<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended JULY 31, 1999
Or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _______ to _______
COMMISSION FILE NUMBER 333-66291
THE DOE RUN RESOURCES CORPORATION
(Exact name of registrant as specified in its charter)
NEW YORK 13-1255630
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
1801 PARK 270 DRIVE, SUITE 300
ST. LOUIS, MISSOURI 63146
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (314) 453 - 7100
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the proceeding 12 months (or for such shorter period that the
registrant was required to file such reports) and (2) has been subject to
such filing requirements for the past 90 days.
[X] YES [ ] NO
Number of shares outstanding of each of the issuer's classes of common stock,
as of September 10, 1999:
<TABLE>
<S> <C>
COMMON STOCK, $.10 PAR VALUE 1,000 SHARES
</TABLE>
<PAGE>
THE DOE RUN RESOURCES CORPORATION
INDEX TO FORM 10-Q
<TABLE>
<CAPTION>
PAGE NO.
--------
<S> <C>
PART 1. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
THE DOE RUN RESOURCES CORPORATION
Condensed Consolidated Balance Sheets
July 31, 1999 and October 31, 1998 3
Consolidated Statements of Operations
three and nine months ended July 31, 1999 and 1998 4
Condensed Consolidated Statements of Cash Flows
nine months ended July 31, 1999 and 1998 5
Notes to Consolidated Financial Statements 6-19
DOE RUN PERU S.R.L.
Condensed Consolidated Balance Sheets
July 31, 1999 and October 31, 1998 20
Condensed Consolidated Statements of Operations
three and nine months ended July 31, 1999 and 1998 21
Condensed Consolidated Statements of Cash Flows
nine months ended July 31, 1999 and 1998 22
Notes to Condensed Consolidated Financial Statements 23
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF 24-35
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT
MARKET RISK 35
PART II. OTHER INFORMATION.
ITEM 2. LEGAL PROCEEDINGS 35
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) EXHIBITS 36
SIGNATURES 37
EXHIBIT INDEX 38
</TABLE>
<PAGE>
PART 1. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
THE DOE RUN RESOURCES CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
JULY 31, OCTOBER 31,
1999 1998
-------- ------------
(UNAUDITED)
<S> <C> <C>
ASSETS
Current assets:
Cash $ 6,963 $ 4,646
Trade accounts receivable, net of allowance for
doubtful accounts 85,190 86,338
Inventories 128,515 126,467
Prepaid expenses and other current assets 35,968 30,306
--------- ---------
Total current assets 256,636 247,757
Property, plant and equipment, net 264,727 264,468
Special term deposit 125,000 125,000
Net deferred tax assets - 8,015
Other noncurrent assets, net 15,582 18,399
--------- ---------
Total assets $ 661,945 $ 663,639
========= =========
LIABILITIES AND SHAREHOLDER'S EQUITY
Current liabilities:
Short-term borrowings and current maturities of long-term debt $ 11,261 $ 2,018
Accounts payable 48,510 53,698
Accrued liabilities 60,802 50,670
Net deferred tax liabilities - 1,815
--------- ---------
Total current liabilities 120,573 108,201
Long-term debt, less current maturities 474,560 476,284
Net deferred tax liabilities 3,558 2,571
Other noncurrent liabilities 57,281 58,005
--------- ---------
Total liabilities 655,972 645,061
Shareholder's equity:
Common stock, $.10 par value, 1,000 shares authorized,
issued, and outstanding - -
Additional paid-in capital 5,000 5,000
Retained earnings 973 13,578
--------- ---------
Total shareholder's equity 5,973 18,578
--------- ---------
Total liabilities and shareholder's equity $ 661,945 $ 663,639
========= =========
</TABLE>
The accompanying notes are an integral part of
these consolidated financial statements.
3
<PAGE>
THE DOE RUN RESOURCES CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
JULY 31, JULY 31,
------------------------------- ------------------------------
1999 1998 1999 1998
-------------- --------------- --------------- --------------
<S> <C> <C> <C> <C>
Net sales $ 204,382 $ 184,360 $ 577,765 $ 527,765
Costs and expenses:
Cost of sales 172,748 156,586 493,095 439,691
Depletion, depreciation and amortization 7,684 5,551 24,064 17,012
Selling, general and administrative 8,658 8,031 26,318 25,731
Exploration 1,005 1,165 2,855 2,764
--------- --------- --------- ---------
Total costs and expenses 190,095 171,333 546,332 485,198
--------- --------- --------- ---------
Income from operations 14,287 13,027 31,433 42,567
Other income (expense):
Interest expense (14,972) (12,532) (44,413) (27,037)
Interest income 3,629 3,641 11,202 6,000
Other, net (800) 704 (1,117) 69
--------- --------- --------- ---------
(12,143) (8,187) (34,328) (20,968)
--------- --------- --------- ---------
Income (loss) before income taxes 2,144 4,840 (2,895) 21,599
Income tax expense 1,186 2,181 9,710 10,161
--------- --------- --------- ---------
Income (loss) before extraordinary item 958 2,659 (12,605) 11,438
Extraordinary item related to early retirement
of debt, net of income tax benefit - - - (4,388)
--------- --------- --------- ---------
Net income (loss) $ 958 $ 2,659 $ (12,605) $ 7,050
========= ========= ========== =========
</TABLE>
The accompanying notes are an integral part of
these consolidated financial statements.
4
<PAGE>
THE DOE RUN RESOURCES CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
NINE MONTHS
ENDED JULY 31,
------------------------------
1999 1998
-------------- --------------
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $ (12,605) $ 7,050
Extraordinary item related to retirement of debt - 6,750
Adjustments to reconcile net income to net cash provided by operating
activities:
Depreciation, depletion and amortization 24,064 17,012
Amortization of deferred financing fees 2,666 1,501
Deferred income taxes 7,187 281
Imputed interest 358 15
Increase (decrease) resulting from changes in assets and liabilities 58 (36,434)
----------- ---------
Net cash provided by (used in) operating activities 21,728 (3,825)
Cash flows from investing activities:
Special term deposit - (125,000)
Purchases of property, plant and equipment (24,912) (17,032)
----------- ---------
Net cash used in investing activities (24,912) (142,032)
Cash flows from financing activities:
Proceeds from (payments on) revolving loans and
short term borrowings, net (15,544) 15,767
Proceeds from long-term debt 5,665 380,000
Payments on long-term debt (2,075) (230,845)
Proceeds from sale/leaseback transactions 17,922 -
Payment of deferred financing costs (467) (12,930)
Payment of dividends - (189)
Redemption of preferred stock - (2,500)
----------- ---------
Net cash provided by financing activities 5,501 149,303
----------- ---------
Net increase in cash 2,317 3,446
Cash at beginning of period 4,646 8,943
----------- ---------
Cash at end of period $ 6,963 $ 12,389
=========== =========
Supplemental disclosure of cash flow information-
Cash paid during the period for:
Interest, net of capitalized interest $ 29,206 $ 9,445
=========== =========
Income taxes $ 6,739 $ 14,089
=========== =========
</TABLE>
The accompanying notes are an integral part of
these consolidated financial statements.
5
<PAGE>
THE DOE RUN RESOURCES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS)
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
UNAUDITED INTERIM FINANCIAL STATEMENTS
These interim consolidated financial statements include the accounts of
The Doe Run Resources Corporation and its subsidiaries (collectively, the
Company). The common stock of the Company is owned by DR Acquisition
Corp., a wholly-owned subsidiary of The Renco Group, Inc. (Renco). In the
opinion of management, the interim consolidated financial statements
contain all adjustments, consisting of normal recurring accruals,
necessary to present fairly the consolidated financial position as of
July 31, 1999 and results of operations for the three and nine month
periods ended July 31, 1999 and 1998. Interim periods are not necessarily
indicative of results to be expected for the year.
RECLASSIFICATIONS
Certain prior year balances have been reclassified in order to conform
to current presentation.
(2) INVENTORIES
<TABLE>
<CAPTION>
JULY 31, OCTOBER 31,
1999 1998
----------- -----------
(UNAUDITED)
<S> <C> <C>
Finished metals and concentrates $ 15,323 $ 10,954
Metals and concentrates in process 66,215 70,224
Materials, supplies and repair parts 46,977 45,289
-------- --------
$128,515 $126,467
======== ========
</TABLE>
Materials, supplies and repair parts are stated net of reserves for
obsolescence of $4,564 and $4,559 as of July 31, 1999 and October 31,
1998, respectively.
(3) SALE/LEASEBACK TRANSACTION
In January 1999, Doe Run Peru S.R.L. (Doe Run Peru) finalized an
agreement for the sale and leaseback of its oxygen plant at the La Oroya
facility for $17,162. Doe Run Peru has an option to repurchase the oxygen
plant at the end of the five-year lease term for $200. This transaction
has been accounted for as a financing arrangement. A sale and leaseback
of computer equipment, accounted for as a financing arrangement, provided
an additional $760 of cash flows from financing activities. Under a
related capital lease, certain computer hardware was leased under a
capital lease obligation for $603, which included a deferred maintenance
balance of $151.
(4) CHANGE IN TAXABLE STATUS
On January 15, 1999, Renco filed an election, with the consent of its
shareholders, with the Internal Revenue Service to change its taxable
status from that of a subchapter C corporation to that of a subchapter S
corporation, effective November 1, 1998. At the same time, Renco elected
for the Company to be treated as a qualified subchapter S subsidiary
(QSSS). Most states in which the Company operates will follow similar tax
treatment. QSSS status requires the ultimate shareholders to include
their pro rata share of the Company's income or loss in their individual
tax returns. The election does not affect foreign income taxes related to
the Company's foreign subsidiaries, and the Company will continue to
provide for state and local taxes for those jurisdictions that do not
recognize QSSS status. As a result of this change in tax status, the
elimination of federal and most state deferred tax assets and liabilities
for income tax purposes resulted in a charge to income tax expense of
$6,200 for the nine months ended July 31, 1999.
6
<PAGE>
THE DOE RUN RESOURCES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS)
(5) HEDGING
The fair market value of the Company's net hedging positions at July 31,
1999 is the difference between quoted prices at the respective period-end
and the contract settlement value. The fair market value represents the
estimated net cash the Company would receive (pay) if the contracts were
canceled on the respective dates. As management has designated these
contracts as hedges, the related gains and losses will be recognized in
net sales when the related production is sold.
The fair market value of the Company's net open hedging positions at
July 31, 1999 was $(792).
(6) ENVIRONMENTAL AND LITIGATION MATTERS
ENVIRONMENTAL
The Company recorded a liability of $34,536 and $35,896 as of July 31,
1999 and October 31, 1998, respectively, which represent management's best
estimates of known obligations relating to environmental and reclamation
matters, which are discussed below.
DOMESTIC OPERATIONS
The Company is subject to numerous federal, state and local environmental
laws and regulations governing, among other things, air emissions, waste
water discharge, solid and hazardous waste treatment, and storage,
disposal and remediation of releases of hazardous materials. In common
with much of the mining industry, the Company's facilities are located on
sites that have been used for heavy industrial purposes for decades and
may require remediation. The Company has made and intends to continue
making the necessary expenditures for environmental remediation and
compliance with environmental laws and regulations. Environmental laws
and regulations may become more stringent in the future which could
increase costs of compliance.
Primary smelter slag produced by and stored at the primary smelter in
Herculaneum, Missouri is currently exempt from hazardous waste regulation
under the Resource Conservation and Recovery Act of 1976, as amended
(RCRA). The Company has accrued approximately $1,000 related to the
Herculaneum smelter's operations, primarily for closure obligations. If
the slag or other wastes at the smelter were to be regulated as hazardous
waste, the Company may be required to take corrective action under RCRA
at the smelter, as well as to adopt stricter management practices for
these wastes. Further, the EPA has initiated an investigation of the
smelter under the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended (CERCLA), which could potentially
require remediation similar to the corrective action mentioned above.
At its primary smelter in Glover, Missouri, the Company intends to open a
new slag pile for disposal of its smelting residue. The cost of opening the
slag pile is estimated at $400, which will be capitalized. The slag pile
will be available for use in November, 1999. According to the purchase
agreement with Asarco, Inc. (ASARCO) is required to close the existing
pile with proportionate contribution from Doe Run based on its use. Doe
Run's contribution is expected to be minimal. The Company will accrue for
closure of the new slag pile over the period of use.
The Company is working with regulators to develop a new three-year
compliance plan so that the Herculaneum smelter meets the ambient air
quality standard for lead promulgated under the federal Clean Air Act.
The plan must be completed by September 2000 and will take effect after
that date to implement the control measures identified in the plan. The
Company expects to make capital expenditures for various control measures
totaling approximately $2,900 in fiscal 1999 and anticipates additional
future cash requirements of $3,000 during the three-year compliance
period. Regulators could require that additional measures be included in
the plan, which could increase the amount of anticipated capital
expenditures.
7
<PAGE>
THE DOE RUN RESOURCES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS)
The Company has received notice that it is a potentially responsible
party (PRP) subject to liability CERCLA, at the following sites: four
sites in St. Francois County, Missouri, including the Big River Mine
Tailings site, the Bonne Terre site, the Federal site and the National
site; the Oronogo-Durenweg site in Jasper County, Missouri; the Cherokee
County site in Cherokee County, Kansas; the Tar Creek site in Ottawa
County, Oklahoma; the Block "P" site in Cascade County, Montana; and the
Missouri Electric Works site in Cape Girardeau, Missouri. There are four
additional sites in St. Francois County for which the Environmental
Protection Agency (EPA) has indicated it will issue notice. These sites
involve historical operations of predecessors of the Company. CERCLA
provides for strict and, in certain circumstances, joint and several
liability for response costs and natural resource damages. The Company
has a reserve as of July 31, 1999 of approximately $14,500 for these
sites, including the four additional sites in St. Francois County, which
the Company believes is adequate based on its investigations to date.
However, depending upon the types of remediation required and certain
other factors, costs at these sites, individually or collectively, could
have a material adverse effect on the results of operations, financial
condition and liquidity of the Company.
The Company signed a voluntary Administrative Order of Consent (AOC) in
1994 with the EPA to remediate the Big River Mine Tailings site. In
February 1997, the Company signed an AOC to perform an Engineering
Evaluation/Cost Analysis (EE/CA) on the Bonne Terre site. In March 1998,
an AOC was signed to perform an EE/CA on the National site. In addition
to remediating the mine waste areas at these sites, the Company has
signed an AOC with the EPA to conduct a Remedial
Investigation/Feasibility Study (RI/FS) to assess potential off-site
impacts of site operations on and the need for remediation regarding
groundwater, residential soils, several creeks and a river. The RIFS is
being conducted by a third party and is approximately one-half complete,
with completion expected within two years. The Company believes the
current reserves assigned to these sites are adequate. However, should
remediation goals or areas change, requiring substantially increased
measures, there can be no assurance that the reserves would be adequate.
The Company has been advised by the EPA that it is considering taking
certain response actions at a mine site in Madison County, Missouri known
as the LaMotte Site. A predecessor of the Company was a former operator
of the site in a joint venture with another company. The EPA has not
decided whether any action will be taken, but the Company has signed an
AOC to conduct an RI/FS at the site. This site is substantially smaller
than the sites in St. Francois County where the Company has been named a
PRP, and the potential issues are less complex. At this time, based on
this preliminary meeting and an inspection of the site, management does
not believe that any future action will result in a material adverse
impact to the results of operations, financial condition or liquidity of
the Company.
The Company's recycling facility is subject to corrective action
requirements under RCRA, as a result of a storage permit for certain
wastes issued in 1989. This has required and may involve future
remediation of solid waste management units at the site. Although it is
not possible to predict whether completed actions will be approved or new
actions required, the Company has reserves as of July 31, 1999 of
approximately $1,800 for future corrective actions and $2,600 for closure
costs for the permitted storage area.
The Company's domestic operating facilities have wastewater discharge
permits issued under the federal Clean Water Act, as amended. It is
expected that stricter discharge limits than previously in effect will be
included in permits now subject to renewal. As a result, there will be
additional treatment facilities required, with anticipated total capital
expenditures of $4,000 over the next five years to meet applicable permit
requirements. Management does not expect an appreciable increase in
operating costs.
The Company's mining and milling operations include seven mine waste
disposal facilities that are subject to Missouri mine closure permit
requirements. The total expected cost of closure is $14,600. The Company
has begun certain closure requirements ahead of closure and will accrue
for the cost of ultimate closure at a rate of approximately $450 per
year. The Company's mine closure reserves were approximately $7,400 as of
July 31, 1999.
8
<PAGE>
THE DOE RUN RESOURCES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS)
FOREIGN OPERATIONS
Doe Run Peru has submitted to and received approval from the Peruvian
government for the Programa de Adecuacion y Manejo Ambiental
(Environmental Adjustment and Management Program) (the PAMA) that
consisted of an environmental impact analysis, monitoring plan and data,
mitigation measures and closure plan. The PAMA also sets forth the
actions and corresponding annual investments the concession holder agrees
to undertake in order to achieve compliance with the maximum applicable
limits prior to expiration of the PAMA (ten years for smelters, such as
Doe Run Peru's operations, and five years for any other type of mining or
metallurgical operation). The required amount of annual investment must
not be less than one percent of annual sales. Once approved, the PAMA
functions as the equivalent of an operating permit with which the
operator must comply. After expiration of the PAMA, the operator must
comply with all applicable standards and requirements.
Doe Run Peru has committed under its PAMA to implement the following
projects through December 31, 2006: (i) new sulfuric acid plants; (ii)
elimination of fugitive gases from the coke plant; (iii) use of
oxygenated gases in the anodic residue plant; (iv) water treatment plant
for the copper refinery; (v) a recirculation system for cooling waters at
the smelter; (vi) management and disposal of acidic solutions at the
silver refinery; (vii) industrial waste water treatment plant for the
smelter and refinery; (viii) containment dam for the lead muds near the
zileret plant; (ix) granulation process water at the lead smelter; (x)
anode washing system at the zinc refinery; (xi) management and disposal
of lead and copper slag wastes; and (xii) domestic waste water treatment
and domestic waste disposal. Annual spending on a calendar year basis
approved in the PAMA is as follows:
<TABLE>
<CAPTION>
ESTIMATED
YEAR COSTS
<S> <C>
1999 $ 5,050
2000 11,265
2001 13,800
2002 14,300
2003 13,180
2004 30,055
2005 34,790
2006 42,040
---------
$ 164,480
=========
</TABLE>
The current estimate for the total of spending on environmental projects
under the PAMA and on additional related process changes for Doe Run Peru
is approximately $195,000 for this period.
Doe Run Peru's operations historically and currently exceed some of the
applicable Ministry of Energy and Mines (MEM) maximum permissible limits
pertaining to air emissions, ambient air quality and waste water effluent
quality. The PAMA projects, which are more fully discussed below, have
been designed to achieve compliance with such requirements prior to the
expiration of the PAMA on January 13, 2007. No assurance can be given
that implementation of the PAMA projects is feasible or that their
implementation will achieve compliance with the applicable legal
requirements by the end of the PAMA period. Doe Run Peru has advised the
MEM that it intends to seek changes in certain PAMA projects that it
believes will more effectively achieve compliance. However, there can be
no assurance that the MEM will approve proposed changes to the PAMA or
that implementation of the changes will not increase the cost of
compliance. Further, there can be no assurance that the Peruvian
government will not in the future require compliance with additional or
different environmental obligations that could adversely affect Doe Run
Peru's business, financial condition or results of operations. Under the
purchase agreement related to the acquisition of the La Oroya assets in
October 1997, Empresa Minera del Centro del Peru S.A. (Centromin), the
previous owner of the La Oroya assets, agreed to indemnify Doe Run Peru
against environmental liability arising out of its prior operations, and
9
<PAGE>
THE DOE RUN RESOURCES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS)
performance of the indemnity has been guaranteed by the Peruvian
government through the enactment of the Supreme Decree No. 042-97-PCM.
However, there can be no assurance that Centromin will satisfy its
environmental obligations and investment requirements, including those in
its PAMA, or that the guarantee will be honored. Any failure by Centromin
to satisfy its environmental obligations could adversely affect Doe Run
Peru's business, financial condition or results of operations.
According to the purchase agreement, the Company has the option to
continue the use of the LaOroya smelter existing zinc ferrite disposal
site until October 2000, after which it can take ownership of the site or
create a new site. If the Company chooses to take ownership of the site,
it will be responsible for its closure costs. The Company has accrued for
management's estimate of the closure costs, or $7,200. If the ferrite
site is abandoned, the Company must pay this amount to Centromin.
Doe Run Peru's Cobriza mine has a separate PAMA. The total cost of
capital projects to manage tailings, sewage and garbage is approximately
$4,700, to be expended over the next three years.
CONSOLIDATED
The Company believes its reserves for domestic and foreign environmental
and reclamation matters are adequate, based on the information available.
Depending upon the type and extent of remediation activities required,
costs in excess of established reserves are reasonably possible.
Therefore, there can be no assurance that additional costs, both
individually and in the aggregate, would not have a material adverse
effect on the results of operations, financial condition and liquidity of
the Company.
LITIGATION
The Company is a defendant in six lawsuits alleging certain damages
stemming from the operations at the Herculaneum smelter. Two of these
cases are class action lawsuits. In one case, the plaintiffs seek to have
certified two separate classes. The first class would consist of property
owners in a certain section of Herculaneum, alleging that property values
have been damaged due to the operations of the smelter. The second class
would be composed of children who lived in Herculaneum during a period of
time when they were nine months to six years old, and the remedy sought
is medical monitoring for the class. The second class action similarly is
seeking certification of a class of property owners allegedly damaged by
operations from the smelter, but the purported size of the class is every
home in Herculaneum, Missouri. The other four cases are personal injury
actions by sixteen individuals who allege damages from the effects of
lead poisoning due to operations at the smelter. Punitive damages also
are being sought in each case. The Company is vigorously defending all of
these claims.
Preliminary investigation and research by the Company indicates property
values in Herculaneum are consistent with those of surrounding
communities and have not been affected by the smelter. Finally, based on
rules for class certification, the Company believes class certification
is not appropriate. Because the cases are in discovery, the Company is
unable at this time to state with certainty the expected outcome of and
the final costs of any of these cases. Therefore, there can be no
assurance that these cases would not have a material adverse effect, both
individually and in the aggregate, on the results of operations,
financial condition and liquidity of the Company.
On May 21, 1999, a lawsuit was filed against the Company alleging certain
damages from discontinued mine facilities in St. Francois County. The
plaintiffs seek to have certified two separate classes. The first class
would consist of property owners, alleging that property values have been
damaged due to the tailings from the discontinued operations. The second
class would be composed of children, and the remedy sought is medical
monitoring for the class. The Company intends to vigorously defend itself
against this claim. The Company is unable at this time to state with
certainty the expected outcome of and the final costs of this suit.
Therefore, there can be no assurance the suit will not have a material
adverse effect on the results of operations, financial condition and
liquidity of the Company.
10
<PAGE>
THE DOE RUN RESOURCES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS)
(7) GUARANTOR SUBSIDIARIES
The Guarantor Subsidiaries (Fabricated Products, Inc. (FPI) and DR Land
Holdings, LLC (the Domestic Guarantors) Doe Run Cayman Ltd. (Doe Run
Cayman) and certain subsidiaries, Doe Run Mining S.R.L. and its
subsidiaries Doe Run Development S.A.C. and Doe Run Peru, and its
wholly-owned subsidiary, Doe Run Air S.A.C.) have jointly and severally,
fully, unconditionally and irrevocably guaranteed the unsecured debt of
the Company. Separate financial statements and other disclosures
concerning certain Guarantor Subsidiaries and disclosures concerning
non-Guarantor Subsidiaries have not been presented because management has
determined that such information is not material to investors.
11
<PAGE>
THE DOE RUN RESOURCES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS)
(7) GUARANTOR SUBSIDIARIES (CONTINUED)
CONDENSED CONSOLIDATING BALANCE SHEET
AS OF JULY 31, 1999 (UNAUDITED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
The Company
Excluding Doe Run Cayman Doe Run
Guarantor Domestic and Certain Peru and The
Subsidiaries Guarantors Subsidiaries Subsidiaries Eliminations Company
------------ ---------- -------------- ------------ ------------ -------
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Current assets:
Cash $ - $ - $ 31 $ 6,932 $ - $ 6,963
Trade accounts receivable, net of allowance
for doubtful accounts 48,462 5,807 - 31,267 (346) 85,190
Inventories 52,603 2,302 - 73,652 (42) 128,515
Prepaid expenses and other current assets 9,730 176 1,234 26,548 (1,720) 35,968
Due from subsidiaries 14,145 - 15,886 - (30,031) -
Due from parent - - - 32,189 (32,189) -
-------- ------- -------- -------- --------- --------
Total current assets 124,940 8,285 17,151 170,588 (64,328) 256,636
Property, plant and equipment, net 143,753 8,103 - 112,871 - 264,727
Special term deposit 125,000 - - - - 125,000
Other noncurrent assets, net 14,658 317 253 354 - 15,582
Investment in subsidiaries 25,172 - 177,764 - (202,936) -
-------- ------- -------- -------- --------- --------
Total assets $433,523 $16,705 $195,168 $283,813 $(267,264) $661,945
======== ======= ======== ======== ========= ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Short-term borrowings and current maturities
of long-term debt $ 349 $ - $ 1,465 $ 9,447 $ - $ 11,261
Accounts payable 17,536 2,745 - 28,575 (346) 48,510
Accrued liabilities 37,626 472 7,208 17,216 (1,720) 60,802
Due to subsidiaries - - 32,189 - (32,189) -
Due to parent - 11,630 1,323 17,078 (30,031) -
-------- ------- -------- -------- --------- --------
Total current liabilities 55,511 14,847 42,185 72,316 (64,286) 120,573
Long-term debt, less current maturities 323,862 - 127,595 23,103 - 474,560
Net deferred tax liabilities - - 128 3,430 - 3,558
Other noncurrent liabilities 48,177 1,904 - 7,200 - 57,281
-------- ------- -------- -------- --------- --------
Total liabilities 427,550 16,751 169,908 106,049 (64,286) 655,972
Shareholders' equity:
Common stock, $.10 par value, 1,000 shares
authorized, issued, and outstanding 0 - - - - 0
Common stock, $1 par value, 1,000 shares
authorized, issued, and outstanding - 1 - - (1) -
Common stock, $1 par value, 2,005,000 shares
authorized, issued and outstanding - - 2,005 - (2,005) -
Common stock, one nuevo sole par value,
648,672,941 shares authorized, issued
and outstanding - - - 255,200 (255,200) -
Additional paid in capital 5,000 1,205 - (113,409) 112,204 5,000
Foreign currency translation adjustment - - - (15,029) 15,029 -
Retained earnings 973 (1,252) 23,255 51,002 (73,005) 973
-------- ------- -------- -------- --------- --------
Total shareholders' equity 5,973 (46) 25,260 177,764 (202,978) 5,973
-------- ------- -------- -------- --------- --------
Total liabilities and shareholders' equity $433,523 $16,705 $195,168 $283,813 $(267,264) $661,945
======== ======= ======== ======== ========= ========
</TABLE>
12
<PAGE>
THE DOE RUN RESOURCES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS)
(7) GUARANTOR SUBSIDIARIES (CONTINUED)
CONDENSED CONSOLIDATING BALANCE SHEET
AS OF OCTOBER 31, 1998
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
The Company
Excluding Doe Run Cayman Doe Run
Guarantor Domestic and Certain Peru and
Subsidiaries Guarantors Subsidiaries Subsidiary
------------ ----------- -------------- ----------
<S> <C> <C> <C> <C>
ASSETS
Current assets:
Cash $ - $ - $ 89 $ 4,557
Trade accounts receivable, net of allowance for
doubtful accounts 51,387 5,127 4,374 30,935
Inventories 39,545 1,735 6,506 78,150
Prepaid expenses and other current assets 6,966 134 3,366 21,923
Due from subsidiaries 20,434 - 10,388 85
Due from parent - - - 22,144
------------ ---------- --------- -------
Total current assets 118,332 6,996 24,723 157,794
Property, plant and equipment, net 151,255 8,818 3,634 100,761
Special term deposit 125,000 - - -
Net deferred tax assets 8,015 - - -
Other noncurrent assets, net 17,274 391 286 448
Investment in subsidiaries 20,776 - 156,174 -
------------ ---------- --------- -------
Total assets $ 440,652 $ 16,205 $ 184,817 $259,003
------------ ---------- --------- -------
------------ ---------- --------- -------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current maturities of long-term debt $ 895 $ - $ 1,123 $ -
Accounts payable 21,120 2,937 4,971 30,155
Accrued liabilities 28,692 366 7,107 16,588
Net deferred tax liabilities 1,815 - - -
Due to subsidiaries - - 22,144 -
Due to parent - 11,068 811 19,028
------------ ---------- --------- -------
Total current liabilities 52,522 14,371 36,156 65,771
Long-term debt, less current maturities 320,689 - 127,595 28,000
Net deferred tax liabilities - - 5 2,566
Other noncurrent liabilities 48,863 1,942 - 7,200
------------ ---------- --------- -------
Total liabilities 422,074 16,313 163,756 103,537
Shareholders' equity:
Common stock, $.10 par value, 1,000 shares authorized,
issued, and outstanding 0 - - -
Common stock, $1 par value, 1,000 shares authorized,
issued, and outstanding - 1 - -
Common stock, $1 par value, 2,005,000 shares authorized,
issued and outstanding - - 2,005 -
Common stock, one nuevo sole par value, 648,672,941
shares authorized, issued and outstanding - - - 247,926
Additional paid in capital 5,000 935 - (125,000)
Retained earnings 13,578 (1,044) 19,056 32,540
------------ ---------- --------- -------
Total shareholders' equity 18,578 (108) 21,061 155,466
------------ ---------- --------- -------
Total liabilities and shareholders' equity $ 440,652 $ 16,205 $ 184,817 $259,003
------------ ---------- --------- -------
------------ ---------- --------- -------
<CAPTION>
The
Eliminations Company
------------ -------
<S> <C> <C>
ASSETS
Current assets:
Cash $ - $ 4,646
Trade accounts receivable, net of allowance for
doubtful accounts (5,485) 86,338
Inventories 531 126,467
Prepaid expenses and other current assets (2,083) 30,306
Due from subsidiaries (30,907) -
Due from parent (22,144) -
------- --------
Total current assets (60,088) 247,757
Property, plant and equipment, net - 264,468
Special term deposit - 125,000
Net deferred tax assets - 8,015
Other noncurrent assets, net - 18,399
Investment in subsidiaries (176,950) -
----------- ----------
Total assets $ (237,038) $ 663,639
----------- ----------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current maturities of long-term debt - $ 2,018
Accounts payable (5,485) 53,698
Accrued liabilities (2,083) 50,670
Net deferred tax liabilities - 1,815
Due to subsidiaries (22,144) -
Due to parent (30,907) -
---------- ---------
Total current liabilities (60,619) 108,201
Long-term debt, less current maturities - 476,284
Net deferred tax liabilities - 2,571
Other noncurrent liabilities - 58,005
---------- ---------
Total liabilities (60,619) 645,061
Shareholders' equity:
Common stock, $.10 par value, 1,000 shares authorized,
issued, and outstanding - 0
Common stock, $1 par value, 1,000 shares authorized,
issued, and outstanding (1) -
Common stock, $1 par value, 2,005,000 shares authorized,
issued and outstanding (2,005) -
Common stock, one nuevo sole par value, 648,672,941
shares authorized, issued and outstanding (247,926) -
Additional paid in capital 124,065 5,000
Retained earnings (50,552) 13,578
---------- ---------
Total shareholders' equity (176,419) 18,578
---------- ---------
Total liabilities and shareholders' equity $ (237,038) $ 663,639
---------- ---------
</TABLE>
13
<PAGE>
THE DOE RUN RESOURCES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS)
(7) GUARANTOR SUBSIDIARIES (CONTINUED)
CONSOLIDATING STATEMENT OF OPERATIONS
THREE MONTHS ENDED JULY 31, 1999 (UNAUDITED)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
The Company
Excluding Doe Run Cayman Doe Run
Guarantor Domestic and Certain Peru and The
Subsidiaries Guarantors Subsidiaries Subsidiaries Eliminations Company
------------- ---------- -------------- ------------ ------------ --------
<S> <C> <C> <C> <C> <C> <C>
Net sales $ 84,152 $ 7,145 $ 3,191 $ 118,304 $ (8,410) $204,382
Costs and expenses:
Cost of sales 67,724 6,069 3,702 95,896 (643) 172,748
Depletion, depreciation and amortization 5,393 382 - 1,909 - 7,684
Selling, general and administrative 4,069 433 2,805 9,103 (7,752) 8,658
Exploration 1,005 - - - - 1,005
-------- ------- ------ --------- -------- --------
Total costs and expenses 78,191 6,884 6,507 106,908 (8,395) 190,095
-------- ------- ------ --------- -------- --------
Income (loss) from operations 5,961 261 (3,316) 11,396 (15) 14,287
Other income (expense):
Interest expense (10,189) (273) (3,698) (1,030) 218 (14,972)
Interest income 3,796 - - 51 (218) 3,629
Other, net 92 (29) (7) (856) - (800)
Equity in earnings of subsidiaries 1,497 - 9,161 - (10,658) -
-------- ------- ------ --------- -------- --------
(4,804) (302) 5,456 (1,835) (10,658) (12,143)
-------- ------- ------ --------- -------- --------
Income (loss) before income tax expense 1,157 (41) 2,140 9,561 (10,673) 2,144
Income tax expense 199 - 587 400 - 1,186
-------- ------- ------ --------- -------- --------
Net income (loss) $ 958 $ (41) $ 1,553 $ 9,161 $(10,673) $ 958
-------- ------- ------ --------- -------- --------
</TABLE>
14
<PAGE>
THE DOE RUN RESOURCES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS)
(7) GUARANTOR SUBSIDIARIES (CONTINUED)
CONSOLIDATING STATEMENT OF OPERATIONS
THREE MONTHS ENDED JULY 31, 1998 (UNAUDITED)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
The Company
Excluding Doe Run Cayman Doe Run
Guarantor Domestic and Certain Peru and The
Subsidiaries Guarantors Subsidiaries Subsidiary Eliminations Company
------------ ---------- -------------- ---------- ------------ -------
<S> <C> <C> <C> <C> <C> <C>
Net sales $62,350 $ 4,614 $ 3,049 $122,085 $ (7,738) $184,360
Costs and expenses:
Cost of sales 51,584 4,148 - 101,406 (552) 156,586
Depletion, depreciation and amortization 3,677 260 - 1,614 - 5,551
Selling, general and administrative 4,220 290 2,418 8,393 (7,290) 8,031
Exploration 1,165 - - - - 1,165
------- ------- ------- -------- -------- --------
Total costs and expenses 60,646 4,698 2,418 111,413 (7,842) 171,333
------- ------- ------- -------- -------- --------
Income (loss) from operations 1,704 (84) 631 10,672 104 13,027
Other income (expense):
Interest expense (8,095) (223) (4,193) (244) 223 (12,532)
Interest income 3,761 - 10 93 (223) 3,641
Other, net (302) 2 1,120 (116) - 704
Equity in earnings of subsidiaries 6,409 - 9,042 - (15,451) -
------- ------- ------- -------- -------- --------
1,773 (221) 5,979 (267) (15,451) (8,187)
------- ------- ------- -------- -------- --------
Income (loss) before income tax expense 3,477 (305) 6,610 10,405 (15,347) 4,840
Income tax expense 818 - - 1,363 - 2,181
Net income (loss) $ 2,659 $ (305) $ 6,610 $ 9,042 $(15,347) $ 2,659
------- ------- ------- -------- -------- --------
------- ------- ------- -------- -------- --------
</TABLE>
15
<PAGE>
THE DOE RUN RESOURCES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS)
(7) GUARANTOR SUBSIDIARIES (CONTINUED)
CONSOLIDATING STATEMENT OF OPERATIONS
NINE MONTHS ENDED JULY 31, 1999 (UNAUDITED)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
The Company
Excluding Doe Run Cayman Doe Run
Guarantor Domestic and Certain Peru and The
Subsidiaries Guarantors Subsidiaries Subsidiary Eliminations Company
------------ ---------- -------------- ---------- ------------ -------
<S> <C> <C> <C> <C> <C> <C>
Net sales $238,862 $ 19,108 $ 15,198 $336,893 $(32,296) $577,765
Costs and expenses:
Cost of sales 197,256 16,105 9,279 280,429 (9,974) 493,095
Depletion, depreciation and amortization 17,221 1,144 45 5,654 - 24,064
Selling, general and administrative 11,896 1,128 8,488 26,555 (21,749) 26,318
Exploration 2,855 - - - - 2,855
-------- -------- -------- -------- -------- --------
Total costs and expenses 229,228 18,377 17,812 312,638 (31,723) 546,332
-------- -------- -------- -------- -------- --------
Income from operations 9,634 731 (2,614) 24,255 (573) 31,433
Other income (expense):
Interest expense (30,530) (826) (11,186) (2,642) 771 (44,413)
Interest income 11,415 - 41 517 (771) 11,202
Other, net (467) (113) 2,272 (2,809) - (1,117)
Equity in earnings of subsidiaries 4,126 - 17,754 - (21,880) -
-------- -------- -------- -------- -------- --------
(15,456) (939) 8,881 (4,934) (21,880) (34,328)
-------- -------- -------- -------- -------- --------
Income (loss) before income tax expense (5,822) (208) 6,267 19,321 (22,453) (2,895)
Income tax expense 6,783 - 2,068 859 - 9,710
-------- -------- -------- -------- -------- --------
Net income (loss) $ (12,605) $ (208) $ 4,199 $ 18,462 $(22,453) $ (12,605)
-------- -------- -------- -------- -------- --------
</TABLE>
16
<PAGE>
THE DOE RUN RESOURCES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS)
(7) GUARANTOR SUBSIDIARIES (CONTINUED)
CONSOLIDATING STATEMENT OF OPERATIONS
NINE MONTHS ENDED JULY 31, 1998 (UNAUDITED)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
The Company
Excluding Doe Run Cayman Doe Run
Guarantor Domestic and Certain Peru and The
Subsidiaries Guarantors Subsidiaries Subsidiary Eliminations Company
------------ ---------- -------------- ---------- ------------ -------
<S> <C> <C> <C> <C> <C> <C>
Net sales $181,356 $12,441 $ 5,049 $ 349,444 $(20,525) $527,765
Costs and expenses:
Cost of sales 148,674 11,470 - 283,037 (3,490) 439,691
Depletion, depreciation and amortization 11,463 539 - 5,010 - 17,012
Selling, general and administrative 12,155 1,002 3,158 26,523 (17,107) 25,731
Exploration 2,764 - - - - 2,764
-------- ------- ------ -------- -------- --------
Total costs and expenses 175,056 13,011 3,158 314,570 (20,597) 485,198
-------- ------- ------ -------- -------- --------
Income (loss) from operations 6,300 (570) 1,891 34,874 72 42,567
Other income (expense):
Interest expense (16,933) (534) (9,825) (279) 534 (27,037)
Interest income 5,975 - 10 549 (534) 6,000
Other, net (543) (30) 179 463 - 69
Equity in earnings of subsidiaries 16,384 - 27,576 - (43,960) -
-------- ------- ------ -------- -------- --------
4,883 (564) 17,940 733 (43,960) (20,968)
-------- ------- ------ -------- -------- --------
Income (loss) before income tax expense 11,183 (1,134) 19,831 35,607 (43,888) 21,599
Income tax expense 2,114 16 - 8,031 - 10,161
-------- ------- ------ -------- -------- --------
Income (loss) before extraordinary item 9,069 (1,150) 19,831 27,576 (43,888) 11,438
Extraordinary item (2,019) - (2,369) - - (4,388)
-------- ------- ------ -------- -------- --------
Net income (loss) $ 7,050 $(1,150) $17,462 $ 27,576 $(43,888) $ 7,050
-------- ------- ------ -------- -------- --------
-------- ------- ------ -------- -------- --------
</TABLE>
17
<PAGE>
THE DOE RUN RESOURCES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS)
(7) GUARANTOR SUBSIDIARIES (CONTINUED)
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
NINE MONTHS ENDED JULY 31, 1998 (UNAUDITED)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
The Company
Excluding Doe Run Cayman Doe Run
Guarantor Domestic and Certain Peru and The
Subsidiaries Guarantors Subsidiaries Subsidiaries Eliminations Company
------------ ---------- -------------- ------------ ------------ -------
<S> <C> <C> <C> <C> <C> <C>
Net cash provided by (used in) operating activities $ 7,373 $ (462) $16,473 $ 24,060 $ (25,716) $21,728
Cash flows from investing activities:
Purchases of property, plant and equipment (11,089) (100) (85) (13,638) - (24,912)
Investment in subsidiaries (4,126) - (21,590) - 25,716 -
-------- ------- ------- -------- -------- --------
Net cash provided by (used in)
investing activities (15,215) (100) (21,675) (13,638) 25,716 (24,912)
Cash flows from financing activities:
Payments on revolving loans
and short-term borrowings, net (2,750) - - (12,794) - (15,544)
Proceeds from long-term debt 5,665 - - - - 5,665
Payments on long-term debt (895) - - (1,180) - (2,075)
Proceeds from sale/leaseback transactions - - - 17,922 - 17,922
Payment of deferred financing costs (467) - - - - (467)
Loans from parent/subsidiaries 6,289 562 5,144 (11,995) - -
-------- ------- ------ -------- -------- --------
Net cash provided by (used in)
financing activities 7,842 562 5,144 (8,047) - 5,501
-------- ------- ------ -------- -------- --------
Net increase (decrease) in cash - - (58) 2,375 - 2,317
Cash at beginning of period - - 89 4,557 - 4,646
-------- ------- ------ -------- -------- --------
Cash at end of period $ - $ - $ 31 $ 6,932 $ - $ 6,963
-------- ------- ------ -------- -------- --------
-------- ------- ------ -------- -------- --------
</TABLE>
18
<PAGE>
THE DOE RUN RESOURCES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS)
(7) GUARANTOR SUBSIDIARIES (CONTINUED)
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
NINE MONTHS ENDED JULY 31, 1998 (UNAUDITED)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
The Company
Excluding Doe Run Cayman Doe Run
Guarantor Domestic and Certain Peru and The
Subsidiaries Guarantors Subsidiaries Subsidiaries Eliminations Company
------------ ---------- -------------- ------------ ------------ -------
<S> <C> <C> <C> <C> <C> <C>
Net cash provided by (used in) operating
activities $ 25,584 $ 420 $ 22,771 $(8,640) $(43,960) $ (3,825)
Cash flows from investing activities:
Special term deposit (125,000) - - - - (125,000)
Purchases of property, plant and equipment (8,729) (4,391) - (3,912) - (17,032)
Investment in subsidiaries (16,384) - (27,576) - 43,960 -
-------- ------- -------- ------- -------- --------
Net cash provided by (used in)
investing activities (150,113) (4,391) (27,576) (3,912) 43,960 (142,032)
Cash flows from financing activities:
Proceeds from revolving loan
and short-term borrowings, net 6,767 - (3,000) 12,000 - 15,767
Proceeds from long-term debt 255,000 - 125,000 - - 380,000
Payments on long-term debt (130,845) - (100,000) - - (230,845)
Payment of deferred financing costs (12,618) - (312) - - (12,930)
Loans from parent/subsidiaries 7,335 3,971 (16,164) 4,858 - -
Payment of dividends (189) - - - - (189)
Redemption of preferred stock (2,500) - - - - (2,500)
-------- ------- -------- ------- -------- --------
Net cash provided by financing activities 122,950 3,971 5,524 16,858 - 149,303
-------- ------- -------- ------- -------- --------
Net increase (decrease) in cash (1,579) - 719 4,306 - 3,446
Cash at beginning of period 1,579 - 2,351 5,013 - 8,943
-------- ------- -------- ------- -------- --------
Cash at end of period $ - $ - $ 3,070 $ 9,319 $ - $ 12,389
-------- ------- -------- ------- -------- --------
-------- ------- -------- ------- -------- --------
</TABLE>
19
<PAGE>
DOE RUN PERU S.R.L.
