate, (v) the Peruvian tax and monetary policies, its laws and regulations; provided in each one of these cases, they could
reasonably have a Material Adverse Effect on the ability of all the Banks to comply with their obligations assumed under this Credit Line Agreement.
8.13 Non-existence of Material Adverse Effect and Material Adverse Change in DRP and/or Affiliates: That no circumstance or situation has arisen from the date of the last audited financial statements, that in the Banks’ Majority reasonable opinion and judgement may cause a Material Adverse Change in or may have a Material Adverse Effect on: (i) DRP’s and/or its Affiliates’ ability to repay the loans, or on (ii) DRP’s and/or its Affiliates’ business, operations, property, assets or liabilities.
8.14 Non-existence of liens regarding DRP’s income and assets: That DRP’s assets and accounts receivable are free from any lien or encumbrance, except those considered in this Credit Line Agreement or those which have been defined as Permitted Liens.
8.15 Payment of Fees: That DRP has paid the AGENT the corresponding fees pursuant to the provisions set forth in Clause Seven hereof, as well as any other applicable expenses, services and professional fees that must be paid under the Credit Line Agreement.
8.16 Tax Payments: The receipt by the AGENT of a certificate signed by DRP’s General Manager or by the person who is carrying out his functions in his absence, stating that DRP is complying with its labor and tax obligations, except those that have been informed of to the AGENT.
CLAUSE NINE: PRECEDENT CONDITIONS TO MAKE THE DISBURSEMENTS
9.1 Security Agreements and Establishment of Collection Accounts: The receipt by the AGENT of the Security Agreements, duly signed by DRP and the agreement by the latter with the establishment of the Collection Accounts in Lima and Miami. Likewise, DRP must have complied with serving notices to its customers instructing them to make their payments to the Collection Accounts and the AGENT must have received copy of the document evidencing receipt of said notifications.
9.2 Filing of Application for Registration of Global and Floating Pledge: An application for registration must have been filed with the corresponding public Registry, of the Global and Floating Pledge granted by DRP in favor of the AGENT, to the benefit of the Banks.
9.3 Certificate of the Base Amount of the Loan: The receipt by the AGENT of a certificate signed by the Financial Manager of DRP or by the person who is carrying out his functions in his absence, establishing the Base Amount of the Loan.
9.4 Non-existence of Material Adverse Effect and Material Adverse Change: That no circumstance or situation has arisen that in the Bank’s Majority reasonable opinion and judgement, may cause a Material Adverse Change in or have a material adverse effect on: (i) the Peruvian financial system, (ii) the international financial system, (iii) the national or international
capital markets; (iv) Peru’s political and economic climate, (v) the Peruvian tax and monetary policies, its laws and regulations; provided in each one of these cases, the same could reasonably have a Material Adverse Effect on the ability of all the Banks to comply with their obligations assumed under this Credit Line Agreement
9.5 Non-existence of Material Adverse Effect and Material Adverse Change in DRP and/or Affiliates: That no circumstance or situation has arisen since the date of the last audited financial statements, that in the Banks’ Majority reasonable opinion and judgement may cause a Material Adverse Change in or may have a Material Adverse Effect on: (i) DRP’s and/or its Affiliates’ ability to repay the loans, or on (ii) DRP’s and/or its Affiliates’ business, operations, property, assets or liabilities.
9.6 Fulfilment of Obligations by DRP: That DRP is in compliance with his Obligations established in this Credit Line Agreement, including its Financial Obligations, except for the provisions set forth in the second paragraph of Subclause 11.17 of Clause Eleven hereof.
9.7 Non-existence of Government Action: That the Peruvian Government has not enacted legislation or taken any action whatsoever that in the Banks’ Majority opinion and judgement, may limit the exportation, by DRP, of its products.
9.8 Non-existence of any Event of Default: That, as of the date of the respective disbursement, no Event of Default whatsoever has occurred.
9.9 Representations and Warranties: That the representations and warranties made by DRP in Clause Ten of this Credit Line Agreement, and in the Security Agreements, are correct and true as of the date they were made as regards all material aspects, unless a misstatement in said representation or guarantee cannot reasonably have a Material Adverse Effect on DRP’s situation, and provided that such representation or warranty was true and complete as regards all its aspects on the date it was made.
9.10 Compliance with the PAMA: That, on the Disbursement Date, DRP must be in compliance with the PAMA, in accordance with the agreements entered into with the competent government authorities, as they may be periodically amended. The AGENT hereby acknowledges that DRP has not been complying with its obligations included in the PAMA for the Cobriza Mine, since the term of the same has already expired. However, in the case of the Cobriza Mine, DRP shall abide by the provisions set forth in Supreme Decree No. 022-2002-EM, except for the provisions set forth in the second paragraph Clause Eleven, Subclause 11.17 hereof.