CONDENSED CONSOLIDATED BALANCE SHEETS
(DOLALRS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
JULY 31, OCTOBER 31,
1999 1998
-------------- -----------
(UNAUDITED)
<S> <C> <C>
ASSETS
Current assets:
Cash $ 6,932 $ 4,557
Trade accounts receivable, net of allowance for
doubtful accounts 31,267 30,935
Inventories 73,652 78,150
Prepaid expenses and other current assets 26,548 21,923
Due from parent/subsidiaries 32,189 22,229
-------- --------
Total current assets 170,588 157,794
Property, plant and equipment, net 112,871 100,761
Other noncurrent assets, net 354 448
-------- --------
Total assets $283,813 $259,003
-------- --------
-------- --------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Short-term borrowings and current maturities of long-term debt $ 9,447 $ -
Accounts payable 28,575 30,155
Accrued liabilities 17,216 16,588
Due to parent 17,078 19,028
-------- --------
Total current liabilities 72,316 65,771
Long-term debt, less current maturities 23,103 28,000
Net deferred tax liabilities 3,430 2,566
Other noncurrent liabilities 7,200 7,200
-------- --------
Total liabilities 106,049 103,537
Shareholders' equity:
Common stock, one nuevo sole par value, 648,672,941
shares authorized, issued and outstanding 255,200 247,926
Due from shareholder (113,409) (125,000)
Foreign currency translation adjustment (15,029) -
Retained earnings 51,002 32,540
-------- --------
Total shareholders' equity 177,764 155,466
-------- --------
Total liabilities and shareholders' equity $283,813 $259,003
-------- --------
-------- --------
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
financial statements.
20
<PAGE>
DOE RUN PERU S.R.L.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
THREE MONTHS NINE MONTHS
ENDED JULY 31, ENDED JULY 31,
--------------------------------- ----------------------------------
1999 1998 1999 1998
---------------- --------------- ---------------- -----------------
<S> <C> <C> <C> <C>
Net sales $ 118,304 $ 122,085 $336,893 $ 349,444
Costs and expenses:
Cost of sales 95,896 101,406 280,429 283,037
Depreciation and amortization 1,909 1,614 5,654 5,010
Selling, general and administrative 9,103 8,393 26,555 26,523
------ ------ ------- ------
Total costs and expenses 106,908 111,413 312,638 314,570
-------- -------- -------- -------
Income from operations 11,396 10,672 24,255 34,874
Other income (expense):
Interest expense (1,030) (244) (2,642) (279)
Interest income 51 93 517 549
Other, net (856) (116) (2,809) 463
------- ----- ------- ---
(1,835) (267) (4,934) 733
------- ----- ------- ---
Income before income tax expense 9,561 10,405 19,321 35,607
Income tax expense 400 1,363 859 8,031
---- ------ ---- -----
Net income $ 9,161 $ 9,042 $ 18,462 $ 27,576
------- ------- -------- --------
------- ------- -------- --------
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
financial statements.
21
<PAGE>
DOE RUN PERU S.R.L.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
NINE MONTHS
ENDED JULY 31,
-------------------------------
1999 1998
-------------- -------------
<S> <C> <C>
Net cash provided by (used in) operating activities $24,060 $(8,640)
Cash flows from investing activities:
Purchases of property, plant and equipment (13,638) (3,912)
-------- -------
Net cash used in investing activities (13,638) (3,912)
Cash flows from financing activities:
Proceeds from (payments on) revolving loans
and short-term borrowings, net (12,794) 12,000
Payments on long-term debt (1,180) -
Proceeds from sale/leaseback transactions 17,922 -
Loans from (to) parent (11,995) 4,858
-------- -----
Net cash provided by (used in) financing activities (8,047) 16,858
------- ------
Net increase in cash 2,375 4,306
Cash at beginning of period 4,557 5,013
------ -----
Cash at end of period $ 6,932 $ 9,319
------- -------
------- -------
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
financial statements.
22
<PAGE>
DOE RUN PERU S.R.L.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS)
(1) BASIS OF PRESENTATION
UNAUDITED INTERIM FINANCIAL STATEMENTS
In the opinion of management, the interim condensed consolidated
financial statements of Doe Run Peru S.R.L. (Doe Run Peru)
contain all adjustments, consisting of normal recurring accruals,
necessary to present fairly the condensed consolidated financial
position as of July 31, 1999 and results of operations for the
three and nine month periods ended July 31, 1999 and 1998.
Interim periods are not necessarily indicative of results to be
expected for the year.
(2) INVENTORIES
<TABLE>
<CAPTION>
JULY 31, OCTOBER 31,
1999 1998
---- ----
(UNAUDITED)
<S> <C> <C>
Refined metals and concentrates for sale $ 3,149 $ 3,857
Metals and concentrates in process 44,968 54,534
Materials, supplies and spare parts 25,535 19,759
-------- --------
$ 73,652 $ 78,150
-------- --------
-------- --------
</TABLE>
(3) SALE/LEASEBACK TRANSACTION
In January 1999, Doe Run Peru finalized an agreement for the sale
and leaseback of its oxygen plant at the La Oroya facility for
$17,162. Doe Run Peru has an option to repurchase the oxygen plant
at the end of the five-year lease term for $200. This transaction
has been accounted for as a financing arrangement. A sale and
leaseback of computer equipment, accounted for as a financing
arrangement, provided an additional $760 of cash flows from
financing activities. Under a related capital lease, certain
computer hardware was leased under a capital lease obligation for
$603, which included a deferred maintenance balance of $151.
(4) CONVERSION OF LOAN TO FOREIGN CURRENCY
In the second quarter of fiscal 1999, Doe Run Mining and Doe Run
Peru agreed to convert the loan payable to Doe Run Peru by Doe Run
Mining from dollars into Peruvian nuevos soles. The related
translation effect of the loan receivable is reflected in other
shareholders' equity as a foreign currency translation adjustment.
(5) MERGER OF DOE RUN PERU AND COBRIZA S.A.
On March 1, 1999 Doe Run Mining merged the Empresa Minera
Cobriza S.A. into Doe Run Peru.
23
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The following discussion and analysis includes the U.S.
operations of the Company, including FPI, and the Peruvian
operations of the Company, including Doe Run Cayman and its
Peruvian subsidiaries, and should be read in conjunction with the
consolidated financial statements of the Company and the notes
thereto, and other financial information included herein.
RESULTS OF OPERATIONS
The Company reported net income of $1.0 million for the
three months ended July 31, 1999 (the 1999 quarter) compared to
net income of $2.7 million for the three months ended July 31,
1998 (the 1998 quarter). The Company's U.S. operations reported a
net loss of $5.2 million (excluding intercompany fee revenue of
$4.6 million) for the 1999 quarter compared to a net loss of $8.3
million (excluding intercompany fee revenue of $4.2 million) in
the 1998 quarter. The improvement in U.S. operations was
primarily due to an increase in gross margins, in spite of lower
lead, copper and zinc prices, due to increased volumes and lower
unit production costs. This improvement was partially offset by
increased depreciation expense primarily associated with the
September 1998 acquisition of the Missouri Lead Division assets
of ASARCO Incorporated (the MLD Acquisition) and increased
interest expense resulting from an increase in outstanding debt,
primarily associated with the MLD Acquisition. Peruvian
operations contributed $6.1 million to net income for the 1999
quarter (excluding intercompany fees and eliminations of $4.6
million) compared to net income of $11.0 million (excluding
intercompany fees and eliminations of $4.1 million) in the 1998
quarter. The decrease in Peruvian net income was due primarily to
lower copper prices and lower margins on refined copper resulting
from lower treatment charges and difficulties in obtaining
suitable feed material. Increased interest expense also
contributed to the decrease in net income. Partially offsetting
these factors were lower income taxes.
The Company reported a net loss of $12.6 million for the
nine months ended July 31, 1999 (the 1999 period) compared to net
income of $7.1 million for the nine months ended July 31, 1998
(the 1998 period). The Company's U.S. operations reported a net
loss of $29.8 (excluding intercompany fee revenue of $12.8
million) million for the 1999 period compared to a net loss of
$22.5 million (excluding intercompany fee revenue of $12.1
million) for the 1998 period. The net loss increased primarily as
a result of increased depreciation expense, increased interest
expense and a write-off of deferred tax balances of $6.2 million
associated with a change in tax status to a qualified subchapter
S subsidiary. See "Item 1. Financial Statements - Note 4 to the
Company's Consolidated Financial Statements" for a discussion of
the change in tax status. These factors were partially offset by
improved gross margins and absence of the extraordinary loss
affecting the 1998 period. Peruvian operations contributed $17.2
million to net income for the 1999 period (excluding intercompany
fees and eliminations of $12.7 million) compared to net income of
$29.5 million (excluding intercompany fees and eliminations of
$12.1 million) for the 1998 period. The decrease in Peruvian net
earnings was due primarily to lower margins on silver and copper
and increased interest expense, partially offset by lower income
taxes and absence of the extraordinary loss affecting the 1998
period.
24
<PAGE>
The Company's results for the three months and the nine
months ended July 31, 1999 reflect declines in the market prices
of metals from the prior year. The following table sets forth
average London Metal Exchange (LME) prices for lead, copper and
zinc and the average London Bullion Market Association (LBMA)
price for silver for the periods indicated:
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
July 31, July 31,
------------------------------ ------------------------------
1999 1998 1999 1998
-------------- --------------- --------------- --------------
<S> <C> <C> <C> <C>
Average Prices
- --------------
Lead ($/ton) $ 462.20 $ 489.00 $ 459.20 $ 492.60
Copper ($/ton) 1,383.60 1,522.60 1,341.20 1,573.20
Zinc ($/ton) 941.20 939.80 911.40 973.60
Silver ($/troy ounce) 5.16 5.43 5.14 5.83
</TABLE>
The following table sets forth the Company's production
statistics for the periods indicated:
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
July 31, July 31,
------------------------ -------------------------
1999 1998 1999 1998
----------- ------------ ----------- ------------
<S> <C> <C> <C> <C>
U.S. Operations
- ---------------
Lead metal - primary (short tons) 94,433 55,056 285,570 183,001
Lead metal - secondary (short tons) 28,934 28,137 83,977 80,391
Lead concentrates (metal content, short tons) 96,253 58,084 288,267 179,582
Ore Grade 5.87% 5.06% 5.66% 5.42%
Peruvian Operations
- -------------------
Refined copper (short tons) 19,354 18,382 54,817 53,283
Refined lead (short tons) 30,607 30,789 89,365 87,771
Refined zinc (short tons) 20,951 19,942 60,408 58,850
Refined silver (thousands of troy ounces) 8,543 7,153 24,206 19,923
Refined gold (thousands of troy ounces) 15 16 48 43
</TABLE>
Mine production of lead metal in concentrates for the
1999 quarter increased by 59.3% compared to the 1998 quarter. Of
this increase, 47.2% was attributable to the MLD Acquisition.
Production by existing properties was 12.1% better in the 1999
quarter, compared to the prior year, primarily due to an increase
in ore grade from 5.56% in the 1998 quarter to 6.24% in the 1999
quarter. Operating plans were modified, beginning in the second
quarter of 1999, based on evaluations designed to optimize mine
production in light of low metal prices and the availability of
lead concentrates for purchase. As a result, during the 1999
period, mining of lower grade areas was scaled back from planned
levels. Mine production of lead metal in concentrates increased
by 60.5% from the 1998 period to the 1999 period. Of this
increase, 48.9% was attributable to the MLD Acquisition.
Production by existing properties was 11.6% better than the prior
year primarily due to an increase in ore grade from 5.42% in the
1998 quarter to 6.01% in the 1999 quarter. While production
exceeded the prior year, it was slightly less than planned, in
spite of the improved ore grade, due to production disruptions
that occurred during the first quarter and the modifications to
the operating plan discussed above.
25
<PAGE>
Primary smelter production for the 1999 quarter was 71.5% greater
than the 1998 quarter. The MLD Acquisition accounted for an increase of
63.5%. Production at the Company's Herculaneum primary smelter for the 1999
quarter was 8.0% better than the 1998 quarter primarily due to a more
efficient startup after the smelter's annual maintenance shutdown. For the
1999 period, primary smelter production increased 56.0% over the 1998 period.
An increase of 55.4% is attributable to the MLD Acquisition. In spite of
cooling system failures on its blast furnaces, which hampered production
during the first quarter of 1999, Herculaneum's production for the 1999
period improved 0.7% compared to the 1998 period
Secondary smelter production exceeded the prior year by 2.8% for the
three months and 4.5% for the nine months ended July 31, 1999 due to improved
smelter operating efficiencies. These improvements were accomplished in spite
of the failure of the reverberatory furnace floor in July 1999, which
resulted in unplanned maintenance downtime and lost production. The furnace
has been rebuilt and production has returned to normal levels.
During the third quarter of 1998, La Oroya installed equipment that
increased the capacity of its silver and lead refineries by approximately
25.0% and 4.8%, respectively. During the 1999 quarter the capacities of the
lead and zinc refineries were each increased by approximately five percent.
The benefits of these improvements, partially offset by problems obtaining
suitable feed material, are reflected in the production results for the
quarter and the nine months ended July 31, 1999. Refined silver production
exceeded the prior year by 19.4% and 21.5% for the quarter and the nine
months ended July 31, 1999, respectively. Refined lead production was .6%
lower for the quarter but up 1.8% for the nine months, compared to the prior
year. Refined zinc production was up 5.1% for the quarter and 2.6% for the
1999 period, compared to the prior year. Copper production was better than
the prior year for both the three months and the nine months ended July 31,
1999, but slightly less than expected, due to the reduced availability of
suitable concentrates. The tight market conditions for copper concentrates
continue currently, and the Company continues to partially mitigate the
impact of these market conditions by maximizing production of copper
concentrates from its Cobriza mine.
Results of operations for the three months and the nine months ended
July 31, 1999 and 1998 include the results of the Company's U.S. and Peruvian
operations. In order to provide a more meaningful analysis, the results of
operations attributable to Peruvian operations will be noted and discussed
separately under "Results of Peruvian Operations."
NET SALES in the 1999 quarter were $204.4 million compared to $184.4
million in the 1998 quarter. A decrease of $3.8 million is attributable to
Peruvian operations. U. S. net sales were $23.9 million or 38.3% higher in
the 1999 quarter, compared to the 1998 quarter, primarily due to greater lead
metal and zinc concentrate sales volume associated with the MLD Acquisition,
partially offset by slightly lower realized prices for lead metal and zinc
concentrates.
26
<PAGE>
The following table sets forth the operating results, sales volumes
and realized prices for the Company's U. S. operations for the periods
indicated:
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
July 31, July 31,
---------------------------- ------------------------
RESULTS OF U.S. OPERATIONS 1999 1998 1999 1998
------------- ------------ ----------- ------------
<S> <C> <C> <C> <C>
Net sales * $ 86,158 $ 62,295 $ 243,722 $ 180,819
Costs and expenses:
Cost of sales 73,230 55,306 211,929 159,152
Depreciation and amortization 5,775 3,937 18,365 12,002
Selling, general and administrative 4,502 4,510 13,024 13,157
Exploration 1,005 1,165 2,855 2,764
-------- -------- --------- ---------
Total costs and expenses 84,512 64,918 246,173 187,075
-------- -------- --------- ---------
Income from operations 1,646 (2,623) (2,451) (6,256)
Other income (expense)
Interest expense (10,244) (8,095) (30,585) (16,933)
Interest income 3,578 3,538 10,644 5,441
Other, net 63 (300) (580) (573)
-------- -------- --------- ---------
(6,603) (4,857) (20,521) (12,065)
-------- -------- --------- ---------
Loss before income tax expense
and extraordinary item $ (4,957) $ (7,480) $ (22,972) $ (18,321)
Income tax expense 199 818 6,783 2,130
Extraordinary item - - - (2,019)
-------- -------- --------- ---------
Net income $ (5,156) $ (8,298) $ (29,755) $ (22,470)
======== ======== ========= =========
* Intercompany fees that are eliminated in the consolidated results of the Company and have been
excluded from the results presented above are as follows:
Net Sales $ 4,561 $ 4,240 $ 12,836 $ 12,058
SALES VOLUMES (SHORT TONS)
Lead metal 109,769 73,211 321,885 209,995
Zinc concentrates 24,365 18,009 74,536 51,151
Copper concentrates 4,468 3,844 11,784 13,339
REALIZED PRICES ($/TON)
Lead metal $566.85 $569.93 $546.20 $582.59
Zinc concentrates 322.63 328.22 301.52 348.07
Copper concentrates 203.22 194.85 205.28 215.16
</TABLE>
27
<PAGE>
Lead metal net sales increased 49.1% from $41.7 million in the 1998
quarter to $62.2 million in the 1999 quarter. An increase of $20.8 million in
lead metal net sales resulted from the production volume increase discussed
above and strong demand in the U.S. market. Zinc concentrate net sales were
higher by $2.0 million due to a 35.3% volume increase, resulting primarily
from the MLD Acquisition, partially offset by lower realized prices. Other
sales were higher primarily due to an increase of approximately $1.4 million
in sales by Seafab Metals Company, a division of FPI, which returned to full
production after relocating its fabrication plant during 1998, partially
offset by a reduction in sales of zinc metal imported from Peru.
Net sales for the 1999 period were $577.8 million compared to $527.8
million for the 1998 period. A decrease of $12.9 million is attributable to
Peruvian operations. U.S. net sales for the 1999 period were $62.9 million
greater than the 1998 period due primarily to increased lead metal and zinc
concentrate sales volume partially offset by lower metal prices. Lead metal
net sales increased 43.7% from $122.3 million in the 1998 period to $175.8
million in the 1999 period. An increase of $65.2 million in lead metal net
sales resulted from the production volume increase and strong demand
discussed above. The average LME price for lead metal decreased 5.3% in the
1999 period, compared to the 1998 period. As a result, the Company's net
realized price was 6.2% lower in the 1999 period reducing net sales by $11.7
million. Net realized prices for lead metal and zinc and copper concentrates
include the effects of changes in premiums received, as well as net hedging
activity. Zinc concentrate sales were $4.7 million higher in the 1999 period,
compared to the 1998 period, due to a 45.7% volume increase partially offset
by a 13.4% reduction in the net realized price. Other sales were higher
primarily due to an increase of approximately $4.9 million in sales by Seafab
Metals Company, partially offset by a reduction in sales of imported zinc
metal.
COST OF SALES for the 1999 quarter was $172.7 million compared to
$156.6 million for the 1998 quarter. A decrease of $1.8 million is
attributable to Peruvian operations. U.S. cost of sales for the 1999 quarter
was $17.9 million greater than the 1998 quarter. Volume changes, primarily
the increased sales of lead metal and zinc concentrates discussed above
accounted for a cost of sales increase of $24.5 million, which was partially
offset by a 9.4% reduction in the per unit production cost of lead metal.
This lower production cost is primarily the result of programs the Company
implemented during the second quarter of 1998 to minimize the impact of metal
price declines through cost reductions and productivity and revenue
enhancements. These programs, which are ongoing, include maintenance and
other expense reductions, selective mining of higher grade ores and increased
primary and secondary smelter production, all of which contributed to
improved unit production cost in the 1999 quarter. Also contributing to lower
unit costs were certain production efficiencies realized as a result of the
MLD Acquisition.
Cost of sales for the 1999 period was $493.1 million compared to
$439.7 million for the 1998 period. Of this increase, $0.6 million is
attributable to Peruvian operations. U.S. cost of sales for the 1999 period
increased by $52.8 million compared to the 1998 period. Lead metal sales
volume was up 53.3% or 111,890 tons over the prior year, increasing cost of
sales by $64.0 million. Other volume changes added an additional $8.2 million
to cost of sales. These volume increases were partially offset by lower unit
production costs which were primarily the result of the Company's programs of
cost reduction and the productivity enhancements, and the efficiencies
realized as a result of the MLD Acquisition, discussed above.
DEPLETION, DEPRECIATION AND AMORTIZATION for the 1999 quarter
increased by $2.1 million compared to the 1998 quarter. For the 1999 period,
depletion, depreciation and amortization increased by $7.1 million, compared
to the 1998 period. Increases of $0.3 million for the 1999 quarter and $0.7
million for the 1999 period are attributable to Peruvian operations. The
increases in depletion, depreciation, and amortization for U.S. operations
for the 1999 quarter and the 1999 period are primarily attributable to the
MLD Acquisition.
28
<PAGE>
INCOME FROM OPERATIONS for the 1999 quarter was $14.3 million
compared to $13.0 million for the 1998 quarter. For the 1999 period,
operating income was $31.4 million compared to $42.6 million for the 1998
period. Decreases of $3.0 million for the quarter and $14.9 million for the
nine months are attributable to Peruvian operations. The remainder of the
changes are primarily due to the factors discussed above.
INTEREST EXPENSE increased by $2.4 million in the 1999 quarter,
compared to the 1998 quarter, due primarily to increases in the Company's
average outstanding debt balance. The increase in the Company's average
outstanding debt balance of approximately $101.5 million for the quarter was
primarily the result of borrowing to finance the MLD Acquisition and
increased working capital required for Peruvian operations and for operations
of the assets acquired in the MLD Acquisition.
Interest expense increased by $17.4 million in the 1999 period,
compared to the 1998 period, due to an increase in the Company's average
outstanding debt balance and higher average interest rates. The increase in
the Company's average outstanding debt balance of approximately $189.4
million from the 1998 period to the 1999 period was primarily the result of
the $125 million required for a deposit (see "INTEREST INCOME", below) made
in a foreign bank as collateral for a loan made to Doe Run Mining (Special
Term Deposit), borrowing related to finance the MLD Acquisition and increased
working capital requirements discussed above.
INTEREST INCOME increased $5.2 from the 1998 period to the 1999
period primarily due to interest income on the $125.0 million Special Term
Deposit.
INCOME TAX EXPENSE for the 1999 quarter and the 1999 period
reflects the impact of a change in tax status effective at the beginning of
the fiscal year. See "Item 1. Financial Statements--Note 4 to the Company's
Consolidated Financial Statements." As a result of this change in tax status,
the elimination of federal and most state deferred tax assets and liabilities
for income tax purposes resulted in a charge to income tax expense of $6.2
million in the 1999 period.
29
<PAGE>
RESULTS OF PERUVIAN OPERATIONS
The following table set forth the operating results, sales volumes
and realized prices of the Company's Peruvian operations for the periods
indicated:
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
July 31, July 31,
-------------------------- ----------------------------
RESULTS OF OPERATIONS 1999 1998 1999 1998
------------- ------------ -------------- -------------
<S> <C> <C> <C> <C>
Net sales * $ 118,224 $ 122,065 $ 334,043 $ 346,946
Costs and expenses:
Cost of sales * 99,518 101,280 281,166 280,539
Depreciation and amortization 1,909 1,614 5,699 5,010
Selling, general and administrative * 4,156 3,521 13,294 12,574
--------- --------- --------- ---------
Total costs and expenses 105,583 106,415 300,159 298,123
--------- --------- --------- ---------
Income from operations 12,641 15,650 33,884 48,823
Other income (expense)
Interest expense (4,728) (4,437) (13,828) (10,104)
Interest income 51 103 558 559
Other, net (863) 1,004 (537) 642
--------- --------- --------- ---------
(5,540) (3,330) (13,807) (8,903)
--------- --------- --------- ---------
Income (loss) before income tax expense
and extraordinary item 7,101 12,320 20,077 39,920
Income tax expense 987 1,363 2,927 8,031
Extraordinary item - - - (2,369)
--------- --------- --------- ---------
Net income $ 6,114 $ 10,957 $ 17,150 $ 29,520
========= ========= ========= =========
* Intercompany sales and fees that are eliminated in the consolidated results of the Company and have
been excluded from the results presented above are as follows:
Net sales $ 80 $ 20 $ 2,850 $ 2,498
Cost of sales 80 126 2,965 2,498
Selling, general and administrative expense 4,561 4,241 12,836 12,058
SALES VOLUMES
Copper (short tons) 19,061 18,943 54,424 54,098
Lead (short tons) 30,065 32,949 89,842 88,387
Zinc (short tons) 20,826 20,656 59,346 60,348
Silver (thousands of troy ounces) 8,589 7,227 24,229 20,235
Gold (thousands of troy ounces) 18 16 48 43
REALIZED PRICES
Copper ($/ton) $ 1,335.12 $ 1,545.46 $ 1,330.68 $ 1,564.87
Lead ($/ton) 501.51 519.09 492.77 520.53
Zinc ($/ton) 959.67 976.55 929.74 1,007.45
Silver ($/troy ounce) 5.19 5.63 5.16 5.81
Gold ($/troy ounce) 275.49 299.34 284.28 300.22
</TABLE>
30
<PAGE>
NET SALES in the 1999 quarter were $118.2 million compared to $122.1
million in the 1998 quarter. This decline is the result of lower realized
prices, partially offset by improved sales volumes. The production
improvements discussed previously increased refined silver sales volume by
1.4 million ounces or 18.8%, increasing net sales by $7.7 million. The
average LBMA price for silver was 5.0% lower in the 1999 quarter, compared to
the 1998 quarter. As a result, the Company's net realized price for refined
silver was 7.8% lower in the 1999 quarter, reducing net sales by $3.8
million. Net realized prices for silver and other refined metals are net of
the effects of changes in premiums and hedging activities. Refined copper net
sales were lower by $3.8 million or 13.1% in the 1999 quarter primarily due
to a 13.6 % decrease in the net realized price. Refined lead net sales were
$2.0 million lower in the 1999 quarter due to a 3.4% decrease in the net
realized price and an 8.8% decrease in sales volume which was the result of
lower availability of metal in inventory at the beginning of the 1999
quarter. Toll volume was 51.2% lower in the 1999 quarter, compared to the
1998 quarter, reducing net sales by $1.8 million. This volume reduction was
due to the absence of toll material in the market at economic terms.
Net sales for the 1999 period were $334.0 million compared to $346.9
million in the 1998 period. The decline is due to lower metal prices
partially offset by improved sales volumes. The production improvements
discussed previously increased refined silver sales volume by 4.0 million
ounces or 19.7%, increasing net sales by $23.2 million. Due to an 11.8%
decrease in the average LBMA price for silver, the Company's net realized
price for refined silver was 11.2% lower in the 1999 period, reducing net
sales by $15.7 million. Refined copper net sales were lower by $12.2 million
in the 1999 period, compared to the 1998 period, primarily due to a 15.0%
decrease in the net realized price. Refined zinc net sales were $5.6 million
lower in the 1999 period compared to 1998 period due to lower prices and
volumes.
COST OF SALES decreased from $101.3 million in the 1998 quarter to
$99.5 million in the 1999 quarter. Sales volume increases, primarily the
increase in silver volume discussed above, account for an increase of $6.5
million in cost of sales. This increase was offset by lower unit production
costs resulting primarily from a decrease in feed costs due to lower market
prices for copper, lead, zinc, gold and silver.
Cost of sales increased 0.2% from the 1998 period to the 1999
period. Increased sales volume of silver, lead, copper, blister copper and
other by-products, partially offset by lower refined zinc and bullion lead
sales, account for a $21.6 million increase in cost of sales. The increase
due to volume was offset by lower unit production costs for copper, lead,
zinc and silver that were primarily the result of lower cost of feed costs
for these metals.
DEPRECIATION AND AMORTIZATION expense increased by $0.3 million for
the 1999 quarter and $0.7 million the 1999 period, compared to the prior
year, primarily due to recent capital additions.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES increased 5.7% in the
1999 period, compared to the 1998 period, primarily due to increased
insurance expense and legal and consulting fees related to the operation of
the Cobriza mine, partially offset by reductions in compensation and other
selling and administrative expenses.
INCOME FROM OPERATIONS decreased $3.0 million in the 1999 quarter
compared to the 1998 quarter and $14.9 million in the 1999 period compared to
the 1998 period due primarily to the factors discussed above.
INTEREST EXPENSE increased $0.3 million for 1999 quarter, compared
to the prior year, primarily as a result of the sale and leaseback of the
oxygen plant at the La Oroya smelter which was completed in January of 1999.
Financing of a portion of the acquisition cost of the Cobriza mine and an
increase in short term debt also contributed to the increase.
31
<PAGE>
Interest expense increased $3.7 million for the 1999
period compared to the prior year, due to an increase of
approximately $45.8 million in the average outstanding debt
balance and higher average interest rates. Proceeds from the
increase in the outstanding debt were used to repay a $23 million
intercompany loan and to finance increased working capital
required for ongoing operations.
OTHER NET, expense was $0.9 million in the 1999 quarter
compared to other net income of $1.0 in the 1998 quarter. The
change is primarily due to fluctuations in exchange gains and
losses partially offset by other net income and expenses.
Other net, expense was $0.5 million in the 1999
period compared to other net income of $0.6 in the 1998 period.
The change is primarily due to fluctuations in exchange gains and
losses partially offset by reductions of expenses related to the
El Nino flooding that occurred during the 1998 period and other
miscellaneous income.
FOREIGN INCOME TAXES
The Company's foreign income tax provision reflects the
provision of its Peruvian subsidiaries at the statutory rate of
30%. Differences between the effective and statutory rate are due
primarily to book losses of certain subsidiaries that cannot be
offset against other subsidiaries' taxable income for Peruvian
income tax purposes.
LIQUIDITY AND CAPITAL RESOURCES
The Company's liquidity requirements arise from its
working capital requirements, and capital investment and debt
service obligations. The Company's primary available sources of
liquidity are cash provided by operating activities and two
revolving credit facilities. In the U.S., the Company has
available a revolving credit facility (the Doe Run Revolving
Credit Facility) that provides for advances by the lender to a
maximum of $100.0 million less outstanding letters of credit,
based on specific percentages of eligible receivables and
inventories. As of July 31, 1999, $18.4 million was outstanding,
exclusive of $5.2 million of letters of credit, under the Doe Run
Revolving Credit Facility. In Peru, the Company has available a
revolving credit facility (the Doe Run Peru Revolving Credit
Facility) that provides for advances by the lender to a maximum
of $40.0 million, less outstanding letters of credit and customs
bonds based upon specific percentages of eligible receivables and
inventories. At July 31, 1999, $9.0 million, exclusive of
$2.5million of letters of credit and customs bonds, was
outstanding under the Doe Run Peru Revolving Credit Facility. Net
unused availability at July 31, 1999 was $42.3 million under the
Doe Run Revolving Credit Facility and $28.5 million under the Doe
Run Peru Revolving Credit Facility. In Peru, the Company also has
available unsecured and uncommitted credit arrangements, and
additional availability related to letters of credit and customs
bonds, provided by local banks. At July 31, 1999, $6.2 million
exclusive of $18.9 million of letters of credit and customs bonds
was outstanding under these arrangements. Borrowings under the
Peruvian working capital facilities, including the Doe Run Peru
Revolving Credit Facility, are limited to $60.0 million under the
indentures governing the Notes. In addition to availability under
the credit facilities, the Company had $7.0 of cash on deposit at
July 31, 1999.
In the 1999 quarter, cash provided by operating
activities was $25.4 million, cash used in investing activities
was $13.1 million and cash provided by financing activities was
$13.5 million. For the 1999 period cash provided by operating
activities was $21.7 million, cash used in investing activities
was $24.9 million and cash provided by financing activities was
$5.5 million (this includes net proceeds of $17.9 million from
sale and leaseback transactions, including the sale and leaseback
of La Oroya's oxygen plant discussed below).
On January 20, 1999, Doe Run Peru executed a sale and
leaseback agreement with two Peruvian financial institutions. The
main oxygen plant at La Oroya was sold at fair market value as
determined by an independent appraisal. The proceeds, net of
value added tax, of $17.2 million were used to reduce
32
<PAGE>
the outstanding balance on the Doe Run Peru Revolving Credit
Facility and to pay the outstanding balance of an obligation to
the Company of $3.8 million. The lease requires monthly payments
of approximately $0.4 million and has a purchase option of $0.2
million at the end its five-year term. On July 6, 1999 the
Company borrowed $5.7 million, under a ten-year 9.9% secured
note, to finance the purchase of capital assets.
Payments are due monthly under the note.
In the U.S., the Company had capital expenditures of
$11.2 million for the 1999 period and has projected total capital
expenditures, in the U.S., for fiscal 1999 of approximately $13.8
million, primarily to support ongoing operations and for
operational and environmental improvements. In addition to these
capital investments, the Company's U.S. operations expended an
average of approximately $63.4 million per year on repairs and
maintenance from fiscal 1996 through fiscal 1998. As a result of
these expenditures, the Company believes that it operates and
will continue to maintain modern and efficient facilities.
As part of the acquisition of its Peruvian operations,
the Company has undertaken a capital investment program, in part
to satisfy an investment commitment of $120.0 million as set
forth in the purchase agreement. The company has recently
received the final report which indicates that total qualifying
expenditures under the investment commitment in fiscal 1998 were
$36.4 million, including capital expenditures of $9.6 million,
operating expenses of $8.5 million and a working capital increase
of $18.3 million. Peruvian operations had capital expenditures of
$13.7 million in the 1999 period and have projected total capital
expenditures for fiscal 1999 of approximately $19.0 million,
primarily to support ongoing operations and for operational and
environmental improvements.
The Company has substantial indebtedness and debt
service requirements. As of July 31, 1999, on a consolidated
basis, the Company had $485.8 million of indebtedness
outstanding, or $360.8 million net of the Special Term Deposit.
Management believes that cash flows from operations, in addition
to availability under the revolving credit facilities, will be
sufficient to meet the Company's liquidity needs for the
foreseeable future.
The Doe Run Revolving Credit Facility, the Doe Run
Peru Revolving Credit Facility, and the indentures governing the
Notes contain numerous covenants and restrictions, including
requirements that the Company satisfy certain financial ratios in
order to incur additional indebtedness. The ability of the
Company to meet its debt service requirements and to comply with
such covenants is dependent upon future operating performance and
financial results which are subject to financial, economic,
political, competitive and other factors affecting the Company,
many of which are beyond the Company's control.
On January 15, 1999, Renco filed an election, with the
consent of its shareholders, with the Internal Revenue Service to
change its taxable status from that of a subchapter C corporation
to that of a subchapter S corporation, effective November 1,
1998. At the same time, Renco elected for the Company to be
treated as a QSSS. As a result of such election, generally, no
provision for federal income taxes will be included in the
Company's statements of income for periods beginning after
October 31, 1998. However, under the "built-in gain" provisions
of the tax law, federal and state taxes may become payable and
will be charged to the Company's statement of income. Such taxes
are measured by the excess of the fair market value of assets
over their tax bases at the effective date of the S corporation
election if the appreciated assets are disposed of within the
ten-year post-conversion period. It is not management's present
intent to generate any taxes under the built-in gain provisions
of the tax laws. See "Item 1. Financial Statements--Note 4 to the
Company's Consolidated Financial Statements."
YEAR 2000 MATTERS
Many information and process control systems used in the
current business environment were designed to use only two digits
in the date field, and therefore may not function properly in the
year 2000. Any of the Company's programs that have date-sensitive
software may recognize a date using "00" as the
33
<PAGE>
year 1900 rather than the year 2000, which could result in a
major system failure or in miscalculations. The Company conducted
a comprehensive review of its computerized information systems
(IS) to identify systems that could be affected by the year 2000
problem and has implemented a plan to resolve the issues
identified. In the U.S., the Company changed its critical
programs so that a four-digit year would be recognized. These
programs were tested at the end of February 1999 and the Company
identified and began correcting programs that were not properly
processing the new date fields. The modified programs are
currently in use and will cointinue to be monitored through
normal operating cycles to determine whether the new date fields
are being processed properly. The Company anticipates that
modification of non-critical systems will be completed by
November 1999. The Company expects to spend,including spending
to date, approximately $.4 million in
modifying its U.S. information systems.
In Peru, current computerized systems supporting the
Company's financial, commercial, and logistical functions are
largely year 2000 non-compliant. The Company is dependent on
these systems to conduct its basic day to day business functions.
The Company has purchased new computing hardware and software to
replace most of these systems. Systems not being replaced are
being upgraded to year 2000 compliance. Implementation and
training on the new systems is being conducted by
cross-functional teams comprised of employees allocated to the
project and specialized outside consultants. The Company has
developed an implementation plan using the software vendor's
implementation methodology. This plan identifies the critical
software modules and four specific phases that must be
accomplished in order to implement them. The first two phases
involve identifying the software functions and reports to be used
by the Company and the changes required to customize the software
to the Company's needs. Phase three involves setting up the
software according to the Company's structure and programming
the required customization. Phase four involves initial
implementation, testing and final user training. The critical
modules have been identified as general ledger, accounts payable,
project costing, purchase order and inventory. The company has
completed the first two phases and is approximately 90% complete
with phase three for all critical modules, with completion of
the fourth phase by November, 1999. Industry-specific commercial
and metallurgical systems are being created that are compatible
with the purchased software modules. The design and development
phases of these systems are substantially complete. Testing and
training are expected to be complete by November, 1999. The
Company has spent approximately $1.0 million to date on these
efforts, with a total estimate at completion of $2.9 million.
The Company has evaluated the status of process controls
and other non-IS systems, and identified the required actions,
which consist mostly of software upgrades, of making these
systems year 2000 compliant. The Company has already completed
the installation of software in certain areas. Correction to all
critical systems is targeted for completion by November 1999. The
Company believes that it can revert to manual process control,
should there be any problems with process control systems as a
result of the year 2000.
The Company's operations are dependent on various third
parties, specifically for the availability of utility services,
primarily electricity, and transportation services. The Peruvian
operations depend on the viability and performance of certain
customers and suppliers. Areas of particular vulnerability
include the supply of concentrate feed, electric power supply,
transportation services. In Peru, the Company also has exposure
to the performance of certain government agencies, particularly
with respect to the import and export of products and the
reimbursement to the company of export tax credits. The Company
has written and/or visited key suppliers, customers and
government agencies requesting assurance that year 2000 issues
will not disrupt their ability to provide service to the Company.
In the U.S., the Company has not received any responses that
indicate any customers' or suppliers' failure to achieve year
2000 compliance will have an impact on its operations. In Peru,
responses have been received from less than one-third of the
parties from whom information has been requested and many
entities responding have not completed Y2K compliance activities.
The Company is developing contingency plans to mitigate
the risk of disruption to its operations
34
<PAGE>
based on responses received from third parties. A substantial
disruption in utility services or feed supply or decreases in
orders from significant customers due to these third parties
failing to achieve year 2000 compliance could have a significant
impact on the Company's results of operations, financial
position, or liquidity.
Except for the new system in Peru discussed above, the
cost of achieving year 2000 compliance are to be included in the
Company's operating and administrative expenses. Due to the
inherent uncertainties surrounding the effect of the year 2000,
there can be no assurance that failures or implications,
including potential litigation, will not have a material adverse
effect on the Company's results of operations, financial position
or liquidity.
FORWARD-LOOKING STATEMENTS
This report includes "forward-looking statements" within
the meaning of the Private Securities Litigation Reform Act of
1995 which involve known and unknown risks, uncertainties and
other important factors that could cause the actual results,
performance or achievements of the Company to differ materially
from any future results, performance or achievements expressed or
implied by such forward-looking statements. Such risks,
uncertainties, and other important factors include, among others:
general economic and business conditions; increasing industry
capacity and levels of imports of non-ferrous metals or
non-ferrous metals products; industry trends, including product
pricing; competition; currency fluctuations; the loss of any
significant customer; availability of qualified personnel;
effects of future collective bargaining agreements; major
equipment failures; unanticipated problems encountered in the
year 2000 readiness program; and availability of replacement
equipment to achieve year 2000 readiness. These forward-looking
statements speak only as of the date of this report. The Company
expressly disclaims any obligation or undertaking to disseminate
any updates or revisions to any forward-looking statement
contained herein to reflect any change in the Company's
expectations with regard thereto or any change in events,
conditions, or circumstances on which any such statement is
based.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK.
In the normal course of its business, the Company has used
in the past, and may use in the future, forward sales commitments
and commodity put and call option contracts to manage its
exposure to fluctuations in the prices of lead, copper, zinc and
silver. Contract positions are designed to ensure that the
Company will receive a defined minimum price for certain
quantities of its production. Gains and losses and the related
costs paid or premiums received for option contracts which hedge
the sales prices of commodities are recognized in net sales when
the related production is sold. None of the aforementioned
activities have been entered into for speculative purposes.
PART II. OTHER INFORMATION.
ITEM 2. LEGAL PROCEEDINGS.
LORI GOVREAU VS. THE DOE RUN RESOURCES CORPORATION was filed in
February, 1999, in the Circuit Court, 23rd Judicial Circuit at
Hillsboro, Jefferson County, Missouri alleging certain damages
stemming from the operations at the Herculaneum smelter damages
from the effects of lead poisoning due to operations at the
smelter. Punitive damages also are being sought.
On May 21, 1999, CHARLES MULLINS, II, ET AL., VS. THE DOE RUN
RESOURCES CORPORATION was filed in the Circuit Court, 23rd
Judicial Circuit at Hillsboro, Jefferson County, Missouri. The
case alleges certain damages from discontinued mine facilities in
St. Francois County. The plaintiffs seek to have certified two
separate classes. The first class would consist of property
owners, alleging that property values have been damaged due to
the tailings from the discontinued operations. The second class
would be composed
35
<PAGE>
of children, and the remedy sought is medical monitoring for the
class. The Company intends to vigorously defend itself against
this claim. The Company is unable at this time to state with
certainty the expected outcome of and the final costs of this
suit. Therefore, there can be no assurance the suit will not have
a material adverse effect on the results of operations, financial
condition and liquidity of the Company.
<TABLE>
<CAPTION>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
<S> <C>
EXHIBITS.
EXHIBIT 10.1 Financial leasing dated January 20, 1999
entered into by and between Credito Leasing
S.A. and Banco de Credito del Peru as party of
the first part and Doe Run Peru S.R.L. as
party of the second part (English)
EXHIBIT 10.2.1 Unconditional Guarantee dated June 11,1999 by
and among the Doe Run Resources Corporation,
Boeing Capital Corporation and First Security
Bank, N.A.
EXHIBIT 10.2.2 Promissory Note dated July 6, 1999 by and
among Boeing Capital Corporation and First
Security Bank, N.A.
EXHIBIT 10.2.3 Loan and Security Agreement dated June 11,
1999 by and among Boeing Capital Corporation
and First Security Bank, N.A.
EXHIBIT 10.3 Amendment No. 4 to Loan and Security Agreement
dated June 11, 1999 by and among the Doe Run
Resources Corporation, Fabricated Products,
Inc. and Congress Financial Corporation
EXHIBIT 27 Financial Data Schedule
</TABLE>
36
<PAGE>
S I G N A T U R E S
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.
THE DOE RUN RESOURCES CORPORATION
(Registrant)
September 13, 1999 /s/ Marvin K. Kaiser
Date Marvin. K. Kaiser
Vice President and Chief Financial Officer
(duly authorized officer and principal
financial officer)
37
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NUMBER DESCRIPTION
<S> <C>
EXHIBIT 10.1 Financial leasing dated January 20, 1999
entered into by and between Credito Leasing
S.A. and Banco de Credito del Peru as party
of the first part and Doe Run Peru S.R.L. as
party of the second part (English)
EXHIBIT 10.2.1 Unconditional Guarantee dated June 11,1999
by and among the Doe Run Resources
Corporation, Boeing Capital Corporation and
First Security Bank, N.A.
EXHIBIT 10.2.2 Promissory Note dated July 6, 1999 by and
among Boeing Capital Corporation and First
Security Bank, N.A.
EXHIBIT 10.2.3 Loan and Security Agreement dated June 11,
1999 by and among Boeing Capital Corporation
and First Security Bank, N.A.
EXHIBIT 10.3 Amendment No. 4 to Loan and Security
Agreement dated June 11, 1999 by and among
the Doe Run Resources Corporation,
Fabricated Products, Inc. and Congress
Financial Corporation
EXHIBIT 27 Financial Data Schedule
</TABLE>
38
<PAGE>
RICARDO ORTIZ DE ZEVALLOS VILLARAN
NOTARY OF LIMA
AV. AREQUIPA No. 1268
Telephones: 472-6825 472-4729
FAX: 471-0549 e-mail: [email protected]
T E S T I M O N Y
OF THE PUBLIC DEED OF: PURCHASE/SALE
GRANTED BY: DOE RUN PERU S. R. L.
IN FAVOR OF: BANCO DE CREDITO DEL PERU
AND CREDITO LEASING S.A.
LIMA, JANUARY 20, 1999
PAGE 2607 No. 96276
SERIES: A NO. 4639498
TWO THOUSAND SIX HUNDRED TWENTY-SEVEN
Number.
Kardex: 96276 (NINETY-SIX THOUSAND TWO HUNDRED SEVENTY-SIX)
PURCHASE/SALE CONTRACT ENTERED INTO BY AND BETWEEN DOE RUN PERU S.
R. L. AS PARTY OF THE FIRST PART AND CREDITO LEASING S.A. AND
BANCO DE CREDITO DEL PERU AS PARTY OF THE SECOND PART.
*****************************************************************INTRODUCTION:
In the City of Lima, on January 20, 1999, before me: RICARDO ORTIZ DE
ZEVALLOS VILLARAN, Lawyer-Notary Public of this Capital; duly identified by
Voter's Registration Card No. (08241353) zero eight million two hundred
forty-one thousand three hundred fifty-three, Military Registration Card No.
(T-34-A-5913251) T - Thirty-four - A - five million nine hundred thirteen
thousand two hundred fifty-one; and with Single Taxpayer Registration No.
(10803373) ten million eight hundred three thousand three hundred
seventy-three.
<PAGE>
APPEAR:
On behalf and representing DOE RUN PERU S. R. L., with Single
Taxpayer' Registration No. 37630381 (thirty-seven million six hundred thirty
thousand three hundred eighty-one), domiciled at Avenida Victor Andres
Belaunde No. 147.Torre Real Tres, Camino Real Business Center, 9th Floor,
District of San Isidro, Province and Department of Lima, authorized as per
the Minutes of the General Extraordinary Partners Meeting held on January 4,
1999, which is in process of being registered in the Registry of Bodies
Corporate of Lima, which will be inserted hereto.
MR. KENNETH RICHARD BUCKELY: a US citizen, who stated that he was married,
an engineer by profession or occupation, duly identified with Alien
Registration Card No. N-97767 (N-ninety-seven thousand seven hundred
sixty-seven).
On behalf and representing BANCO DE CREDITO DEL PERU with Single
Taxpayer's registration No. 10004721 (ten million four thousand seven hundred
twenty-one), domiciled at Calle Centenario No. 156, La Molina, Province and
Department of Lima, authorized to this effect as per powers of attorney
registered on Entry No. 6444, pages 100, of Voluyme 297 and in Entry 73, of
Filing Card No. 117464 of the Registry of Bodies Corporate of Lima.
MR. SERGIO BASSINO BELLACCI: a Peruvian citizen, who stated that he was
married, an economist by profession or occupation, duly identified by Voter's
Registration Card No. 08771672 (zero eight million seven hundred seventy-one
thousand six hundred seventy-two) and Military Registration Card No.
2151902588 (two thousand one hundred fifty-one million nine hundred two
thousand five hundred eighty-eight).
MR. ANDRES ALEJANDRO FERRAND DEL BUSTO: a Peruvian citizen, who stated
SERIES: A NO. 4639496
TWO THOUSAND SIX HUNDRED TWENTY-EIGHT
that he was married, an executive by profession or occupation, duly
identified by Voter's Registration Card No. 08248466 (zero eight million two
hundred forty-eight thousand four hundred sixty-six) and Military
Registration Card No. 2200090575 (two thousand two hundred million ninety
thousand five hundred seventy-five).
On behalf and representing CREDITO LEASING S.A., with Single Tax
Payer's Registration No. 30866878 (thirty million eight hundred sixty-six
thousand eight hundred seventy-eight), domiciled at Calle Centenario No. 156,
La Molina, Province and Department of Lima, authorized to this effect as per
powers of attorney registered on Filing Card No. 130316 of the Registry of
Bodies Corporate of Lima.
<PAGE>
MR. JOSE LUIS FERREYRA ARCE: a Peruvian citizen, who stated that he was
married, an economist by profession, duly identified by Voter's Registration
Card No. 08810126 (zero eight million eight hundred ten thousand one hundred
twenty-six) and Military Registration Card No. 8100506676 (eight thousand on
hundred million five hundred six thousand six hundred seventy-six).
MR. JUAN PABLO BOZA RIZO PATRON: a Peruvian citizen, who stated that he was
married, an executive by profession or occupation, duly identified by Voter's
Registration Card No. 08271164 (zero eight million two hundred seventy one
thousand one hundred sixty-four) and Military Registration Card No.
2413049673 (two thousand four hundred thirteen million forty-nine thousand
six hundred seventy-three).
THE PERSONS WHO APPEAR:
Are of age, and I have identified them as able to contract and are
intelligent in Spanish with sufficient capacity, freedom and knowledge to
contract; to which I attest to, and they have delivered to me a writ that was
duly signed and authorized, to be converted into a Public Deed, which I now
place in my file under the corresponding order number, and whose text reads
as follows:
WRIT:
Mr. Notary, DOCTOR RICARDO ORTIZ DE ZEVALLOS VILLARAN,
Kindly enter in your Register of Public Deeds a Purchase-Sale Contract
entered into by and between DOE RUN PERU S.R.L. with Single Taxpayer's
Registration (RUC) No 37630381, domiciled at Ave. Victor Andres Belaunde No.
147, Camino Real Business Center, Torre Real Tres, 9th Floor, District of San
Isidro, Province and Department of Lima, duly represented by Mr. Kenneth
Richard Buckley with Alien's Registration Card No. N-97767, duly authorized
this end as per the Minutes of the Extraordinary General Partners Meeting
dated January 4, 1999, whose registration with the Registry of Bodies
Corporate of Lima is in process and that you Mr. Notary will kindly insert,
hereinafter referred to as THE SELLER, as party of the first part; AND BANCO
DE CREDITO DEL PERU with Single Taxpayer's Registration (RUC) No. 10004721,
domiciled at Calle Centenario No. 156, La Molina, Province and Department of
Lima, duly represented by Messrs. Sergio Bassino Bellacci and Andres
Alejandro Ferrand del Busto, duly authorized to this effect as per powers of
attorney registered on entry No. 6444, pages 100, of Volume 297 and in entry
73, of Filing Card No. 117464, respectively, of the Registry of Bodies
Corporate of Lima; CREDITO LEASING S.A., with Single Taxpayer's Registration
(RUC) No. 30866878, domiciled at Calle Centenario No. 156, La
SERIES A NO. 4639494
TWO THOUSAND SIX HUNDRED TWENTY-NINE
<PAGE>
Molina, Provincia and Department of Lima, duly represented by Messrs. Jose
Luis Ferreyra Arce and Juan Pablo Boza Rizo Patron, duly authorized to this
effect as per powers of attorney registered on Filing Card No. 130316, of the
Registry of Bodies Corporate of Lima, hereinafter referred to as THE BUYERS,
as party of the second part; under the following terms and conditions:
FIRST: The Seller hereby declares to be the owner of the following:
1. MOVABLE PROPERTY:
- Air Filters, 48 cartridge units manufactured in synthetic
material, make VILEDON, MODEL MF 85/95 G35K.
- Turbocompressor, make DEMAG, 43,000 Nm3/hour capacity, Series No.
8567.
- Electric motor, make SIEMENS, 5,000 KW (6705HP) power, with
direct starting, Series No. D9041105101.
- Air washer, Series No. 7324, make LINDE.
- Molecular screens, 43,000 Nm3/hour capacity, 2 units with Series
No. 9898 and 9899, make BERTSH.
- Turbocharger, make ATLAS COPCO, 7,800 Nm3/hour capacity with 7.9
bar pressure, Series No.15-2872.
- Expansion turbine, make ATLAS COPCO, 7,700 Nm3/hour capacity,
Series No. 15-2872.
- Heat exchangers, 2 units, Series No. 106/1195/90(ZK1) and No.
106/1196/90(ZK2), make DELTECHNIK, model DK185.380.4.118 (ZK1) and
(ZK2).
- 02 Condensers, make LINDE, models 3-3216 (main condenser) and E-3217
(air condenser) with identification numbers 533021 and 533026,
respectively.
- Liquefaction Columns, make LINDE; models T-3211 (liquefaction
column-high) and T-.3212 (liquefaction column-low), with
identification numbers 533028 and 533027, respectively.
- Liquid oxygen tank, 200 MT capacity, Series No. 11-09670.
- Oxygen vaporizer, make LINDE, model E-7116, with identification
number 552320.
- 02 Cooling towers, make SULZER EBCHERWYSS GMH, model E-8421 A/B,
type EWK 1800/09 with Series No. 8112 and No. 142.
2. REAL PROPERTY:
Lot named "F-1 Oxygen Plant No. 2", an integrating part of the Smelter
Sector, located on the right margin of the main access road to the La Oroya
Smelter, in the District of La Oroya, Province of Yauli, Department of Junin;
a real property that has an area of 1,421.35 m2, whose boundaries and
perimetrical measurements are registered on Entry 1-B of Filing Card No.
002180 of the Registry of Real Property of the Tarma Registry Office.
The ownership of the owner of the aforementioned real property is
registered on Entry 1-C, of Filing Card No. 002180 of the Registry of Real
Property of the Tarma Registry Office.
<PAGE>
SECOND: By means of this writ, The Seller gives in real sale and perpetual
transfer in favor of The Buyers, the movable and real property described in
subpoints 1.1 and 1.2 hereof, corresponding to them by means of this sale all
that by fact and/or law corresponds to them, without any reserve or
limitation whatsoever.
SERIES A. NO. 4639492
TWO THOUSAND SIX HUNDRED THIRTY
As regards the real property that is sold, that the purchase-sale
comprises in addition to the aforementioned area, all uses, customs, right of
way, entries, exits, airs and everything that by fact and/or by law
corresponds to it, without any reserve or limitation whatsoever.
The Seller hereby declares that the movable and real property matter
of this purchase-sale are acquired by The Buyers under his express and
specific request, due to the fact that said goods are acquired as per a
Financial Leaseback Contract that both parties have executed on this same
date.
THIRD: The parties hereby agree to set the Purchase-Sale price of the goods
referred to in clause one, numerals 1.1 and 1.2 hereof in accordance with
what is indicated below:
3.1.- The goods described in numeral 1.1 hereof for the amount of
US$18,605,886.00 (EIGHTEEN MILLION SIX HUNDRED FIVE THOUSAND EIGHT HUNDRED
EIGHTY-SIX AND 00/100 US DOLLARS), amount that includes the Value Added Tax,
sum that The Buyers will pay The Seller at the time of the signing of the
Public Deed that this writ will originate. The sale price will by paid by
The Buyers in the following manner:
3.1.1 CREDITO LEASING S.A. participates in the purchase of the movable property
paying the amount of US$15,815,003.10 (FIFTEEN MILLION EIGHT HUNDRED
FIFTEEN THOUSAND AND THREE WITH 10/100 US DOLLARS), amount that includes
the Value Added Tax, thus becoming co-owner of the movable property in a
percentage of 85%.
3.1.2 BANCO DE CREDITO DEL PERU participates in the purchase-sale of the
movable property paying the amount of US$2,790,882.90 (TWO MILLION SEVEN
HUNDRED NINETY THOUSAND EIGHT HUNDRED EIGHTY-TWO AND 90/100 US DOLLARS),
amount that includes the corresponding Value Added Tax, thus resulting
being co-owner of the movable property in a percentage of 15%.
3.2. The real property described in numeral 1.2 hereof, for the sum of
US$1,394,114.00 (ONE MILLION THREE HUNDRED NINETY-FOUR THOUSAND ONE
HUNDRED AND FOURTEEN WITH 00/100 US DOLLARS), an operation that is not
levied with the Value Added Tax, amount that The Buyers will pay The
Seller upon the signature of the Public
<PAGE>
Deed that will originate from this writ. The sale price will be paid
by The Buyers in the following manner:
3.2.1 CREDITO LEASING S.A. participates in the purchase of the real
property paying the amount of US$1,184,996.90 (ONE MILLION ONE
HUNDRED EIGHTY-FOUR THOUSAND NINE HUNDRED NINETY-SIX AND 90/100 US
DOLLARS), thus becoming co-owner of the real property in a
percentage of 85%.
3.2.2 BANCO DE CREDITO DEL PERU participates in the purchase-sale of the
real property paying the amount of US$209,117.10 (TWO HUNDRED NINE
THOUSAND ONE HUNDRED SEVENTEEN AND 10/100 US DOLLARS), thus
becoming co-owner of the real property in a percentage of 15%.
The parties hereby declare that the purchase sale of the
aforementioned movable and real property amounts to the total sum of
US$20,000,000.00 (TWENTY MILLION AND 00/100 US DOLLARS)
SERIES NO. 4639490
TWO THOUSAND SIX HUNDRED THIRTY-ONE
FOURTH: The contracting parties hereby declare that there is fair and
perfect equivalence between the movable and real property sold and the price
agreed upon, and that the sale of the real property is Ad Corpus. Therefore,
they declare that if there would be a difference of more or of less that they
do not actually receive, they make of it a mutual grace and reciprocate
donation, expressly waiving any action, exception and terms that may be
brought to invalidate the legal effects of this Purchase-Sale, inasmuch as it
is carried out in a permanent manner and pursuant to the aforesaid.
FIFTH: The Seller hereby declares that on the movable and real property
matter of the Purchase-Sale there are no liens, or encumbrances of any type,
nor judicial or extra-judicial measures of any nature that limit or restrict
its right to the property and to its free disposal, hereby binding themselves
notwithstanding this statement to guarantee title and right of possession in
case of an eviction.
SIXTH: The Seller hereby declares that does not owe anything as regards the
Real Estate Tax or Excise Tax, nor any other tax and/or administrative
obligation corresponding to the real property that is being sold. Without
prejudice to the aforementioned, the Seller hereby declares that in the event
that any tax debt is charged (by tax authorities) on the aforementioned
taxes, it will assume the payment of such debt, provided all corresponding
instances have been previously used.
<PAGE>
SEVENTH: All expenses -inclusive those of a Testimony for The Buyers-, duties
and other contributions that derive from this writ and from its conversion
into a Public Deed, and its registration in the Public Registry, shall be
borne exclusively by The Seller.
EIGHT: The parties hereby expressly agree that any conflict or controversy
that may arise between them as a consequence of the interpretation or
execution of this contract, including those related with its nullity and
voidance, shall be resolved by arbitration of law in charge of an Arbitration
Court made of three members who must necessarily be certified lawyers,
carried out pursuant to the Regulations for National and International
Conciliation and Arbitration of the Chamber of Commerce of Lima.
The Arbitration Court shall be made up of the following manner: each
one of the parties shall designate an arbiter and the third one shall be
designated by common agreement by the two first arbiters. This so designated
third arbiter shall chair the Arbitration Court.