9.11 Authorizations and Approvals: If required, that all government authorizations and approvals necessary to carry out DRP’s operations have been obtained and are in full force and effect, except those which absence (not obtained or expired) cannot cause a Material Adverse Effect. Likewise, that all substantial contracts, substantial concessions and necessary licenses to carry out DRP’s operations have been obtained and are in full force and effect.
CLAUSE TEN: REPRESENTATIONS AND WARRANTIES
10.1 Organization and Classification: DRP is a limited liability company that was incorporated and exists under Peruvian Laws, which is authorized by Peruvian legislation to own its property and perform its normal activities.
10.2 Powers of Attorney and Authorizations: DRP possesses and has granted to its lawyers all the necessary powers of attorney and authorizations to sign this Credit Line Agreement and the Security Agreements, as well as any other Financing Documents thereto and to comply with all obligations assumed under each one of them.
10.3 Compulsory Compliance: This Credit Line Agreement and the Security Contracts are valid and binding obligations that are of compulsory compliance for DRP, except for what is provided in the applicable bankruptcy, insolvency and equity restructuring laws.
10.4 Government Authorizations: DRP has all the necessary government authorizations under the laws in force to comply with this Credit Line Agreement, the Security Agreements and the other Financing Documents and to fulfill the obligations assumed under each one of them; that these authorizations are in force and not subject to any condition or requirement whatsoever. Any authorization that DRP may require as of the Closing Date shall be obtained by the latter in a timely manner, unless, its absence (not obtained or expired) cannot cause a Material Adverse Effect.
10.5 Non-existence of Conflicts: DRP’s signing and execution of this Credit Line Agreement, the Security Agreements or any other Financing Document (i) is not in conflict nor does it create an event of default with regard to (a) any of the terms, conditions or provisions of DRP’s bylaws and other incorporation documents, (b) any applicable law or regulation, or any court judgment, judicial mandate or decree from any pertinent court or authority, (c) any agreement or contract in which DRP is a part or by which it is bound, (ii) nor can it result in the creation or imposition of any lien, charge or encumbrance on any property of DRP, unless such lien, charge or encumbrance (a) cannot reasonably have a Material Adverse Effect on DRP’s situation and has been duly informed to the AGENT prior the Closing Date; (b) is considered in this Credit Line Agreement, including the Permitted Liens.
10.6 Legal Situation: DRP is not in default under any applicable law or regulation, or court judgment, judicial order or decree from any competent court or authority, unless such default situation cannot reasonably have a Material Adverse Effect on DRP’s situation and has been duly informed to the AGENT before the Closing Date.
10.7 Financial Statements: DRP has placed at the AGENT’s disposal its Financial Statements as of December 31, 2001, duly audited and its situation Financial Statements as of March 31, 2002. All of the information contained therein has been prepared in a correct and complete manner in accordance with the Generally Accepted Accounting Practices (GAAP) in Peru, and they reflect DRP’s financial condition in a precise manner. As of the Closing Date, DRP does not have any direct or contingent liabilities, which should be reflected in its financial statements according to the GAAP in Peru, other than those (i) referred to or reflected in the aforementioned
financial statements on said dates, (ii) arising from this Credit Line Agreement, the Security Agreements and other Financing Documents, or (iii) those informed to the AGENT; or (iv) that result from DRP’s the regular business activities and that are considered an Authorized Debt. As of the Closing Date, no Material Adverse Change has occurred in DRP’s consolidated financial condition reflected on the financial statements as of December 31, 2001, unless (a) said Material Adverse Change has been corrected or remedied by DRP, or the AGENT or the Banks have waived their right to complain against said Material Adverse Change; or (b) DRP had informed the AGENT of said Material Adverse Change before the Closing Date, including those considered in the Informative Prospectus
10.8 Legal Proceedings: Except for what was disclosed to the AGENT before the signing of this Credit Line Agreement, there is no pending action, investigation, suit, written complaint or judicial proceeding against DRP or its property in any court, government commission or committee, board, government agency or arbitrator, of which any of the members of the administration or management may be aware, and that could have a Material Adverse Effect on DRP.
10.9 Disclosure: As of the Closing Date, except for what has been informed to the AGENT, the declarations made by DRP members of the administration or Management in this document and in the Security Agreements, do not include any false statement regarding any fact or intentional omission of a material fact that could cause the information furnished by DRP to lead the Banks to err. As of the Closing Date, there is not a fact known by DRP, which has not been disclosed to the AGENT, and that could bring as a result a Material Adverse Effect on DRP.
10.10 Non-existence of Acts of God and Events of Force Majeure: DRP’s business and property have not been affected by fire, explosion, accidents, strikes, forced upon stoppages or any other labor problem, drought, storm, hail, earthquakes, embargoes or by any other circumstance that in a reasonable manner may have a Material Adverse Effect on DRP.