The arbitration shall take place in the City of Lima, and its duration
shall not exceed sixty (60) business days, counted as of the date of the
installation of the Arbitration Court until the issue of the respective
arbitration award.
The Arbitration Award shall be definitive and unappealeable.
The expenses originated by the arbitration process shall be borne by
the party who failed to win.
In the case that any of the parties may decide to file before the
Judiciary an appeal for annulment against the arbitration award, it shall
first establish a Bank Letter of Guaranty in favor of the opposing party,
granted by a first order Bank with headquarters in Lima, equivalent to
US$50,000.00
SERIES A NO. 4639488
TWO THOUSAND SIX HUNDRED THIRTY-TWO
(FIFTY THOUSAND US DOLLARS), executable in case that the final decision on
the appeal is to declare it groundless. Said bank letter of credit must be
in effect during the time the process lasts.
Kindly Mr. Notary, add any other clause required by Law and convert
this writ into a Public Deed, making sure of sending the respective report to
the Registro of Real Estate
<PAGE>
Propery of Tarma for the registration of the purchase-sale of the real
property described in numeral 1.2 of this writ.
Lima, January 20, 1999.
Signed: DOE RUN PERU S. R. L.- p.p. Kenneth Richard Buckely.
Signed: BANCO DE CREDITO DEL PERU.- p.p. Sergio Bassino Bellacci.- Andres
Alejandro Ferrand del Busto.
Signed: CREDITO LEASING S.A.- p.p. Jose Luis Ferreyra Arce.- Juan Pablo Boza
Rizo Patron.
This writ is authorized by Doctor Jennifer Houghton Von Hemelrick with Bar
Association Registration No. 25894.
INSERT NO. 1
CERTIFIED COPY OF THE EXTRAORDINARY GENERAL PARTNERS MEETING DATED
JANUARY 4, 1999.-
Ricardo Ortiz de Zevallos Villaran.- Lawyer-Notary Public of Lima.- HEREBY
CERTIFY: that I have in sight the book titled Minutes No. 2 of DOE RUN PERU
S. R. L., legalized before the Notary Public Dr. Anibal Corvetto Romero, on
December 9, 1998, being registered on the chronological book under Number
10223-98 (ten thousand two hundred twenty three - ninety-eight); and I have
verified that from pages 3 to 6 inclusive, appear the Minutes of the
Extraordinary General Partners Meeting dated January 4, 1999; whose pertinent
part follows:
EXTRAORDINARY GENERAL PARTNERS MEETING DATED JANUARY 4, 1999
On January 4, at 12 noon, the following partners met together in the
Company's offices, located at Av. Victor Andres Belaunde No. 147, Via
Principal 155, 9th Floor, Camino Real Business Center, Torre Real 3, San
Isidro, Lima, chaired by Victor Raul Eyzaguirre Parra, with Mr. Anthony Wayne
Worcester acting as Secretary:
At the request made by the Chairman, the Secretary read the text of
the Summoning Notice to the members present, sent on December 21, 1998,
ordering that the documents with the stamp, signature and time evidencing
their receipt be adhered to the beginning of these Minutes.
LIST OF ATTENDANTS:
-"Doe Run Peru S.R.L., domiciled at Av. Victor Andres Belaunde No. 147,
Via Principal 155, 9th Floor, Camino Real Business Center, Torre Real
Tres, San Isidro, represented by Victor Raul Eyzaguirre Parra, according
to the power of attorney inscribed in the Company's records, owner of
648,628,009 participations; and
-Ruth Anabeli Gonzalez Velapatino representing Julio Enrique Guadalupe
Bascones, domiciled at Av. Ramon Ribeyro No. 421, Apartment 2, San
Antonio, Miraflores, owner of 11 participations, as per power of attorney
duly inscribed in the Company's records.
<PAGE>
-Teresa Saenz Picasso, domiciled at Octavio Espinoza 410, San isidro,
owner of 6,540 participations.
SERIES A NO. 4639486
TWO THOUSAND SIX HUNDRED THIRTY-THREE
-Floren Eddy Ramos Aparicio, domiciled at Av. Morro Solar 2204, Surco,
owner of 2,351 participations.
-Alfredo Arturo Basualdo Ricaldi, Calle 2 de Mayo 141, La Oroya, owner of
1,307 participations.
-Margarita Delicia Mondragon Hernandez, Jiron Chinchaysuyo 119, Maranga,
San Miguel, owner of 2,618 participations.
QUORUM 648,640,836 PARTICIPATIONS
Having been the meeting duly called and having complied with the
quorum established in Article Seven of the By-Laws, the Chairman declared it
duly installed.
The Chairman indicated that as the participants were aware, and as it was
indicated in the summoning notice, the subjects on the agenda were as follows:
- - Approval of the Sale and Leaseback operation with Banco de Credito del
Peru and Credito Leasing S.A.
- - Granting of special powers.
1. APPROVAL OF THE SALE AND LEASEBACK OPERATION WITH BANCO DE CREDITO DEL
PERU AND CREDITO LEASING S.A.
The Chairman stated that due to the need of working capital to increase
the operations of the Company, coordinations had been made with Banco de
Credito del Peru and Credito Leasing S.A., to obtain new financing under
the modality of sale and leaseback. To this end, a proposal was made so
that the Oxygen Plant of the La Oroya Smelter, would be the object of
said operation.
The Chairmain submitted to the consideration of the partners, the
approval of a sale and leaseback for up to US$20,000,000.00 for a term of
five years with Banco de Credito del Peru and Credito Leasing S.A., on
the Oxygen Plant located in the Smelter Sector, in La Oroya, of which the
Company is the owner.
After listening to the Chairman's proposal, the Board
unanimously agreed to approve it under the terms and conditions stated by
the Chairman.
<PAGE>
3. GRANTING OF SPECIAL POWERS.
2.1 Special powers for the signing of the documents related to the Sale and
Leaseback Operation.
The Chairman proposed the granting of special powers to different
executives to sign the documents pertinent to the operation that had been
approved.
After a brief exchange of ideas, the Board unanimously agreed to grant
a special power of attorney to the following: Mr. Kenneth Richard Buckley, a
US citizen, with Immigrant's Identity Card No. N-97767, Mr. Anthony Wayne
Worcester, a US citizen, identified by Immigrant's Identity Card No. N-97937;
Mr. Kenneth Ernest Hecker Jr., a US citizen identified by Immigrant's
Identity Card No. N-99670; and, Mr. Marvin K. Kaiser, a US citizen,
identified by US Passport No. 152075471; all of them domiciled at Av. Victor
Andres Belaunde No. 147, Camino Real Business Center, Torre Real Tres, 9th
Floor, San Isidro,
- -------------------------------------------------------------------------------
SERIES A NO. 4639484
TWO THOUSAND SIX HUNDRED THIRTY FOUR
so that on behalf and in representation of the Company, they may individually
or jointly, sign contracts, writs, public deeds and other documents required
to formalize the sale and leaseback operation approved hereinbefore, and also
to carry out the corresponding proceedings for its registration with the
Public Registries.
- -------------------------------------------------------------------------------
There being no other matter to deal with and it being 1 p.m.,
the meeting was adjourned, after drafting, reading and approval of the
Minutes, which same were signed by all those present in sign of agreement
therewith and without observations.
INSERT: VOUCHER
A stamp: Evidencing receipt
DOE RUN PERU.- Victor Andres Belaunde 147, Camino Real Business Center, Torre
Tres, 9th Floor, San Isidro.
Telephone: (511) 215-1200.
KENETH R. BUCKLEY.- PRESIDENT & GENERAL MANAGER.- Telephone (511) 215-1200.
A stamp: ESTUDIO FERRERO.- ABOGADOS.- December 24, 1998.-
RECEIVED.-
San Isidro, December 21, 1998.-
Mr. JULIO GUADALUPE BASCONES.- Victor Andres Belaunde.- San Isidro.-
DEAR SIR:
<PAGE>
The General Manager of DOE RUN PERU S.R.L., with Single Taxpayer
Registration No. 37630381, in keeping with the Bylaws and the General
Business Corporations Law calls a General Partners Meeting, to be held on
January 4, 1999, at noon, in the Company's office located at Victor Andres
Belaunde No. 147, Camino Real Business Center, Torre Real 3, 9th Floor,
District of San Isidro, in order to deal with the matters included in the
following agenda:
- - Approval of the sale and leaseback operation with Banco de Credito del
Peru and Credito Leasing S.A.
- - Granting of Special Powers.
We thank you in advance for your kind attendance and we remain,
Sincerely yours,
An illegible signature.- Kenneth Richard Buckley.- General Manager, Signed:
Illegible signatures.- Date: December 24, 1998.
INSERT: VOUCHER
A stamp: Evidencing receipt
DOE RUN PERU.- Victor Andres Belaunde 147, Camino Real Business Center, Torre
Tres, 9th Floor, San Isidro.
Telephone: (511) 215-1200.
KENETH R. BUCKLEY.- PRESIDENT & GENERAL MANAGER.- Telephone (511) 215-1200.
A stamp: ESTUDIO FERRERO.- ABOGADOS.- December 24, 1998.-
RECEIVED.-
San Isidro, December 21, 1998.-
Mr. BASILIO MELGAREJO MALPARTIDA.- MARCAVALLE BLOCK 13, APARTMENT 301.- LA OROYA
DEAR SIR:
The General Manager of DOE RUN PERU S.R.L., with Single Taxpayer
Registration No. 37630381, in keeping with the Bylaws and the General
Business Corporations Law calls a General Partners Meeting, to be held on
January 4, 1999, at noon, in the Company's office located at Victor Andres
SERIES A NO. 4639482
TWO THOUSAND SIX HUNDRED THIRTY-FIVE
Belaunde No. 147, Camino Real Business Center, Torre Real 3, 9th Floor,
District of San Isidro, in order to deal with the matters included in the
following agenda:
- - Approval of the sale and leaseback operation with Banco de Credito del
Peru and Credito Leasing S.A.
- - Granting of Special Powers.
We thank you in advance for your kind attendance and we remain,
<PAGE>
Sincerely yours,
An illegible signature.- Kenneth Richard Buckley.- General Manager, Signed:
Illegible signatures.- Date: December 24, 1998.
INSERT: VOUCHER
A stamp: Evidencing receipt
DOE RUN PERU.- Victor Andres Belaunde 147, Camino Real Business Center, Torre
Tres, 9th Floor, San Isidro.
Telephone: (511) 215-1200.
KENETH R. BUCKLEY.- PRESIDENT & GENERAL MANAGER.- Telephone (511) 215-1200.
A stamp: ESTUDIO FERRERO.- ABOGADOS.- December 24, 1998.-
RECEIVED.-
San Isidro, December 21, 1998.-
MISS ROCIO EVA SIFUENTES AYVAR.- CALLE PIURA 122, SANTA PATRICIA.- LA MOLINA
DEAR MADAM:
The General Manager of DOE RUN PERU S.R.L., with Single Taxpayer
Registration No. 37630381, in keeping with the Bylaws and the General
Business Corporations Law calls a General Partners Meeting, to be held on
January 4, 1999, at noon, in the Company's office located at Victor Andres
Belaunde No. 147, Camino Real Business Center, Torre Real 3, 9th Floor,
District of San Isidro, in order to deal with the matters included in the
following agenda:
- - Approval of the sale and leaseback operation with Banco de Credito del
Peru and Credito Leasing S.A.
- - Granting of Special Powers.
We thank you in advance for your kind attendance and we remain,
Sincerely yours,
An illegible signature.- Kenneth Richard Buckley.- General Manager, Signed:
Illegible signatures.- Date: December 24, 1998.
INSERT: VOUCHER
A stamp: Evidencing receipt
DOE RUN PERU.- Victor Andres Belaunde 147, Camino Real Business Center, Torre
Tres, 9th Floor, San Isidro.
Telephone: (511) 215-1200.
KENETH R. BUCKLEY.- PRESIDENT & GENERAL MANAGER.- Telephone (511) 215-1200.
A stamp: ESTUDIO FERRERO.- ABOGADOS.- December 24, 1998.-
RECEIVED.-
San Isidro, December 21, 1998.-
<PAGE>
Mr. JACINTO CANALES, Av. Peru 4106.- San Martin de Porres.
DEAR SIR:
The General Manager of DOE RUN PERU S.R.L., with Single Taxpayer
Registration No. 37630381, in keeping with the Bylaws and the General
Business Corporations Law calls a General Partners Meeting, to be held on
January 4, 1999, at noon, in the Company's office located at Victor Andres
Belaunde No. 147, Camino Real Business Center, Torre Real 3, 9th Floor,
SERIES A NO. 4639480
TWO THOUSAND SIX HUNDRED THIRTY-SIX
District of San Isidro, in order to deal with the matters included in the
following agenda:
- - Approval of the sale and leaseback operation with Banco de Credito del
Peru and Credito Leasing S.A.
- - Granting of Special Powers.
We thank you in advance for your kind attendance and we remain,
Sincerely yours,
An illegible signature.- Kenneth Richard Buckley.- General Manager, Signed:
Illegible signatures.- Date: December 24, 1998.
INSERT: VOUCHER
A stamp: Evidencing receipt
DOE RUN PERU.- Victor Andres Belaunde 147, Camino Real Business Center, Torre
Tres, 9th Floor, San Isidro.
Telephone: (511) 215-1200.
KENETH R. BUCKLEY.- PRESIDENT & GENERAL MANAGER.- Telephone (511) 215-1200.
A stamp: ESTUDIO FERRERO.- ABOGADOS.- December 24, 1998.-
RECEIVED.-
San Isidro, December 21, 1998.-
MISS DANITZA ROCIO YUPARI CAPCHA.- CALLE LEON 180, URB. MAYORAZGO, PRIMERA
ETAPA, ATE VITARTE..-
DEAR MADAM:
The General Manager of DOE RUN PERU S.R.L., with Single Taxpayer
Registration No. 37630381, in keeping with the Bylaws and the General
Business Corporations Law calls a General Partners Meeting, to be held on
January 4, 1999, at noon, in the Company's office located at Victor Andres
Belaunde No. 147, Camino Real Business Center, Torre Real 3, 9th Floor,
District of San Isidro, in order to deal with the matters included in the
following agenda:
<PAGE>
- - Approval of the sale and leaseback operation with Banco de Credito del
Peru and Credito Leasing S.A.
- - Granting of Special Powers.
We thank you in advance for your kind attendance and we remain,
Sincerely yours,
An illegible signature.- Kenneth Richard Buckley.- General Manager, Signed:
Illegible signatures.- Date: December 24, 1998.
INSERT: VOUCHER
A stamp: Evidencing receipt
DOE RUN PERU.- Victor Andres Belaunde 147, Camino Real Business Center, Torre
Tres, 9th Floor, San Isidro.
Telephone: (511) 215-1200.
KENETH R. BUCKLEY.- PRESIDENT & GENERAL MANAGER.- Telephone (511) 215-1200.
A stamp: ESTUDIO FERRERO.- ABOGADOS.- December 24, 1998.-
RECEIVED.-
San Isidro, December 21, 1998.-
Mr. ALFREDO ARTURO BASUALDO RICALDI.- CALLE DOS DE MAYO 141, OROYA ANTIGUA.-
DEAR SIR:
The General Manager of DOE RUN PERU S.R.L., with Single Taxpayer Registration
No. 37630381, in keeping with the Bylaws and the General Business Corporations
Law calls a General Partners Meeting, to be held on January 4, 1999, at noon, in
the Company's office located at Victor Andres Belaunde No. 147, Camino Real
Business Center, Torre Real 3, 9th Floor,
SERIES A NO. 4639478
TWO THOUSAND SIX HUNDRED THIRTY-SEVEN
District of San Isidro, in order to deal with the matters included in the
following agenda:
- - Approval of the sale and leaseback operation with Banco de Credito del
Peru and Credito Leasing S.A.
- - Granting of Special Powers.
We thank you in advance for your kind attendance and we remain,
Sincerely yours,
An illegible signature.- Kenneth Richard Buckley.- General Manager, Signed:
Illegible signatures.- Date: December 24, 1998.
INSERT: VOUCHER
<PAGE>
A stamp: Evidencing receipt
DOE RUN PERU.- Victor Andres Belaunde 147, Camino Real Business Center, Torre
Tres, 9th Floor, San Isidro.
Telephone: (511) 215-1200.
KENETH R. BUCKLEY.- PRESIDENT & GENERAL MANAGER.- Telephone (511) 215-1200.
A stamp: ESTUDIO FERRERO.- ABOGADOS.- December 24, 1998.-
RECEIVED.-
San Isidro, December 21, 1998.-
MR. FLOREN -EDDY RAMOS APARICIO.- AV. MORRO SOLAR 2204, SURCO, LIMA 33..-
DEAR SIR:
The General Manager of DOE RUN PERU S.R.L., with Single Taxpayer
Registration No. 37630381, in keeping with the Bylaws and the General
Business Corporations Law calls a General Partners Meeting, to be held on
January 4, 1999, at noon, in the Company's office located at Victor Andres
Belaunde No. 147, Camino Real Business Center, Torre Real 3, 9th Floor,
District of San Isidro, in order to deal with the matters included in the
following agenda:
- - Approval of the sale and leaseback operation with Banco de Credito del
Peru and Credito Leasing S.A.
- - Granting of Special Powers.
We thank you in advance for your kind attendance and we remain,
Sincerely yours,
An illegible signature.- Kenneth Richard Buckley.- General Manager, Signed:
Illegible signatures.- Date: December 24, 1998.
INSERT: VOUCHER
A stamp: Evidencing receipt
DOE RUN PERU.- Victor Andres Belaunde 147, Camino Real Business Center, Torre
Tres, 9th Floor, San Isidro.
Telephone: (511) 215-1200.
KENETH R. BUCKLEY.- PRESIDENT & GENERAL MANAGER.- Telephone (511) 215-1200.
A stamp: ESTUDIO FERRERO.- ABOGADOS.- December 24, 1998.-
RECEIVED.-
San Isidro, December 21, 1998.-
MISS TERESA SAENZ PICASSO.- OCTAVIO ESPINOZA 410, SAN ISIDRO.-
DEAR MADAM:
The General Manager of DOE RUN PERU S.R.L., with Single Taxpayer
Registration No. 37630381, in keeping with the Bylaws and the General
Business Corporations Law calls a General Partners Meeting, to be held on
January 4, 1999, at noon, in the Company's office
<PAGE>
located at Victor Andres Belaunde No. 147, Camino Real Business Center, Torre
Real 3, 9th Floor, District of San Isidro, in order to deal with the matters
included in the following agenda:
- - Approval of the sale and leaseback operation with Banco de Credito del
Peru and Credito Leasing S.A.
SERIES A NO. 4639476
TWO THOUSAND SIX HUNDRED THIRTY-EIGHT
- - Granting of Special Powers.
We thank you in advance for your kind attendance and we remain,
Sincerely yours,
An illegible signature.- Kenneth Richard Buckley.- General Manager, Signed:
Illegible signatures.- Date: December 24, 1998.
INSERT: VOUCHER
A stamp: Evidencing receipt
DOE RUN PERU.- Victor Andres Belaunde 147, Camino Real Business Center, Torre
Tres, 9th Floor, San Isidro.
Telephone: (511) 215-1200.
KENETH R. BUCKLEY.- PRESIDENT & GENERAL MANAGER.- Telephone (511) 215-1200.
A stamp: ESTUDIO FERRERO.- ABOGADOS.- December 24, 1998.-
RECEIVED.-
San Isidro, December 21, 1998.-
MISS MARGARITA DELICIA MONDRAGON HERNANDEZ.- JR. CHINCHAYSUYO 119, MARANGA,
CUARTA ETAPA, SAN MIGUEL.-
DEAR MADAM:
The General Manager of DOE RUN PERU S.R.L., with Single Taxpayer
Registration No. 37630381, in keeping with the Bylaws and the General
Business Corporations Law calls a General Partners Meeting, to be held on
January 4, 1999, at noon, in the Company's office located at Victor Andres
Belaunde No. 147, Camino Real Business Center, Torre Real 3, 9th Floor,
District of San Isidro, in order to deal with the matters included in the
following agenda:
Approval of the sale and leaseback operation with Banco de Credito del Peru
and Credito Leasing S.A.
- - Granting of Special Powers.
We thank you in advance for your kind attendance and we remain,
Sincerely yours,
An illegible signature.- Kenneth Richard Buckley.- General Manager, Signed:
Illegible signatures.- Date: December 24, 1998.
<PAGE>
INSERT: VOUCHER
A stamp: Evidencing receipt
DOE RUN PERU.- Victor Andres Belaunde 147, Camino Real Business Center, Torre
Tres, 9th Floor, San Isidro.
Telephone: (511) 215-1200.
KENETH R. BUCKLEY.- PRESIDENT & GENERAL MANAGER.- Telephone (511) 215-1200.
A stamp: ESTUDIO FERRERO.- ABOGADOS.- December 24, 1998.-
RECEIVED.-
San Isidro, December 21, 1998.-
Messrs. DOE RUN MINING S. R. L. - AV. VICTOR ANDRES BELAUNDE 124, TORRE REAL 3,
9TH FLOOR, SAN ISIDRO.-
DEAR SIRS:
The General Manager of DOE RUN PERU S.R.L., with Single Taxpayer
Registration No. 37630381, in keeping with the Bylaws and the General
Business Corporations Law calls a General Partners Meeting, to be held on
January 4, 1999, at noon, in the Company's office located at Victor Andres
Belaunde No. 147, Camino Real Business Center, Torre Real 3, 9th Floor,
District of San Isidro, in order to deal with the matters included in the
following agenda:
SERIES A NO. 4639474
TWO THOUSAND THIRTY NINE
- - Approval of the sale and leaseback operation with Banco de Credito del
Peru and Credito Leasing S.A.
- - Granting of Special Powers.
We thank you in advance for your kind attendance and we remain,
Sincerely yours,
An illegible signature.- Kenneth Richard Buckley.- General Manager, Signed:
Illegible signatures.- Date: December 24, 1998.
This is what appears in the original minutes and inserts referred to herein.
Signed: Ricardo Ortiz de Zevallos Villaran, Lawyer-Notary Public of Lima.
A Notarial Stamp follows:
CONCLUSION:
After previously reading the writ and the transcribed inserts I have found
all them to be in order and I have instructed the parties appearing before me
of their content and they have ratified their purpose by signing the deed.
The signing process was concluded pursuant to the provisions set forth in
clause 3) of Article 59 (fifty-nine) of the Law of Notary Publics, on January
<PAGE>
21, 1999 and I hereby leave evidence that the Series No. of the page where
this instrument begins is 4639448 and it concludes in the page with the
series No. 4639474: and I hereby attest to all of the aforesaid.
Signatures:
Kenneth Richard Buckley
Jose Luis Ferreyra Arce
Juan Pablo Boza Rizo Patron
Sergio Bassino Bellaci
Andres Alejandro Ferrand del Busto
Dr. Ricardo Ortiz de Zevallos Villaran
Lawyer-Notary Public of Lima
THIS IS A PHOTOCOPY OF THE PUBLIC DEED INSCRIBED IN MY REGISTER AND AT THE
REQUEST OF AN INTERESTED PARTY I ISSUE THIS TESTIMONY IN KEEPING WITH THE
LAW, WHICH I SIGN AND STAMP IN LIMA, ON JANUARY 29, 1999 (KARDEX 96276).
<PAGE>
RICARDO ORTIZ DE ZEVALLOS VILLARAN
NOTARY OF LIMA
AV. AREQUIPA No. 1268
Telephones: 472-6825 472-4729
FAX: 471-0549 e-mail: [email protected]
T E S T I M O N Y
OF THE PUBLIC DEED OF: FINANCIAL LEASING
GRANTED BY: CREDITO LEASING S.A. AND
BANCO DE CREDITO DEL PERU
IN FAVOR OF: DOE RUN PERU S. R. L.
LIMA, JANUARY 20, 1999
PAGE 2601 No. 96277
<PAGE>
Number.
Kardex: 96277 (NINETY-SIX THOUSAND TWO HUNDRED SEVENTY-SEVEN)
FINANCIAL LEASING ENTERED INTO BY AND BETWEEN CREDITO LEASING S.A.
AND BANCO DE CREDITO DEL PERU AS PARTY OF THE FIRST PART AND DOE
RUN PERU S. R. L. AS PARTY OF THE SECOND PART.
*******************************************************************************
INTRODUCTION:
In the City of Lima, on January 20, 1999, before me: RICARDO ORTIZ DE
ZEVALLOS VILLARAN, Lawyer-Notary Public of this Capital; duly identified by
Voter's Registration Card No. (08241353) zero eight million two hundred
forty-one thousand three hundred fifty-three, Military Registration Card No.
(T-34-A-5913251) T - Thirty-four - A - five million nine hundred thirteen
thousand two hundred fifty-one; and with Singe Taxpayer Registration No.
(10803373) ten million eight hundred three thousand three hundred
seventy-three.
APPEAR: On behalf and representing CREDITO LEASING S.A., with Single Tax
Payer's Registration No. 30866878 (thirty million eight hundred sixty-six
thousand eight hundred seventy-eight), domiciled at Calle Centenario No. 156,
La Molina, Province and Department of Lima, authorized to this effect as per
powers of attorney registered on Filing Card No. 130316 of the Registry of
Bodies Corporate of Lima.
MR. JOSE LUIS FERREYRA ARCE: a Peruvian citizen, who stated that he was
married, an economist by profession, duly identified by Voter's Registration
Card No. 08810126 (zero eight million eight hundred ten thousand one hundred
twenty-six) and Military Registration Card No. 8100506676 (eight thousand on
hundred million five hundred six thousand six hundred seventy-six).
MR. JUAN PABLO BOZA RIZO PATRON: a Peruvian citizen, who stated that he was
married, an executive by profession or occupation, duly identified by Voter's
Registration Card No. 08271164 (zero eight million two hundred seventy one
thousand one hundred sixty-four) and Military Registration Card No.
2413049673 (two thousand four hundred thirteen million forty-nine thousand
six hundred seventy-three).
On behalf and representing BANCO DE CREDITO DEL PERU with Single
Taxpayer's registration No. 10004721 (ten million four thousand seven hundred
twenty-one), domiciled at Calle Centenario No. 156, La Molina, Province and
Department of Lima, authorized to this effect as per
<PAGE>
powers of attorney registered on Entry No. 6444, pages 100, of Voluyme 297
and in Entry 73, of Filing Card No. 117464 of the Registry of Bodies
Corporate of Lima.
MR. SERGIO BASSINO BELLACCI: a Peruvian citizen, who stated that he was
married, an economist by profession or occupation, duly identified by Voter's
Registration Card No. 08771672 (zero eight million seven hundred seventy-one
thousand six hundred seventy-two) and Military Registration Card No.
2151902588 (two thousand one hundred fifty-one million nine hundred two
thousand five hundred eighty-eight).
MR. ANDRES ALEJANDRO FERRAND DEL BUSTO: a Peruvian citizen, who stated that
he was married, an executive by profession or occupation, duly identified by
Voter's Registration Card No. 08248466 (zero eight million two hundred
forty-eight thousand four hundred sixty-six) and Military Registration Card
No. 2200090575 (two thousand two hundred million ninety thousand five hundred
seventy-five).
On behalf and representing DOE RUN PERU S. R. L., with Single
Taxpayer' Registration No. 37630381 (thirty-seven million six hundred thirty
thousand three hundred eighty-one), domiciled at Avenida Victor Andres
Belaunde No. 147.Torre Real Tres, Camino Real Business Center, 9th Floor,
District of San Isidro, Province and Department of Lima, authorized as per
the Minutes of the General Extraordinary Partners Meeting held on January 4,
1999, which is in process of being registered in the Registry of Bodies
Corporate of Lima, which will be inserted hereto.
MR. KENNETH RICHARD BUCKELY: a US citizen, who stated that he was married,
an engineer by profession or occupation, duly identified with Alien
Registration Card No. N-97767 (N-ninety-seven thousand seven hundred
sixty-seven).
THE PERSONS WHO APPEAR:
Are of age, and I have identified them as able to contract and are
intelligent in Spanish with sufficient capacity, freedom and knowledge to
contract; to which I attest to, and they have delivered to me a writ that was
duly signed and authorized, to be converted into a Public Deed, which I now
place in my file under the corresponding order number, and whose text reads
as follows:
WRIT:
Mr. Notary, DOCTOR RICARDO ORTIZ DE ZEVALLOS VILLARAN,
Please record in your Register of Public Deeds, a Financial Leasing
Contract executed in accordance with Legislative Decree No. 299, Regulations
thereunder and the provisions of this contract, entered into by and between,
CREDITO LEASING S.A., with Single Taxpayers Register (R.U.C.) No. 30866878,
and the BANCO DE CREDITO DEL PERU, with RUC No. 10004721, hereinafter
referred to as THE LESSORS, with the domicile that is indicated at the end of
this document, duly represented by the persons who are signing this document,
as party of the first part; and THE
<PAGE>
CLIENT, whose names/firm name and other data required by law is indicated at
the end of this contract, as party of the second part ; subject to the
following conditions:
FIRST: THE LESSORS, in accordance with their bylaws and with the laws in
force are authorized to carry out financial leaseback operations; and, in
accordance with an express request made to them by the CLIENT, they have
acquired as property for the purpose of a financial lease in favor of the
CLIENT, the goods described in EXHIBIT B, that form part of this contract,
for the price, plus the taxes and other expenses stipulated in the
aforementioned Exhibit.
The goods subject matter of this contract are co-ownership of THE
LESSORS, in the following proportion:
CREDITO LEASING S.A. participates with 85% of the ownership of the
movable property described in Exhibit B of this contract, having invested in
the purchase of the same, the amount of US$15,815,003.10 (FIFTEEN MILLION
EIGHT HUNDRED FIFTEEN THOUSAND AND THREE WITH 10/100 US DOLLARS), Value Added
Tax included.
BANCO DE CREDITO DEL PERU participates with 15% of the ownership of
the movable property described in Exhibit B of this contract, having invested
in the purchase of the same the amount of US$2,790,882.90 (TWO MILLION SEVEN
HUNDRED NINETY THOUSAND EIGHT HUNDRED EIGHTY-TWO WITH 90/100 US DOLLARS),
Value Added Tax included.
CREDITO LEASING S.A. participates with 85% of the ownership of the
real estate property described in Exhibit B of this contract, having invested
in the purchase of the same, the amount of US$1,184,996.90 (ONE MILLION ONE
HUNDRED EIGHTY-FOUR THOUSAND NINE HUNDRED NINETY-SIX WITH 90/100 US
DOLLARS), Value Added Tax included.
BANCO DE CREDITO DEL PERU participates with 15% of the ownership of
the real estate property described in Exhibit B of this contract, having
invested in the purchase of the same the amount of US$209,117.10 (TWO HUNDRED
NINE THOUSAND ONE HUNDRED SEVENTEEN WITH 10/100 US DOLLARS), Value Added Tax
included.
THE CLIENT ratifies in this act the application that in accordance
with the Memorandum Order that appears as Exhibit A, it has made to THE
LESSORS, stating their full and total acceptance of the goods acquired by THE
LESSORS at his request, and which correspond to those required by him;
specifically accepting that they will take them in use and as financial
leasing under the terms of this contract.
SECOND: The CLIENT hereby declares that it shall bear the cost of any
maintenance, service or repair required by the goods matter of this contract,
originated by any cause, unless the repair was originated by any damage
caused by THE LESSORS, including possible claims and lawsuits which
<PAGE>
may correspond to be filed against the original supplier, freeing THE LESSORS
from any charge thereof.
THIRD: The goods matter of this financial leasing are at THE LA OROYA
METALLURGICAL COMPLEX, LOT "F-1 OXYGEN PLANT NO. 2", a part of the Smelter
Section, located on the right margin of the main access road to the La Oroya
smelter, in the District of La Oroya, Province of Yauli, Department of Junin,
since it is the site for their final installation. Any change of place must
have the express and written authorization of THE LESSORS, which shall not be
denied unreasonably, always at the cost and responsibility of the CLIENT, who
hereby commits itself to comply with the terms that THE LESSORS impose for
such change of place.
FOURTH: THE CLIENT hereby complies with ratifying that the good(s) matter of
this contract is(are) co-ownership of THE LESSORS, in the proportion
indicated in clause one hereof, hereby binding itself to adopt every
necessary and convenient measure so that THE LESSORS may identify the good(s)
that belong to them, in possession by the CLIENT; by placing plates that
indicate that it(they) is(are) good(s) which is(are) a co-ownership of THE
LESSORS, in the cases that the aforesaid may correspond.
In every credit /or guaranty contract, under any modality, that the
CLIENT enters into in the future with third parties and that in any manner
may affect the goods matter of this contract, evidence should be given in a
special clause to the fact that said good(s) is(are) a property of THE
LESSORS, and thus it(they) is(are) not subject to any measure whatsoever that
may favor them.
In the case of a declaration of insolvency, bankruptcy of THE CLIENT,
precautionary measures for embargo or any other measure that in any manner
may affect the property that THE LESSORS have on the good(s) matter of this
contract, the CLIENT must immediately inform the respective authority or
entity, as well as THE LESSORS, thereof; bearing all the expenses and costs
that may be incurred by THE LESSORS to file the legal actions required for
the recognition of their right to the property or for third-party
interventions; without prejudice to assume and pay THE LESSORS the damages
and losses that such measures may cause them.
FIFTH: Should the good(s) that is(are) the subject matter of this contract
have to be fixed or incorporated into a real estate element, this must be
done in such a manner that will permit it(their) separation without damaging
or affecting its(their) characteristics and functions. Any modification made
by THE CLIENT to the good(s), be them movable or real property, whose cost is
less than US$200,000.00, plus the corresponding Value Added Tax, must be
informed to THE LESSORS. If
<PAGE>
the modification exceeds the amount ofUS$200,000.00, plus the corresponding
Value Added Tax, THE CLIENT must obtain THE LESSORS' prior written
authorization to make such modification, which shall not be denied
unreasonably. Likewise, THE CLIENT cannot incorporate accessories or parts
within the good(s) that reduce its(their) value.
The modifications introduced by the CLIENT within the goods which cost
is less than US$200,000, will be informed to THE LESSORS quarterly.
SIXTH: Since the rulings in force specifically indicate that the goods
matter of financial leasing must be insured, THE CLIENT will contract,
directly, an Insurance Policy from an Insurance Company regarded satisfactory
by THE LESSORS, against "ALL RISK PROPERTY INSURANCE COVERING ALSO ENGINEER
RISKS AND BURGLARY OR ASSAULT" (destruction, loss, theft, earthquake, civil
disturbance, terrorism, violence of third parties and dependents, sabotage,
fire, flood, misuse, civil liability, machine breaking, and other normal and
ordinary matters). The aforementioned insurance must be contracted at least
as from two days before the date fixed for the delivery of the good(s) and
for an amount equivalent to the replacement value of the good(s); assuming
the cost of the premiums.
The respective Policy must be delivered to THE LESSORS, issued or
endorsed in their favor, indicating as a condition that the insurance
contract will not be canceled due to lack of payment without first informing
THE LESSORS on this regard; who are hereby authorized to make the payment and
entitled to demand its refund plus compensatory and moratorium interest at a
rate of 3% per year in addition to the compensatory interests, from the date
of non-compliance to the date that the total owed amount is fully paid,
without assuming any liability if such payment is not made. If for some
unforeseen reason, the CLIENT has not taken out the insurance policy within
the established term, and the delivery of the good(s) has taken place, THE
LESSORS will directly insure the leased good(s) under the already stated
terms and the cost of the policy will be automatically charged to any of the
accounts kept by the CLIENT in the Banco de Credito del Peru, hereby
irrevocably authorizing the Banco de Credito del Peru so that THE LESSORS may
make the aforementioned charges with a simple request only.
The parties hereby acknowledge that they are aware of the fact that
the amount of the franchise of the insurance to be contracted is
US$250,000.00 (TWO HUNDRED AND FIFTY THOUSAND AND 00/100 US DOLLARS), thus,
any damage/loss for a smaller amount, shall be directly assumed by THE CLIENT.
Any uncovered risk, provided and when it has not been caused by THE
LESSORS, as well as any default or refusal to pay by the Insurance Company,
shall be assumed by THE CLIENT.
Independent from who contracted the aforementioned insurance, if a
damage/loss occurs which in THE LESSORS' reasonable opinion affects the
aptitude or good performance or good
<PAGE>
operation of the leased goods because they are not commercially repairable
and the Insurance Company accepts the total loss of the goods, the sum paid
by the referred Insurance Company will be destined by THE LESSORS, prior
agreement with the CLIENT, to:
(a) Replace or repair the goods that have thus been declared, so that this
contract will go forward under the same terms. If this were not possible
for any reason of legal nature or at the parties' will, a new contract
will be executed exclusively referred to such goods, ending this
contract.
(b) Apply its amount to the payment of the balance of the financial leasing
obligation, which will be equivalent to the current value of the
installments pending maturity, applying a discount rate equivalent to
4.75% per year.
If within a term of 30 days of having received the payment made by the
Insurance Company, THE LESSORS and the CLIENT do not reach an agreement with
regard to whether said funds must be applied in the manner describe in items
(a) or (b) hereinbefore, the funds paid by the Insurance company will be
destined to the alternative contemplated in clause (b).
In the event that a loss/damage is considered a partial damage, the
parties will make the necessary efforts so that the payment made by the
Insurance Company in favor of THE LESSORS is deposited in the account that
the CLIENT keeps in the Banco de Credito del Peru, so that this amount may be
placed at the disposal of the CLIENT upon his request, in order to make the
necessary repairs. Any surplus that may result from the amount paid by the
Insurance Company after repairing the damages, shall exclusively benefit the
CLIENT.
All surpluses that may arise from the amount paid by the Insurance Company,
after opting for alternative (a) or (b) mentioned hereinbefore, shall
exclusively benefit THE CLIENT.
SEVENTH: This financial leasing contract will have the duration that is
stipulated in EXHIBIT B. Said term will be counted as from the first day of
the month following the date on which THE LESSORS make the total disbursement
required for the purchase of the good(s) matter of this contract, until the
date corresponding to the payment of the last installment; hereby agreeing
that this term shall be mandatory for both parties.
Notwithstanding the provisions of the foregoing paragraph, the
obligations that are provided for within this contract shall enter into force
from the moment in which THE LESSORS make the full payment for the purchase
of the good(s) stated in EXHIBIT B, reason why, THE CLIENT is hereby
committed to the payment of one pre-installment that represents the
compensatory interest in effect
<PAGE>
at the Banco de Credito del Peru for this type of operations, interest that
will be applied to the payment of the expenses, services and taxes that may
be applicable, as well as to the interests and to any other additional
concept that may correspond for investments made by THE LESSORS to make the
financial leasing matter of this contract feasible; all of which will be
calculated from the date on which the disbursements are produced to the first
working day of the following period.
The parties hereby agree that THE CLIENT may use the good(s) during
the period counted as from the time THE CLIENT has transferred the property
of the good(s) to THE LESSORS until this contract goes into effect.
EIGHTH: THE CLIENT pledges to regularly pay in US Dollars and under the
method of payment stipulated to that effect in EXHIBIT B, financial leasing
installments in accordance with the Payment Schedule that as EXHIBIT C forms
an integral part of this contract.
Thus, any increase before the end of this contract, generated as a
consequence of taxes directly related to the property of the good(s) will
entail, prior communication to the CLIENT, the generation of extraordinary
installments; a situation that the CLIENT hereby declares to know and accept.
THE LESSORS will facilitate THE CLIENT the possibility of bringing
actions, appeals, claims or participating in the processes and, in general,
of using every legal recourse to enforce his rights to be able to obtain the
refund of what was paid by THE LESSORS, against any authority, public or
private entity or company that may have generated the payment of said
expenses or taxes.
DISBURSEMENT COMMISSION: The CLIENT hereby binds itself to pay THE LESSORS
at the time of the disbursement a Commission equivalent to 1% of the total
financed amount, that is, US$200,000.00, plus the corresponding Value Added
Tax.
NINTH: With regard to the payments that the CLIENT assumes by means of this
contract, it pledges to maintain a current account in the Banco de Credito
del Peru, in the same currency that has been agreed upon for the payments,
and it pledges to maintain every month in this account on the day of each
maturity, the necessary funds in that account to handle the respective
monthly charges; unless THE LESSORS have specifically authorized a different
form of payment. For purposes of what was established above, by means of this
document and without any need for any other formality, the CLIENT irrevocably
authorizes the Banco de Credito del Peru to make the charges that arise from
this contract. Should there be no timely payment of the total amount of any
of the payment obligations assumed by means of this contract, whatever the
reason may be, and after having elapsed 8 (eight) calendar days as from the
maturity date, the CLIENT hereby specifically and irrevocably authorizes THE
LESSORS to apply any fund or security that it may have
<PAGE>
in the power of Credito Leasing S.A. and/or the Banco de Credito del Peru in
its name, whether individually or jointly with third parties; for which
purpose no prior formality whatsoever will be needed and the CLIENT
specifically exempts both Credito Leasing S.A. as well as the Banco de
Credito del Peru from any liability for the disposal of the funds and/or
securities authorized hereinabove.
For the above indicated purposes, the CLIENT authorizes Credito
Leasing S.A. and the Banco de Credito del Peru to sell/purchase the necessary
currency to honor its obligations at the rate of exchange that the Banco de
Credito del Peru has in force at the time of the foreign exchange operation,
exempted from any liability for any difference in the rate of exchange.
TENTH: Both parties hereby agree that a delay in the payment of one financial
leasing installment, as well as any other delay in the compliance with the
payments that as a consequence from this contract the CLIENT must make in
favor of THE LESSORS, shall originate for the former the additional
obligation of paying moratorium interest, at a rate of 3% per year, in
addition to compensatory interests; from the date of non-compliance to the
date the total owed amount is paid.
For the purposes of what is provided in the preceding paragraph and
pursuant to the provisions set forth in item 1 of Article 1333 of the Civil
Code, the CLIENT shall incur in automatic moratorium without needing any
notification or demand whatsoever.
ELEVENTH: The CLIENT may exercise the option to purchase the financial
leasing in an anticipated manner, only 25 months after the time it went into
effect. To this end, it must pay THE LESSORS an amount equivalent to the
current value of the leasing installments that have not matured yet, applying
to them a discount rate equivalent to 4.75% per year, plus 1% of the purchase
value of the goods matter of the financial leasing, plus the amount
equivalent to the value of one installment per year or fraction that is
prepaid, plus the corresponding value added tax.
The request to exercise the purchase option in an anticipated manner
must be made by the CLIENT at least (2) months before the day determined to
exercise the option.
TWELFTH: The CLIENT, with regard to the good(s) owned by THE LESSORS that
is(are) object of this contract, hereby pledges to:
(a) Use and operate it(them) solely in the activities that belong to
its line of business; through its responsible and skilled personnel or
by means of an specialized operator or contractor. The CLIENT is hereby
expressly forbidden from subleasing the good(s) and from any other direct
or indirect form of use by third parties.
<PAGE>
(b) Maintain in force and at its expense, all licenses, permits and
registers needed for the operation, in line with prevailing legal
rulings.
(c) Allow, at the time and with a frequency freely determined by THE
LESSORS within the usual working schedules, the inspections and
verifications that they decide to make, enabling THE LESSORS to resort to
technicians or experts whose selection, technical qualifications, costs
and time of service shall be reasonable determined by mutual agreement
between the parties and assumed by THE CLIENT.
(d) Assume all risks, be them for accidents, deterioration, third-
party actions, defects, faults, manufacture defects, defects found in the
materials, components, installation and any other of any nature that may
affect this/these good(s) in any way, as well as the repairs that may be
necessary to make produced by any cause; provided and when they have not
been caused by THE LESSORS.
(e) Assume the cost of repairs due to damages that may caused by the
goods to third parties or to third parties' goods; provided and when they
have not been caused by THE LESSORS.
(f) Assume the cost of the repairs, provided and when the damages have
not been caused by THE LESSORS, maintenance, services andother necessary
expenses required to maintain the good(s) in good operating condition for
the purposes served by the good(s), which must necessarily be made by
specialized operators, experts, contractors, or qualified personnel, if
necessary. The parts or pieces that are replaced shall be fully
incorporated within the good(s) to THE LESSORS' benefit.; and the
replaced parts and pieces will remain as property of the CLIENT.
(g) Inform THE LESSORS quarterly of any modification or alteration in
the good(s) which cost is less than US$200,000.00 plus the corresponding
Value Added Tax, and request authorization from THE LESSORS in case the
modification or alteration exceeds the aforementioned amount, which shall
not be unreasonably denied. Likewise, THE CLIENT cannot incorporate
accessories or parts within the goods which may reduce their value. Any
alteration or modification introduced within the good(s), will be
exclusively assumed by THE CLIENT.
Likewise, THE CLIENT binds itself to:
(h) Abstain from participating in merger or split-up processes and
restrain from selling or transferring all or a substantial part of its
fixed assets to anyone, or from acquiring all or substantially all of the
assets of anyone, without prior express written authorization by THE
LESSORS, to be given within 30 days of receiving the request made by THE
CLIENT,
<PAGE>
attaching thereto the respective analysis, the Financial Statements of
the company/ies) to be merged or split-up, the merger or split-up
project, as well as a projection of the Financial Statements after the
merger or split-up takes place.
The restrictions and prohibitions provided in the preceding paragraph,
that require prior authorization by THE LESSORS to proceed to merger or
split-up processes, do not comprise or include the merger that THE
CLIENTE is at present carrying out with Empresa Minera Cobriza S. R. L.,
by means of which the former will take over the latter. The
aforementioned process will go into effect within 60 days after the
signing of this contract.
If THE LESSORS do not approve the merger or split-up process,
THE CLIENT may opt for ending this contract. If the termination occurs
within the first 25 (twenty-five) months of the term of effect of this
contract, the CLIENT must pay THE LESSORS in addition to what is provided
in clause eleven, all the extraordinary costs they incur to terminate the
contract, including the refund of the Tax Credit to the Tax
Administration Superintendency -SUNAT.
(i) Abstain from distributing dividends or paying subordinate debts in
case of a delay in the payments to THE LESSORS, that qualifies as an
"Event of Default".
(j) Present to THE LESSORS its complete financial information, that
is, Balance Sheet, Profit and Loss Statement, Cash Flows, duly audited
and with their respective notes, within a term not to exceed 120 calendar
days from the closing of each fiscal year, hereby pledging to promptly
inform THE LESSORS, of any fact or circumstance that may originate a
<PAGE>
substantial reduction of the CLIENT's revenues, profits, payment capacity
and/or financial standing. Likewise, THE CLIENT must send THE LESSORS an
unaudited version of its financial statements, without including the
notes, within a term not greater than 60 calendar days from the closing
of each quarter.
THIRTEENTH: The CLIENT pledges to inform THE LESSORS, in writing, and no
later than five (5) working days after it happened, any of the following
events:
(a) When a third party seizes all or part of the good(s), or adopts
measures that affect their ownership or use in a substantial manner;
(b) When any judicial or administrative authority has ordered a
measure of any nature that restricts or affects in any way the ownership,
possession or use of the good(s); unless said procedure has been started
by THE LESSORS.
(c) When the good(s) suffer(s) deterioration that is not caused by
the normal or diligent use, loss, theft, mechanical failures and/or any
other event whether it is covered or not by the Insurance Policy
contracted by the CLIENT, provided the value of said deterioration is
greater than US$200,000.00, plus the corresponding Value Added Tax.
FOURTEENTH:
14.1 The parties hereby agree that any of the following circumstances
constitutes an "Event of Default".
(a) Failure to comply with a Payment Obligation.- If the CLIENT fails
to comply with any of the payment obligations assumed in this
contract, and such circumstance continues without being corrected
within a term of ten (10) calendar days as of the date of the
notarial notice sent by THE LESSORS for such purpose;
(b) Failure to comply with an Obligation.- If the CLIENT fails to
comply with any of the obligations assumed under this contract,
and such circumstance continues without being corrected within a
term of thirty (30) calendar days as of the date of the notarial
notice sent by THE LESSORS for such purpose.
In the case of any default in the payment or the obligations assumed by
the CLIENT referred to in the preceding items a and b, THE LESSORS, at their
sole decision, will be fully entitled to demand the defaulted obligations
plus interest, taxes and other expenses that may have been generated,
including those incurred as a result of proceedings for extra-judicial
collection whether carried out directly or through third parties.
<PAGE>
14.2 In the case that an "Event of Default" will occur, this contract will be
ended without any further formality, and THE LESSORS will be entitled to
collect the amount owed to that date, as well as the total amount of the
installments and/or pre-installment pending payment, as loss of profit
that corresponds to THE LESSORS; voiding the effect of the benefit of the
not-matured terms established in favor of the CLIENT.
Under that assumption, the CLIENT will be bound to pay moratorium
interest at a rate of 3% per year, in addition to the compensatory
interest, as of the date of non-compliance and until the date on which
the total owed amount in fully paid, plus the total amount of the
installments regarded as matured as a consequence of the preclusion of
the terms, due to non compliance by the CLIENT.
14.3 Once the contract is ended in an automatic manner, due to any of the
reasons that this document foresees, THE LESSORS hereby bind themselves
to inform the CLIENT thereof by means of a notarial notice within a term
that shall not exceed seven (7) business days after the termination
occurs.
On the other hand, the CLIENT hereby assumes the obligation of placing at
the disposal of THE LESSORS for their return, the good(s) which belong to
them within a term of three (03) business days counted as of the receipt
of the letter sent by THE LESSORS referred to in the preceding paragraph,
in the same condition that it received it(them) and without more wear
that the normal and adequate use of the good(s) for the purpose it(they)
were bought, during the time it(they) were used; being on the account of
the CLIENT the payment of the delivery expenses, as well those that THE
LESSORS may indicate to repair any damage(s) of the good(s).
For the purpose of this contract the good(s) shall be understood as
returned with the notarial letter that the CLIENT sends to THE LESSORS
indicating that the good(s) are at their disposal .
14.4 Any "Event of Default" incurred by the CLIENT regarding its obligations,
be it partially or totally, and that originates the termination of this
contract, shall automatically result in the loss of the aforementioned of
the right to exercise the option to acquire the property of the good(s)
subject of this contract.
<PAGE>
As an exception, if so accepted by THE LESSORS, the CLIENT will have
the right to keep the possession of the good(s) and as property, if after
making the total payment of the above mentioned matured or to be matured
installments and /or pre-installment, and of any other amount indicated by
THE LESSORS, the CLIENT exercises the option right agreed upon making the
respective total payment, before THE LESSORS have proceeded to the withdrawal
of the good(s).
FIFTEENTH: This contract having been canceled for any motive or the contract
having ended without the CLIENT exercising his option right, THE LESSORS may
freely dispose of the good(s); being hereby specifically authorized by the
CLIENT to enter into the premises that their property leased in favor of THE
CLIENT without their consent, or to withdraw it(them) from the place where
it(they) is(are) without incurring in any liability whatsoever, whether for
trespassing or for any other infraction or damage, to which the CLIENT hereby
expressly waives by granting in this act authorization for the withdrawal of
the good(s) in accordance with what is indicated hereinabove.
All of this without prejudice to continue paying THE LESSORS as a
lease, installments equal to those stipulated within this contract and once
its term has expired, monthly installments equal to the last one established
for the financial leasing and in both presumptions, plus an increase
equivalent to the moratorium interest of 3% in addition to the compensatory
interests on the monthly installments, as long as the return of the good(s)
takes.
SIXTEENTH: Aside from the causes for the cancellation of the contract that
have already been indicated, this contract shall be considered to have been
automatically concluded when any of the following situations have occurred:
(a) Provided they qualify as an "Event of Default" the lack of payment
of two or more consecutive installments and/or pre-installments, unless
it would be the last installment or an extraordinary installment, in
which case the lack of payment of this last one or of any extraordinary
one, or the delay of payment for more than two months will suffice.
(b) The CLIENT, at its request or at the request of third parties, is
declared to be insolvent or a court demands that it indicates which goods
are free subject to the penalty of being declared bankrupt or titles are
protested of which the CLIENT is the main debtor or when the CLIENT
enters into a process of dissolution and liquidation or seeks shelter
under the Law of Equity Restructuring;
(c) When the CLIENT for any reason ceases to perform its activity;
<PAGE>
(d) If Doe Run Resources Corporations ceases to own, be it directly or
indirectly, the 66.66% interest in Doe Run Peru, except if has the
approval by THE LESSORS.
(e) When changes of location of the good(s) matter of this contract
occur from the site where they are to a place that has not been
previously authorized by THE LESSORS;
(f) When the CLIENT fails to present the financial information
referred to in literal (j) Clause Twelve, and that qualifies as an Event
of Default.
(g) When the use of the good(s) is subleased or assigned to third
parties, without written authorization by THE LESSORS; except for what is
provided in literal (a) of clause twelve hereof.
(h) When the CLIENT incurs in any cause for the rescission and/or
cancellation in any other credit contract entered into with THE LESSORS;
(i) If on a date after the signing of this contract, the Peruvian
Government carries out any action that under the reasonable criterion of
THE LESSORS may result in the loss of any of its substantial rights as
creditors under this contract - THE LESSORS will immediately communicate
it to THE CLIENT to seek a solution within a term of 15 calendar days -
or confiscates, expropriates or nationalizes the property or control of
the CLIENT, of the goods, matter of this contract.
In the event that the Peruvian Government expropriates the good(s) matter
of the financial leasing contract, the fair price that it pays to THE
LESSORS shall serve to pay to the extent possible the debt of THE CLIENT
to THE LESSORS deriving from this contract, and only if there is a
balance in favor, this will be delivered to THE CLIENT.
Likewise, THE LESSORS hereby agree and commit themselves, in the event
that any of the institutions or entities of the Peruvian State
expropriate or nationalize the good(s) matter of the financial leasing
contract, to facilitate THE CLIENT (i) the filing of the complaints,
recourse or legal or judicial measure or (ii) the answer to the
complaint, recourse or measure that the State may impose on the property
of the good(s), that enable THE CLIENT to enforce its rights before the
Peruvian State for the collection of a fair-priced indemnization, that
reflects the true value of the good(s) and damages and losses caused by
the expropriation.
THE LESSORS hereby commit themselves to facilitate to THE CLIENT the
exercise of its rights and actions provided in Article 552 of the Code of
Civil Procedures, so that (i) the lapsing of the expropriation right of
the Peruvian State be declared, as well as (ii) the nullity,
<PAGE>
illegality, incompatibility of the legal provision that authorizes,
orders and executes the expropriation, (ii) the disagreement with the
appraisal or the form of payment, and (iv) the reversion, as well as any
other action or right that may be created in the future.
SEVENTEENTH: By this act, THE LESSORS grant the CLIENT the right to an option
to purchase the good(s) indicated in EXHIBIT B and that may be exercised by
the CLIENT only up to the day indicated as the end of the contract, provided
that on the date of exercising the option, it has previously complied with
the payment of all the installments. In that case, it will deliver to THE
LESSORS as full payment for the transfer of ownership in its favor, the
purchase option established in EXHIBIT B which must be fully paid up within
the peremptory term of 2 business days after exercising the option right.
This payment shall be understood to be for the transfer of the ownership of
the good(s) in favor of the CLIENT and shall be made in the same currency
that has been agreed upon, plus the taxes that directly affect said transfer.
THE LESSORS hereby declare that the goods matter of the purchase option will
be free from any lien or encumbrance or judicial or extra-judicial measure of
any kind that may limit or restrict its property and right to free disposal,
hereby binding themselves notwithstanding this statement to guarantee title
and right of possession in case of an eviction.
Should the CLIENT not exercise this option, and if it so agreed between the
parties, this contract may be extended or renewed for the term and under the
new conditions agreed upon and formalized for this purpose by means of
another public deed.
EIGHTEENTH: The CLIENT, pursuant to the provisions set forth in clause eight
hereof is obliged to assume all taxes, costs and expenses originated from the
acquisition of the good(s) and/or which affect this financial leasing
operation and the installments that correspond to be paid by the CLIENT; as
well as the notary and registry expenses deriving from the aforesaid; which
unless they have been included as part of this financial leasing operation,
will be charged to the CLIENT's account kept in Banco de Credito del Peru in
keeping with the provisions set forth in clause nine hereof, unless the
CLIENT proves to have paid them directly with prior authorization by THE
LESSORS.
Likewise, the CLIENT will fully assume the payment of the water,
electricity and/or telephone bills.
NINETEENTH: THE CLIENT hereby declares that as regards the computer systems
that it uses, and, particularly, the software required for the normal
operation of its business, it is aware and knows the risks associated to the
change of date from December 31, 1999 to January 1 of year 2000. Thus,
before such foreseeable risks of which it is aware, THE CLIENT hereby
declares that
<PAGE>
no event, foreseeable or not by him related to the aforementioned change of
the millennium, shall constitute a reason to justify any non-compliance
whatsoever with any of its obligations with THE LESSORS, and they shall not
constitute acts of God, events of force majeure, or unforeseeable events, or
causes that justify its default, partial or total non-compliance with, or
delay in fulfilling its obligations with THE LESSORS.
TWENTIETH: THE LESSORS may only assign this contract to any company related
to the CREDICORP group, a situation that the CLIENT declares to know and
accept.
TWENTY FIRST: The CLIENT hereby authorizes THE LESSORS to publicize the
signing of this financial leasing agreement, under the terms agreed to by
mutual consent.
TWENTY SECOND: The parties hereby expressly agree that any conflict or
controversy that may arise between them as a consequence of the
interpretation or execution of this contract, including those related to its
nullity or voidance, shall be resolved by means of an arbitration of law, in
charge of an Arbitration Court made up of three members that must necessarily
be
<PAGE>
SERIE A NO. 4639477
TWO THOUSAND SIX HUNDRED FOURTEEN
certified lawyers. The arbitration process shall be carried out in line with
the Regulations for National and International Conciliation and Arbitration
of the Chamber of Commerce of Lima.
The Arbitration Court shall be made up in the following manner: each
one of the parties shall designate one arbiter and the third one shall be
designated by common agreement of the first two; this third one shall chair
the Arbitration Court.
The arbitration will be carried out in the City of Lima, and its
duration shall not exceed 60 (sixty) business days, counted as of the date of
the installation of the Arbitration Court until the issue of the respective
arbitration award.
The Arbitration Award shall be definitive and unappealeable.
The expenses originated by the arbitration process shall be borne by
the party who fails to win.
In the case that any of the parties may decide to file before the
Judiciary an appeal for annulment against the arbitration award, it must
first establish a Bank Letter of Guaranty in favor of the opposing party,
granted by a first order Bank with headquarters in Lima, equivalent to
US$50,000.00 (FIFTY THOUSAND US DOLLARS), executable in case that the final
decision on the appeal declares it groundless. Said bank letter of credit
must be in effect during the time that the process lasts.
TWENTY THIRD.- Any notification, request, demand, consent, designation,
direction, instruction, certificate or other communications to be given under
this contract (hereinafter referred to as "communications") shall be made in
writing or sent by fax (with written confirmation of receipt, confirmation
that may be sent by fax, provided this contract does not require that it be a
notarial communication).
For communications to THE CLIENT to be valid, they must be sent to the
address or fax number with reference to THE CLIENT, or ESTUDIO FERRERO
ABOGADOS as indicated below.
For communications to THE LESSORS to be valid, they must be sent to
the address or fax number with reference to BANCO DE CREDITO DEL PERU and
CREDITO LEASING S.A. as indicated below.
CLIENT: DOE RUN PERU S. R. L.
ATTENTION: Messrs. Kenneth Richard Buckley and Henry Eric Peitz
ADDRESS: Av. Victor Andres Belaunde 147, Via Principal 155, Camino Real Business
Center- Torre Real 3, 9th Floor, San Isidro.
<PAGE>
FAX NO.: 215-1235 and 215-1281.
ESTUDIO FERRERO ABOGADOS
ATTENTION: Dr. Raul Ferrero and Dr. Guillermo Ferrero
ADDRESS: Av. Victor Andres Belaunde 395, San Isidro.
FAX NO.: 421-6481 and 441-8642
BANCO DE CREDITO DEL PERU
ATTENTION: Mr. Giorgio Badani
ADDRESS: Av. Centenario 156, Urbanizacion Las Laderas de Melgarejo, La Molina.
FAX NO. 349-0794
CREDITO LEASING S.A.
ATTENTION: Mr. Juan Pablo Boza
ADDRESS: Av. Centenario 156, Urbanizacion Las Laderas de Melgarejo, La Molina.
FAX NO.: 349-0395
Lima, January 20, 1999
I.- CLIENT'S DATA:
COMPANY NAME: DOE RUN PERU S. R. L., Single Taxpayer Registration No.
37630381.
ADDRESS: Av. Victor Andres Belaunde 147, Via Principal 155, Camino Real Business
Center- Torre Real 3, 9th Floor, San Isidro, Province and Department of Lima
CLIENT'S LEGAL REPRESENTATIVES:
(1) Kenneth Richard Buckley with Alien Registration Card No. N-97767.
Authorized to this effect as per the Minutes of the Extraordinary General
Partners Meeting dated January 4, 1999, whose registration with the Registry of
Bodies Corporate of Lima is in process, an which you Mr. Notary will kindly
insert.
SIGNED: DOE RUN PERU S. R. L. .- p.p. Kenneth Richard Buckely.
II. LESSORS' DATA:
COMPANY NAME: CREDITO LEASING S.A., Single Taxpayer Registration No. 30866878.
ADDRESS: Centenario #156, La Molina, Lima 12, Lima
NAME OF THE REPRESENTATIVES:
(1) Jose Luis Ferreyra Arce
(2) Juan Pablo Boza Rizo Patron
Authorized to this effect as per powers of attorney registered on Filing Card
No. 130316 of the Registry of Bodies Corporate of Lima.
SIGNED: CREDITO LEASING S.A.- p.p. Jose Luis Ferreyra Arce.- Juan Pablo Boza
Rizo Patron
COMPANY NAME: BANCO DE CREDITO DEL PERU
<PAGE>
ADDRESS: Centenario #156, La Molina, Lima 12, Lima
NAME OF THE REPRESENTATIVES:
1) Mr. Sergio Bassino Bellacci
2) Mr. Andres Alejandro Ferrand del Busto.
Authorized to this effect as per powers of attorney registered on Entry 6444,
page 100, of Volume 297 and on Entry 73, of Filing Card No. 117464 of the
Registry of Bodies Corporate of Lima.
SIGNED: BANCO DE CREDITO DEL PERU.- p.p. Sergio Bassino Bellacci.- Andres
Alejandro Ferrand del Busto.
Lawyer who authorizes this Writ: Doctor Jennifer Houghton Von Hemelrick with
Lima Bar Association Register No. 25894.
INSERT NO. 1
EXHIBIT A
MEMORANDUM ORDER
Lima, January 20, 1999
Messrs.
CREDITO LEASING S.A.
Ref.: Memorandum Order for a Financial Leasing Operation Nr.
Dear Sirs,
I(we) hereby comply with ratifying and confirming my(our) request so that
you kindly acquire the good(s), whose pro forma I(we ) enclose hereto in order
to be allotted to the financial leasing in my(our) favor.
The supplier, price, quality, manufacture conditions, technical
specifications and other characteristics are those indicated in the attached pro
forma, and we hereby indicate that such good(s) has(have) been directly selected
by me(us); therefore, any defect in the manufacture or assembly, hidden defect,
operating defects or if it results inadequate for its purpose, shall be my(our)
sole responsibility.
The good(s) to be acquired are:
1. MOVABLE PROPERTY:
- Air Filters, 48 cartridge units manufactured in synthetic
material, make VILEDON, MODEL MF 85/95 G35K.
- Turbocompressor, make DEMAG, 43,000 Nm3/hour capacity, Series No.
8567.
- Electric motor, make SIEMENS, 5,000 KW (6705HP) power, with
direct starting, Series No. D9041105101.
- Air washer, Series No. 7324, make LINDE.
<PAGE>
- Molecular screens, 43,000 Nm3/hour capacity, 2 units with Series
No. 9898 and 9899, make BERTSH.
- Turbocharger, make ATLAS COPCO, 7,800 Nm3/hour capacity with 7.9
bar pressure, Series No.15-2872.
- Expansion turbine, make ATLAS COPCO, 7,700 Nm3/hour capacity,
Series No. 15-2872.
- Heat exchangers, 2 units, Series No. 106/1195/90(ZK1) and No.
106/1196/90(ZK2), make DELTECHNIK, model DK185.380.4.118 (ZK1) and
(ZK2).
- 02 Condensers, make LINDE, models 3-3216 (main condenser) and
E-3217 (air condenser) with identification numbers 533021 and
533026, respectively.
- Liquefaction Columns, make LINDE; models T-3211 (liquefaction
column-high) and T-.3212 (liquefaction column-low), with
identification numbers 533028 and 533027, respectively.
- Liquid oxygen tank, 200 MT capacity, Series No. 11-09670.
- Oxygen vaporizer, make LINDE, model E-7116, with identification
number 552320.
- 02 Cooling towers, make SULZER EBCHERWYSS GMH, model E-8421 A/B,
type EWK 1800/09 with Series No. 8112 and No. 142.
2. REAL PROPERTY:
Lot named "F-1 Oxygen Plant No. 2", an integrating part of the Smelter
Sector, located on the right margin of the main access road to the La Oroya
Smelter, in the District of La Oroya, Province of Yauli, Department of Junin;
a real property that has an area of 1,421.35 m2, whose boundaries and
perimetrical measurements are registered on Entry 1-B of Filing Card No.
002180 of the Registry of Real Property of the Tarma Registry Office.
This(these) good(s) shall be acquired directly from our company.
Sincerely yours,
Signed: DOE RUN PERU S. R. L. - p.p kENNETH RICHARD BUCKLEY
This insert is authorized by Doctor Jennifer Houghton Van Hemelrick with
Lima Bar Association Registration No. 25894.
INSERT NO. 2
EXHIBIT B
LIST AND DESCRIPTION OF THE GOOD(S) OBJECT OF THE FINANCIAL LEASING AND SPECIAL
PROVISIONS:
OPERATION REGISTERED UNDER NUMBER:
I. References regarding the good(s):
Movable property:
- Air Filters, 48 cartridge units manufactured in synthetic
material, make VILEDON, MODEL MF 85/95 G35K (US$300,800.00 +VAT).
<PAGE>
- Turbocompressor, make DEMAG, 43,000 Nm3/hour capacity, Series No.
8567 (US$2,683,600.00 + VAT).
- Electric motor, make SIEMENS, 5,000 KW (6705HP) power, with
direct starting, Series No. D9041105101 (US$748,100.00 + VAT).
- Air washer, Series No. 7324, make LINDE (US$211,400.00 +VAT).
- Molecular screens, 43,000 Nm3/hour capacity, 2 units with Series
No. 9898 and 9899, make BERTSH (US$1,626,400.00 + VAT).
- Turbocharger, make ATLAS COPCO, 7,800 Nm3/hour capacity with 7.9
bar pressure, Series No.15-2872 (US$894,500.00 + VAT)..
- Expansion turbine, make ATLAS COPCO, 7,700 Nm3/hour capacity,
Series No. 15-2872 (US$569,200.00 + VAT).
- Heat exchangers, 2 units, Series No. 106/1195/90(ZK1) and No.
106/1196/90(ZK2), make DELTECHNIK, model DK185.380.4.118 (ZK1) and
(ZK2) (US$487,900.00 + VAT).
- 02 Condensers, make LINDE, models 3-3216 (main condenser) and
E-3217 (air condenser) with identification numbers 533021 and
533026, respectively (US$2,195,600.00 + VAT).
- Liquefaction Columns, make LINDE; models T-3211 (liquefaction
column-high) and T-.3212 (liquefaction column-low), with
identification numbers 533028 and 533027, respectively
(US$2,846,200.00 + VAT).
- Liquid oxygen tank, 200 MT capacity, Series No. 11-09670
(US$683,000.00 + VAT).
- Oxygen vaporizer, make LINDE, model E-7116, with identification
number 552320 (US$1,870,400.00 + VAT).
- 02 Cooling towers, make SULZER EBCHERWYSS GMH, model E-8421 A/B,
type EWK 1800/09 with Series No. 8112 and No. 142
(US$650,600.00 + VAT).
TOTAL: US$18,605,886.00 (EIGHTEEN MILLION SIX HUNDRED FIVE THOUSAND EIGHT
HUNDRED EIGHTY-SIX AND 00/100 US DOLLARS).
This amount includes the Value Added Tax.