10.11 Non-existence of Damages to the Environment: DRP operates its business in compliance with all environmental legal and regulatory standards applicable to mining-metallurgical activities, as amended, taking into consideration the provisions stipulated in its respective Environmental Adjustment and Management Program (PAMA). In the case of the Cobriza PAMA, which has already expired, DRP will abide by the provisions set forth in Supreme Decree No. 022-2002-EM. No harmful, toxic or hazardous material, as defined by the aforementioned standards, has been or is discharged, disposed of, spread or freed by DRP violating any applicable mining-metallurgical law or regulatory standards, unless suitable measures accepted by the respective government authorities and disclosed to the AGENT are being taken to remedy the situation. The transportation of any harmful, toxic or hazardous material by DRP shall be carried out in compliance with the environmental standards applicable to this effect, adopting the suitable measures accepted by the respective government authorities.
10.12 Taxes: DRP has prepared, signed and submitted to the competent authority the forms of all taxes and contributions, which it is legally obliged to pay; and has paid the same except those that: are being claimed by DRP through suitable impugning appeals for which purpose, if so required pursuant to the GAAP in Peru, provisions or reserves have been made in DRP accounting records. There is no outstanding proceeding or dispute between DRP and any
government authority with regard to taxes and contributions, different from those mentioned in detail in Exhibit V, which forms an integral part of this Credit Line Agreement, as shall be periodically amended by DRP.
10.13 Immunity: DRP has no immunity with respect to the jurisdiction and competence of any court, arbitrator or tribunal whatsoever regarding any legal proceeding or demand.
10.14 Priority: All obligations assumed by DRP under this Credit Line Agreement are top priority obligations for DRP and thus they prevail over any other direct or indirect, present or future obligation of DRP, except those expressly indicated in the Equity Restructuring Law as amended or replaced from time to time. In this sense, the obligations that could arise for DRP from the generic security given for the Issue of New Bonds, Existing Bonds and the New Loan, shall be contractually Subordinated to the obligations assumed by DRP by virtue of this Credit Line Agreement.
CLAUSE ELEVEN: DRP’S OBLIGATIONS
11.1 Financial Obligations
(i) To send to the AGENT, within one hundred and twenty (120) days following the closing of the fiscal year (December 31), and within the thirty (30) days following the closing of each six-monthly period, a certificate that shall have the nature of an Affidavit, signed by its General Manager, Vice-President of Finance, Treasurer or by the persons who carry out their functions in their absence, indicating the Cash Flow Available for Distribution. Said certificate must contain a detailed explanation of the concepts used by DRP for the calculation of the Cash Flow Available for Distribution for the T and T + 1 periods. The Banks’ Majority, hereby reserves itself the right to approve the Cash Flow Available for Distribution, and said approval shall not be denied without reasonable justification by the Banks’ Majority.
(ii) To send to the AGENT, within the thirty (30) business days following each fiscal quarter, a certificate signed by its General Manager, Vice-President of Finance, Treasurer or by the persons who carry out their functions in their absence, testifying that DRP is complying with the Minimum Consolidated Net Worth.
11.2 Information.
(i) Veracity: To provide correct and complete information when making the Disbursement Request and, at all times during the term of effect of this Credit Line Agreement.
(ii) Financial Information: To send to the AGENT or to whomever it designates, provided such designation has been communicated to DRP in writing, complete financial information, the Audited Year-end Financial Statements and Unaudited Quarterly Financial Statements prepared by DRP in accordance with the GAAP in Peru and any information that the AGENT may reasonably request on a periodic basis. The Audited Financial Statements shall be furnished within a term not to exceed one hundred and twenty (120) days after the closing of each fiscal
year (December 31) during the term of effect of this Credit Line Agreement and the Unaudited Financial Statements shall be furnished within thirty (30) days after the closing of each quarter, DRP hereby binding itself to promptly communicate to the AGENT or whomever it designates, any a fact or circumstance that could originate a substantial impairment of DRP’s income, profits, payment capacity and/or financial situation. Likewise, to send to the AGENT or to whomever it designates, an unaudited version of DRP’s financial statements at the closing of each quarter of the fiscal year.
(iii) Additional Information: To send to the AGENT, within a prudent term after its request, any additional information that may be requested related to this Credit Line Agreement, the Security Agreements and DRP’s ability to comply with the obligations assumed by virtue of the aforementioned documents.
(iv) Information on Accounts Receivable and Collected Accounts: To send to the AGENT, each time the latter requests it, within a prudent term, the detail of the accounts receivable and collected accounts during the period that, in each opportunity, the AGENT shall indicate to DRP.
(v) Restricted Subsidiaries: To send to the AGENT, an updated version of Exhibit II of this document, each time an amendment is made to the listing of DRP’s and/or DRR’s Restricted Subsidiaries.
11.3 Notification of Special Events: To promptly notify the AGENT of the occurrence of any of the following events, including a description regarding its nature and the actions DRP plans to take on this regard: (i) any Event of Default, and/or (ii) any law suit, arbitration or administrative proceeding in which DRP is a part; which in case of being resolved in an unfavourable manner to DRP may have a Material Adverse Effect on DRP.
11.4 Accounting Books and Record Keeping: To keep accounting books and records in accordance with generally accepted accounting principles and practices accepted in Peru, binding itself before the Banks that the company’s annual financial statements will be reported upon by independent public accountants with international repute. The names of the selected independent public accountants shall be informed by DRP to the AGENT in a timely manner. The records must be kept in sufficient detail so as to specify investments made, their cost and, if applicable, the progress made as to their execution, in each case, pursuant to the provisions set forth in the GAAP in Peru.
11.5 Inspection: To allow the AGENT’s technical personnel or the persons that the AGENT may designate, to verify the information supplied and the proper allocation of the funds provided by virtue of the credits and/or loans granted by the Banks to DRP within the framework of this Credit Line Agreement, as well as to carry out inspections of DRP’s plant and establishments. DRP hereby agrees to bear the cost of up to four inspections with respect to the quantity of DRP’s inventory and up to two inspections regarding the quality of DRP’s inventory per year (these last ones shall be made at the time any of the four quantity inspections of DRP’s inventory is made). To this effect, the annual periods shall be computed from the Closing Date to each anniversary of the aforementioned date.
11.6 Existence and Capacity: To maintain its existence as a limited liability company under Peruvian Law.
11.7 Non-Participation in Unrelated Activities: To remain within its own line of business and abstain from directly or indirectly participating in unrelated activities. The provisions, set forth in this Subclause do not limit DRP’s ability to provide funding, assistance, benefits and improvements to local schools, government organizations and communities, as it has being doing in the past.
11.8 Use of Funds: To allocate the funds from the credits and/or loans granted by the Banks within the framework of this agreement, to the purpose mentioned in Clause Three of this Credit Line Agreement.
11.9 Payment to Affiliates: To limit payments to DRR and its Affiliates (including the payments related to the Subordinated Loan and excluding the Trade Accounts to DRR) to the availability of a cash flow surplus, pursuant to the Cash Flow Available for Distribution. Likewise, Administration Fees in the amount of US$4,000,000 shall be paid in accordance to what is provided in the definition of Cash Flow Available for Distribution.
11.10 Maintenance of Assets: To maintain in good condition, in accordance with the type of business that DRP develops, the plant and other productive areas that are necessary for the development of its business purpose and, at certain times perform the repairs and replacements required to this end, except those that would not cause a Material Adverse Effect.
11.11 Limitation to Dispose of Assets: To abstain, during the term of effect of this Credit Line, from selling, leasing, transferring or assigning the use of the fixed assets that are necessary to maintain the Company’s estimated production and sales stated in the credit application filed with the Banks, unless (i) it would be in the regular course of its business; (ii) said fixed asset are no longer necessary to carry out its operations, (iii) the fixed assets are considered, in accordance with previous practices surplus or obsolete, or (iv) that they have been replaced or are going to be replaced in the regular course of DRP’s Business.
11.12 Pledge on Stock Participations: To deliver to the AGENT, on the Closing Date, a certificate signed by DRCayman’s Vice-President, by virtue of which said company binds itself to abstain from encumbering, pledging, and/or in any other way affecting in favor of third parties the percentage that results by subtracting from the 33.33% of the participations that represent DRP’s stock capital, the percentage of quota participations which title is held by quota holders that are the former or current employees of CENTROMIN, Metaloroya or Doe Run Peru, or their successors or assigns or any other quota holder different from DRCayman.
11.13 Government Authorizations: To keep in force, during the term of effect of this Credit Line Agreement, all substantial licenses, permits, and, in general any authorization that may result being necessary for the normal performance of its activities and the execution of this Credit Line Agreement, unless their absence would not cause a Material Adverse Effect.
11.14 Taxes: To comply with the payment of all taxes and contributions, which DRP is obliged to pay pursuant to legislation in force; except those that are being questioned or claimed by DRP through suitable challenges and with respect to which, if required by the GAAP in Peru, the corresponding provisions and reserves have been made in DRP’s accounting books and records.
11.15 Abstaining from Mergers or Splits: To abstain from participating in company merger or split-up processes and to refrain from selling or transferring all or a substantial part of its fixed assets to any person whatsoever, nor acquire all or substantially all the assets from any person whatsoever, without prior express written authorization by the Banks’ Majority, which shall not be denied without a reasonable justification.
11.16 Compliance with the Law: To keep up to date the fulfillment of its tax and labor obligations including those derived from social security laws and private pension funds administrators, as well as with any other aspect of applicable Peruvian or foreign laws and regulations thereunder, unless (i) the need to comply with such legislation or regulation is being debated and/or questioned by DRP in good faith through suitable means and adequate provisions have been made in DRP’s accounting books and records; (ii) their non-compliance would not have a Material Adverse Effect on DRP, (iii) the situation would have been informed to the AGENT before the Closing Date, or, (iv) it refers to the situation matter of Clause 11.17 hereof.