REAL PROPERTY:
Lot named "F-1 Oxygen Plant No. 2", an itegral part of the Smelter Sector,
located on the right margin of the main access road to the La Oroya Smelter,
in the District of La Oroya, Province of Yauli, Department of Junin; a real
property that has an area of 1,421.35 m2, whose boundaries and perimetrical
measurements are registered on Entry 1-B of Filing Card No. 002180 of the
Registry of Real Property of the Tarma Registry Office.
TOTAL: US$1,394,114.00 (ONE MILLION THREE HUNDRED NINETY-FOUR THOUSAND ONE
HUNDRED FOURTEEN AND 00/100 US DOLLARS).
<PAGE>
TOTAL INVESTMENT: US$20,000,000.00 (TWENTY MILLION AND 00/100 US DOLLARS).
II. The supplier of the purchased goods is: DOE RUN PERU S.R.L.
III. The term of the contract is: 60 (SIXTY) MONTHS.
IV. The terms of payment of the installments of the financial leasing are:
MONTHLY.
V. The method of payment of the financial leasing installments is:
MATURED.
VI. The purchase option will be: the equivalent to 1.00% of the total
acquisition value of the goods matter of this contract, plus the Value
Added Tax.
The Purchase Option will be: US$200,000.00 (TWO HUNDRED THOUSAND AND
00/100 US DOLLARS) plus the Value Added Tax.
Signed: DOE RUN PERU S.R.L.- p.p. Kenneth Richard Buckley.-
Signed: CREDITO LEASING S.A. - p.p. Jose Luis Ferreyra Arce.- Juan Pablo Boza
Rizo Patron.
Signed: BANCO DE CREDITO DEL PERU.- p.p. Sergio Bassino Bellacci.- Andres
Alejandro Ferrand del Busto.
This insert is authorized by Doctor Jennifer Houghton Van Hemelrick with Bar
Assocation Registration No. 25894.
<PAGE>
INSERT NO. 3
EXHIBIT C
PAYMENT SCHEDULE
<TABLE>
<CAPTION>
Installment VAT Total
<S> <C> <C> <C>
1 379,190.95 68,254,37 447,445.32
2 379,190.95 68,254,37 447,445.32
3 379,190.95 68,254,37 447,445.32
4 379,190.95 68,254,37 447,445.32
5 379,190.95 68,254,37 447,445.32
6 379,190.95 68,254,37 447,445.32
7 379,190.95 68,254,37 447,445.32
8 379,190.95 68,254,37 447,445.32
9 379,190.95 68,254,37 447,445.32
10 379,190.95 68,254,37 447,445.32
11 379,190.95 68,254,37 447,445.32
12 379,190.95 68,254,37 447,445.32
13 379,190.95 68,254,37 447,445.32
14 379,190.95 68,254,37 447,445.32
15 379,190.95 68,254,37 447,445.32
16 379,190.95 68,254,37 447,445.32
17 379,190.95 68,254,37 447,445.32
18 379,190.95 68,254,37 447,445.32
19 379,190.95 68,254,37 447,445.32
20 379,190.95 68,254,37 447,445.32
21 379,190.95 68,254,37 447,445.32
22 379,190.95 68,254,37 447,445.32
23 379,190.95 68,254,37 447,445.32
24 379,190.95 68,254,37 447,445.32
25 379,190.95 68,254,37 447,445.32
26 379,190.95 68,254,37 447,445.32
27 379,190.95 68,254,37 447,445.32
28 379,190.95 68,254,37 447,445.32
29 379,190.95 68,254,37 447,445.32
30 379,190.95 68,254,37 447,445.32
31 379,190.95 68,254,37 447,445.32
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C>
32 379,190.95 68,254,37 447,445.32
33 379,190.95 68,254,37 447,445.32
34 379,190.95 68,254,37 447,445.32
35 379,190.95 68,254,37 447,445.32
36 379,190.95 68,254,37 447,445.32
37 379,190.95 68,254,37 447,445.32
38 379,190.95 68,254,37 447,445.32
39 379,190.95 68,254,37 447,445.32
40 379,190.95 68,254,37 447,445.32
41 379,190.95 68,254,37 447,445.32
42 379,190.95 68,254,37 447,445.32
43 379,190.95 68,254,37 447,445.32
44 379,190.95 68,254,37 447,445.32
45 379,190.95 68,254,37 447,445.32
46 379,190.95 68,254,37 447,445.32
47 379,190.95 68,254,37 447,445.32
48 379,190.95 68,254,37 447,445.32
49 379,190.95 68,254,37 447,445.32
50 379,190.95 68,254,37 447,445.32
51 379,190.95 68,254,37 447,445.32
52 379,190.95 68,254,37 447,445.32
53 379,190.95 68,254,37 447,445.32
54 379,190.95 68,254,37 447,445.32
55 379,190.95 68,254,37 447,445.32
56 379,190.95 68,254,37 447,445.32
57 379,190.95 68,254,37 447,445.32
58 379,190.95 68,254,37 447,445.32
59 379,190.95 68,254,37 447,445.32
60 379,190.95 68,254,37 447,445.32
oc 200,000.00 36,000.00 236,000.00
</TABLE>
<PAGE>
Signed: DOE RUN PERU S. R. L.- p.p. Kenneth Richard Buckely.
Signed: CREDITO LEASING S.A.- p.p. Jose Luis Ferreyra Arce.- Juan Pablo Boza
Rizo Patron.
Signed: BANCO DE CREDITO DEL PERU.- p.p. Sergio Bassino Bellacci.- Andres
Alejandro Ferrand del Busto.
This Exhibit is authorized by Doctor Jennifer Houghton Von Hemelrick with Bar
Association
Registration No. 25894.
INSERT NO. 4
CERTIFIED COPY OF THE EXTRAORDINARY GENERAL PARTNERS MEETING DATED
JANUARY 4, 1999.-
Ricardo Ortiz de Zevallos Villaran.- Lawyer-Notary Public of Lima.- HEREBY
CERTIFY: that I have in sight the book titled Minutes No. 2 of DOE RUN PERU
S. R. L., legalized before the Notary Public Dr. Anibal Corvetto Romero, on
December 9, 1998, being registered on the chronological book under Number
10223-98 (ten thousand two hundred twenty three - ninety-eight); and I have
verified that from pages 3 to 6 inclusive, appear the Minutes of the
Extraordinary General Partners Meeting dated January 4, 1999; whose pertinent
part follows:
EXTRAORDINARY GENERAL PARTNERS MEETING DATED JANUARY 4, 1999
On January 4, at 12 noon, the following partners met together in the
Company's offices, located at Av. Victor Andres Belaunde No. 147, Via
Principal 155, 9th Floor, Camino Real Business Center, Torre Real 3, San
Isidro, Lima, chaired by Victor Raul Eyzaguirre Parra, with Mr. Anthony Wayne
Worcester acting as Secretary:
At the request made by the Chairman, the Secretary read the text of
the Summoning Notice to the members present, sent on December 21, 1998,
ordering that the documents with the stamp, signature and time evidencing
their receipt be adhered to the beginning of these Minutes.
LIST OF ATTENDANTS:
-"Doe Run Peru S.R.L., domiciled at Av. Victor Andres Belaunde No. 147,
Via Principal 155, 9th Floor, Camino Real Business Center, Torre Real
Tres, San Isidro, represented by Victor Raul Eyzaguirre Parra, according
to the power of attorney inscribed in the Company's records, owner of
648,628,009 participations; and
-Ruth Anabeli Gonzalez Velapatino representing Julio Enrique Guadalupe
Bascones, domiciled at Av. Ramon Ribeyro No. 421, Apartment 2, San
Antonio, Miraflores, owner of 11 participations, as per power of attorney
duly inscribed in the Company's records.
-Teresa Saenz Picasso, domiciled at Octavio Espinoza 410, San isidro,
owner of 6,540 participations.
-Floren Eddy Ramos Aparicio, domiciled at Av. Morro Solar 2204, Surco,
owner of 2,351 participations.
-Alfredo Arturo Basualdo Ricaldi, Calle 2 de Mayo 141, La Oroya, owner of
1,307 participations.
<PAGE>
-Margarita Delicia Mondragon Hernandez, Jiron Chinchaysuyo 119, Maranga,
San Miguel, owner of 2,618 participations.
QUORUM 648,640,836 PARTICIPATIONS
Having been the meeting duly called and having complied with the
quorum established in Article Seven of the Bylaws, the Chairman declared it
duly installed.
The Chairman indicated that as the participants were aware, and as it was
indicated in the summoning notice, the subjects on the agenda were as follows:
- - Approval of the Sale and Leaseback operation with Banco de Credito del
Peru and Credito Leasing S.A.
- - Granting of special powers.
1. APPROVAL OF THE SALE AND LEASEBACK OPERATION WITH BANCO DE CREDITO DEL
PERU AND CREDITO LEASING S.A.
The Chairman stated that due to the need of working capital to increase
the operations of the Company, coordinations had been made with Banco de
Credito del Peru and Credito Leasing S.A., to obtain new financing under
the modality of sale and leaseback. To this end, a proposal was made so
that the Oxygen Plant of the La Oroya Smelter, would be the object of
said operation.
The Chairmain submitted to the consideration of the partners, the
approval of a sale and leaseback for up to US$20,000,000.00 for a term of
five years with Banco de Credito del Peru and Credito Leasing S.A., on
the Oxygen Plant located in the Smelter Sector, in La Oroya, of which the
Company is the owner.
After listening to the Chairman's proposal, the Board unanimously
agreed to approve it under the terms and conditions stated by the Chairman.
2. GRANTING OF SPECIAL POWERS.
2.1 Special powers for the signing of the documents related to the Sale and
Leaseback Operation.
<PAGE>
The Chairman proposed the granting of special powers to different
executives to sign the documents pertinent to the operation that had been
approved.
After a brief exchange of ideas, the Board unanimously agreed to grant a
special power of attorney to the following: Mr. Kenneth Richard Buckley,
a US citizen, with Immigrant's Identity Card No. N-97767, Mr. Anthony
Wayne Worcester, a US citizen, identified by Immigrant's Identity Card
No. N-97937; Mr. Kenneth Ernest Hecker Jr., a US citizen identified by
Immigrant's Identity Card No. N-99670; and, Mr. Marvin K. Kaiser, a US
citizen, identified by US Passport No. 152075471; all of them domiciled
at Av. Victor Andres Belaunde No. 147, Camino Real Business Center, Torre
Real Tres, 9th Floor, San Isidro, so that on behalf and in representation
of the Company, they may individually or jointly, sign contracts, writs,
public deeds and other documents required to formalize the sale and
leaseback operation approved hereinbefore, and also to carry out the
corresponding proceedings for its registration with the Public
Registries.
- -------------------------------------------------------------------------------
There being no other matter to deal with and it being 1 p.m., the meeting
was adjourned, after drafting, reading and approval of the Minutes, which
same were signed by all those present in sign of agreement therewith and
without observations.
INSERT: VOUCHERA stamp: Evidencing receipt
DOE RUN PERU.- Victor Andres Belaunde 147, Camino Real Business Center, Torre
Tres, 9th Floor, San Isidro.
Telephone: (511) 215-1200.
KENETH R. BUCKLEY.- PRESIDENT & GENERAL MANAGER.- Telephone (511) 215-1200.
A stamp: ESTUDIO FERRERO.- ABOGADOS.- December 24, 1998.-
RECEIVED.-
San Isidro, December 21, 1998.-
Mr. JULIO GUADALUPE BASCONES.- Victor Andres Belaunde.- San Isidro.-
DEAR SIR:
The General Manager of DOE RUN PERU S.R.L., with Single Taxpayer
Registration No. 37630381, in keeping with the Bylaws and the General
Business Corporations Law calls a General Partners Meeting, to be held on
January 4, 1999, at noon, in the Company's office located at Victor Andres
Belaunde No. 147, Camino Real Business Center, Torre Real 3, 9th Floor,
District of San Isidro, in order to deal with the matters included in the
following agenda:
<PAGE>
- - Approval of the sale and leaseback operation with Banco de Credito del
Peru and Credito Leasing S.A.
- - Granting of Special Powers.
We thank you in advance for your kind attendance and we remain,
Sincerely yours,
An illegible signature.- Kenneth Richard Buckley.- General Manager, Signed:
Illegible signatures.- Date: December 24, 1998.
A stamp: Evidencing receipt
DOE RUN PERU.- Victor Andres Belaunde 147, Camino Real Business Center, Torre
Tres, 9th Floor, San Isidro.
Telephone: (511) 215-1200.
KENETH R. BUCKLEY.- PRESIDENT & GENERAL MANAGER.- Telephone (511) 215-1200.
A stamp: ESTUDIO FERRERO.- ABOGADOS.- December 24, 1998.-
RECEIVED.-
San Isidro, December 21, 1998.-
Mr. BASILIO MELGAREJO MALPARTIDA.- MARCAVALLE BLOCK 13, APARTMENT 301.- LA OROYA
DEAR SIR:
The General Manager of DOE RUN PERU S.R.L., with Single Taxpayer
Registration No. 37630381, in keeping with the Bylaws and the General
Business Corporations Law calls a General Partners Meeting, to be held on
January 4, 1999, at noon, in the Company's office located at Victor Andres
Belaunde No. 147, Camino Real Business Center, Torre Real 3, 9th Floor,
District of San Isidro, in order to deal with the matters included in the
following agenda:
- - Approval of the sale and leaseback operation with Banco de Credito del
Peru and Credito Leasing S.A.
- - Granting of Special Powers.
We thank you in advance for your kind attendance and we remain,
Sincerely yours,
An illegible signature.- Kenneth Richard Buckley.- General Manager, Signed:
Illegible signatures.- Date: December 24, 1998.
INSERT: VOUCHER
A stamp: Evidencing receipt
DOE RUN PERU.- Victor Andres Belaunde 147, Camino Real Business Center, Torre
Tres, 9th Floor, San Isidro.
Telephone: (511) 215-1200.
<PAGE>
KENETH R. BUCKLEY.- PRESIDENT & GENERAL MANAGER.- Telephone (511) 215-1200.
A stamp: ESTUDIO FERRERO.- ABOGADOS.- December 24, 1998.-
RECEIVED.-
San Isidro, December 21, 1998.-
MISS ROCIO EVA SIFUENTES AYVAR.- CALLE PIURA 122, SANTA PATRICIA.- LA MOLINA
DEAR MADAM:
The General Manager of DOE RUN PERU S.R.L., with Single Taxpayer
Registration No. 37630381, in keeping with the Bylaws and the General
Business Corporations Law calls a General Partners Meeting, to be held on
January 4, 1999, at noon, in the Company's office located at Victor Andres
Belaunde No. 147, Camino Real Business Center, Torre Real 3, 9th Floor,
District of San Isidro, in order to deal with the matters included in the
following agenda:
- - Approval of the sale and leaseback operation with Banco de Credito del
Peru and Credito Leasing S.A.
- - Granting of Special Powers.
We thank you in advance for your kind attendance and we remain,
Sincerely yours,
An illegible signature.- Kenneth Richard Buckley.- General Manager, Signed:
Illegible signatures.- Date: December 24, 1998.
INSERT: VOUCHER
A stamp: Evidencing receipt
DOE RUN PERU.- Victor Andres Belaunde 147, Camino Real Business Center, Torre
Tres, 9th Floor, San Isidro.
Telephone: (511) 215-1200.
KENETH R. BUCKLEY.- PRESIDENT & GENERAL MANAGER.- Telephone (511) 215-1200.
A stamp: ESTUDIO FERRERO.- ABOGADOS.- December 24, 1998.-
RECEIVED.-
San Isidro, December 21, 1998.-
Mr. JACINTO CANALES, Av. Peru 4106.- San Martin de Porres.
DEAR SIR:
The General Manager of DOE RUN PERU S.R.L., with Single Taxpayer
Registration No. 37630381, in keeping with the Bylaws and the General
Business Corporations Law calls a General Partners Meeting, to be held on
January 4, 1999, at noon, in the Company's office located at Victor Andres
Belaunde No. 147, Camino Real Business Center, Torre Real 3, 9th Floor,
District of San Isidro, in order to deal with the matters included in the
following agenda:
<PAGE>
- - Approval of the sale and leaseback operation with Banco de Credito del
Peru and Credito Leasing S.A.
- - Granting of Special Powers.
We thank you in advance for your kind attendance and we remain,
Sincerely yours,
An illegible signature.- Kenneth Richard Buckley.- General Manager, Signed:
Illegible signatures.- Date: December 24, 1998.
INSERT: VOUCHER
A stamp: Evidencing receipt
DOE RUN PERU.- Victor Andres Belaunde 147, Camino Real Business Center, Torre
Tres, 9th Floor, San Isidro.
Telephone: (511) 215-1200.
KENETH R. BUCKLEY.- PRESIDENT & GENERAL MANAGER.- Telephone (511) 215-1200.
A stamp: ESTUDIO FERRERO.- ABOGADOS.- December 24, 1998.-
RECEIVED.-
San Isidro, December 21, 1998.-
MISS DANITZA ROCIO YUPARI CAPCHA.- CALLE LEON 180, URB. MAYORAZGO, PRIMERA
ETAPA, ATE VITARTE..-
DEAR MADAM:
The General Manager of DOE RUN PERU S.R.L., with Single Taxpayer
Registration No. 37630381, in keeping with the Bylaws and the General
Business Corporations Law calls a General Partners Meeting, to be held on
January 4, 1999, at noon, in the Company's office located at Victor Andres
Belaunde No. 147, Camino Real Business Center, Torre Real 3, 9th Floor,
District of San Isidro, in order to deal with the matters included in the
following agenda:
- - Approval of the sale and leaseback operation with Banco de Credito del
Peru and Credito Leasing S.A.
- - Granting of Special Powers.
We thank you in advance for your kind attendance and we remain,
Sincerely yours,
An illegible signature.- Kenneth Richard Buckley.- General Manager, Signed:
Illegible signatures.- Date: December 24, 1998.
INSERT: VOUCHER
A stamp: Evidencing receipt
<PAGE>
DOE RUN PERU.- Victor Andres Belaunde 147, Camino Real Business Center, Torre
Tres, 9th Floor, San Isidro.
Telephone: (511) 215-1200.
KENETH R. BUCKLEY.- PRESIDENT & GENERAL MANAGER.- Telephone (511) 215-1200.
A stamp: ESTUDIO FERRERO.- ABOGADOS.- December 24, 1998.-
RECEIVED.-
San Isidro, December 21, 1998.-
Mr. ALFREDO ARTURO BASUALDO RICALDI.- CALLE DOS DE MAYO 141, OROYA ANTIGUA.-
DEAR SIR:
The General Manager of DOE RUN PERU S.R.L., with Single Taxpayer
Registration No. 37630381, in keeping with the Bylaws and the General
Business Corporations Law calls a General Partners Meeting, to be held on
January 4, 1999, at noon, in the Company's office located at Victor Andres
Belaunde No. 147, Camino Real Business Center, Torre Real 3, 9th Floor,
District of San Isidro, in order to deal with the matters included in the
following agenda:
- - Approval of the sale and leaseback operation with Banco de Credito del
Peru and Credito Leasing S.A.
- - Granting of Special Powers.
We thank you in advance for your kind attendance and we remain,
Sincerely yours,
An illegible signature.- Kenneth Richard Buckley.- General Manager, Signed:
Illegible signatures.- Date: December 24, 1998.
INSERT: VOUCHER
A stamp: Evidencing receipt
DOE RUN PERU.- Victor Andres Belaunde 147, Camino Real Business Center, Torre
Tres, 9th Floor, San Isidro.
Telephone: (511) 215-1200.
KENETH R. BUCKLEY.- PRESIDENT & GENERAL MANAGER.- Telephone (511) 215-1200.
A stamp: ESTUDIO FERRERO.- ABOGADOS.- December 24, 1998.-
RECEIVED.-
San Isidro, December 21, 1998.-
Mr. Floren -Eddy Ramos Aparicio.- Av. Morro Solar 2204, Surco, Lima 33..-
DEAR SIR:
The General Manager of DOE RUN PERU S.R.L., with Single Taxpayer
Registration No. 37630381, in keeping with the Bylaws and the General
Business Corporations Law calls a General Partners Meeting, to be held on
January 4, 1999, at noon, in the Company's office located at Victor
<PAGE>
Andres Belaunde No. 147, Camino Real Business Center, Torre Real 3, 9th
Floor, District of San Isidro, in order to deal with the matters included in
the following agenda:
- - Approval of the sale and leaseback operation with Banco de Credito del
Peru and Credito Leasing S.A.
- - Granting of Special Powers.
We thank you in advance for your kind attendance and we remain,
Sincerely yours,
An illegible signature.- Kenneth Richard Buckley.- General Manager, Signed:
Illegible signatures.- Date: December 24, 1998.
INSERT: VOUCHER
A stamp: Evidencing receipt
DOE RUN PERU.- Victor Andres Belaunde 147, Camino Real Business Center, Torre
Tres, 9th Floor, San Isidro.
Telephone: (511) 215-1200.
KENETH R. BUCKLEY.- PRESIDENT & GENERAL MANAGER.- Telephone (511) 215-1200.
A stamp: ESTUDIO FERRERO.- ABOGADOS.- December 24, 1998.-
RECEIVED.-
San Isidro, December 21, 1998.-
Miss Teresa Saenz Picasso.- Octavio Espinoza 410, San Isidro.-
DEAR MADAM:
The General Manager of DOE RUN PERU S.R.L., with Single Taxpayer
Registration No. 37630381, in keeping with the Bylaws and the General
Business Corporations Law calls a General Partners Meeting, to be held on
January 4, 1999, at noon, in the Company's office located at Victor Andres
Belaunde No. 147, Camino Real Business Center, Torre Real 3, 9th Floor,
District of San Isidro, in order to deal with the matters included in the
following agenda:
- - Approval of the sale and leaseback operation with Banco de Credito del
Peru and Credito Leasing S.A.
- - Granting of Special Powers.
We thank you in advance for your kind attendance and we remain,
Sincerely yours,
An illegible signature.- Kenneth Richard Buckley.- General Manager, Signed:
Illegible signatures.- Date: December 24, 1998.
INSERT: VOUCHER
A stamp: Evidencing receipt
<PAGE>
DOE RUN PERU.- Victor Andres Belaunde 147, Camino Real Business Center, Torre
Tres, 9th Floor, San Isidro.
Telephone: (511) 215-1200.
KENETH R. BUCKLEY.- PRESIDENT & GENERAL MANAGER.- Telephone (511) 215-1200.
A stamp: ESTUDIO FERRERO.- ABOGADOS.- December 24, 1998.-
RECEIVED.-
San Isidro, December 21, 1998.-
Miss Margarita Delicia Mondragon Hernandez.- Jr. Chinchaysuyo 119, Maranga,
Cuarta Etapa, San Miguel.-
DEAR MADAM:
The General Manager of DOE RUN PERU S.R.L., with Single Taxpayer
Registration No. 37630381, in keeping with the Bylaws and the General
Business Corporations Law calls a General Partners Meeting, to be held on
January 4, 1999, at noon, in the Company's office located at Victor Andres
Belaunde No. 147, Camino Real Business Center, Torre Real 3, 9th Floor,
District of San Isidro, in order to deal with the matters included in the
following agenda:
- - Approval of the sale and leaseback operation with Banco de Credito del
Peru and Credito Leasing S.A.
- - Granting of Special Powers.
We thank you in advance for your kind attendance and we remain,
Sincerely yours,
An illegible signature.- Kenneth Richard Buckley.- General Manager, Signed:
Illegible signatures.- Date: December 24, 1998.
INSERT: VOUCHER
A stamp: Evidencing receipt
DOE RUN PERU.- Victor Andres Belaunde 147, Camino Real Business Center, Torre
Tres, 9th Floor, San Isidro.
Telephone: (511) 215-1200.
KENETH R. BUCKLEY.- PRESIDENT & GENERAL MANAGER.- Telephone (511) 215-1200.
A stamp: ESTUDIO FERRERO.- ABOGADOS.- December 24, 1998.-
RECEIVED.-
San Isidro, December 21, 1998.-
Messrs. DOE RUN MINING S. R. L. - AV. VICTOR ANDRES BELAUNDE 124, TORRE REAL 3,
9TH FLOOR, SAN ISIDRO.-
DEAR SIRS:
<PAGE>
The General Manager of DOE RUN PERU S.R.L., with Single Taxpayer
Registration No. 37630381, in keeping with the Bylaws and the General
Business Corporations Law calls a General Partners Meeting, to be held on
January 4, 1999, at noon, in the Company's office located at Victor Andres
Belaunde No. 147, Camino Real Business Center, Torre Real 3, 9th Floor,
District of San Isidro, in order to deal with the matters included in the
following agenda:
- - Approval of the sale and leaseback operation with Banco de Credito del
Peru and Credito Leasing S.A.
- - Granting of Special Powers.
We thank you in advance for your kind attendance and we remain,
Sincerely yours,
An illegible signature.- Kenneth Richard Buckley.- General Manager, Signed:
Illegible signatures.- Date: December 24, 1998.
This is what appears in the original minutes and inserts referred to herein.
Signed: Ricardo Ortiz de Zevallos Villaran, Lawyer, Notary Public of Lima.
A Notarial Stamp follows:
CONCLUSION:
After previously reading the writ and the transcribed inserts I have found
all them to be in order and I have instructed the parties appearing before me
of their content and they have ratified their purpose by signing the deed.
The signing process was concluded pursuant to the provisions set forth in
Article 59 (fifty-nine) of the Law of Notary Publics, on January 21, 1999 and
I hereby leave evidence that the Series No. of the page where this instrument
begins is 4639451 and it concludes in the page with the series No. 4639500:
and I hereby attest to all of the aforesaid.
Signatures:
Kenneth Richard Buckley
Jose Luis Ferreyra Arce
Juan Pablo Boza Rizo Patron
Sergio Bassino Bellacci
Andres Alejandro Ferrand del Busto
Dr. Ricardo Ortiz de Zevallos Villaran
Lawyer-Notary Public of Lima
THIS IS A PHOTOCOPY OF THE PUBLIC DEED INSCRIBED IN MY REGISTER AND AT THE
REQUEST OF AN INTERESTED PARTY I ISSUE THIS TESTIMONY IN KEEPING WITH THE
LAW, WHICH I SIGN AND STAMP IN LIMA, ON JANUARY 29, 1999.
<PAGE>
Andres Belaunde No. 147, Camino Real Business Center, Torre Real 3, 9th Floor,
District of San Isidro, in order to deal with the matters included in the
following agenda:
- - Approval of the sale and leaseback operation with Banco de Credito del Peru
and Credito Leasing S.A.
- - Granting of Special Powers.
We thank you in advance for your kind attendance and we remain,
Sincerely yours,
An illegible signature.- Kenneth Richard Buckley.- General Manager, Signed:
Illegible signatures.- Date: December 24, 1998.
INSERT: VOUCHER
A stamp: Evidencing receipt
DOE RUN PERU.- Victor Andres Belaunde 147, Camino Real Business Center, Torre
Tres, 9th Floor, San Isidro.
Telephone: (511) 215-1200.
KENETH R. BUCKLEY.- PRESIDENT & GENERAL MANAGER.- Telephone (511) 215-1200.
A stamp: ESTUDIO FERRERO.- ABOGADOS.- December 24, 1998.-
RECEIVED.-
San Isidro, December 21, 1998.-
Miss Teresa Saenz Picasso.- Octavio Espinoza 410, San Isidro.-
DEAR MADAM:
`The General Manager of DOE RUN PERU S.R.L. , with Single Taxpayer Registration
No. 37630381, in keeping with the Bylaws and the General Business Corporations
Law calls a General Partners Meeting, to be held on January 4, 1999, at noon, in
the Company's office located at Victor Andres Belaunde No. 147, Camino Real
Business Center, Torre Real 3, 9th Floor, District of San Isidro, in order to
deal with the matters included in the following agenda:
- - Approval of the sale and leaseback operation with Banco de Credito del Peru
and Credito Leasing S.A.
- - Granting of Special Powers.
We thank you in advance for your kind attendance and we remain,
Sincerely yours,
An illegible signature.- Kenneth Richard Buckley.- General Manager, Signed:
Illegible signatures.- Date: December 24, 1998.
INSERT: VOUCHER
A stamp: Evidencing receipt
<PAGE>
DOE RUN PERU.- Victor Andres Belaunde 147, Camino Real Business Center, Torre
Tres, 9th Floor, San Isidro.
Telephone: (511) 215-1200.
KENETH R. BUCKLEY.- PRESIDENT & GENERAL MANAGER.- Telephone (511) 215-1200.
A stamp: ESTUDIO FERRERO.- ABOGADOS.- December 24, 1998.-
RECEIVED.-
San Isidro, December 21, 1998.-
Miss Margarita Delicia Mondragon Hernandez.- Jr. Chinchaysuyo 119, Maranga,
Cuarta Etapa, San Miguel.-
DEAR MADAM:
The General Manager of DOE RUN PERU S.R.L. , with Single Taxpayer Registration
No. 37630381, in keeping with the Bylaws and the General Business Corporations
Law calls a General Partners Meeting, to be held on January 4, 1999, at noon, in
the Company's office located at Victor Andres Belaunde No. 147, Camino Real
Business Center, Torre Real 3, 9th Floor, District of San Isidro, in order to
deal with the matters included in the following agenda:
- - Approval of the sale and leaseback operation with Banco de Credito del Peru
and Credito Leasing S.A.
- - Granting of Special Powers.
We thank you in advance for your kind attendance and we remain,
Sincerely yours,
An illegible signature.- Kenneth Richard Buckley.- General Manager, Signed:
Illegible signatures.- Date: December 24, 1998.
INSERT: VOUCHER
A stamp: Evidencing receipt
DOE RUN PERU.- Victor Andres Belaunde 147, Camino Real Business Center, Torre
Tres, 9th Floor, San Isidro.
Telephone: (511) 215-1200.
KENETH R. BUCKLEY.- PRESIDENT & GENERAL MANAGER.- Telephone (511) 215-1200.
A stamp: ESTUDIO FERRERO.- ABOGADOS.- December 24, 1998.-
RECEIVED.-
San Isidro, December 21, 1998.-
Messrs. DOE RUN MINING S. R. L. - AV. VICTOR ANDRES BELAUNDE 124, TORRE REAL 3,
9TH FLOOR, SAN ISIDRO.-
DEAR SIRS:
<PAGE>
The General Manager of DOE RUN PERU S.R.L. , with Single Taxpayer Registration
No. 37630381, in keeping with the Bylaws and the General Business Corporations
Law calls a General Partners Meeting, to be held on January 4, 1999, at noon, in
the Company's office located at Victor Andres Belaunde No. 147, Camino Real
Business Center, Torre Real 3, 9th Floor, District of San Isidro, in order to
deal with the matters included in the following agenda:
- - Approval of the sale and leaseback operation with Banco de Credito del Peru
and Credito Leasing S.A.
- - Granting of Special Powers.
We thank you in advance for your kind attendance and we remain,
Sincerely yours,
An illegible signature.- Kenneth Richard Buckley.- General Manager, Signed:
Illegible signatures.- Date: December 24, 1998.
This is what appears in the original minutes and inserts referred to herein.
Signed: Ricardo Ortiz de Zevallos Villaran, Lawyer, Notary Public of Lima.
A Notarial Stamp follows:
CONCLUSION:
After previously reading the writ and the transcribed inserts I have found all
them to be in order and I have instructed the parties appearing before me of
their content and they have ratified their purpose by signing the deed. The
signing process was concluded pursuant to the provisions set forth in Article 59
(fifty-nine) of the Law of Notary Publics, on January 21, 1999 and I hereby
leave evidence that the Series No. of the page where this instrument begins is
4639451 and it concludes in the page with the series No. 4639500: and I hereby
attest to all of the aforesaid.
Signatures:
Kenneth Richard Buckley
Jose Luis Ferreyra Arce
Juan Pablo Boza Rizo Patron
Sergio Bassino Bellacci
Andres Alejandro Ferrand del Busto
Dr. Ricardo Ortiz de Zevallos Villaran
Lawyer-Notary Public of Lima
THIS IS A PHOTOCOPY OF THE PUBLIC DEED INSCRIBED IN MY REGISTER AND AT THE
REQUEST OF AN INTERESTED PARTY I ISSUE THIS TESTIMONY IN KEEPING WITH THE LAW,
WHICH I SIGN AND STAMP IN LIMA, ON JANUARY 29, 1999.
<PAGE>
BOEING CAPITAL CORPORATION
Loan and Security Agreement No. 3548-2
UNCONDITIONAL GUARANTY
For value received and in order to induce Boeing Capital Corporation, a Delaware
corporation ("Lender"), to enter into, accept or acquire a certain Loan and
Security Agreement dated as June 11, 1999 (hereinafter with all present and
future, amendments, addenda and riders thereto referred to as the "Loan") with
The First Security Bank, N.A., not in its individual capacity but as Trustee
under that certain Bell 412 Peru Trust No. 1, a Utah trust ("Debtor"), and/or to
advance monies or extend or continue to extend credit to or for the benefit of
Debtor, under the Loan or otherwise, the undersigned hereby absolutely,
irrevocably and unconditionally guarantees to Lender (i) the prompt and full
payment when due, by acceleration or otherwise, of all sums now or at any time
hereafter due from Debtor to Lender, under the Loan or otherwise and agrees to
pay any and all expenses (including reasonable counsel fees and expenses)
incurred by Lender in enforcing any rights under this Guaranty, and (ii) the
prompt, full and faithful performance and discharge by Debtor of each and every
obligation and warranty of Debtor set forth in the Loan (collectively "Debtor's
Obligations").
This Guaranty is absolute, unconditional and continuing and shall remain in
effect until all of Debtor's Obligations have been paid, performed and
discharged regardless of the enforceability of Debtor's Obligations and
regardless of any law, regulation or decree now or hereafter in effect which
might in any manner affect Debtor's Obligations. The death or bankruptcy of the
undersigned or of Debtor shall not terminate this Guaranty or any obligations
hereunder. The liability of the undersigned hereunder shall in no event be
affected or impaired by any renewals, amendments, modifications or supplements
of or to the Loan, or by any extensions, forebearances, compromises or releases
of any of Debtor's Obligations, any of Lender's rights under the Loan or any
lack of validity or enforceability of Debtor's Obligations or any agreement or
instrument relating thereto or any other circumstance which might otherwise
constitute a defense available to, or a discharge of, Debtor or the undersigned
and the undersigned hereby consents to and waives notice of any of the
foregoing. The undersigned further expressly waives (i) all diligence in
collection and any failure or delay by Lender in protection or perfection of
Lender's rights under the Loan or in or to any collateral securing any of
Debtor's Obligations, (ii) notice of acceptance by Lender of this Guaranty or of
the Loan, (iii) notice of advancement of any additional funds to or for the
benefit of Debtor, (iv) presentment, demand for payment, protest and notice of
protest, default, non-payment or partial payment by Debtor, (v) all other
notices and formalities to which Debtor and/or the undersigned might be
entitled, by statute or otherwise, (vi) any right of subrogation, reimbursement,
exoneration, contribution, indemnity or any other right that would result in
Guarantor being deemed a creditor of Debtor under the United States Bankruptcy
Code or any other law or any right to enforce any remedy which Lender now has or
may hereafter have against Debtor and any benefit of, and any right to
participate in, any security now or hereafter held by Lender, whether any of the
foregoing arise in equity, at law or by contract and (vii) any other action or
any other circumstance whatsoever which might constitute a defense to
enforcement of this Guaranty. This Guaranty shall continue to be effective or be
reinstated, as the case may be, if at any time any payment of any of the
Debtor's Obligations is rescinded or must otherwise be returned by Lender upon
the insolvency, bankruptcy or reorganization of Debtor or otherwise, all as
though such payment had not been made.
The undersigned further waives any right of setoff, recoupment or counterclaim
against Lender with respect to any claim or demand the undersigned may at any
time have against Debtor, or against any other person or concern liable for
Debtor's Obligations, and as further security to Lender, any and all debts or
liabilities
Unconditional Guaranty Page 1 of 2
<PAGE>
now or hereafter owing to the undersigned by Debtor, and/or such other person or
concern, and any lien, security or collateral given to the undersigned in
connection therewith, are hereby subordinated to the claims and liens of, and
assigned to, Lender.
The obligations of the undersigned hereunder are and shall at all times be the
original, direct and primary obligations of the undersigned, as if the
undersigned were the Debtor under the Loan. Lender shall not in any event be
obligated to pursue or exhaust any rights or remedies against Debtor or others,
or resort to any security, prepayments or collateral, as a prerequisite to
enforcing this Guaranty against the undersigned. This Guaranty shall be binding
upon the undersigned and its, his or her respective heirs, personal
representatives, successors and assigns, and shall inure to the benefit of
Lender and its successors and assigns. All of the obligations and agreements of
the undersigned in this Guaranty are joint and several.
If the undersigned is a corporation, each signatory on behalf of such
corporation warrants that he or she has the authority to sign on behalf of such
corporation and by so signing, to bind said corporation hereunder. No
modification or waiver of any of the provisions of this Guaranty shall be
effective unless in writing and signed by the undersigned and an officer of
Lender. Guarantor, being a corporation with publicly held debt or equity, shall
furnish to Lender promptly upon their availability, copies of all financial
statements, reports, notices and proxy statements, if any, sent by Guarantor to
its public security holders, and all regular and periodic reports filed by
Guarantor with the principal securities exchange including without limitation
balance sheet, profit and loss statement and statement of cash flows, with said
fiscal year reports audited by a recognized firm of independent certified public
accountants reasonably satisfactory to Lender on which the securities of
Guarantor are listed, if any, or with the Securities and Exchange Commission,
including but not limited to 10-K and 10-Q reports. If any provision of this
Guaranty or the application thereof is hereafter held invalid or unenforceable,
the remainder of this Guaranty shall not be affected thereby, and to this end
the provisions of this Guaranty are declared severable.
Guarantor is not in default under any agreement, contract or judgment to which
Guarantor is a party and any period of cure has expired, in an amount of $5
million or more .
Guarantor has filed all required material tax returns and has paid all material
taxes to the extent they have become due other than those which are being
contested in good faith by appropriate proceedings and as to which appropriate
reserves are being maintained by Guarantor in accordance with GAAP and so long
as such proceedings operate during the pendency thereof to prevent the sale,
forfeiture, or loss of the Collateral, and Guarantor does not have any knowledge
of any actual or proposed deficiency or additional assessment in connection
therewith.
This Guaranty shall be governed in all respects by the laws of the State of
California and the undersigned hereby irrevocably consent to the jurisdiction of
the California State Courts and the United States Courts located in Los Angeles
County.
Dated this __________ day of June, 1999.
Witness: Guarantor:
- ----------------------------------- The Doe Run Resources Corporation
By: /s/ William W. Simms By: /s/ David Chaput
-------------------------------- ---------------------------------
Printed Name: William W. Simms Printed Name: David Chaput
-------------------- ---------------------
Title: Cash and Financial Manager Title: Treasurer
----------------------------- ------------------------------
Unconditional Guaranty Page 2 of 2
<PAGE>
Note No. 3548-2
PROMISSORY NOTE
$5,665,140.00 July 6, 1999
Long Beach, California
This Note is executed and delivered as of the date set forth above to
Boeing Capital Corporation, a Delaware corporation ("Lender"), by First Security
Bank, N.A., not in its individual capacity but solely as Owner Trustee under
Bell 412 Peru Trust No. 1, a Utah trust (the "Debtor"), in consideration of a
loan made pursuant to that certain Loan and Security Agreement ("Agreement")
dated June 11, 1999 between Lender and Debtor.
Debtor promises to pay to Lender the principal sum of Five Million Six
Hundred Sixty-five Thousand One Hundred Forty dollars ($5,665,140.00) plus
interest on such principal sum from time to time outstanding at the rate of
9.8878% per annum. Interest shall be calculated on the basis of a 360-day year
for the actual number of days the principal is outstanding. Debtor's obligation
to Lender under this Note shall be payable in 120 consecutive monthly
installments each in the amount of $74,496.59 and each payable on the 6th day of
the month commencing August 6, 1999. Debtor agrees that Lender shall apply each
monthly installment payment first to any late payment fees and costs then due,
second to interest accrued and unpaid, and finally to the then outstanding
principal balance. Debtor's payments to Lender shall be credited on the day
Lender receives collected funds and no installment payment shall be considered
paid until Lender has received collected funds. All amounts paid hereunder shall
be paid by federal funds wire transfer or by Automated Clearing House (ACH)
payment format Cash Concentration and Disbursement Plus Addendum (CCD+) for the
account of Lender to a bank to be designated by Lender, together with notice so
as to provide Lender with use of the funds on or before 11 a.m., California
time, on the due date.
In the event that Debtor fails to pay any installment payment(s) when
due, the principal balance, to the extent permitted by applicable law, shall
bear interest at a rate (the "Default Rate") of two percent (2%) per annum
greater than the interest rate stated in the second paragraph hereof, from the
due date until the date of payment in full of such installment payment(s).
This Note is secured by the security interests Debtor has granted
Lender under the Agreement.
Borrower may repay the loan at any time after the 36th month for an
amount equal to the sum of (i) the Prepayment Amount shown on Exhibit "A"
hereto, (ii) any break funding costs, and (iii) any other amounts due under the
Loan.
1
<PAGE>
If an Event of Default occurs under the Agreement or under any other
Loan Document, then Lender shall have the right, without giving Debtor notice or
making a demand, to declare that the entire balance then due under this Note is
immediately payable (the "Accelerated Balance"). The Accelerated Balance shall
be calculated by adding to the principal balance outstanding: (i) interest
(including without limitation any interest at the Default Rate) on such
principal balance and (ii) any other amounts due hereunder.
Debtor's default under this Note shall constitute a default under the
Agreement as well.
Debtor's obligations under this Note are absolute and unconditional.
Debtor waives its right to assert any claim, counterclaim, right of offset or
affirmative defense it may have against Lender in any lawsuit Lender brings to
collect this Note, although Debtor may bring such claim in a separate lawsuit
against Lender.
If Lender decides to waive strict compliance by Debtor of Debtor's
obligations under this Note, the waiver shall apply only to the specific right
or remedy at the time of such waiver, and Debtor shall not be excused from
strict compliance with Debtor's obligations at other or future times, nor may
Debtor rely on any waiver being applicable to prevent Lender from exercising
Lender's rights and remedies at other or future times or as a consequence of
other failures by Debtor to strictly comply with Debtor's obligations under this
Note or the other Loan Documents.
Lender's rights and remedies under this Note or the other Loan
Documents are in addition to, and not exclusive of, any other rights or remedies
to which Lender may be entitled by operation of law or in equity. Lender may
collect this Note by proceeding against Debtor, any collateral given to secure
this Note or against any guarantor, endorser or other Person liable to Lender
for the obligations evidenced by this Note, and Lender may so proceed after
default, in any order, at any time or simultaneously as Lender decides in its
sole discretion.
Debtor waives demand for payment, protest, notice of dishonor and other
notices or formalities to which Debtor might be entitled.
Notwithstanding any provision to the contrary herein, or in any of the
documents evidencing the Obligations or otherwise relating thereto, no such
provision shall require the payment or permit the collection of interest in
excess of the maximum permitted by applicable usury laws. If any such excessive
interest is so provided for, then in such event: (i) the provisions of this
paragraph shall govern and control; (ii) neither the Debtor nor its heirs, legal
representatives, successors or assigns or any other party liable for the payment
thereof shall be obligated to pay the amount of such interest to the extent that
it is in excess of the maximum amount permitted by law; (iii) any such excess
interest that may have been collected shall be, at the option of the holder of
the instrument evidencing the Obligations, either applied as a credit against
the unpaid principal amount thereof or refunded to the
2
<PAGE>
maker thereof; and (iv) the effective rate of interest shall be automatically
reduced to the maximum lawful rate under applicable usury laws as now or
hereafter construed by the courts having jurisdiction.
This Note is a negotiable instrument. Lender may sell, assign, transfer
or endorse this Note. If Lender does so, all of Debtor's obligations shall then
run to the Person to whom Lender sells, assigns, transfers or endorses this
Note, or to Lender's successors and assigns provided, however, that no such
assignment shall be binding on Debtor until notice of the same has been given
Debtor. If more than one Person has executed this Note, the obligations of each
Person so signing shall be joint and several. Capitalized terms not defined
herein shall have the meaning ascribed to them in the Agreement.
BELL 412 PERU TRUST NO. 1
By: FIRST SECURITY BANK,
NATIONAL ASSOCIATION, not in its
individual capacity, but solely
as Owner Trustee
By: /s/ Greg A. Hawley
---------------------------
Name: Greg A. Hawley
---------------------------
Title: Vice President
---------------------------
3
<PAGE>
Loan No. 3548-2
LOAN AND SECURITY AGREEMENT
THIS LOAN AND SECURITY AGREEMENT ("Agreement") dated as of June 11,
1999 is made by and between First Security Bank, N.A., not in its individual
capacity but solely as Owner Trustee under Bell 412 Peru Trust No. 1, created
pursuant to the Trust Agreement dated as of June 11, 1999, a Utah trust with
its office at 79 South Main, Salt Lake City, Utah 84111 ("Debtor"), and
Boeing Capital Corporation, a Delaware corporation with its chief executive
office at 4060 Lakewood Blvd., 6th Floor, Long Beach, CA 90808 ("Lender").
SECTION 1. DEFINITIONS.
All capitalized terms which are not defined herein shall have the
meaning ascribed thereto in the Note or Supplement hereto. Accounting terms not
specifically defined shall be construed in accordance with generally accepted
accounting principles ("GAAP"). As used in this Agreement, the following terms
shall have the following defined meanings (applicable to both singular and
plural forms):
"COLLATERAL" means (a) Equipment; (b) all certificates of title,
statements of origin, log books, maintenance records, ledger sheets, files,
records, documents and instruments (including, without limitation, computer
programs, tapes and related electronic data processing software) evidencing an
interest in or relating to the Equipment or used or useful in identifying,
maintaining or locating the Equipment, and (c) Proceeds of any of the foregoing.
"DEFAULT" means any event which with notice, lapse of time, or both
would constitute an Event of Default.
"EQUIPMENT" means the items of property identified or described in the
Supplement hereto, and all accessions, attachments, additions, replacements,
substitutions and component parts thereto or thereof.
"LOAN DOCUMENTS" means this Agreement, the Supplement, the Note and any
other agreements between Lender and Debtor executed and delivered in connection
with this Agreement.
"PROCEEDS" means any payment received upon the sale, exchange,
collection or disposition of any item(s) of Equipment, including but not limited
to (a) any and all proceeds of any insurance, indemnity, warranty or guaranty
payable to Debtor from time to time with respect to any of the Equipment; (b)
any and all payments made or due and payable from time to time, in connection
with any requisition, confiscation, condemnation, seizure or forfeiture of all
or any part of the Equipment by any Person; (c) any and all accounts arising out
of, or chattel paper evidencing a lease, sublease or other hiring out of, any of
the Equipment; and (d) any and all other rents or profits or other amounts from
time to time paid or payable in connection with any of the Equipment.
SECTION 2. AMOUNT AND TERMS OF LOANS; GRANT OF SECURITY INTEREST.
Subject to the terms and conditions of the Loan Documents, Lender shall
make the loan (the "Loan") to Debtor two Business days following the date Debtor
advises that the Equipment is acceptable for delivery. The Loan shall be
evidenced by (a) a promissory note (the "Note") in the form of Exhibit A, which
shall set forth the amount, repayment terms and interest rate ("Interest Rate")
for such Loan and (b) one or more supplements (each a "Supplement").
Loan and Security Agreement Page 1 of 12
<PAGE>
As security for the prompt and complete payment and performance when
due of all the obligations, indebtedness and liabilities of Debtor to Lender,
now existing or hereafter incurred under, arising out of, or in connection with,
the Loan Documents whether direct or indirect, joint or several, absolute or
contingent, liquidated or unliquidated, secured or unsecured, matured or
unmatured ("Obligations") and in order to induce Lender to enter into this
Agreement and make a Loan to Debtor, under this Agreement, Debtor hereby grants
to Lender a first (and only) priority security interest ("Security Interest")
which shall be a purchase money security interest, in all Debtor's right, title
and interest in, to and under the Collateral.
SECTION 3. CONDITIONS PRECEDENT.
Lender shall not be required to make the Loan hereunder unless on or
before the closing date thereof:
(a) Lender shall have received all required transaction documents
(in form and substance satisfactory to Lender) including but not limited to the
following:
(i) Opinion of counsel for Debtor;
(ii) (A) a guaranty in the form attached as Exhibit B,
duly executed by the guarantor of any and all of Debtor's Obligations hereunder
and under the Note (the "Guarantor"), (B) a Guarantor's Secretary's Certificate
in the form of Exhibit C, and (C) an opinion of counsel for Guarantor in the
form of Exhibit D;
(iii) a duly executed and delivered (A) Note evidencing the
Loan, and (B) Supplement;
(iv) certificate of insurance and related broker's letter
evidencing that the Equipment is insured in accordance with the provisions
hereof;
(v) invoices, bills of sale and other evidence that the
cost associated with the Equipment has been, or concurrently with the making of
the Loan shall be, fully paid;
(vi) evidence that all filings, recordings and other
actions (including obtaining landlord and/or mortgagee waivers) deemed necessary
or desirable by Lender in order to perfect a Security Interest in the Collateral
have been duly effected;
(b) The following additional conditions shall have been met to the
satisfaction of Lender:
(i) the Equipment to secure such Loan shall have been
delivered to, and accepted by, Debtor;
(ii) the representations and warranties contained in this
Agreement, in any related guaranty and any other document delivered to Lender in
connection herewith, shall be true and correct with the same effect as if made
on and as of such date, and no Default or Event of Default shall be in existence
on such date or shall occur as a result of such Loan;
(iii) Lender shall have received from Debtor and each
Guarantor such other documents and information as Lender has reasonably
requested;
Loan and Security Agreement Page 2 of 12
<PAGE>
(iv) Lender shall have received and found satisfactory
Guarantor's most recent quarterly financial statement; and
(v) Debtor shall have satisfied all other conditions of
the letters from Lender to Debtor which, subject to certain conditions, commit
the Lender and Debtor to certain terms of the transaction which this Agreement
documents (collectively the "Commitment Letter").
The conditions precedent in this Section 3 shall be deemed to have been
met (or waived) upon the consummation of the closing of the Loan.
SECTION 4. REPRESENTATIONS AND WARRANTIES.
In order to induce Lender to enter into this Agreement and to make each
Loan, Debtor represents and warrants that:
(a) Debtor is a trust duly organized, validly existing and in good
standing under the laws of its State of its organization, has the necessary
authority and power to own the Equipment and its other assets and to transact
the business in which it is engaged, and its chief executive office is located
at the address set forth in the first paragraph of this Agreement.
(b) Debtor has full power, authority and legal right to execute
and deliver this Agreement and the other Loan Documents, to perform its
obligations hereunder and thereunder, to borrow hereunder and to grant the
Security Interest created hereby.
(c) This Agreement has been (and each Note and Supplement when
executed and delivered shall have been) duly authorized, executed and delivered
by Debtor and constitutes (and each Note and Supplement when executed and
delivered shall constitute) a legal, valid and binding obligation of Debtor
enforceable in accordance with its terms except as such rights may be limited by
bankruptcy, insolvency or similar laws affecting the enforcement of creditors'
rights generally.
(d) The execution, delivery and performance by Debtor of this
Agreement and the Note and Supplement do not and will not violate any provision
of any applicable law or regulation or of any judgment or order of any court or
governmental instrumentality, and will not violate any provision of, or cause a
default under, any loan, other agreement, contract or judgment to which Debtor
is a party in an amount in excess of five million dollars.
(e) There is no action, audit, investigation or proceeding pending
or threatened against or affecting Guarantor or any of its assets which involves
any of the Equipment or any of the contemplated transactions hereunder or which,
if adversely determined, could have a material adverse effect on Debtor's
business, operations or financial condition except as shown in the financial
statements delivered pursuant to Section 3(b)(v) above.
(f) Debtor shall have good and marketable title to the Equipment
and Lender shall have a perfected Security Interest in the Collateral, and
Debtor shall have acquired its rights in trust in the Equipment in the ordinary
course of business.
(g) All financial statements of Guarantor which have been
delivered to Lender have been prepared in accordance with GAAP consistently
applied, and present fairly Guarantor's financial position as at, and the
results of its operations for, the periods ended on the dates set forth on such
financial statements, and there has been no material adverse change in
Guarantor's financial condition, business or operations since the date of the
financial statements received pursuant to Section 3(b)(v).
Loan and Security Agreement Page 3 of 12
<PAGE>
(h) Debtor has not changed its name in the last five years or done
business under any other name except as previously disclosed in writing to
Lender.
(i) All consents of any Person, and all consents, licenses,
approvals or authorizations of, or registrations or filings with, any
governmental authority, bureau or agency required in connection with the
execution, delivery and performance of, or payment under, this Agreement have
been obtained or performed.
(j) It will use the Equipment solely in the lawful conduct of its
business and as shown in the Management Agreement in the form of Exhibit E, the
Lease in the form of Exhibit F, and the Services Agreement in the form of
Exhibit G.
SECTION 5. COVENANTS.
Debtor covenants and agrees that from and after the date
hereof and so long as the Note is outstanding:
(a) It will at its expense:
(i) give prompt written notice to Lender of the
occurrence of any Event of Total Loss or of any Partial Loss of the Equipment in
excess of twenty thousand dollars ($20,000);
(ii) observe all material and validly imposed requirements
of any governmental authorities relating to the conduct of its business, the
performance of its obligations hereunder, the use, operation or ownership of the
Equipment, or to its other properties or assets where the violation of which
could have a material adverse effect on the financial condition of the Debtor,
the Equipment, or the security interest of the Lender in the same;
(iii) maintain its existence as a legal entity and obtain
and keep in full force and effect all rights, franchises, licenses and permits
which are necessary to the proper conduct of its business, and pay all fees,
taxes, assessments and governmental charges or levies imposed upon any of the
Equipment;
(iv) at any reasonable time(s) permit Lender or its
authorized representative(s) to inspect the Equipment and the books and records
of Debtor pertaining to the Equipment and the Loan;
(v) in accordance with GAAP, keep proper books of record
and account in which entries will be made of all dealings or transactions in
relation to its business and activities as the same pertain to the Loan or the
Equipment;
(vi) Guarantor, being a corporation with publicly held
debt or equity, shall furnish to Lender promptly upon their availability, copies
of all financial statements, reports, notices and proxy statements, if any, sent
by Guarantor to its public security holders, and all regular and periodic
reports filed by Guarantor with the principal securities exchange including
without limitation balance sheet, profit and loss statement and statement of
cash flows, with said fiscal year reports audited by a recognized firm of
independent certified public accountants reasonably satisfactory to Lender on
which the securities of Guarantor are listed, if any, or with the Securities and
Exchange Commission, including but not limited to 10-K and 10-Q reports;
(vii) promptly execute and deliver to Lender such
instruments and documents, and take such action, as Lender may from time to time
reasonably request in order to carry out the intent and
Loan and Security Agreement Page 4 of 12
<PAGE>
purpose of this Agreement and to establish and protect the rights, interests
and remedies created, or intended to be created, in favor of Lender hereby
authorizing Lender, in such jurisdictions where such action is authorized by
law, to effect any such recordation or filing of financing statements without
Debtor's signature, and to file as valid financing statements in the
applicable financing statement records, photocopies hereof, of the
Supplement, Note and of any other financing statement executed in connection
herewith;
(viii) warrant and defend its good and marketable title to
the Equipment, and Lender's perfected Security Interest in the Collateral,
against all claims and demands whatsoever (hereby agreeing that the Equipment
shall be and at all times remain separately identifiable personal property, and
shall not become part of any real estate), and will take such action as may be
necessary to prevent any other Person from acquiring any right or interest in
the Collateral without Lender's prior written consent;
(ix) if requested by Lender in writing, attach to the
Equipment a notice satisfactory to Lender disclosing Lender's Security Interest
in the Equipment;
(x) maintain, or cause to be maintained, the Equipment in
good condition and working order and furnish all parts, replacements and
servicing required therefor so that the value, condition and operating
efficiency thereof will at all times be maintained, normal wear and tear
excepted, and any repairs, replacements and parts added to the Equipment in
connection with any repair or maintenance or with any improvement, change,
addition or alteration shall immediately, without further act, become part of
the Equipment and subject to the Security Interest created by this Agreement;
(xi) give prompt written notice to Lender of the
occurrence of any material violations, citations, orders or other instructions
or actions of any government;
(xii) give prompt written notice to Lender of the
occurrence of any Event of Default as defined in the Aircraft Lease Agreement
dated as of June 11, 1999, between Jet Aviation Business Jets, Inc. and Aero
Transporte, S.A., the Agreement for Rendering of Air Transportation Services
dated as of June 11, 1999, between Aero Transporte, S.A. and Doe Run Peru,
S.R.L., and the Certificate of Authority to Lease dated as of June 11, 1999,
between First Security Bank, N.A. and Jet Aviation Business Jets, Inc.
(xiii) within 45 days after the end of each calendar
quarter, unless such information shall have been previously provided, furnish
proof of payment of VAT taxes with respect to the Equipment; and
(xiv) maintain, or cause to be maintained, with respect to
the Equipment (A) all risk physical loss insurance for an amount at least equal
to the outstanding Loan balance with respect to the Equipment and (B) public
liability and property damage insurance with respect to the Equipment as set
forth in the Supplement. Such liability insurance shall be on an occurrence
basis rather than a claims made basis and operate with respect to the Lender as
a separate policy, except as to the limits of liability. Such insurance shall be
primary insurance up to and including the stated policy limits and not excess
over other coverage. Such insurance shall (1) with respect to liability
insurance, name Lender as first named insured, (2) with respect to all risk
physical loss insurance, name Lender as loss payee and first named insured, (3)
waive any and all rights of subrogation which the insurers may have or may
acquire against the Lender, and (4) be with companies satisfactory to Lender.
The Lender has the right to carry additional insurance at its own expense,
provided that such additional insurance does not increase the cost to the Debtor
of carrying the required insurance. There shall be no right of contribution with
respect to any insurance maintained by Lender, Debtor or any other person. All
insurance required hereunder shall provide that coverage may not be altered or
canceled by the insurer without thirty (30) days' prior written notice to
Lender. Losses with
Loan and Security Agreement Page 5 of 12
<PAGE>
respect to physical loss in excess of Twenty Thousand Dollars ($20,000) shall
be adjusted only with and paid to, Lender and its assignee, if any, and so
long as no Event of Default shall have occurred and be continuing, shall be
made available to Debtor to effect the necessary repairs and rehabilitation
of the Equipment. Such insurance shall not be invalidated, as against Lender,
by any action or inaction of Debtor or any other person and shall insure
Lender regardless of any breach or violation by Debtor or any other person of
any warranties, declarations or conditions contained in the policies
evidencing such insurance or in applications for such insurance. All
insurance required hereunder shall be satisfactory to Lender and shall
contain such other endorsements as may be requested by Lender. Debtor hereby
appoints Lender as Debtor's attorney-in-fact to make claim for, receive
payment of and execute and endorse all documents, checks or drafts for loss
or damages or return premium under any insurance policy issued on the
Equipment; provided however, Lender shall not exercise this power of attorney
unless an Event of Default has occurred and is continuing. Debtor's
obligation to keep the Equipment insured as provided herein shall continue
until all Obligations have been paid in full.
The insurance policy shall be endorsed to provide that the
Lender will have no liability for premiums or other costs of the insurance
required hereby. The insurance carried by Debtor with respect to the Equipment
shall be no less favorable in scope or amount than that carried by Debtor with
respect to other comparable equipment. Such insurance shall not include any
self-insured retentions. Such insurance shall not include any deductibles except
for any deductibles which are consistent with Debtor's industry standard and are
acceptable to Lender.
Debtor shall furnish Lender with insurance certificates
evidencing such insurance prior to the Acceptance Date of the applicable
Supplement and prior to the expiration of each such certificate. Each
certificate of insurance shall be attached to a letter from an insurance broker
acceptable to Lender confirming that the underlying insurance policy summarized
by the certificate of insurance complies with the requirements of this Section.
At Lender's request, Debtor shall provide to Lender a copy of the entire
insurance policy covering the Equipment.
(b) It will not without the prior written consent of Lender:
(i) except as contemplated in the Management Agreement,
the Lease and the Services Agreement, sell, convey, transfer, exchange, lease or
otherwise relinquish possession or dispose of any of the Collateral or attempt
or offer to do any of the foregoing without Lender's prior written consent which
will not be unreasonably withheld;
(ii) create, assume or suffer to exist any lien, mortgage,
security interest, financing statement or other encumbrance of any kind
whatsoever ("Lien") upon the Collateral except for the Security Interest created
hereby;
(iii) TRANSFER, LEASE, ASSIGN OR PLEDGE THE EQUIPMENT OR
ANY PART THEREOF OR ANY INTEREST THEREIN, EXCEPT IN THE NORMAL COURSE OF
BUSINESS WITHOUT LENDER'S PRIOR WRITTEN CONSENT, WHICH WILL NOT BE UNREASONABLY
WITHHELD;
(iv) change the form of organization of its business;
(v) without thirty (30) days' prior written notice to
Lender, change its name or its chief executive office;
Loan and Security Agreement Page 6 of 12
<PAGE>
(vi) move or change the principal base of any of the
Equipment from the location specified on the Supplement relating thereto without
the prior written consent of Lender which will not be unreasonably withheld; or
(vii) make or authorize any improvement, change, addition
or alteration to the Equipment which would materially and adversely impair its
originally intended function or use or its value. Notwithstanding the foregoing,
the Equipment shall be maintained in compliance with all service bulletins
issued or supplied by any manufacturer of any Item, all Airworthiness Directives
and Regulation revisions applicable to the Equipment issued or supplied by the
United States Department of Transportation Federal Aviation Administration
("FAA"), and be sufficient to enable the airworthiness certification of each
Item to be maintained in good standing at all times.
(c) It will cause to be obtained as promptly as possible but no
later than August 31, 1999 or such later date as provided by applicable law in
the case of actions of governmental agencies, or such later date as the Lender
may agree, all actions and proceedings required to be taken by the Lease and by
applicable Peruvian law to lawfully operate the Equipment in Peru, including
without limitation, the following:
(i) filing of the FAA Helicopter Registration certificate
with the Peruvian DGTA;
(ii) the issuance of the Operating Certificate by the
Peruvian DGTA to Aero Transporte S.A. for the regular operation of the
Equipment;
(iii) the filing of the FAA Helicopter airworthiness
certificate with the Peruvian DGTA; and
(iv) the approval under Part 129.14 for the Peruvian
operation of the Equipment to be issued by the United States FAA.
In the event Lender consents to any of the foregoing acts, Debtor
agrees that Lender may charge Debtor a reasonable documentation and
administration fee. Consent to any of the foregoing acts shall not be deemed to
be consent to any subsequent similar act.
SECTION 6. EVENT OF LOSS.
"Event of Total Loss" with respect to the Equipment means (i) the
actual or constructive loss or loss of use thereof, due to theft, destruction,
damage beyond repair or to an extent which makes repair uneconomical, or (ii)
the condemnation, confiscation or seizure thereof, or requisition of title
thereto, or use thereof, by any Person. "Person" means an individual,
partnership, corporation, trust, unincorporated association, joint venture,
limited liability company, governmental authority or other entity of whatever
nature. "Event of Partial Loss" with respect to the equipment means (i) the
actual or constructive loss or loss of use thereof, due to theft, destruction,
damage beyond repair or to an extent which does NOT make repair uneconomical; or
(ii) the condemnation, confiscation or seizure thereof or requisition of title
thereto, which does not involve a loss of the equipment or the loss of use
thereof.
Should any item of Equipment suffer an Event of Total Loss, Debtor
shall make a payment as described herein on the corresponding Note within 30
days thereafter. The amount to be paid shall be (i) the unpaid principal amount
of such Note and (ii) all other amounts then due and owing hereunder and under
the Note, but reduced by the total insurance proceeds paid to and retained by
the Lender.
Loan and Security Agreement Page 7 of 12
<PAGE>
SECTION 7. EVENTS OF DEFAULT; REMEDIES.
(a) Events of Default: For purposes of this Agreement, the
following events shall each constitute an "Event of Default":
(i) Debtor shall fail to pay any of the Obligations when
due and such failure to pay shall continue for a period of ten (10) or more days
after the due date thereof.
(ii) There shall occur any termination of, material
alteration in the scope of the coverage of, or reduction in the maximum amounts
payable under, any insurance required to be maintained by Debtor pursuant to
this Agreement without the prior written consent of Lender.
(iii) Any representation or warranty made by Debtor herein
or by Debtor or Guarantor in any document or certificate furnished Lender in
connection herewith shall prove to be incorrect when made in any material
respect and not cured to the reasonable satisfaction of Lender within 10 days
after notice by Lender to Debtor and Guarantor.
(iv) Debtor or Guarantor shall fail to perform or observe
any other covenant, condition, or agreement to be performed or observed under
any Loan Document or under any guaranty of any Obligations and such failure
shall continue unremedied for a period of thirty (30) days and reasonable
efforts to cure have not commenced within that thirty (30) day period.
(v) Debtor or Guarantor or any affiliate of any Debtor or
subsidiary of Guarantor shall default in the payment of, or other performance
under, any obligation for payment or lease or any guarantee in an amount in
excess of five million dollars ($5,000,000) and any period of cure thereof shall
have expired and such default be continuing.
(vi) There shall be entered any judgment against Debtor or
Guarantor for the payment of money in an amount in excess of five million
dollars ($5,000,000), which is final and not discharged, appealed or bonded
within thirty (30) days.
(vii) There shall be (A) entered a decree or order for
relief by a court having jurisdiction in respect of Debtor or Guarantor in an
involuntary case under any applicable federal, state or foreign bankruptcy,
insolvency or other similar law as now or hereafter constituted (collectively,
"Bankruptcy Laws"), or the appointing of a receiver, liquidator, or similar
official ("Receiver") of Debtor or Guarantor for a material portion of its
assets, or ordering the winding-up or liquidation of its affairs and the
continuance of any such decree or order remains unstayed and in effect for a
period of sixty (60) consecutive days, or (B) commenced by Debtor or Guarantor a
voluntary case under the Bankruptcy Laws, or the consent by it to the
appointment of or taking possession by a Receiver for Debtor or Guarantor or for
a material portion of its assets or the making by it of any assignment for the
benefit of creditors, or the admission by it of its insolvency or inability to
pay its debts as they come due, or (C) any seizure or attachment of a material
portion of the assets of Debtor or of Guarantor which is not vacated or bonded
within sixty (60) days.
(viii) The Guaranty of the Obligations shall cease to be in
full force and effect or shall be declared null and void, or the validity or
enforceability thereof shall be contested by Guarantor.
(b) If an Event of Default shall occur, Lender may in its sole
discretion, by notice of default given to Debtor, do any one or more of the
following:
Loan and Security Agreement Page 8 of 12
<PAGE>
(i) Declare the Note to be due and payable, whereupon the
principal amount of the Note, together with accrued interest thereon and all
other amounts owing under this Agreement and the Note, shall become immediately
due and payable without presentment, demand, protest or other notice of any
kind, all of which are hereby expressly waived (and in the case of any Event of
Default specified in Section 7(a)(vii), such acceleration of the Note shall be
automatic, without any notice by Lender).
(ii) Exercise all other rights and remedies available to
it, whether under this Agreement, under any other instrument or agreement
securing, evidencing or relating to the Obligations, under the applicable
Uniform Commercial Code, or otherwise available at law or in equity.