11.17 Compliance with Environmental Legislation: Without prejudice to the obligations set forth in the preceding Subclause, to comply with each and all obligations emanating from the mining-metallurgical environmental legislation in force, taking into consideration the provisions set forth in the PAMA. In the case of the Cobriza Mine, which PAMA has already expired, DRP shall abide by the provisions set forth in Supreme Decree No. 022-2002-EM. The obligation of compliance provided in this clause includes carrying out assessments and fulfilling the requisites established by the respective laws and regulations thereunder.
11.18 Non-Existence of Hedging Agreements for Speculative Purposes: To abstain from entering in to hedging agreements for speculative purposes, which do not have as an essential objective to protect itself against possible fluctuations in interest rates and exchange rates, as well as in the price of concentrates, fuel and end products.
11.19 Transactions and Agreements with Affiliated or Related Persons: To abstain from entering into transactions with related companies or persons under conditions that are less advantageous than those that would be obtained should the transaction be entered into with non-related third parties. Excluded from the limitation referred to in this Subclause are DRP’s obligations with the Affiliates or related persons who appear listed on Exhibit VI, which forms an integral part of this Credit Line Agreement and the Administration fees.
11.20 Obligations: To comply on or before the Maturity Date with all obligations assumed under this or other agreements it has entered into and whose default could result, in the Banks’ Majority reasonable opinion and judgment, in a Material Adverse Effect on DRP, unless said default: (i) is being debated and questioned by DRP in good faith through suitable means and (ii) with respect to which the corresponding provisions and reserves have been made in DRP’s accounting books to the extent required by the GAAP in Peru.
11.21 Restriction on Assuming Financial Debts and Obligations: To abstain from assuming, creating or incurring in any debt or financial obligation different from an Authorized Debt.
11.22 Restriction on Liens: To abstain from creating or assuming liens on any of its present or future property, assets or contractual rights, unless they refer to: (i) liens that are specifically created, required or permitted by this Credit Line Agreement or the Security Agreements, and (ii) Permitted Liens.
11.23 Certificate Indicating the Base Amount of the Loan: To send to the AGENT a certificate signed by its General Manager, Vice-President of Finance, Treasurer or the persons who exercise their functions in case of their absence, establishing the Base Amount of the loan effective on the twentieth (20th) day of each calendar month, as well as the detail of the accounts that served to determine the same, which information shall have the nature of an affidavit. This certificate shall be delivered by DRP to the AGENT within the five (5) five business days following the twentieth (20th) day of each calendar month. This certificate shall be in force during the next calendar month counted from the twentieth (20th) day of every calendar month, unless in the interim DRP submits to the AGENT a new certificate replacing the original one, in which case this new certificate shall be in force for the remaining days until the twentieth day (20th) of the calendar month.
11.24 Restriction on the Distribution of Dividends: To abstain from distributing dividends or paying subordinated debts should an Event of Default occur or should it be delayed as to its contractual obligations with the Banks and/or the AGENT.
11.25 Successful execution of DRR’s Restructuring Plan: The successful execution of DRR’s Restructuring Plan must be concluded under terms and conditions regarded satisfactory by the
Banks, within sixty (60) days counted as of the date in which this contract goes into effect as provided in Subclause 3.10 hereof. To this end, and within the aforementioned term of sixty 60) days, DRP must deliver to the AGENT the following information:
(i) Restructuring: DRP must deliver to the AGENT all signed information that supports DRR’s Restructuring. In addition, it shall deliver a certificate signed by DRP’s and DRR’s General Managers or by whomever exercises their functions in case of absence, in which they inform of the results of DRR’s Restructuring.
(ii) Contractual Subordination: DRP shall deliver to the AGENT all documents that accredit that the guarantee given by DRP and its Affiliates to back up the New Loan, the New Bonds and the Existing Bonds is contractually subordinated to the obligations that DRP has assumed in favor of the Banks by virtue of the Credit Line.
(iii) Renewal of Credit Facilities: The AGENT must be in receipt of the documents that accredit the signing of the renewal of the credit facility given by Congress/CIT to DRR.
(iv) Satisfactory Legal Opinions: DRP must deliver to the AGENT the legal opinions signed by DRP’s and DRR’s legal counsels substantially in the form attached hereto as Exhibit VII.
CLAUSE TWELVE: EVENTS OF DEFAULT
12.1 Default on a Payment Obligation: If DRP fails to pay (i) any amount which corresponds to the principal or interest of any of the loans and/or credits granted under this Credit Line Agreement, (ii) any fee, professional fee or expense that it must pay and/or reimburse by virtue of this Credit Line Agreement, the Security Agreements or the other Financing Documents, or (iii) any other obligation assumed under this Credit Line Agreement or the Security Agreements or the other Financing Documents.
12.2 False Representations or Warranties: If any of the representations or warranties made by DRP in this Credit Line Agreement or in the Security Agreements is false or uncertain as regards a material aspect, and such circumstance continues without being corrected during a term of fifteen (15) calendar days as of the notarial notice sent for that purpose by the AGENT.
12.3 Default on an Obligation: If DRP fails to comply with any of the obligations assumed under this Credit Line Agreement or the Security Agreements, different from the Payment Obligations referred to in Subclause 12.1 of this Clause Twelve, or if DRP incurs in an additional debt or financial obligation different from the Authorized Debt.
12.4 Default on a Financial Obligation: If DRP fails to comply with any of the Financial Obligations described in Clause Eleven, Subclause 11.1 hereof and said non-compliance is not remedied within thirty (30) calendar days following the notarial notification sent to this effect by the AGENT.
12.5 Bankruptcy or Insolvency: If DRP, DRR or one of its Affiliates initiates a bankruptcy, insolvency or equity restructuring proceeding or one of the aforesaid is initiated against it pursuant to the legislation applicable to these matters.
12.6 Cross Default: If DRP, DRR or any of its Affiliates fails to comply with any of the obligations assumed by virtue of another financing agreement that they have entered into, provided said default is for amounts greater than (i) US$500,000.00 in the case of DRP and/or DRR and (ii) US$1,000,000.00 in the case of any of DRP’s or DRR’s Affiliates, provided that in each case this originates the termination or anticipated expiration of the term for complying with its obligations derived from said agreement.
12.7 Invalidity of Security Agreements: If any of the Security Agreements is rescinded, terminates or ceases (i) to create a valid and complete guarantee on the property subject to this security with the priority granted on it, or (ii) to be in full force an effect for having been declared ineffective and without value by a competent arbitration or jurisdictional entity.
12.8 Invalidity of Financing Documents: If any of the Financing Documents ceases to be demandable or executable.
12.9 Government Authorizations: If any government authorization that DRP may need with respect to this Credit Line Agreement, to the Security Agreements or to the Financing Documents ceases to have full force and effect and provided that would cause a Material Adverse Effect.
12.10 Change in Stock Participation Title Holding: If DRR ceases to directly or indirectly own 66.66% of its interest in DRP, unless it has the approval of the Banks’ Majority.
12.11 Existence of Liens on the La Oroya Production Unit: If DRP encumbers, transfers, affects or in any other manner permitted by law, disposes of the mining concessions, the processing concessions, and/or any of the assets that it owns or that are related to, or physically located in the La Oroya Production Unit, except for the Permitted Liens and the disposal of assets referred in Clause 11.11 hereof, including disposal of the Cobriza mine assets.
12.12 Expropriation: If on a date after the Closing Date, the Peruvian Government should carry out any act that in the reasonable opinion and judgement of the Banks’ Majority, (i) could result in depriving the Banks of any of their rights as creditors under this Credit Line Agreement or the Security Agreements, or (ii) confiscates, expropriates or nationalizes DRP’s ownership or control of the properties matter of this Credit Line Agreement or of the Security Agreements.
12.13 Political Violence: If on a date after the Closing Date, occurs any act of war (declared or undeclared), civil war, revolution, insurrection or terrorism in the Republic of Peru that has a material adverse effect on DRP’s ability to comply with its obligations under this Credit Line Agreement or the Security Agreements.
12.14 Material Adverse Effect: If on the date after the signing of this Credit Line Agreement occurs any act or circumstance that, in the Banks’ Majority reasonable judgement and opinion, could have a Material Adverse Effect.
12.15 Material Adverse Change: If on the date after the signing of this Credit Line Agreement any act or circumstance should occur, which in the Banks’ Majority reasonable judgement and opinion may cause a Material Adverse Change.
12.16 Failure to Comply with the PAMA: If DRP has failed to comply with any of its obligations assumed by virtue of the PAMA, as amended from time to time, pursuant to the agreements in force, which were entered into with the competent government authorities; except if it involves the final closure of the Cobriza mine or if they have been disclosed to the AGENT pursuant to the provisions set forth in the second paragraph of Clause Eleven, Subclause 11.7 hereof.
12.17 Failure to Comply with Investments: If DRP fails to comply with the investment commitments agreed upon with the competent government authorities and does not cure the same in the manner permitted by such authorities.