(c) Without limiting the generality of the foregoing, Debtor
agrees that in any such event, Lender, without demand of performance or other
demand, advertisement or notice of any kind (except the notice specified below
of time and place of public or private sale) to or upon Debtor or any other
Person (all and each of which demands, advertisements and notices are hereby
expressly waived), may forthwith do any one or more of the following: collect,
receive, appropriate and realize upon the Collateral or any part thereof, and
sell, lease, assign, give an option or options to purchase or otherwise dispose
of and deliver, the Collateral (or contract to do so), or any part thereof, in
one or more parcels at public or private sale(s) at such place(s) and at such
price(s) as it may reasonably deem appropriate, for cash or on credit or for
future delivery without the assumption of any credit risk. Lender shall have the
right upon any such public sale(s), and, to the extent permitted by law, upon
any such private sale(s), to purchase the whole or any part of the Collateral so
sold, free of any right or equity of redemption of Debtor, which right or equity
is hereby expressly released. Debtor further agrees, at Lender's request, to
assemble (at Debtor's expense) the Collateral and make it available to Lender at
such place(s) which Lender shall select, whether in Peru or the continental
United States. Lender shall apply the net proceeds of any such collection,
recovery, receipt, appropriation, realization or sale (after deducting all
reasonable costs and expenses of every kind incurred therein or incidental to
the care, safekeeping or otherwise of any or all of the Collateral or in any way
relating to the rights of Lender hereunder, including reasonable attorneys' fees
and legal expenses) to the payment in whole or in part of the Obligations, in
such order as Lender may elect. Debtor agrees that Lender need not give more
than 10 days' notice of the time and place of any public sale or of the time
after which a private sale may take place and that such notice is reasonable
notification of such matters. Debtor shall be liable for any deficiency if the
proceeds of any sale or disposition of the Collateral are insufficient to pay
all amounts to which Lender is entitled. Debtor agrees to pay all costs of
Lender, including reasonable attorneys' fees, incurred with respect to
collection of any of the Obligations and enforcement of any of Lender's rights
hereunder. To the extent permitted by law, Debtor hereby waives presentment,
demand, protest or any notice (except as expressly provided in this Section 7)
of any kind in connection with this Agreement or any Collateral.
SECTION 8. MISCELLANEOUS.
(a) No delay or omission in exercising any right, power or remedy
accruing to Lender upon any breach or default by Debtor under this Agreement
shall impair any such right, power or remedy; nor shall any such delay or
omission be construed as a waiver of any breach or default, or of any similar
breach or default thereafter occurring; nor shall any waiver of a single breach
or default be deemed a waiver of any subsequent breach or default; nor shall
consent by Lender to any act of Debtor be deemed to be consent to any subsequent
similar act.
(b) All notices, requests and demands to or upon any party hereto
shall be deemed duly given or made when sent if given by telecopier, when
delivered if given by personal delivery or overnight commercial carrier, on the
third calendar day after deposit in the United States mail, certified mail,
return receipt requested, addressed to such party at its address set forth in
the first paragraph of this Agreement or such other address or telecopier number
as may be hereafter designated in writing by such party to the
Loan and Security Agreement Page 9 of 12
<PAGE>
other party hereto. All notices to Lender shall be to the attention of Vice
President-Operations, and if by fax to (562) 627-3002. All notices to Debtor
shall also be given to Guarantor at The Doe Run Resources Corporation, 1801
Park 270 Drive, Suite 300, St. Louis, MO 63146 to the attention of the Chief
Financial Officer.
(c) Debtor agrees, whether or not the contemplated transactions
are consummated:
(i) to pay or reimburse Lender for (A) all fees, taxes
and expenses of whatever nature incurred in connection with the creation,
preservation and protection of Lender's Security Interest in the Collateral,
including, without limitation, all filing and lien search fees, payment or
discharge of any taxes or Liens upon, or in respect to, the Collateral, and all
other fees and expenses in connection with protecting or maintaining the
Collateral or in connection with defending or prosecuting any actions, suits or
proceedings arising out of, or related to, the Collateral, and (B) all other
costs or expenses Debtor has agreed to pay, and (C) all costs and expenses
(including reasonable attorneys' fees and legal expenses) of Lender in
connection with the enforcement of this Agreement and the other Loan Documents;
and
(ii) to defend at its own cost and to indemnify and hold
harmless Lender, its successors and assigns, and their respective agents and
employees, from and against any and all losses, claims, intellectual property,
infringements, costs, expenses (including attorneys' fees), damages and
liabilities (including those for strict liability in tort), however caused,
resulting directly or indirectly in any manner from the issuance of Debtor's
purchase order, assignment of Debtor's purchase order or agreement to purchase,
Debtor's 's failure, delay or refusal to accept delivery of any Equipment, the
ownership, purchase, maintenance, possession, return or disposition of the
Equipment, or directly or indirectly from or pertaining to the use, condition,
design (including without limitation latent or other defects whether or not
discoverable) or operation of the Equipment, ordinary wear and tear excepted, or
the performance of this Agreement (including without limitation such losses,
claims, costs, expenses, damages and liabilities arising from the death or
injury to agents or employees of Debtor or Lender or any third person, or damage
to the property of Debtor or Lender, their agents or employees, or any third
person), (the foregoing being referred to as the "Indemnified Liabilities"),
provided, that Debtor shall have no obligation hereunder with respect to
Indemnified Liabilities arising from the gross negligence or willful misconduct
of Lender. If Debtor fails to perform or comply with any of its agreements
contained in this Agreement and Lender shall itself perform, comply or cause
performance or compliance, the expenses of Lender so incurred, together with
interest thereon at the Default Rate, shall be payable by Debtor to Lender on
demand and until such payment is made shall constitute Obligations hereunder.
The agreements and indemnities contained in this paragraph shall survive
termination of this Agreement and payment of the Note.
(d) This Agreement, together with the Note, Supplement and addenda
or amendments hereto, contains the complete, final and exclusive statement of
the terms of the agreement between Lender and Debtor related to the contemplated
transactions, and neither this Agreement, nor any terms hereof, may be changed,
waived, discharged or terminated orally, but only by an instrument in writing
signed by the party against which enforcement of a change, waiver, discharge or
termination is sought.
(e) This Agreement shall be binding upon, and inure to the benefit
of, Debtor and Lender and their respective successors and assigns, except that
Debtor may not assign or transfer its rights hereunder or any interest herein
without the prior written consent of Lender.
(f) Headings of sections and paragraphs are for convenience only,
are not part of this Agreement and shall not be deemed to affect the meaning or
construction of any of the provisions hereof. 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
Loan and Security Agreement Page 10 of 12
<PAGE>
remaining provisions hereof, and any such prohibition or unenforceability
shall not invalidate or render unenforceable such provision in any other
jurisdiction.
(g) Debtor hereby authorizes Lender to correct patent errors and
to fill in such blanks as serial numbers and dates herein and in the Note,
Supplement and in any document executed in connection herewith.
(h) This Agreement may be executed by the parties hereto in
separate counterparts, each of which when so executed and delivered shall be an
original, but all such counterparts shall together constitute the same
instrument.
(i) To the extent permitted by applicable law, Debtor hereby
waives any provision of law which renders any provision of this Agreement
prohibited or unenforceable in any respect. Any action by Debtor against Lender
for any default by Lender under this Agreement shall be barred unless commenced
within one (1) year after any such default occurs.
(j) Notwithstanding any provision to the contrary herein, or in
any of the documents evidencing the Obligations or otherwise relating thereto,
no such provision shall require the payment or permit the collection of interest
in excess of the maximum permitted by applicable usury laws. If any such
excessive interest is so provided for, then in such event: (i) the provisions of
this paragraph shall govern and control; (ii) neither the Debtor nor its heirs,
legal representatives, successors or assigns or any other party liable for the
payment thereof shall be obligated to pay the amount of such interest to the
extent that it is in excess of the maximum amount permitted by law; (iii) any
such excess interest that may have been collected shall be, at the option of the
holder of the instrument evidencing the Obligations, either applied as a credit
against the unpaid principal amount thereof or refunded to the maker thereof;
and (iv) the effective rate of interest shall be automatically reduced to the
maximum lawful rate under applicable usury laws as now or hereafter construed by
the courts having jurisdiction.
(k) The relationship between Debtor and Lender is solely of debtor
and creditor, and Lender has no fiduciary or other special relationship with
Debtor, and no term or provision of any of the Loan documents evidencing the
Obligations shall be construed so as to deem the relationship between the
parties to be other than that of debtor and creditor.
(l) THIS AGREEMENT AND THE NOTES AND SUPPLEMENTS SHALL BE GOVERNED
BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE
STATE OF NEW YORK. DEBTOR HEREBY IRREVOCABLY CONSENTS AND AGREES THAT ANY LEGAL
ACTION RELATING TO ANY LOAN DOCUMENT MAY BE INSTITUTED IN THE COURTS OF THE
STATE OF CALIFORNIA, IN THE COUNTY OF LOS ANGELES OR THE UNITED STATES COURTS
FOR THE SOUTHERN DISTRICT OF CALIFORNIA, AS LENDER MAY ELECT, AND BY EXECUTION
AND DELIVERY OF THIS AGREEMENT, DEBTOR HEREBY IRREVOCABLY ACCEPTS AND SUBMITS
TO, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, THE NON-EXCLUSIVE JURISDICTION OF
ANY SUCH COURT, AND TO ALL PROCEEDINGS IN SUCH COURTS. DEBTOR AND LENDER
ACKNOWLEDGE THAT JURY TRIALS OFTEN ENTAIL ADDITIONAL EXPENSES AND DELAYS NOT
OCCASIONED BY NONJURY TRIALS. DEBTOR AND LENDER AGREE AND STIPULATE THAT A FAIR
TRIAL MAY BE HAD BEFORE A STATE OR FEDERAL JUDGE BY MEANS OF A BENCH TRIAL
WITHOUT A JURY. IN VIEW OF THE FOREGOING, AND AS A SPECIFICALLY NEGOTIATED
PROVISION OF THIS AGREEMENT, DEBTOR AND LENDER HEREBY EXPRESSLY WAIVE ANY RIGHT
TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION ARISING UNDER
THIS AGREEMENT, THE NOTES AND SUPPLEMENTS OR THE TRANSACTIONS RELATED HERETO,
WHETHER NOW EXISTING OR
Loan and Security Agreement Page 11 of 12
<PAGE>
HEREAFTER ARISING, AND WHETHER SOUNDING IN CONTRACT OR TORT OR OTHERWISE; AND
DEBTOR AND LENDER HEREBY AGREE AND CONSENT THAT DEBTOR OR LENDER MAY FILE AN
ORIGINAL COUNTERPART OR A COPY OF THIS SECTION WITH ANY COURT AS WRITTEN
EVIDENCE OF THE CONSENT OF THE PARTIES HERETO TO THE WAIVER OF THEIR RIGHT TO
TRIAL BY JURY.
IN WITNESS WHEREOF, the parties have caused this Agreement to
be duly executed and delivered by their duly authorized officers.
Lender: Debtor:
BOEING CAPITAL CORPORATION
FIRST SECURITY BANK, NATIONAL
ASSOCIATION, not in its individual capacity, but
solely as Owner Trustee
By: /s/ Daniel O. Anderson By: /s/ Brett R. King
------------------------ -----------------------------
Title: V.P.--OPERATIONS Title: ASST. VICE PRESIDENT
--------------------- --------------------------
Loan and Security Agreement Page 12 of 12
<PAGE>
AMENDMENT NO. 4 TO
LOAN AND SECURITY AGREEMENT
THIS AMENDMENT NO. 4 TO LOAN AND SECURITY AGREEMENT, dated as of June
11, 1999, is by and among The Doe Run Resources Corporation, a New York
corporation ("Doe Run"), Fabricated Products, Inc., a Delaware corporation
("Fabricated Products", and together with Doe Run, collectively, "Borrowers")
and Congress Financial Corporation, a Delaware corporation ("Lender").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, Lender has entered into financing arrangements with Borrowers
pursuant to which Lender has made and may make loans and advances and provide
other financial accommodations to Borrowers as set forth in the Loan and
Security Agreement, dated March 12, 1998, by and among Lender and Borrowers, as
amended pursuant to Amendment No. 1 to Loan and Security Agreement, dated
September 1, 1998, Amendment No. 2 to Loan and Security Agreement, dated as of
January 13, 1999, and Amendment No. 3 to Loan and Security Agreement, dated as
of February 1, 1999, as further amended by this Amendment No. 4 to Loan and
Security Agreement (this "Amendment", and together with the foregoing described
agreements, as the same may hereafter be further amended, modified,
supplemented, extended, renewed, restated or replaced, the "Loan Agreement") and
the agreements, documents and instruments referred to therein or at any time
executed and/or delivered in connection therewith or related thereto (all of the
foregoing, together with the Loan Agreement, as the same now exists or may
hereafter be amended, modified, supplemented, extended, renewed, restated or
replaced, being collectively referred to herein as the "Financing Agreements");
WHEREAS, Doe Run has entered into certain agreements to purchase a Bell
model 412EP helicopter ("Helicopter No. 36213"; as hereinafter further defined)
from Bell Helicopter Textron Inc. as set forth in the Helicopter Purchase
Agreements (as hereinafter defined) and the Boeing Loan Documents (as
hereinafter defined);
WHEREAS, in connection with that transaction, Borrowers have requested
that, among other things, Lender (a) permit Doe Run to establish a new
Subsidiary for the purpose of, among other things, acquiring title to Helicopter
No. 36213, (b) permit Doe Run to guarantee the obligations of that new
Subsidiary to Boeing Capital Corporation, (c) permit Doe Run to incur certain
Indebtedness to Bell Helicopter Textron, Inc., and (d) enter into certain
amendments to the Loan Agreement in connection with such transactions, and
Lender is willing to agree to the foregoing, subject to the terms and conditions
contained in this Amendment;
NOW, THEREFORE, in consideration of the mutual conditions and
agreements and covenants set forth herein, and for other good and valuable
consideration, the adequacy and sufficiency of which are hereby acknowledged,
the parties hereto agree as follows:
<PAGE>
1. DEFINITIONS.
1.1 ADDITIONAL DEFINITIONS. As used herein, the following terms shall
have the respective meanings given to them below and the Loan Agreement shall be
deemed and is hereby amended to include, in addition and not in limitation of,
each of the following definitions:
(a) "AERO TRANSPORTE" shall mean Aero Transporte, S.A., a
sociedad anonima organized under the laws of Peru, and its successors and
assigns, or any successor or replacement Peruvian air transport company
appointed in accordance with the terms of the Helicopter Purchase Agreements and
the Boeing Loan Documents.
(b) "BELL TEXTRON" shall mean Bell Helicopter Textron Inc., a
Delaware corporation, and its successors and assigns.
(c) "BELL TEXTRON INDEMNITY" shall mean the Indemnity
Agreement, dated as of June 11, 1999, by Doe Run in favor of Bell Textron, as
the same now exists or may hereafter be amended, modified, supplemented,
extended, renewed, restated or replaced.
(d) "BELL TEXTRON SELLER NOTE" shall mean the Promissory Note,
dated as of June 11, 1999, issued by Doe Run to Bell Textron in the maximum
principal amount of up to $4,574,600, as the same now exists or may hereafter be
amended, modified, supplemented, extended, renewed, restated or replaced.
(e) "BOEING" shall mean Boeing Capital Corporation, a Delaware
corporation, and its successors and assigns.
(f) "BOEING GUARANTY" shall mean the Guaranty, dated as of
June 11, 1999, by Doe Run in favor of Boeing with respect to the obligations of
First Security under the Boeing Note, as the same now exists or may hereafter be
amended, modified, supplemented, extended, renewed, restated or replaced.
(g) "BOEING LOAN DOCUMENTS" shall mean, individually and
collectively, (i) the Loan and Security Agreement, dated as of June 11, 1999, by
and between First Security, and Boeing, (ii) the Boeing Guaranty, (iii) the
Boeing Note, (iv) the Assignment of Rent, dated as of June 11, 1999, between Jet
Aviation and Aero Transporte, and (v) any other agreements, documents or
instruments executed or delivered in connection therewith, as the same now exist
or may hereafter be amended, modified, supplemented, extended, renewed, restated
or replaced.
(h) "BOEING NOTE" shall mean the Promissory Note, dated as of
June 11, 1999, issued by First Security to Boeing in the maximum principal
amount of $5,900,000, as the same now exists or may hereafter be amended,
modified, supplemented, extended, renewed, restated or replaced.
(i) "FIRST SECURITY" shall mean First Security Bank, N.A., a
national banking association organized under the laws of the United States of
America, in its capacity as trustee
- 2 -
<PAGE>
under the Helicopter Trust Agreement, and its successors and assigns, together
with any successor or replacement trustee appointed in accordance with the
Helicopter Trust Agreement.
(j) "HELICOPTER NO. 36213" shall mean the Bell 412EP
Helicopter Aircraft, Serial Number 36213, FAA Registration Number N426DR,
together with the engines attached thereon and the other equipment and material
incorporated therein, all as described more particularly in the Helicopter
Purchase Agreements.
(k) "HELICOPTER PURCHASE AGREEMENTS" shall mean,
individually and collectively, (i) the Purchase Agreement, dated February 16,
1999, between Bell Textron, as seller, and Doe Run, as purchaser, (ii) the
Assignment of Purchase Agreement, dated as of June 11, 1999, among Bell
Textron, Doe Run and First Security, (iii) the Trust Agreement, (iv) Aircraft
Lease Agreement, dated as of June 11, 1999, by and between Jet Aviation, as
lessor, and Aero Transporte, as lessee, (v) the Bell Textron Indemnity
Agreement, (vi) the Escrow Agreement, dated June 9, 1999 by and between
Morgan Aircraft Title Services, Inc, as escrow agent, Doe Run and Bell
Textron, (vii) the Aircraft Management Services Agreement, dated June 11,
1999, between First Security and Jet Aviation, (viii) the Air Transportation
Service Agreement, dated June11, 1999, between Doe Run Peru and Aero
Transporte, and (ix) any other agreements, documents or instruments executed
or delivered in connection therewith, as all of the foregoing now exist or
may hereafter be amended, modified, supplemented, extended, renewed, restated
or replaced.
(l) "HELICOPTER PURCHASE PRICE" shall mean the amount of not
more than $5,900,000.
(m) "HELICOPTER TRUST" shall mean Bell 412 Peru Trust No. 1
created pursuant to the Helicopter Trust Agreement, and its successors and
assigns, together with any successor or replacement trust.
(n) "HELICOPTER TRUST AGREEMENT" shall mean the Trust
Agreement, dated as of June 11, 1999, between Doe Run and First Security, as the
same now exists or may hereafter be amended, modified, supplemented, extended,
renewed, restated or replaced.
(o) "JET AVIATION" shall mean Jet Aviation Business Jets,
Inc., a Maryland corporation, and its successors and assigns.
1.2 AMENDMENTS TO DEFINITIONS. All references to the term "Subsidiary"
or "subsidiary" in the Loan Agreement and the other Financing Agreements shall
be deemed and each such reference is hereby amended to mean any corporation,
association or organization, active or inactive, as to which more than fifty
(50%) percent of the outstanding voting stock or shares or interests shall now
or hereafter be owned or controlled, directly or indirectly, by a Borrower, any
subsidiary of Borrower, any subsidiary of a Borrower, or any subsidiary of each
subsidiary; PROVIDED, THAT, (a) the term "Subsidiary" as used elsewhere in the
Loan Agreement, as to Doe Run, shall not include Doe Run Cayman and its
Subsidiaries or DR Exploration Company (Proprietary) Ltd. (South Africa), except
(i) as otherwise expressly provided in any specific
- 3 -
<PAGE>
section of the Loan Agreement, (ii) for purposes of Section 5.1(b) hereof, and
(iii) for purposes of this definition and (b) the term "Subsidiary" as used
elsewhere in the Loan Agreement shall include neither First Security nor the
Helicopter Trust.
1.3 INTERPRETATION. For purposes of this Amendment, all terms used
herein, including but not limited to, those terms used or defined in the
recitals hereto shall have the respective meanings assigned thereto in the Loan
Agreement.
2. CONSENTS. Subject to the terms and conditions contained herein,
Lender hereby consents to the following:
(a) the formation of the Helicopter Trust pursuant to the
Helicopter Trust Agreement;
(b) the transfer by Doe Run to First Security of all of the
right, title and interest of Doe Run in and to the Helicopter Purchase
Agreements as in effect on the date hereof (other than the Helicopter Trust
Agreement and the Bell Textron Indemnity), including, without limitation, the
sale and transfer by Doe Run to First Security of Helicopter No. 36213 in
accordance with the terms Helicopter Purchase Agreements as in effect on the
date hereof and with the Boeing Loan Documents as in effect on the date hereof;
(c) the payment by Doe Run to First Security of the reasonable
cost, fees and expenses of First Security in an amount not to exceed $10,000 in
any calendar year payable in accordance with the Helicopter Trust Agreement as
in effect on the date hereof;
(d) the contingent, unsecured Indebtedness of Doe Run to Bell
Textron evidenced by the Bell Textron Seller Note as in effect on the date
hereof;
(e) the contingent, unsecured guarantee by Doe Run in favor of
Boeing with respect to the secured Indebtedness of First Security to Boeing
arising under the Boeing Loan Documents as set for in the Boeing Guaranty as in
effect on the date hereof;
(f) the indemnification by Doe Run in favor of First Security
as set forth in Sections 4.06 and 6.01 of the Helicopter Trust Agreement as in
effect on the date hereof; and
(g) the direct and indirect payments by Doe Run Peru arising
under the Helicopter Purchase Agreements as in effect on the date hereof and
under the Boeing Loan Documents as in effect on the date hereof.
3. AMENDMENTS.
3.1 INDEBTEDNESS. Section 6.3 of the Loan Agreement is hereby amended
by adding new Sections 6.3(n), (o), (p) and (q) immediately after Section
6.3(m), as follows:
- 4 -
<PAGE>
"(n) the contingent, unsecured Indebtedness of Doe Run to Bell
Textron evidenced by the Bell Textron Seller Note (as in effect on the
execution and delivery date thereof); PROVIDED, THAT,
(i) such Indebtedness is and shall be unsecured;
(ii) such Indebtedness shall not exceed
$4,574,000;
(iii) Doe Run shall not, directly or indirectly,
make any payments in respect of such
Indebtedness, including, but not limited to,
any prepayments or other non-mandatory
payment without the prior written consent of
Lender, except to the extent such payments
are made using proceeds of the loan made
under the Boeing Loan Documents as in effect
on the execution and delivery date thereof;
(iv) Doe Run shall not, directly or indirectly,
(A) amend, modify, alter or change any terms
of such Indebtedness or any of the
provisions of any agreement, document or
instrument to the extent such provision
governs or affects the Indebtedness or as
otherwise permitted herein or consented to
in writing by Lender, or (B) except to the
extent permitted in this Section 6.3(n),
redeem, retire, defease, purchase or
otherwise acquire such Indebtedness, or set
aside or otherwise deposit or invest any
sums for such purpose; and
(v) Doe Run shall furnish to Lender all notices
or demands in connection with such
Indebtedness either received by Doe Run or
on its behalf, promptly after the receipt
thereof, or sent by Doe Run or on its
behalf, concurrently with the sending
thereof, as the case may be;
(o) the contingent, unsecured Indebtedness of Doe Run to
Boeing arising under the Boeing Guaranty; PROVIDED, THAT,
(i) such Indebtedness shall not be secured by
any assets of Borrowers or any of their
Subsidiaries;
(ii) Doe Run shall not, directly or indirectly,
(A) amend, modify, alter or change any terms
of such Indebtedness or any of the
provisions of any agreement, document or
instrument to the extent such provision
governs or affects such Indebtedness or as
otherwise permitted herein or consented to
in writing by Lender, or (B) redeem, retire,
defease, purchase or otherwise acquire such
Indebtedness, or set aside or otherwise
deposit or invest any sums for such purpose;
and
- 5 -
<PAGE>
(iii) Doe Run shall furnish to Lender all notices
or demands in connection with such
Indebtedness either received by Doe Run or
on its behalf, promptly after the receipt
thereof, or sent by Doe Run or on its
behalf, concurrently with the sending
thereof, as the case may be;
(p) the contingent, unsecured Indebtedness of Doe Run to First
Security arising under the indemnification by Doe Run in favor of First
Security as set forth in Sections 4.06 and 6.01 of the Helicopter Trust
Agreement as in effect on the execution and delivery date thereof;
PROVIDED, THAT, (i) Doe Run gives Lender written notice promptly after
First Security takes any action to seek payment in respect of any
indemnified item as set forth in the Helicopter Purchase Agreements;
(ii) Lender shall have received not less than ten (10) Business Days'
prior written notice of the intention of Doe Run to make a payment in
respect thereof; and (iii) as of the date of and after giving effect to
such payment, no Event of Default or act, condition or event, which
with notice or passage of time or both would constitute an Event of
Default, shall exist or have occurred and be continuing; and
(q) the contingent, unsecured Indebtedness of Doe Run to Bell
Textron arising under the indemnification by Doe Run in favor of Bell
Textron as set forth in the Bell Textron Indemnity as in effect on the
execution and delivery date thereof; PROVIDED, THAT, (i) Doe Run gives
Lender written notice promptly after Bell Textron takes any action to
seek payment in respect of any indemnified item as set forth in the
Bell Textron Indemnity; (ii) Lender shall have received not less than
ten (10) Business Days' prior written notice of the intention of Doe
Run to make a payment in respect thereof; and (iii) as of the date of
and after giving effect to such payment, no Event of Default or act,
condition or event, which with notice or passage of time or both would
constitute an Event of Default, shall exist or have occurred and be
continuing."
3.2 LOANS, INVESTMENTS AND GUARANTEES.
(a) Section 6.5 of the Loan Agreement is hereby amended by
adding new Sections 6.5(r), (s) and (t), as follows:
"(r) the transfer by Doe Run to First Security of all of the
right, title and interest of Doe Run in and to the Helicopter Purchase
Agreements as in effect on the execution and delivery date thereof
(other than the Helicopter Trust Agreement and the Bell Textron
Indemnity), including, without limitation, the sale and transfer by Doe
Run to First Security of its interest in Helicopter No. 36213 in
accordance with the terms Helicopter Purchase Agreements as in effect
on the execution and delivery date thereof;
(s) the payment by Doe Run Peru in respect of the
Indebtedness arising under the Boeing Loan Documents in accordance with
the Helicopter Purchase Agreements as in effect on the execution and
delivery date thereof and with the
- 6 -
<PAGE>
Boeing Loan Documents as in effect on the execution and delivery date
thereof; and
(t) the guarantee by Doe Run in favor of Boeing of the
Indebtedness of First Security evidenced by the Boeing Note as in
effect on the execution and delivery date thereof permitted hereunder
as set forth in the Helicopter Guaranty as in effect on the execution
and delivery date thereof."
(b) The acquisition of Helicopter No. 36213, and the financing
of that acquisition, pursuant to the Helicopter Purchase Agreements as in effect
on the date hereof and the Boeing Loan Documents as in effect on the date
hereof, and subject to the terms and conditions set forth in this Amendment,
shall be deemed to and does hereby amend and replace the acquisition and
financing of the helicopter by Doe Run permitted by Section 6.5 as set forth in
Schedule 6.5 to the Loan Agreement, and no other or future acquisitions are
intended or implied pursuant to Section 6.5 and that Schedule 6.5.
4. REPRESENTATIONS, WARRANTIES AND COVENANTS. In addition to the
continuing representations, warranties and covenants heretofore or hereafter
made by Borrower to Lender pursuant to the other Financing Agreements, each of
Borrowers, jointly and severally, hereby represents, warrants and covenants with
and to Lender as follows (which representations, warranties and covenants are
continuing and shall survive the execution and delivery hereof and shall be
incorporated into and made a part of the Financing Agreements):
4.1 ACQUISITION OF HELICOPTER NO. 36213.
(a) The Helicopter Purchase Agreements and the transactions
contemplated thereunder that are required thereby to be completed on or before
the date hereof, shall have been, substantially contemporaneously with the
execution and delivery of this Amendment, duly executed, delivered and performed
in accordance with their terms by the respective parties thereto in all
respects, including the fulfillment of all conditions precedent set forth
therein. After giving effect to the Helicopter Purchase Agreements and subject
to the Boeing Loan Documents, First Security has acquired good and marketable
title to Helicopter No. 36213.
(b) The consummation of the transactions contemplated by the
Helicopter Purchase Agreements and the Boeing Loan Documents shall not result in
the imposition of any lien, security interest or encumbrance on or in any of the
assets of Borrowers or their Subsidiaries.
(c) All actions and proceedings required to be taken on or
before the date hereof by the Helicopter Purchase Agreements, applicable law or
regulation (including, without limitation, the Federal Aviation Act laws, being
Title 49 of the United States Code, as amended together with all rules,
regulations and interpretations thereunder or related thereto) have been taken
and the transactions contemplated thereunder required to be consummated on or
before the date hereof have been duly and validly consummated. Borrowers, Doe
Run Peru and First Security have obtained all necessary consents and approvals
of third parties to the transactions
- 7 -
<PAGE>
contemplated by the Helicopter Purchase Agreements and the Boeing Loan Documents
and required thereby to be completed on or before the date hereof, including,
without limitation, the Senior Secured Note Agreements.
(d) By no later than August 31, 1999, (i) the transactions
contemplated under the Helicopter Purchase Agreements that are required to be
completed after the date hereof, shall have been performed in accordance with
their terms by the respective parties thereto in all respects, and (ii) all
actions and proceedings required to be taken after the date hereof by the
Helicopter Purchase Agreements, applicable law or regulation shall have been
taken and the transactions contemplated thereunder required to be consummated
after the date hereof will be duly and validly consummated.
(e) No court of competent jurisdiction has issued any
injunction, restraining order or other order which prohibits consummation of the
transactions described in the Helicopter Purchase Agreements or in the Boeing
Loan Documents and, to the best of Borrower's knowledge, no governmental or
other action or proceeding has been threatened or commenced, seeking any
injunction, restraining order or other order which seeks to void or otherwise
modify the transactions described in the Helicopter Purchase Agreements.
(f) Doe Run shall not permit the Helicopter Trust to conduct
any business or engage in any commercial activities, except to the extent
required by and as specified in the Helicopter Trust Agreement as in effect on
the date hereof.
(g) This Amendment has been duly executed and delivered by
Borrowers and is in full force and effect as of the date hereof and the
agreements and obligations of Borrowers contained herein constitute legal, valid
and binding obligations of Borrowers enforceable against Borrowers in accordance
with their respective terms.
(h) Borrowers have delivered, or caused to be delivered, to
Lender true, correct and complete copies of the Helicopter Purchase Agreements
and of the Boeing Loan Documents.
(i) No Event of Default or act, condition or event, which with
notice or passage of time or both would constitute an Event of Default, exists
or has occurred and is continuing (after giving effect to the amendments made
and the consents given by Lender under this Amendment.)
5. CONDITIONS PRECEDENT. The effectiveness of the consent, waiver and
other terms and conditions contained herein shall be subject to the satisfaction
of each of the following conditions as determined by Lender:
5.1 DELIVERY OF DOCUMENTS. Lender shall have received, in form and
substance satisfactory to Lender, each of the following:
(a) an original of this Amendment, duly authorized, executed
and delivered by Borrowers to Lender;
- 8 -
<PAGE>
(b) evidence that the Helicopter Purchase Agreements and the
Boeing Loan Documents have been duly authorized, executed and delivered by and
to the appropriate parties thereto and that the transactions contemplated under
the terms and conditions of the Helicopter Purchase Agreements and the Boeing
Loan Documents have been consummated contemporaneously with the execution and
delivery of this Amendment, together with opinions of counsel with respect to
such transactions and agreements, if any, addressed to Lender or upon which
Lender is expressly permitted to rely; and
(c) true, correct and complete copies of the Helicopter
Purchase Agreements and the Boeing Loan Documents.
5.2 NO DEFAULT. No Event of Default exists on the date hereof after
giving effect to the amendment to the Loan Agreement made by the provisions of
this Amendment.
6. MISCELLANEOUS.
6.1 ADDITIONAL EVENT OF DEFAULT. The parties hereto acknowledge,
confirm and agree that the failure of Borrowers to comply with the covenants,
conditions and agreements contained herein shall constitute an Event of Default
under the Financing Agreements (subject to the applicable cure period, if any,
with respect thereto provided for in the Loan Agreement as in effect on the date
hereof).
6.2 EFFECT OF THIS AMENDMENT. Except as modified pursuant hereto, no
other consents, changes or modifications to the Financing Agreements are
intended or implied, and in all other respects, the Financing Agreements are
hereby specifically ratified, restated and confirmed by all parties hereto as of
effective date hereof. Any acknowledgment or consent contained herein shall not
be construed to constitute a consent to any other or further action by Borrower
or to entitle Borrowers to any other consent. The Loan Agreement and this
Amendment shall be read and construed as one agreement. To the extent of
conflict between the terms of this Amendment and the other Financing Agreements,
the terms of this Amendment shall control.
6.3 FURTHER ASSURANCES. The parties hereto shall execute and deliver
such additional documents and take such additional actions as may be necessary
to effectuate the provisions and purposes of this Amendment.
6.4 GOVERNING LAW. The rights and obligations hereunder of each of the
parties hereto shall be governed by and interpreted and determined in accordance
with the laws of the State of New York (without giving effect to principals of
conflict of laws).
6.5 BINDING EFFECT. This Amendment shall be binding upon and inure to
the benefit of each of the parties hereto and their respective successors and
assigns.
6.6 COUNTERPARTS. This Amendment may be executed in any number of
counterparts, but all of such counterparts shall together constitute but one and
the same agreement. In making
- 9 -
<PAGE>
proof of this Amendment, it shall not be necessary to produce or account for
more than one counterpart thereof signed by each of the parties thereto.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed and delivered by their authorized officers as of the date and year
first above written.
CONGRESS FINANCIAL CORPORATION
By: /s/ Herbert Korn
-----------------------------
Title: Assistant Vice President
--------------------------
THE DOE RUN RESOURCES
CORPORATION
By: /s/ David Chaput
-----------------------------
Title: Treasurer
--------------------------
FABRICATED PRODUCTS, INC.
By: /s/ David Chaput
-----------------------------
Title: Treasurer
--------------------------
- 10 -
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> OCT-31-1999
<PERIOD-START> NOV-01-1998
<PERIOD-END> JUL-31-1999
<CASH> 6,963
<SECURITIES> 0
<RECEIVABLES> 86,093
<ALLOWANCES> (903)
<INVENTORY> 128,515
<CURRENT-ASSETS> 35,968
<PP&E> 170,519
<DEPRECIATION> (94,208)
<TOTAL-ASSETS> 661,945
<CURRENT-LIABILITIES> 120,573
<BONDS> 300,453
0
0
<COMMON> 0
<OTHER-SE> 5,973
<TOTAL-LIABILITY-AND-EQUITY> 661,945
<SALES> 577,765
<TOTAL-REVENUES> 577,765
<CGS> 493,095
<TOTAL-COSTS> 546,332
<OTHER-EXPENSES> 1,117
<LOSS-PROVISION> 94
<INTEREST-EXPENSE> 44,413
<INCOME-PRETAX> (2,895)
<INCOME-TAX> 9,710
<INCOME-CONTINUING> (12,605)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (12,605)
<EPS-BASIC> 0
<EPS-DILUTED> 0
</TABLE>