CLAUSE THIRTEEN: CONSEQUENCES OF THE EVENTS OF DEFAULT
13.1 Should any of the Events of Default described in the preceding Clause take place, and provided the term, should there be such a term, to remedy said Event of Default would have expired without DRP having cured it, the AGENT is entitled, provided the Banks’ Majority requests it, to declare this Credit Line Agreement cancelled pursuant to the provisions set forth in Article 1430 of the Civil Code, by means of a written communication served through notarial mean to DRP attaching thereto the statement of the owed balance in accordance with the provisions set forth in Article 132, clause 7 of the General Law of the Financial System and of the Insurance System and Organic Law of the Banking and Insurance Superintendency (Law No. 26702), this agreement shall be understood as having been cancelled without need of any other communication or procedure. Likewise, the term shall be regarded expired and the immediate payment of the sums owed shall be demanded, in which case the AGENT shall be entitled to execute and/or demand in court the payment of all the sums owed, as well as to execute the guarantees mentioned in Clause Fourteen of this Credit Line Agreement. A delay by the AGENT and/or the Banks in exercising this right shall not mean in any case whatsoever a presumption of waiver of the same.
13.2 Should the presumption contemplated in the preceding Subclause occur and until the AGENT does not collect all the amounts owed by DRP, the compensatory interest and delayed payment interest will be applicable at the highest rates established by the AGENT and permitted by law.
CLAUSE FOURTEEN: GUARANTEES
14.1 Assignment of Rights to Accounts Receivable in favor of the AGENT, to the Benefit of the Banks, originated from the sales obtained from agreements or sale operations of its products and from collections generated from them, provided said accounts receivable are Accounts Receivable from Eligible Buyers, for which purpose DRP shall sign the corresponding Security Agreement.
14.2 First and Preferred Global and Floating Pledge in favor of the AGENT, to the Benefit of the Banks, on the entirety of concentrates (in beds), products in process and end products kept and/or prepared by DRP; for which purpose DRP shall sign the corresponding Security Agreement.
CLAUSE FIFTEEN: INDEMNITY
CLAUSE SIXTEEN: ASSIGNMENTS AND PARTICIPATIONS
CLAUSE SEVENTEEN: AMENDMENT TO THE AGREEMENT
17.1 The parties hereby reserve themselves the right to amend the terms of this Credit Line Agreement at any time they deem convenient. The amendments introduced shall become effective as of the execution of the contract that will be signed to this end or on the date agreed upon by the parties. Any amendments to this Credit Line Agreement must be necessarily made by means of a Public Deed, unless they refer to changes of domiciles, facsimile numbers, e-mail addresses and/or authorized persons to make the communications, in which case a communication of any of the aforementioned changes through a notarial letter will suffice.
17.2 Without prejudice to the aforementioned, any change in the terms and conditions of this Credit Line Agreement that implies: (i) a reduction or increase in the principal amount; (ii) a reduction or increase in the interest rates, whether compensatory or for delayed payment; (iii) an extension or reduction of the term; (iv) a reduction or increase in the amount of the fees; and (v) any amendment to the Security Agreements, shall require a written approval by all the Eligible Banks participating in the Credit Line.
CLAUSE EIGHTEEN: COSTS AND EXPENSES
18.1 DRP hereby binds itself to assume and pay all the costs and expenses originated for the AGENT as a result of the preparation, negotiation and execution of this Credit Line Agreement, including but not limited to attorneys’ fees, due diligence expenses, expenses derived from the AGENT’s participation and/or syndication and fees collected by the Banks in which the Collection Accounts are established as a consequence of this Credit Line Agreement.
18.2 Likewise, DRP hereby binds itself to assume and pay all in and out-of-court expenses that may originate from the collection of the sums that DRP could owe to the Banks and/or the AGENT by virtue of this Credit Line Agreement and/or the enforcement of the Security Agreements.
18.3 Likewise, DRP hereby binds itself to assume and pay the fees and expenses that could be charged to the AGENT by the correspondent banks that participate one way or another in the Letters of Credit issued by the AGENT, referred to in Clause Five hereof. The AGENT hereby binds itself to hand over to DRP one copy of the evidence of the liquidation(s) that said correspondent Bank(s) shall give to the former, but not the Income Tax that said banks must pay as a result of the income obtained, derived from this Credit Line Agreement.
18.4 Without prejudice to what is stated in the foregoing paragraphs, DRP shall assume all other costs and expenses derived from this Credit Line Agreement, including the Notary’s fees for the recording of this Credit Line Agreement as a Public Deed and the cost of a Testimony and a Simple Copy of the same for the AGENT.
CLAUSE NINETEEN: NOTICES
CLAUSE TWENTY: THE AGENT AND THE BANKS
20.1 Each one of Banks, hereby irrevocably designates Banco de Crédito del Perú as AGENT for all effects derived from this Credit Line Agreement, and the Financing Documents, and each Bank hereby authorizes the AGENT to execute the actions, exercise the powers and comply with the obligations that correspond to them in accordance with the terms of this Credit Line Agreement. Consequently, the functions of the AGENT for purposes of the Credit Line shall include (but not be limited to) those that correspond to an AGENT of disbursements, to receive payments from DRP, an AGENT to establish guarantees, to receive documents to be delivered by DRP under the Credit Line Agreement and to execute any measure that the Banks are entitled to under this Credit Line Agreement, among others. The parties hereby recognize and agree that all notices that have to be given by the Banks to DRP and by DRP to the Banks shall be solely and exclusively made through the AGENT.
20.2 The AGENT is entitled to execute any action it must execute under this Credit Line Agreement or under any Financing Document through agents or representatives. The AGENT shall not be held liable for the actions of said agents or representatives unless in the selection of such agents or representatives the AGENT incurred in an inexcusable wrongful act or omission.
20.3 The AGENT is entitled to act (or abstain from acting) based on any communication received in accordance to what is stipulated in this Credit Line Agreement and which it reasonably believes to be correct, genuine and executed by the authorized persons. Any decision that the AGENT shall take for the fulfilment of its duties, must have the approval of the Banks’ Majority, as established in Clause 1.1. Therefore, any action or forbearance by the AGENT within the framework of this Credit Line Agreement shall be fully justified if it is based on a communication from the Banks’ Majority. Any action or forbearance adopted by the AGENT based on the vote of a Banks’ Majority shall be mandatory to all Banks.
20.4 For purposes of this Credit Line Agreement, it shall be presumed that the AGENT does not know of the occurrence of any default by DRP or of any Event of Default, unless it has received a written communication in this sense from a Bank or from DRP or from any person that is a party in the granting of the Credit Line. Said communication must be in writing and must specify that it is a notification of a default.
20.5 Each Bank hereby declares that any action of forbearance adopted by said Bank and any decision taken shall be on an individual basis and shall be the result of its own analysis of the submitted and evaluated situations and documents. Each Bank hereby declares that the AGENT has not made any declaration, affirmation, or qualification of any type with respect to the analysis and evaluation that each Bank must make and no Bank’s decision is or shall be based on any declaration, affirmation or information of and furnished by the AGENT, except during the performance of its AGENT’s function of collecting DRP’s documents.
20.6 The AGENT shall be entitled to participate, in its capacity of Bank, as a Bank in this Credit Line Agreement, for which purpose it shall have all the rights and shall assume all the obligations that correspond to the Banks under the Financing Documents. In such situation, the term Bank shall include the AGENT in its capacity of Bank and not of AGENT.
20.7 The AGENT is entitled to waive his position and assign its contractual position of AGENT in this Credit Line Agreement. The Banks and DRP hereby give their irrevocable consent to the AGENT to waive its capacity of AGENT by means of a written notice to the Banks and to DRP no less than twenty (20) days in advance. However, said waiver shall not go into effect until a new AGENT is designated pursuant to the provisions set forth below in this Credit Line Agreement.
20.8 The Banks hereby bind themselves to indemnify the AGENT (in its capacity of AGENT and not of Bank) proportionally to their participation in the Credit Line, and to its Subsidiaries and Affiliates, as well as to their respective directors, officers or employees (each one an Indemnity Subject) for any loss, liability, claim, damage or expense (Indemnifying Damages) incurred by any of them as a result of, derived from, or directly or indirectly related to any investigation, law suit or any type of proceeding related to the operations encompassed under this Credit Line Agreement or another Financing Documents, including attorneys’ fees and costs of payments for in or out-of-court transactions, to the extent that said Indemnifying Damages have not been paid by DRP, its subsidiaries or Affiliates.
CLAUSE TWENTY-ONE: GOVERNING LEGISLATION
CLAUSE TWENTY-TWO: ARBITRATION
22.1 The parties hereby expressly agree that any conflict of controversy that may arise between them as a result of the interpretation or execution of this Credit Line Agreement, including those related to its being null and void or not valid, shall be resolved by means of a de jure arbitration entrusted to an Arbitration Court made up of three members who must necessarily be attorneys at law registered in the Bar Association, which will be held in accordance with the National and International Conciliation and Arbitration Regulation of the Chamber of Commerce of Lima.
22.2 The Arbitration Court will be formed in the following manner: each one of the parties shall designate one arbitrator and the third will be designated by mutual agreement of the first two arbitrators, who will be the Chairman of the Arbitration Court.
22.3 The arbitration shall be held in the city of Lima and the duration of the same may not exceed sixty (60) business days counted as of the date of installation of the Arbitration Court until the respective award is issued.
22.4 The Arbitration Award shall be final and unappealable.
22.5 The losing party shall assume the costs caused by the arbitration.
22.6 Should any of the parties decide to appeal for the annulment of the arbitration award before the Judiciary, it must first establish in favor of the opposite part a Bank Letter of Guaranty granted by a first-rank Bank with headquarters in Lima, equivalent to US$50,000.00 (FIFTY THOUSAND AND 00/100 US DOLLARS), which can be executed should that appeal be declared to be groundless in a final sentence. Said Bank Letter of Guaranty must be in force during the time the promoted process lasts.
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